Enter to open, tab to navigate, enter to select
Budget 2013: implications for IP, IT and communications
Practical Law UK Legal Update 6-525-3334 (Approx. 4 pages)
Budget 2013: implications for IP, IT and communications
by PLC IPIT & Communications
| Published on 21 Mar 2013 • United Kingdom |
A summary of the IP, IT and communications implications of the 20 March 2013 Budget. (Free access)
Speedread
The Chancellor's Budget Statement on 20 March 2013 includes measures relating to the new "above the line" research and development tax credit for large companies; a consultation on the provision of support to the visual effects industry through the tax system; and a plan to legislate to subject intra-EU business-to-consumer supplies of telecommunications, broadcasting and e-services to VAT in the member state in which the consumer is located. For all our Budget coverage, including practice area summaries, see PLC 2013 Budget.
If you don’t yet subscribe to PLC, you can request a free trial by completing this form or contacting the PLC Helpline.
Facts
George Osborne, the Chancellor of the Exchequer, delivered the 2013 Budget on 20 March 2013. The Budget includes measures relating to the new "above the line" (ATL) research and development (R&D) tax credit for large companies; a consultation on the provision of support to the visual effects industry through the tax system; and a plan to legislate to subject intra-EU business-to-consumer supplies of telecommunications, broadcasting and e-services to VAT in the member state in which the consumer is located.
For an overview of the key business tax announcements made in the 2013 Budget, see Legal update, 2013 Budget: key business tax announcements.
For PLC's coverage of the 2013 Budget, see PLC 2013 Budget. Further content will be added to this page over the coming days.
References to "Overview" are to the HMRC/HM Treasury Overview of Tax Legislation and Rates published on 20 March 2013. References to "TIIN" are to HMRC/HM Treasury Tax Information and Impact Notes published on 20 March 2013.
Research and development: above the line tax credit
The government has announced that the new ATL R&D tax credit for large companies will be paid at the rate of 10% of qualifying expenditure, an increase from the 9.1% rate in the December 2012 draft legislation. The ATL credit is intended to increase the visibility of large company R&D relief and provide greater cash flow support to companies with no corporation tax liability.
The credit will be available for companies with qualifying expenditure incurred on or after 1 April 2013. The scheme will initially be optional, but will become mandatory with effect from 1 April 2016.
The government first announced plans to introduce an ATL tax credit as part of its 2011 Autumn Statement (see further Legal update, 2011 Autumn Statement: business tax implications: R&D "above the line" tax credit). Draft legislation was published on 6 December 2011 (see Legal update, R&D tax credit and vaccine research relief: draft Finance Bill 2012 provisions and consultation response). The announcement was confirmed in the 2012 Budget (see Legal update, 2012 Budget: key business tax announcements: Research and development (R&D): above the line tax credit) and a further consultation was launched (see Legal update, Consultation on "above the line" R&D credit). Further draft legislation was published in December 2012 (see Legal update, Research and development "above the line" tax credit: draft Finance Bill 2013 legislation and response document), which indicated that the rate of the credit would be 9.1%.
For further detail on the existing R&D regime, see Practice notes, Intangible property: tax: Research and development and R&D tax reliefs: practical aspects.
Visual effects industry: consultation on tax support
The government has announced that it will consult on options to provide support to the visual effects industry through the tax system, possibly along the lines of the new reliefs for high-end television and animation (see Legal update, Creative sector tax relief: draft Finance Bill 2013 legislation and response document).
(See Overview, paragraph 2.22.)
Communications: VAT place of supply rules
Legislation will be introduced in the Finance Bill 2014 to subject intra-EU business-to-consumer supplies of telecommunications, broadcasting and e-services to VAT in the member state in which the consumer is located. These services are currently subject to VAT in the member state in which the business is established. The changes will take effect from 1 January 2015 and implement already-agreed EU legislation into UK legislation, ensuring that these services are taxed in the member state of consumption.
To save the need for businesses affected by these changes to register for VAT in other member states, a Mini One Stop Shop will also be introduced from 1 January 2015. This is an IT system that will give businesses the option of registering for VAT only in the UK and accounting for VAT due in other member states using a single return.