Thursday 31 October 2013

A spoonful of sugar helps the taxation go down ...

Earlier this summer, in  Trustees of the Mrs PL Travers Will Trust v HMRC [2013] UKFTT 436 (TC), 14 August 2013, a First-tier Tribunal in the UK found that whether copyright royalties payable to trustees were taxable as capital or income depended on an analysis of copyright ownership in the light of trust law principles. The Tribunal also considered what constituted accumulation of income, where royalties were being exploited.

Curiously, in reaching its decision the tribunal judges had to refer to a line of Scottish cases relating to mineral rights. This reflects the fact that there are not many cases on the tax and trust treatment of copyright. This decision is therefore likely to be a useful reference point for trustees who are holding copyright and for the executors of literary estates as well as their advisers.

Cultural note: the P. L. Travers in this case is not as well known as her famous literary creation, this being none other than Mary Poppins.

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