|
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|
589 | Person liable for tax under section 587 |
| |
The person liable for any tax charged under section 587 is the seller of the |
| |
| |
590 | UK resident sellers: spreading rules |
| |
(1) | This section applies if the person liable under section 587 is a UK resident. |
| 5 |
(2) | If the person does not receive the proceeds of sale in instalments, one-sixth of |
| |
the amount chargeable is taxed in the tax year in which the person receives the |
| |
proceeds of the sale and in each of the next 5 tax years. |
| |
(3) | The person may elect to be taxed instead on the whole of the amount |
| |
chargeable under section 587 in the tax year in which the person receives the |
| 10 |
| |
(4) | If the person receives the proceeds of sale in instalments, one-sixth of the |
| |
amount chargeable in respect of each instalment is taxed in the tax year in |
| |
which the person receives the instalment and in each of the next 5 tax years. |
| |
(5) | The person may elect to be taxed instead on the whole of any instalment in the |
| 15 |
tax year in which the person receives it. |
| |
(6) | An election under subsection (3) or (5) must be made on or before the first |
| |
anniversary of the normal self-assessment filing date for that tax year. |
| |
591 | Non-UK resident sellers: election for spreading |
| |
(1) | If the person liable under section 587— |
| 20 |
(a) | is a non-UK resident, and |
| |
(b) | does not receive the proceeds of sale in instalments, |
| |
| the whole amount chargeable is taxed in the tax year in which the person |
| |
| |
(2) | The person may elect to be taxed instead on one-sixth of the amount chargeable |
| 25 |
in the tax year in which the person receives the proceeds of sale and in each of |
| |
| |
(3) | An election under subsection (2) must be made on or before the first |
| |
anniversary of the normal self-assessment filing date for the tax year in which |
| |
the proceeds of sale are received. |
| 30 |
(4) | Such repayments and assessments are to be made for each of the tax years |
| |
affected as are necessary to give effect to the election. |
| |
(5) | Subsection (4) is subject to the qualifications in section 596 (adjustments where |
| |
| |
592 | Further provision about elections for spreading: instalments |
| 35 |
(1) | If the person liable under section 587— |
| |
(a) | is a non-UK resident, and |
| |
(b) | receives the proceeds of sale in instalments, |
| |
| the amount chargeable in respect of each instalment is taxed in the tax year in |
| |
which the person receives the instalment. |
| 40 |
|
| |
|
| |
|
(2) | The person may, for any instalment, elect to be taxed instead on one-sixth of |
| |
the amount chargeable in respect of the instalment in the tax year in which the |
| |
person receives it and in each of the next 5 tax years. |
| |
(3) | An election under subsection (2) must be made on or before the first |
| |
anniversary of the normal self-assessment filing date for the tax year in which |
| 5 |
the instalment is received. |
| |
(4) | Such repayments and assessments are to be made for each of the tax years |
| |
affected as are necessary to give effect to the election. |
| |
(5) | Subsection (4) is subject to the qualifications in section 596 (adjustments where |
| |
| 10 |
| |
(1) | If a seller who is liable to income tax under section 587 dies, any amounts |
| |
which would have been chargeable in later tax years under— |
| |
(a) | section 590(2) or (4) (UK resident sellers: spreading rules), or |
| |
(b) | section 591(2) or 592(2) (non-UK resident sellers: elections for |
| 15 |
| |
| are taxed in the tax year in which the seller dies. |
| |
(2) | The personal representatives may elect that the tax payable by reason of |
| |
subsection (1) be reduced to the total amount of income tax that the seller and |
| |
the estate would have been liable to pay if the amounts chargeable by reason |
| 20 |
of that subsection had been taxed in equal parts in each of the lifetime tax years. |
| |
(3) | In subsection (2) “the lifetime tax years” means— |
| |
(a) | the tax year in which the seller received the proceeds or, as the case may |
| |
| |
(b) | each of the next tax years up to and including that in which the seller |
| 25 |
| |
(4) | An election under subsection (2) must be made on or before the first |
| |
anniversary of the normal self-assessment filing date for the tax year in which |
