The new income tax charge on offshore receipts in respect of intangibles

While the UK’s new digital services tax hogged the limelight in the recent Budget much less attention was paid to the fact that the proposed extension of withholding tax on royalties paid to tax havens (announced at the previous Budget) was converted into a direct income tax charge recoverable from UK affiliates of the person exploiting the intangible property if not collected directly.

Is this really a withholding tax by another name?

This change to the royalty withholding tax regime was made after consultation but apart from the mechanics of recovery the end result is broadly the same as a withholding tax so there are still some questions of principle and practicability to address.

First withholding taxes are intrinsically bad when imposed on businesses – because they are taxes on gross income with no relief for costs (such...