The Government has finally enacted (in Finance (No.2) Bill 2010, which will become Finance (No.3) Act 2010, a relaxation for small and medium-sized companies’ (SMEs) R&D tax relief by removing the requirement that they own any intellectual property that results from the R&D.
So, what did the budget do for IP? Well, left it mostly alone – for now at least. The swings and roundabouts of corporate tax changes and other such matters will affect IP-related businesses in the same way as they affect all businesses, but the budget releases are fairly light on IP specific material.
HMRC’s Notice 34 on intellectual property rights enforcement at the UK external border has been updated (although not yet on the HMRC website) to take into account changes in EC regulations.
Hardwicke Chambers, in association with Gray’s Inn Tax Chambers, are putting on a seminar on IP and tax, on May 12th, looking at: what is intellectual property; why move IPR; how does one move IPR and the stumbling blocks that may be involved.
IP- related announcements in today’s Budget:
- Following consultation on design, the Government will introduce a tax relief for the UK video games industry, subject to state aid approval from the European Commission. No more detail than that, but it will presumably be similar to the film/sound recordings reliefs.
- The Government is creating a £270 million Higher Education Modernisation Fund in 2010-11. This fund will enable universities to identify and drive efficiencies in the sector and fund an extra 20,000 undergraduates on courses starting in September 2010, with priority given to key subjects like science, technology, engineering and mathematics.
- A little more news on the patent box announced in the 2009 Pre-Budget Report: the Government will work with business to design a practical and competitive regime for patents to support the UK’s strengths in innovative industries. This will include looking at how to identify and value embedded patent income and how to give relief to acquired patents. In addition to patents granted after legislation is passed in 2011, the consultation will also consider how to include patents not yet commercialised at that point, and how the regime will apply to equivalent overseas patents held by UK companies. The Government will be consulting with business over the summer.
HM Treasury have released the slides from yesterday’s (February 23rd) stakeholder event – more detail to follow once I’ve got free of a 10 day case in court!
The discussion document on controlled foreign companies produced by HM Treasury at the end of January includes proposals for a variation on the UK exit tax to apply for intellectual property assets moved overseas.
HM Treasury has published the discussion document on the future of taxation of controlled foreign companies. Of particular interest to IP are the questions on how they should treat overseas companies with IP, proposing to distinguish between those that actively manage the IP and those that passively receive it. The effect would be to ensure that UK parent companies are not taxed on the profits of IP holding subsidiaries in certain circumstances (to be defined!)
The document simply asks questions at this point, rather than suggesting any particular line of thought. In particular, it seeks responses on what constitutes active management of IP – this is likely to be an interesting area of discussion, as many of the characteristics of active management would seem to reflect well-managed investment IP activities as well.
Prolab Nutrition Europe (TC00269): the customs value of goods for import duties includes any royalties and licence fees paid as a condition of sale (Article 29(1)/Article 32(1) of Council Regulation 2913/92 (the Community Customs Code). The court held that payments for exclusive distribution rights are not royalties or licence fees for the purposes of determining customs value.