Annex 1: Minor changes in the law made by the Act: Change 63: Post-cessation receipts: design right: section 253
This change corrects an anomaly in section 104(3) of ICTA. It ensures that a lump sum received by personal representatives for the assignment of design right is not treated as a post-cessation receipt.
The policy is that a lump sum from the disposal of certain rights should not be treated as a post-cessation receipt. That is the rule in section 103(3)(b) and (bb) of ICTA. Paragraph (bb) was inserted by the Copyright, Designs and Patents Act 1988.
Section 104 of ICTA charges sums “not ... otherwise chargeable to tax” (subsection (2)). Section 104(3) of ICTA provides that, in the case of a lump sum from a patent right etc, the section does not charge sums that would have been chargeable to tax under section 103 of ICTA but for the exemption in section 103(3)(b) of ICTA. As there is no reference to the exemption in section 103(3)(bb) of ICTA a lump sum from a design right could in principle be caught by section 104 of ICTA.
This change ensures that the intended exemption applies.
This change is in taxpayers' favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small.