Excluded activities: receipt of royalties and licence feesU.K.
46(1)Sub-paragraph (3) applies, in the circumstances mentioned in sub-paragraph (2), for the purpose of modifying the effect of section 195 of ITA 2007 (as applied for the purposes of the definition of “excluded activities” by section 79(7) of this Act) in relation to a relevant time or a relevant period.U.K.
(2)Sub-paragraph (3) applies if—
(a)shares in or securities of a company (“the company”) were issued before 6 April 2007,
(b)immediately before that date—
(i)the right to exploit an intangible asset (“the asset”) was vested in the company or a subsidiary of it (in either case, whether alone or jointly with others), and
(ii)the asset was a relevant intangible asset,
(c)at any time on or after that date, an activity carried on by the company or a subsidiary of it would be an excluded activity by reason only of the receipt of royalties or licence fees attributable to the exploitation of the asset, and
(d)the activity would not be an excluded activity if the amendments made by Part 3 of Schedule 16 to FA 2007 had not been made.
(3)The activity is to be treated, in relation to those shares or securities, as not being an excluded activity at that time.
(4)For the purposes of sub-paragraph (1)—
(a)a “relevant time” is any time relevant for the purposes of condition A in section 78(2) falling on or after 6 April 2007, and
(b)a “relevant period” is any period relevant for the purposes of condition B in section 78(3) beginning on or after that date (but see also sub-paragraph (5)).
(5)In the case of a period that begins before 6 April 2007 but ends on or after that date, the part of the period falling on or after that date is a “relevant period” for the purposes of sub-paragraph (1).
(6)In sub-paragraph (2), “intangible asset” and “relevant intangible asset” have the same meanings as in section 195 of ITA 2007.
47(1)This paragraph applies in relation to shares issued on or after 6 April 2000 but before 6 April 2007.U.K.
(2)Section 79 has effect in relation to a relevant time or a relevant period as if the following modifications were made to section 195 of ITA 2007 (as applied for the purposes of the definition of “excluded activities” by section 79(7) of this Act)—
(a)in subsection (4), the substitution for paragraphs (a) and (b) of—
“(a)by the company carrying on the trade, or
(b)by a company which at all times during which it created the intangible asset was—
(i)the holding company of the company carrying on the trade, or
(ii)a qualifying subsidiary of that holding company.”,
(b)in subsection (6), the insertion of the following definition—
““holding company” means a company that—
(a)has one or more 51% subsidiaries, but
(b)is not itself a 51% subsidiary of another company,”, and
(c)the omission of subsection (7).
(3)In a case where section 79 has effect as if the modifications in sub-paragraph (2) were made to section 195 of ITA 2007—
(a)section 79 of this Act applies with the omission of subsection (9), and
(b)section 88 applies with the omission of subsection (3).
(4)For the purposes of sub-paragraph (2)—
(a)a “relevant time” is any time relevant for the purposes of condition A in section 78(2) falling before 6 April 2007, and
(b)a “relevant period” is any period relevant for the purposes of condition B in section 78(3) ending before 6 April 2007 (but see also sub-paragraph (5)).
(5)In the case of a period relevant for the purposes of condition B in section 78(3) that ends on or after 6 April 2007 but begins before that date, the part of the period falling before that date is a “relevant period” for the purposes of sub-paragraph (2).
48U.K.In relation to shares issued before 6 April 2000, section 79 has effect as if, for the purposes of the definition of “excluded activities” in section 79(7), the following section was substituted for section 195 of ITA 2007—
“195Excluded activities: receipt of royalties and licence fees
(1)This section supplements section 192(1)(e) (receipt of royalties and licence fees).
(2)A trade is not to be regarded as consisting in the carrying on of excluded activities within section 192(1)(e) as a result only of it consisting to a substantial extent in the receiving of royalties or licence fees if—
(a)the company carrying on the trade is engaged throughout the relevant period in—
(i)the production of films, or
(ii)the production of films and the distribution of films produced by it in the relevant period, and
(b)all royalties and licence fees received by it in the relevant period are in respect of films produced by it in that period or sound recordings in relation to such films or other products arising from such films.
(3)A trade is not to be regarded as consisting in the carrying on of excluded activities within section 192(1)(e) as a result only of it consisting to a substantial extent in the receiving of royalties or licence fees if—
(a)the company carrying on the trade is engaged in research and development throughout the relevant period, and
(b)all royalties and licence fees received by it in the relevant period are attributable to research and development which it has carried out.
(4)In this section “the relevant period” means the continuous period that is relevant for the purposes of section 78(3) of CTA 2010.”