Increasing focus is being given to tax optimising business models, including the centralisation and holding of IP in favourable tax jurisdictions. Current proposals regarding full reform of the CFC rules and the two-step approach now outlined by the government demonstrate that HMRC remain concerned about IP being transferred out of the UK where there is not, in their view, an ‘appropriate’ exit charge. However, under the two-step approach one would expect all foreign IP to be outside the scope of the new rules. This demands greater focus on understanding exactly where IP has been generated and a need to consider ‘day 1’ offshore acquisition and development.
