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PART III |
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OTHER AMENDMENTS |
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Qualifying trades |
| | 13. - (1) In section 297 of the Taxes Act 1988 for subsections (4) and (5) (trades consisting of receiving royalties and licence fees) substitute-
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"(4) A trade shall not be treated as failing to comply with this section by reason only that at some time in the relevant period it consists to a substantial extent in the receiving of royalties or licence fees if the royalties and licence fees (or all but for a part that is not a substantial part in terms of value) are attributable to the exploitation of relevant intangible assets.
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(5) For this purpose an intangible asset is a "relevant intangible asset" if the whole or greater part (in terms of value) of it has been created-
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(a) by the company carrying on the trade, or |
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(b) by a company which at all times during which it created the intangible asset was- |
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(i) the parent company of the company carrying on the trade, or
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(ii) a qualifying subsidiary of that parent company.
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(5A) For the purposes of subsection (5) above-
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(a) in the case of an intangible asset that is intellectual property, references to the creation of the asset by a company are to its creation in circumstances in which the right to exploit it vests in the company (whether alone or jointly with others); |
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(b) "parent company" means a company that- |
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(i) has one or more 51% subsidiaries, but
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(ii) is not itself a 51% subsidiary of another company; and
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(c) a subsidiary of the parent company referred to in subsection (5)(b) above is a "qualifying subsidiary" of that company if it is a subsidiary of a kind which the parent company may hold by virtue of section 308. |
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For the purposes of paragraph (c) above, section 308 shall have effect as if the references in that section to the qualifying company were to that parent company.
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(5B) For the purposes of subsections (4) to (5A) above "intangible asset" means any asset which falls to be treated as an intangible asset in accordance with normal accounting practice.
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For this purpose "normal accounting practice" means normal accounting practice in relation to the accounts of companies incorporated in any part of the United Kingdom.
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(5C) In subsection (5A)(a) above "intellectual property" means-
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(a) any patent, trade mark, registered design, copyright, design right, performer's right or plant breeder's right; and |
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(b) any rights under the law of a country or territory outside the United Kingdom which correspond or are similar to those falling within paragraph (a) above.". |
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(2) This paragraph has effect in relation to shares issued on or after 6th April 2000.
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Meaning of "arrangements" |
| | 14. - (1) In section 312 of the Taxes Act 1988 (interpretation), in subsection (1)-
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(a) after "In this Chapter-" insert- |
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""arrangements" includes any scheme, agreement or understanding, whether or not legally enforceable;"; and |
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(b) in the definition of "control", after "291B(4)" insert ", 293(8)(b)". |
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(2) This paragraph has effect-
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(a) in relation to shares issued on or after 21st March 2000, and |
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(b) in respect of the application of section 312 of the Taxes Act 1988 on or after that date in relation to shares- |
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(i) that were issued after 31st December 1993 but before 21st March 2000, and
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(ii) to which income tax relief or deferral relief was attributable immediately before 21st March 2000.
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(3) In sub-paragraph (2)-
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"income tax relief" means relief under Chapter III of Part VII of the Taxes Act 1988 (enterprise investment scheme); and |
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"deferral relief" has the same meaning as in Schedule 5B to the Taxation of Chargeable Gains Act 1992. |
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Meaning of "research and development" |
| | 15. - (1) In section 312 of the Taxes Act 1988 (interpretation), in subsection (1), for the definition of "research and development" substitute-
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""research and development" has the meaning given by section 837A;". |
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(2) This paragraph has effect in relation to shares issued on or after 6th April 2000.
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(3) Nothing in this paragraph affects the operation of any of the following provisions in relation to shares issued before 6th April 2000-
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(a) Chapter III of Part VII of the Taxes Act 1988 (enterprise investment scheme); |
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(b) sections 573 and 574 of that Act (relief for losses on shares in trading companies); |
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(c) Schedule 5B to the Taxation of Chargeable Gains Act 1992. |
