B5.343 Intellectual property—know-how
Although the sale of know-how is normally treated as a trading receipt, there are special provisions which tax as income those few receipts which would otherwise be capital. The provisions do not apply where profits are calculated using the cash basis for unincorporated businesses (see B2.111)1.
Definitions
'Know-how' means any industrial information or techniques likely to assist in2:
- Ìý
•ÌýÌýÌýÌý manufacturing or processing goods or materials
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•ÌýÌýÌýÌý working, searching for or testing a source of mineral deposits
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•ÌýÌýÌýÌý carrying out any agricultural, forestry or fishing operations
'Mineral deposits' means any natural deposits capable of being lifted from the earth (including geothermal energy)3.
This is a wide definition and would include most payments normally referred to as know-how fees and could also include designs for manufactured products and secret processes. The definition does not exclude non-technical information but the body of information must serve the production industries. HMRC state that the types of know-how likely to be accumulated in the course of a trade include manufacturing techniques,
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Web page updated on 17 Mar 2025 16:45