XX v HMRC (and related appeals)

In XX v HMRC (and related appeals) (TC00689 – 12 October) a company director (X) invented a specialist product (the details of which are not fully set out in the tribunal decision). He licensed the product to a company (U) of which he was the managing director and his wife was the controlling shareholder. U sold the product to the US Government Department of Defence and paid X sums which were described as ‘licence fees’. The First-Tier Tribunal upheld assessments on X charging tax on the basis that these payments were trading income applying the principles laid down in Jeffrey v Rolls-Royce Ltd [1962] 1 All ER 801 and finding that ‘the beneficial ownership of all the IP rights remained throughout with (X) as inventor’. (The Tribunal allowed appeals against alternative assessments which HMRC had issued on the basis that the fees were employment income rather...