| |
| |
594 | Winding up of a body corporate |
| 30 |
(1) | If a body corporate which is liable to income tax under section 587 commences |
| |
to be wound up, any amounts falling within subsection (2) are taxed in the year |
| |
in which the winding up commences. |
| |
| |
(a) | any amounts which would have been chargeable in later tax years |
| 35 |
under section 591(2) or 592(2), and |
| |
(b) | any amounts (arising to the body in a fiduciary or representative |
| |
capacity) which would have been chargeable in later tax years under |
| |
| |
595 | Deduction of tax from payments to non-UK residents |
| 40 |
(1) | This section applies if a person who is a non-UK resident is liable to tax under |
| |
section 587 on profits from the sale of the whole or part of any patent rights. |
| |
|
| |
|
| |
|
(2) | The rules in section 588 allowing the capital cost (if any) of the rights sold to be |
| |
deducted in calculating the profits from the sale do not affect the amount of |
| |
income tax which (by virtue of section 349ZA of ICTA: application of rules for |
| |
deduction of income tax by the payer) is to be— |
| |
(a) | deducted under section 349(1) of ICTA, and |
| 5 |
(b) | assessed under section 350 of that Act (assessment on the payer). |
| |
(3) | No election made by the seller under section 591(2) or 592(2) (election for |
| |
spreading) in relation to the proceeds of sale or any instalment affects the |
| |
amount of income tax which (by virtue of section 349ZA of ICTA: application |
| |
of rules for deduction of income tax by the payer) is to be— |
| 10 |
(a) | deducted from the proceeds of sale or instalment under section 349(1) |
| |
| |
(b) | assessed under section 350 of that Act. |
| |
596 | Adjustments where tax has been deducted |
| |
(1) | Where any sum has been deducted from a payment by virtue of section 595(2), |
| 15 |
any adjustment necessary— |
| |
(a) | because of section 595(2), or |
| |
(b) | because of an election under section 591(2) or 592(2), |
| |
| must be made by way of repayment of tax. |
| |
(2) | Adjustments necessary to give effect to an election under section 591(2) or |
| 20 |
592(2) must be made year by year, treating one-sixth of the sum deducted from |
| |
the proceeds of sale or instalment as income tax paid for each of the 6 years. |
| |
(3) | No repayment is to be made of any tax treated under subsection (2) as income |
| |
tax paid for a particular year unless and until it is ascertained that the income |
| |
tax ultimately falling to be paid for that year is less than the amount which was |
| 25 |
| |
597 | Licences connected with patents |
| |
(1) | The acquisition of a licence in respect of a patent is treated for the purposes of |
| |
sections 587 to 596 as a purchase of patent rights. |
| |
(2) | The grant of a licence in respect of a patent is treated for the purposes of |
| 30 |
sections 587 to 596 as a sale of part of patent rights. |
| |
(3) | But the grant by a person entitled to patent rights of an exclusive licence is |
| |
treated for the purposes of sections 587 to 596 as a sale of the whole of those |
| |
| |
(4) | In subsection (3) “exclusive licence” means a licence to exercise the rights to the |
| 35 |
exclusion of the grantor and all other persons for the period remaining until the |
| |
| |
598 | Rights to acquire future patent rights |
| |
(1) | If a sum is paid to obtain a right to acquire future patent rights, then for the |
| |
purposes of sections 587 to 596— |
| 40 |
(a) | the payer is treated as purchasing patent rights for that sum, and |
| |
(b) | the recipient is treated as selling patent rights for that sum. |
| |
|
| |
|
| |
|
| |
(a) | pays a sum to obtain a right to acquire future patent rights, and |
| |
(b) | subsequently acquires those rights, |
| |
| the expenditure is to be treated for the purposes of sections 587 to 596 as having |
| |
been expenditure on the purchase of those rights. |
| 5 |
(3) | In this section “a right to acquire future patent rights” means a right to acquire |
| |
in the future patent rights relating to an invention in respect of which the |
| |
patent has not yet been granted. |
| |
599 | Sums paid for Crown use etc. treated as paid under licence |
| |
(1) | This section applies if an invention which is the subject of a patent is used by |
| 10 |
| |
(a) | the Crown under sections 55 to 59 of the Patents Act 1977 (c. 37), or |
| |
(b) | the government of a country outside the United Kingdom under |
