Modifications etc. (not altering text)
C1Pt. 13 Ch. 1 modified (8.11.1995) by Atomic Energy Authority Act 1995 (c. 37), Sch. 3 para. 20
Textual Amendments
F1Ss. 537A, 537B and preceding cross-heading inserted (1.8.1989) by Intellectual Property Act 1988 (c. 48), Sch. 7 para. 36(6); S.I. 1989/816, art. 2
(1)Where the designer of a design in which design right subsists assigns that right, or the author of a registered design assigns the right in the design, wholly or partially, or grants an interest in it by licence, and—
(a)the consideration for the assignment or grant consists, in whole or in part, of a payment to which this section applies, the whole amount of which would otherwise be included in computing the amount of his profits or gains for a single year of assessment, and
(b)he was engaged in the creation of the design for a period of more than 12 months,
he may, on making a claim, require that effect shall be given to the following provisions in connection with that payment.
(2)If the period for which he was engaged in the creation of the design does not exceed 24 months, then, for all income tax purposes, one-half only of the amount of the payment shall be treated as having become receivable on the date on which it actually became receivable and the remaining half shall be treated as having become receivable 12 months before that date.
(3)If the period for which he was engaged in the creation of the design exceeds 24 months, then, for all income tax purposes, one-third only of the amount of the payment shall be treated as having become receivable on the date on which it actually became receivable, and one-third shall be treated as having become receivable 12 months, and one-third 24 months, before that date.
(4)This section applies to—
(a)a lump sum payment, including an advance on account of royalties which is not returnable, and
(b)any other payment of or on account of royalties or sums payable periodically which does not only become receivable more than two years after articles made to the design or, as the case may be, articles to which the design is applied are first made available for sale or hire.
[F2(5)A claim under this section with respect to any payment to which it applies by virtue only of subsection (4)(b) above—
(a)shall have effect as a claim with respect to all qualifying payments, that is to say, all such payments in respect of rights in the design in question which are receivable by the claimant, whether before or after the claim; and
(b)where qualifying payments are so receivable in two or more years of assessment, shall be treated for the purposes of the Management Act as if it were two or more separate claims, each in respect of the qualifying payments receivable in one of those years.
(5A)A claim under this section may be made at any time within one year from the 31st January next following—
(a)in the case of such a claim as is mentioned in subsection (5) above, the latest year of assessment in which a qualifying payment is receivable; and
(b)in the case of any other claim, the year of assessment in which the payment in question is receivable.
(5B)For the purposes of subsections (5) and (5A) above, a payment shall be regarded as receivable in the year of assessment in computing the amount of the profits or gains of which it would, but for this section, be included.]
(6)In this section—
(a)“designer” includes a joint designer, and
(b)any reference to articles being made available for sale or hire is to their being so made available anywhere in the world by or with the licence of the design right owner or, as the case may be, the proprietor of the registered design.
Textual Amendments
F2S. 537A(5)-(5B) substituted for s. 537A(5) (with effect in accordance with s. 128(11) of the amending Act) by Finance Act 1996 (c. 8), s. 128(9)
(1)Where the usual place of abode of the owner of a right in a design is not within the United Kingdom, section 349(1) shall apply to any payment of or on account of any royalties or sums paid periodically for or in respect of that right as it applies to annual payments not payable out of profits or gains brought into charge to income tax.
(2)In subsection (1) above—
(a)“right in a design” means design right or the right in a registered design,
(b)the reference to the owner of a right includes a person who, notwithstanding that he has assigned the right to some other person, is entitled to receive periodical payments in respect of the right, and
(c)the reference to royalties or other sums paid periodically for or in respect of a right does not include royalties or sums paid in respect of articles which F3. . . have been exported from the United Kingdom for distribution outside the United Kingdom.
(3)Where a payment to which subsection (1) above applies is made through an agent resident in the United Kingdom and that agent is entitled as against the owner of the right to deduct any sum by way of commission in respect of services rendered, the amount of the payment shall for the purpose of section 349(1) be taken to be diminished by the sum which the agent is entitled to deduct.
(4)Where the person by or through whom the payment is made does not know that any such commission is payable or does not know the amount of any such commission, any income tax deducted by or assessed and charged on him shall be computed in the first instance on, and the account to be delivered of the payment shall be an account of, the total amount of the payment without regard being had to any diminution thereof F4. . . .
(5)The time of the making of a payment to which subsection (1) above applies shall, for all tax purposes, be taken to be the time when it is made by the person by whom it is first made and not the time when it is made by or through any other person.
(6)Any agreement for the making of any payment to which subsection (1) above applies in full and without deduction of income tax shall be void.
Textual Amendments
F3Words in s. 537B(2) repealed (with effect in accordance with s. 103(7) of the repealing Act) by Finance Act 1995 (c. 4), s. 115(10)(a), Sch. 29 Pt. 8(14), Note 2
F4Words in s. 537B(4) repealed (with effect in accordance with s. 103(7) of the repealing Act) by Finance Act 1995 (c. 4), s. 115(10)(b), Sch. 29 Pt. 8(14), Note 2