The technical consultation on the (draft) Income Tax (Trading and Other Income) Act 2005 (Amendments to Chapter 2A of Part 5) Regulations 2019 that amends the ‘Offshore Receipts in respect of Intangible Property’ (ORIP) is open for comment until 19 July.
The Finance Act introduced the legislation and it came into effect on 6 April 2019.
The ORIP legislation imposes income tax on amounts received by persons resident in low tax jurisdictions for intangible property (such as brands, patents and copyrights) where those amounts are referrable to the sale of goods or services in the United Kingdom (UK).
There is an exemption from charge for persons who do not have UK sales in a tax year of more than £10m. However, the meaning of a person's UK sales is very widely defined: it includes the person's UK sales combined with that of any person connected to them.
The guidance states that ‘UK sales includes amounts that have been received, or to which there is an entitlement, whether of a capital or revenue nature. The amount can be wholly, or in part, and directly, or indirectly, relating to the provision of services, goods or other property constituting UK sales. Note that this will include the revenue from UK sales made by connected persons (as well as those through third party resellers). The measure of the UK sales threshold is the total sales revenues of the group and is not calculated by reference to UK-derived amounts. Connected persons follows the ITTOIA definition in Part 2 Schedule 4 (s993 of ITA07).’