|
| |
|
910 | Profits charged under section 908 |
| |
(1) | The profits charged under section 908 are— |
| |
(a) | the amount of the consideration, less |
| |
(b) | any expenditure incurred by the company wholly and exclusively in |
| |
the acquisition or disposal of the know-how. |
| 5 |
(2) | Such expenditure may not be taken into account more than once, whether |
| |
under this section or otherwise. |
| |
(3) | This section needs to be read with section 926 (contributions to expenditure). |
| |
| |
| 10 |
| |
| |
| |
(a) | applies the charge to corporation tax on income to profits from sales of |
| |
patent rights (see sections 912 and 913), |
| 15 |
(b) | contains provision about how the amount chargeable is taxed (see |
| |
| |
(c) | contains related provision, including provision relevant to the |
| |
application of the Chapter (see sections 919 to 923). |
| |
(2) | Section 848 of ITA 2007, under which a sum representing income tax deducted |
| 20 |
under section 910 of that Act (deduction from payment to non-UK residents in |
| |
respect of sale of patent rights) is treated as income tax paid by the recipient, is |
| |
also relevant to the tax treatment of payments made to non-UK resident |
| |
companies in respect of sales of patent rights. |
| |
| 25 |
912 | Charge to tax on profits from sales of patent rights |
| |
(1) | The charge to corporation tax on income applies to profits from sales by a |
| |
company of the whole or part of any patent rights. |
| |
(2) | Subsection (1) applies in the case of a non-UK resident company if the patent |
| |
is granted under the laws of the United Kingdom. |
| 30 |
(3) | In this Chapter “patent rights” means the right to do or authorise the doing of |
| |
anything which, but for the right, would be an infringement of a patent. |
| |
913 | Profits charged under section 912 |
| |
(1) | A company’s profits from the sale of the whole or part of patent rights are— |
| |
(a) | any capital sum comprised in the proceeds of sale, less |
| 35 |
(b) | the deductible costs. |
| |
(2) | The deductible costs are— |
| |
|
| |
|
| |
|
(a) | the capital cost (if any) of the rights sold, and |
| |
(b) | any incidental expenses incurred by the company in connection with |
| |
| |
| |
(a) | the company acquired the rights sold, or the rights out of which they |
| 5 |
were granted, by purchase, |
| |
(b) | the company has previously sold part of the purchased rights, and |
| |
(c) | the proceeds of that sale, after deducting any incidental expenses, |
| |
consisted wholly or partly of a capital sum, |
| |
| the capital cost is reduced by that sum. |
| 10 |
(4) | References in this Chapter to the capital cost of patent rights are to any capital |
| |
sum included in any price paid by the company to purchase— |
| |
| |
(b) | the rights out of which they were granted. |
| |
(5) | This section needs to be read with sections 924 (relief for expenses: patent |
| 15 |
income) and 926 (contributions to expenditure). |
| |
Spreading of charge to tax |
| |
914 | UK resident companies: proceeds of sale not received in instalments |
| |
(1) | This section applies if a company liable for tax under section 912— |
| |
| 20 |
(b) | does not receive the proceeds of sale in instalments. |
| |
(2) | The appropriate fraction of the amount chargeable is taxed— |
| |
(a) | in the accounting period in which the company receives the proceeds |
| |
of sale (“the period of receipt”), and |
| |
(b) | in successive accounting periods, until the expiry of the 6-year period |
| 25 |
beginning at the start of the period of receipt. |
| |
(3) | The appropriate fraction is the same fraction of the amount chargeable as the |
| |
accounting period in question is of 6 years (or, in the last period, such smaller |
| |
fraction of that amount as has not already been taxed). |
| |
(4) | The company may elect that the whole of the amount chargeable is to be taxed |
| 30 |
instead in the period of receipt. |
| |
(5) | An election under subsection (4) must be made within the two-year period |
| |
beginning at the end of the period of receipt. |
| |
915 | UK resident companies: proceeds of sale received in instalments |
| |
(1) | This section applies if a company liable for tax under section 912— |
| 35 |
| |
(b) | receives the proceeds of sale in instalments. |
| |
(2) | The appropriate fraction of the amount chargeable in respect of each |
| |
| |
(a) | in the accounting period in which the company receives the instalment |
| 40 |
(“the period of receipt”), and |
| |
|
| |
|
| |
|
(b) | in successive accounting periods, until the expiry of the 6-year period |
| |
beginning at the start of the period of receipt. |
| |
(3) | The appropriate fraction of the amount chargeable in respect of an instalment |
| |
is the same fraction of that amount as the accounting period in question is of 6 |
| |
years (or, in the last period, such smaller fraction of the amount as has not |
| 5 |
| |
(4) | The company may elect that the whole of any instalment is to be taxed instead |
| |
in the period of receipt. |
| |
(5) | An election under subsection (4) must be made within the two-year period |
| |
beginning at the end of the period of receipt. |
| 10 |
916 | Non-UK resident companies: proceeds of sale not received in instalments |
