Annex 1: Minor Changes in the Law Change 41: Trading income: disposal of know-how: restore an express definition of mineral deposits: sections 176 and 908
This change restores a previous definition of “mineral deposits”.
It brings the income tax and corporation tax codes back into line.
The definition of “mineral deposits” in these sections is in substance the definition that applied for the purposes of the definition of “know-how” in the source legislation for section 176 of this Act. That definition applied before certain amendments of Chapter 1 of Part 13 of ICTA were made by CAA.
Section 531 of ICTA makes provision about the tax treatment of certain disposals of know-how. Different provision is made about disposals of know-how that has been used in the course of a trade and other disposals of know-how. The former provision is rewritten in sections 177 and 178 of this Act.
Section 533 of ICTA defines know-how for the purposes of section 531 of ICTA as:
	any industrial information and techniques likely to assist in the manufacture or processing of goods or materials, or in the working of a mine, oil-well or other source of mineral deposits (including the searching for, discovery or testing of deposits or the winning of access thereto), or in the carrying out of any agricultural, forestry or fishing operations.
Before certain amendments of ICTA were made by CAA, the following definition applied to the expression “mineral deposits” in that definition:
The history of that definition is as follows. The provisions of section 531 of ICTA derive from section 21 of FA 1968, which included the following definition:
Subsection (9) of that section required the above definition to be construed as if it were contained in Part 1 of the Capital Allowances Act 1968, so that the following definition of “mineral deposits” applied:
That definition was amended by paragraph 2(3) of Schedule 13 to FA 1968, which added the words from “and, for this purpose” onwards.
The relevant provisions were consolidated in 1970 and again in 1988. Section 532 of ICTA originally provided for the definition of “know-how” to be construed as if it were contained in Part 1 of the Capital Allowances Act 1968. A reference to “the 1990 Act” was substituted by CAA 1990. This attracted the definition of “mineral deposits” which is set out above in the fifth paragraph of this note, and applied throughout that Act.
CAA rewrote provisions about know-how allowances that were previously in Chapter 1 of Part 13 of ICTA. In consequence of the repeal of CAA 1990, CAA also amended section 532 of ICTA with the result that it provides for the definition of “know-how” to be construed as if it were contained in the 2001 Act. However, no definition of “mineral deposits” applies for the purposes of CAA as a whole. So the consequential amendment failed to preserve the application of CAA 1990 definition of “mineral deposits” to the remaining provisions of Chapter 1 of Part 13 of ICTA (including those on which sections 176 and 908 are based).
It is noteworthy that a version of the definition of “mineral deposits” is carried forward in CAA to apply to the rewritten material about know-how allowances. See section 452(3) of that Act.
The failure to preserve the application of CAA 1990 definition of “mineral deposits” to the remaining provisions of Chapter 1 of Part 13 of ICTA is believed to have resulted from an oversight. The inclusion of a definition of “mineral deposits” in sections 176 and 908 corrects this error.
The definition of “mineral deposits” in sections 176 and 908 of this Act differs from the definition formerly in section 161(2) of CAA 1990 in that the words “whether in the form of aquifers, hot dry rocks or otherwise” are omitted. The definition of “mineral deposits” in section 452(3) of CAA also omits these words. The omission was made in that Act on the basis that the words are merely illustrative and that leaving them out does not change the legal effect of the definition. They are omitted in this Act for the same reasons. A fuller discussion of this point can be found in Note 46 in Annex 2 to the explanatory notes to CAA.
This change clarifies the law by making it certain that the definition of “mineral deposit” continues to apply for the purposes described above.
This change clarifies the law and removes uncertainty. But it is expected to have no practical effect as it is in line with generally accepted practice.