Intellectual Property: The Key Tax Issues

This is an area of tax legislation which is poorly understood because most practitioners do not consider it will be relevant for their clients.  This course aims to give a comprehensive review of the basic provisions and how these can apply in practical situations.  Through the use of extensive examples and a comprehensive case study, the intention is to give clarity to practitioners about the relevant issues.

This course will update delegates on: 

• The corporate assets to which the Intangible Fixed Asset regime applies with a focus on considering the (numerous) changes in application since the regime was introduced in 2002
• The tax treatment of pre-2002 intellectual property assets
• The computational aspects of dealing with assets within the IFA regime including debits, credits, reinvestment relief and group tax issues
• A detailed review of the changes in FA2020 and consideration of the practical impact of those changes, if any
• A review of specific topics including fungible assets, anti-avoidance provisions, reconstructions and foreign aspects of the regime

Overview

• What is the definition of IFA (Institute of Financial Accountants) and how is this interpreted for tax intellectual property purposes?
  • How does the accounting definition interact with the tax definition?
• Assets excluded from the IFA regime and the practical impact
  • Considering the difference between complete and partial exclusion from the regime
• The changing landscape of the IFA regime
  • Why have the provisions changed so much?
• The impact of transactions between related parties
  • What are related parties?
  • Why is identifying related parties important?
  • What is the overall impact on transactions involving related parties?
• The interaction with the pre-2002 regime
  • The continuing capital gains treatment

 Goodwill

• What is goodwill?
• How has the treatment of goodwill changed since 2002?
  • Identifying the relevant dates
  • Making sure that the historical position is correct
• What is the current position in obtaining intellectual property tax relief on acquisitions of goodwill?
  • The purchase of goodwill with relevant IP
• What challenges have we seen from HMRC and how have the Courts reacted?
  • Property Tax Valuation and other practical challenges

 Computational issues

• Trading and non-trading debits and credits
  • Where do we follow accounting and where do we diverge?
• The use of non-trading debits
  • What is the impact of the 2017 changes
• Reinvestment relief and the differences from the capital gains tax
  • Identifying the capital gains tax reinvestment relief
  • Applying the restriction where not all proceeds are reinvested
• Revaluation and impairment
• Group tax issues
  • Transfers between group companies
  • Restrictions on relief
• Impact on change of tax accounting policy
• Degrouping charges and the FA2019 changes
  • When are you at risk of a tax charge arising?

 FA2020 changes in the definition of qualifying IFA

• What is FA2020 seeking to achieve?
  • Considering the political motivation behind the updated definitions
• What is the apparent change in the definition of IFAs?
  • What types of assets might now come into the IFA regime
• What is a restricted asset and relieving acquisition?
  • Considering the practical impact of the anti-avoidance provisions
• What is the impact of being a restricted asset for the intellectual property tax relief available on acquisitions of IFAs?
  • Calculating the relief available
  • Considering the planning opportunities arising from these provisions

 Fungible assets

• The definition of fungible assets
  • What types of assets might fall within these definitions?
• The computational issues relating to these and how they are dealt with for tax intellectual property purposes

 Miscellaneous topics

• The impact of anti-avoidance provisions and their general application
  • Is there much evidence of HMRC using these provisions?
• Reconstructions and migrations including intellectual property tax issues on transfers in and out of the UK
  • the mitigation of the tax liability on such transactions
• Transfer pricing and IFAs
  • What types of transfer pricing issues do we see involving IFAs?
• The impact of IFAs on the CFC regime
  • The specific computational issues
• The interaction with Double Tax Treaties

 Case study

• • The principles of the course will be brought together at the end by considering the computational adjustments arising on transactions involving IFAs in a specific company situation

The trainer started her career with HM Inland Revenue as a Fully Trained Inspector before gaining qualification as a Chartered Tax Advisor whilst still working for the department. She worked in the Large Business Office and in the local District network covering all aspects of direct tax. She left in 2000 to become a consultant before setting up in the intellectual property business providing training and consultancy.

The training involves CPD seminars, exam training, mentoring, and bespoke in-house training for all levels of accountants and tax specialists. The consultancy involves accountants and businesses in all aspects of tax planning as well as dealing with tax disclosures, HMRC enquiries and Tribunal cases. All aspects of direct tax and Stamp Duty Land Tax are covered. The trainer believes that the interaction between the training and consultancy is vital to providing the highest quality service in both areas. The consultancy allows the training to be practical by focusing on real cases where problems have been encountered and solved. The experience of providing consultancy allows the training to be interactive with delegates encouraged to participate and discuss their own cases.

The aim of this course is to enable delegates to consider the tax implications of dealing with intangible fixed assets and to address issues which arise with clients.  We will cover the basic legislative provisions and consider the practical problems which arise from the implementation of that provision.  We will use HMRC and real-life examples to illustrate the necessary points and conclude by reviewing a detailed intellectual property case study derived from a real client scenario.