Commentary on Sections Structure of Chapters Overview Section 583: Charge to tax on income from disposals of know-how
2273.Sections 583 to 586 all relate to consideration received for the disposal of know-how. Section 583 charges to tax the proceeds of certain disposals of know-how. It is based on section 531 of ICTA. Under the source legislation, income from disposals of know-how is charged to tax under Schedule D Case VI.
2274.Section 531(6) of ICTA, which categorises a charge under section 531(4) of ICTA as “earned income”, is repealed by this Act and replaced by new section 833(5A) of ICTA (see paragraph 338(5) of Schedule 1 to this Act). The concept of “earned income” in the context of know-how will now only be relevant for the purposes of section 282A of ICTA (jointly held property).
2275.Subsection (1) imposes the tax charge. Subsection (1)(b) is based on section 531(8) of ICTA but the words “whether absolute or qualified” have been omitted since they are superfluous. The word “profits” has been used here as it more accurately describes the sum which, after deduction of certain expenditure, is chargeable to tax.
2276.Subsection (5) defines “mineral deposits” for the purposes of this Chapter. This restores, for income tax purposes, a definition of “mineral deposits” that applied before CAA was enacted. See Change 51 in Annex 1.