| |
(1) | This section applies if a company liable for tax under section 912— |
| |
(a) | is not UK resident, and |
| |
(b) | does not receive the proceeds of sale in instalments. |
| |
(2) | The whole of the amount chargeable is taxed in the accounting period in which |
| 15 |
the company receives the proceeds (“the period of receipt”). |
| |
(3) | The company may elect instead that the amount chargeable— |
| |
(a) | is to be treated as arising rateably in the accounting periods ending 6 |
| |
years from the start of the period of receipt, and |
| |
(b) | is taxed accordingly. |
| 20 |
(4) | An election under subsection (3) must be made within the two-year period |
| |
beginning at the end of the period of receipt. |
| |
(5) | The election has effect in relation to accounting periods of the company during |
| |
which the company is within the charge to corporation tax in respect of any |
| |
proceeds of the sale not consisting of a capital sum. |
| 25 |
(6) | Such repayments and assessments are to be made for each of the accounting |
| |
periods affected as are necessary to give effect to the election. |
| |
(7) | Subsection (6) is subject to the qualifications in section 920 (adjustments where |
| |
| |
917 | Non-UK resident companies: proceeds of sale received in instalments |
| 30 |
(1) | This section applies if a company liable for tax under section 912— |
| |
(a) | is not UK resident, and |
| |
(b) | receives the proceeds of sale in instalments. |
| |
(2) | The amount chargeable in respect of each instalment is taxed in the accounting |
| |
period in which the company receives the instalment (“the period of receipt”). |
| 35 |
(3) | The company may, for any instalment, elect instead that the amount |
| |
chargeable in respect of the instalment— |
| |
(a) | is to be treated as arising rateably in the accounting periods ending 6 |
| |
years from the start of the period of receipt, and |
| |
(b) | is taxed accordingly. |
| 40 |
|
| |
|
| |
|
(4) | An election under subsection (3) must be made within the two-year period |
| |
beginning at the end of the period of receipt. |
| |
(5) | The election has effect in relation to accounting periods of the company during |
| |
which the company is within the charge to corporation tax in respect of any |
| |
proceeds of the sale not consisting of a capital sum. |
| 5 |
(6) | Such repayments and assessments are to be made for each of the accounting |
| |
periods affected as are necessary to give effect to the election. |
| |
(7) | Subsection (6) is subject to the qualifications in section 920 (adjustments where |
| |
| |
918 | Winding up of a body corporate |
| 10 |
(1) | If a body corporate which is liable for tax under section 912 commences to be |
| |
wound up, any amounts falling within subsection (2) are taxed in the |
| |
accounting period in which the winding up commences. |
| |
| |
(a) | any amounts which would have been chargeable in later accounting |
| 15 |
periods under section 914(2) or 915(2) (UK resident companies: |
| |
spreading of charge to tax), and |
| |
(b) | any amounts which would have been chargeable in later accounting |
| |
periods under section 916(3) or 917(3) (non-UK resident companies: |
| |
election to spread charge to tax). |
| 20 |
| |
919 | Deduction of tax from payments to non-UK resident companies |
| |
(1) | This section applies if a non-UK resident company is liable for tax under |
| |
section 912 on profits from the sale of the whole or part of any patent rights. |
| |
(2) | The rules in section 913 allowing the capital cost (if any) of the rights sold to be |
| 25 |
deducted in calculating the profits from the sale do not affect the amount of |
| |
income tax which is to be deducted under section 910 of ITA 2007. |
| |
(3) | No election made by the company under section 916(3) or 917(3) (election to |
| |
spread charge to tax) in relation to the proceeds of sale or any instalment affects |
| |
the amount of income tax which is to be deducted under section 910 of ITA |
| 30 |
| |
920 | Adjustments where tax has been deducted |
| |
Where any sum has been deducted from a payment under section 910 of ITA |
| |
2007, any adjustment necessary— |
| |
(a) | because of section 919(2), or |
| 35 |
(b) | because of an election under section 916(3) or 917(3), |
| |
must be made by way of repayment of tax. |
| |
921 | Licences connected with patents |
| |
(1) | The acquisition of a licence in respect of a patent is treated for the purposes of |
| |
this Chapter as a purchase of patent rights. |
| 40 |
|
| |
|
| |
|
(2) | The grant of a licence in respect of a patent is treated for the purposes of this |
| |
Chapter 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 this Chapter as a sale of the whole of those rights. |
| |
(4) | In subsection (3) “exclusive licence” means a licence to exercise the rights to the |
| 5 |
exclusion of the grantor and all other persons for the period remaining until the |
| |
| |
922 | 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 this Chapter— |
| 10 |
(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, |
| 15 |
| the expenditure is to be treated for the purposes of this Chapter as having been |
| |