| |
corresponding provisions of the law of that country. |
| |
(2) | The use is treated for the purposes of sections 587 to 596 as having taken place |
| 15 |
| |
(3) | Sums paid in respect of the use are treated for the purposes of sections 587 to |
| |
596 as having been paid under a licence. |
| |
Relief from income tax on patent income |
| |
600 | Relief for expenses: patent income |
| 20 |
(1) | Relief may be claimed under this section for— |
| |
(a) | inventor’s expenses, and |
| |
(b) | patent application and maintenance expenses. |
| |
(2) | In this section “inventor’s expenses” means expenses which— |
| |
(a) | have been incurred by an individual who, alone or jointly, devised an |
| 25 |
invention for which a patent has been granted, and |
| |
(b) | are attributable to devising it. |
| |
(3) | In this section “patent application and maintenance expenses” means expenses |
| |
incurred by a person in connection with— |
| |
(a) | the grant or maintenance of a patent, |
| 30 |
(b) | the extension of the term of a patent, or |
| |
(c) | a rejected or abandoned application for a patent, |
| |
| but not incurred for the purposes of any trade carried on by the person. |
| |
(4) | Relief may not be claimed under this section for patent application and |
| |
maintenance expenses unless they are expenses which would, if incurred for |
| 35 |
the purposes of a trade, have been allowable as a deduction in calculating the |
| |
| |
(5) | Relief may not be claimed under this section for any expenses if relief for them |
| |
| |
(a) | section 582 (calculation of income for the purposes of the charge to tax |
| 40 |
| |
(b) | any other provision of the Tax Acts. |
| |
|
| |
|
| |
|
(6) | This section needs to be read with section 603 (contributions to expenditure). |
| |
601 | How relief is given under section 600 |
| |
(1) | This section sets out how relief for expenses is given where a person makes a |
| |
| |
(2) | The amount of the expenses must be deducted from or set off against the |
| 5 |
person’s income from patents for the tax year in which the expenses were |
| |
| |
(3) | If the amount to be allowed is greater than the amount of the person’s income |
| |
from patents for that tax year, the excess must be deducted from or set off |
| |
against the person’s income from patents for the next tax year, and so on for |
| 10 |
subsequent tax years, without the need for a further claim. |
| |
(4) | In this section “income from patents” means— |
| |
(a) | royalties or other sums paid in respect of the use of a patent (whether |
| |
chargeable under this Chapter or otherwise), |
| |
(b) | amounts on which tax is payable under section 587, 593 or 594, and |
| 15 |
(c) | amounts on which tax is payable under— |
| |
(i) | section 472(5) of CAA 2001 (patent allowances: balancing |
| |
| |
(ii) | paragraph 100 of Schedule 3 to that Act (balancing charges in |
| |
respect of pre-1st April 1986 expenditure on the purchase of |
| 20 |
| |
(5) | In this section references to a person’s income from patents are to the income |
| |
after any allowance has been deducted from or set off against it under section |
| |
479 of CAA 2001 (certain allowances against income from patents). |
| |
Payments received after deduction of tax |
| 25 |
602 | Payments received after deduction of tax |
| |
Income tax deducted under either of the following sections from a payment of |
| |
royalties or other income within this Chapter is treated as income tax paid by |
| |
| |
section 348(1) of ICTA (under which income tax may be deducted from |
| 30 |
some payments by the payer), and |
| |
section 349(1) of ICTA (under which income tax must be deducted from |
| |
some payments by the payer). |
| |
| |
603 | Contributions to expenditure |
| 35 |
(1) | For the purposes of sections 585, 588 and 600, the general rule is that a person |
| |
(“A”) is to be regarded as not having incurred expenditure so far as it has been, |
| |
or is to be, met (directly or indirectly) by— |
| |
| |
(b) | a person other than A. |
| 40 |
|
| |
|
| |
|
(2) | In this Chapter “public body” means the Crown or any government, local |
| |
authority or other public authority (whether in the United Kingdom or |
| |
| |
(3) | The general rule does not apply to the expenses mentioned in section 588(2)(b) |
| |
(incidental expenses incurred by a seller of patent rights). |
| 5 |
(4) | The general rule is subject to the exception in section 604. |
