INTM620310 - Offshore Receipts in respect of Intangible Property (ORIP): Exemptions: Limited UK sales

ITTOIA05/Ch2A/S608J

There is an exemption from charge for persons who do not have UK sales in a tax year of more than £10,000,000.

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.

UK sales includes amounts that have been received, or to which there is an entitlement, whether of a capital or revenue nature (INTM620740). 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. This means that all of a group’s UK sales are taken into account in testing whether this exemption applies, irrespective of whether or not all sales are facilitated, enabled or promoted by IP. Connected persons follows the ITTOIA definition in Part 2 Schedule 4 (s993 Income Tax Act 2007, ITA07).

Example 1

A multinational group sells software. Person A within the group meets the conditions for a charge under Chapter 2A. In a tax year, the group makes direct UK sales of software amounting to £5m of UK sales revenues. The group also sells the same software via a third party reseller to the UK market where the sales revenues are £2m. Total UK sales of £7m do not exceed the threshold of £10m in a tax year and person A is exempt from charge for that tax year. The sale of goods by Person A to the third party reseller is excluded from the measure of UK sales in accordance with S608F(4); the sale of goods by the reseller to end purchasers are included.