expenditure on the purchase of those rights. |
| |
(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. |
| 20 |
923 | 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 |
| |
| |
(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 |
| 25 |
corresponding provisions of the law of that country. |
| |
(2) | The use is treated for the purposes of this Chapter as having taken place under |
| |
| |
(3) | Sums paid in respect of the use are treated for the purposes of this Chapter as |
| |
having been paid under a licence. |
| 30 |
| |
Relief from corporation tax on patent income |
| |
924 | Relief for expenses: patent income |
| |
(1) | Relief may be claimed under this section for patent application and |
| |
| 35 |
(2) | In this section “patent application and maintenance expenses” means expenses |
| |
incurred by a company in connection with— |
| |
(a) | the grant or maintenance of a patent, |
| |
(b) | the extension of the term of a patent, or |
| |
(c) | a rejected or abandoned application for a patent, |
| 40 |
|
| |
|
| |
|
| but not incurred for the purposes of any trade carried on by the company. |
| |
(3) | Relief may not be claimed under this section for patent application and |
| |
maintenance expenses unless they are expenses which would, if incurred for |
| |
the purposes of a trade, have been allowable as a deduction in calculating the |
| |
| 5 |
(4) | This section needs to be read with section 926 (contributions to expenditure). |
| |
925 | How relief is given under section 924 |
| |
(1) | This section sets out how relief for expenses is given where a company makes |
| |
a claim under section 924. |
| |
(2) | The amount of the expenses must be deducted from or set off against the |
| 10 |
company’s income from patents for the accounting period in which the |
| |
| |
(3) | If the amount to be allowed is greater than the amount of the company’s |
| |
income from patents for that accounting period, then (so long as the company |
| |
remains within the charge to corporation tax) the excess must be deducted |
| 15 |
from or set off against the company’s income from patents for the next |
| |
accounting period, and so on for subsequent accounting periods, 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, |
| 20 |
(b) | amounts on which tax is payable under section 912, 918 or 1272, and |
| |
(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 |
| 25 |
respect of pre-1st April 1986 expenditure on purchase of patent |
| |
| |
| but does not include any amount chargeable to income tax. |
| |
(5) | In this section references to a company’s income from patents are to the income |
| |
after any allowance has been deducted from or set off against it under section |
| 30 |
480 of CAA 2001 (certain allowances against income from patents). |
| |
| |
| |
926 | Contributions to expenditure |
| |
(1) | For the purposes of sections 910, 913 and 924, the general rule is that a company |
| 35 |
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 the company. |
| |
(2) | In this Chapter “public body” means the Crown or any government, local |
| 40 |
authority or other public authority (whether in the United Kingdom or |
| |
| |
|
| |
|
| |
|
(3) | The general rule does not apply to the expenses mentioned in section 913(2)(b) |
| |
(incidental expenses incurred by a seller of patent rights). |
| |
(4) | The general rule is subject to the exception in section 927. |
| |
927 | Contributions not made by public bodies nor eligible for tax relief |
| |
(1) | A company is to be regarded as having incurred expenditure (despite section |
| 5 |
926(1)) so far as the requirements in subsections (2) and (3) are met in relation |
| |
| |
(2) | The first requirement is that the person meeting the company’s expenditure |
| |
(“X”) is not a public body. |
| |
(3) | The second requirement is that— |
| 10 |
(a) | no allowance can be made under Chapter 2 of Part 11 of CAA 2001 |
| |
(contribution allowances) in respect of X’s expenditure, and |
| |
(b) | the expenditure is not allowed to be deducted in calculating the profits |
| |
of a trade, profession or vocation carried on by X. |
| |
(4) | When determining for the purposes of subsection (3)(a) whether such an |
| 15 |
allowance can be made, assume that X is within the charge to tax. |
| |
| |
(1) | In this Part references to the sale of property include the exchange of property. |
| |
| |
references to property include know-how, and |
| 20 |
references to the sale of property include the disposal of know-how. |
| |
(3) | For the purposes of subsection (1), any provision of this Part referring to a sale |
| |
has effect with the necessary modifications, including, in particular, those in |
| |
| |
(4) | References to the proceeds of sale and to the price include the consideration for |
| 25 |
| |
(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. |
| |
929 | Apportionment where property sold together |
| 30 |
(1) | Any reference in this Part to the sale of property includes the sale of that |
| |
property together with other property. |
| |
| |
references to property include know-how, and |
| |
references to the sale of property include the disposal of know-how. |
| 35 |
(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 |
| 40 |
| |
|
| |
|