| |
604 | Contributions not made by public bodies nor eligible for tax relief |
| |
(1) | A person (“A”) is to be regarded as having incurred expenditure (despite |
| |
section 603(1)) so far as the requirements in subsections (2) and (3) are met in |
| |
relation to the expenditure. |
| 10 |
(2) | The first requirement is that the person meeting A’s expenditure (“B”) is not a |
| |
| |
(3) | The second requirement is that— |
| |
(a) | no allowance can be made under Chapter 2 of Part 11 of CAA 2001 |
| |
(contribution allowances) in respect of B’s expenditure, and |
| 15 |
(b) | the expenditure is not allowed to be deducted in calculating the profits |
| |
of a trade, profession or vocation carried on by B. |
| |
(4) | When determining for the purposes of subsection (3)(a) whether such an |
| |
allowance can be made, assume that B is within the charge to tax. |
| |
| 20 |
(1) | In this Chapter references to the sale of property include the exchange of |
| |
| |
| |
references to property include know-how, and |
| |
references to the sale of property include the disposal of know-how. |
| 25 |
(3) | For the purposes of subsection (1), any provision of this Chapter referring to a |
| |
sale has effect with the necessary modifications, including, in particular, those |
| |
in subsections (4) and (5). |
| |
(4) | References to the proceeds of sale and to the price include the consideration for |
| |
| 30 |
(5) | References to capital sums included in the proceeds of sale include references |
| |
to so much of the consideration for the exchange as would have been a capital |
| |
sum if it had been a money payment. |
| |
606 | Apportionment where property sold together |
| |
(1) | Any reference in this Chapter to the sale of property includes the sale of that |
| 35 |
property together with other property. |
| |
| |
references to property include know-how, and |
| |
references to the sale of property include the disposal of know-how. |
| |
|
| |
|
| |
|
(3) | For the purposes of subsection (1), all property sold as a result of one bargain |
| |
is to be treated as sold together even though— |
| |
(a) | separate prices are, or purport to be, agreed for separate items of that |
| |
| |
(b) | there are, or purport to be, separate sales of separate items of that |
| 5 |
| |
(4) | If an item of property is sold together with other property, then, for the |
| |
purposes of the charges under sections 583 and 587— |
| |
(a) | the net proceeds of the sale of that item are treated as being so much of |
| |
the net proceeds of the sale of all the property as, on a just and |
| 10 |
reasonable apportionment, is attributable to that item, and |
| |
(b) | the expenditure incurred on the provision or purchase of that item is |
| |
treated as being so much of the consideration given for all the property |
| |
as, on a just and reasonable apportionment, is attributable to that item. |
| |
607 | Questions about apportionments affecting two or more persons |
| 15 |
(1) | Any question about the way in which a sum is to be apportioned under section |
| |
606 must be determined in accordance with section 563(2) to (6) of CAA 2001 |
| |
(procedure for determining certain questions affecting two or more persons) if |
| |
it materially affects two or more taxpayers. |
| |
(2) | For the purposes of subsection (1) a question materially affects two or more |
| 20 |
taxpayers if at the time when the question falls to be determined it appears that |
| |
the determination is material to the liability to tax (for whatever period) of two |
| |
| |
608 | Meaning of “capital sums” etc. |
| |
Section 4 of CAA 2001 (meaning of “capital sums” etc.) applies in relation to |
| 25 |
this Chapter as it applies in relation to that Act. |
| |
| |
Films and sound recordings: non-trade businesses |
| |
609 | Charge to tax on films and sound recordings businesses |
| |
(1) | Income tax is charged on income from a business involving the exploitation of |
| 30 |
films or sound recordings where the activities carried on do not amount to a |
| |
| |
| Such a business is referred to in this Chapter as a “non-trade business”. |
| |
(2) | Expressions which are used in this Chapter and in Chapter 9 of Part 2 (trade |
| |
profits: films and sound recordings) have the same meaning in this Chapter as |
| 35 |
| |
| |
(1) | Tax is charged under this Chapter on the full amount of the income arising in |
| |
| |
|
| |
|