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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Intellectual Property Rights: copyright

Copyright is a property right which protects the economic interests of authors in relation to works created by them. The owner of copyright has the exclusive right to do certain acts in respect of the work in question which would otherwise be restricted. For example, if a person without the consent or licence of the copyright owner, imports into the UK an article which he has reason to believe is an infringing copy of the work and which he uses for non-domestic or public purposes, he will infringe copyright. Copyright infringement is generally actionable by the owner of copyright, an exclusive licensee or, in certain cases, a non-exclusive licensee, who has a claim for damages, injunctive relief or an account of profits against the infringer.

Whilst copyright in relation to a particular work consists of a bundle of rights it is treated as a single asset within the meaning of TCGA92/S21(1).

Ideas are not the subject matter of copyright except in relation to the form in which ideas are expressed. To be protected by copyright under the Copyright Designs and Patents Act 1988 (CDPA 1988) that form of expression must, in the case of literary, dramatic, musical and artistic works, be original. That is, it must originate from the author, not be copied from another work and it must involve some labour, skill or independent judgment.

Works created on or after 1 August 1989 are protected in law by the CDPA 1988 whilst works created before that date are protected by pre-existing legislation. The statutory provisions prevent the unauthorised use of copyright works thus protecting the economic interests of the author.

S1 CDPA 1988 provides that copyright subsists in the following descriptions of work:

  • original literary, dramatic, musical or artistic works,
  • sound recordings, films, broadcasts or cable programmes, and
  • the typographical arrangement of published editions.Literary works include work expressed in writing or in print which involves skill and labour and generally affords information, instruction or pleasure. The Copyright (Computer Programs) Regulations 1992 extended the rules covering literary works to include computer programs.

A database may qualify for protection under the CDPA 1988 as a literary work. In such situations it may be termed a copyright database and the general rules relating to copyright apply. A database may also be protected under the Copyright and Rights in Databases Regulations 1997 (SI 1997/3032) by virtue of a database right.

Dramatic works include works of dance or mime.

Musical works consist of music exclusive of the words or actions to be sung or performed with the music.

Artistic works include graphic works, photographs, sculpture, collages and a work of architecture. Graphic works include any painting, drawing, diagram, map, chart or plan.

The author or person who created the work is the first owner of copyright except where a literary, dramatic, musical or artistic work created after 1 August 1989 or a film created after 1 December 1996 is made by an employee in the course of his employment, in which case the employer is the original owner. However, copyright is capable of assignment in part or in full provided that it is in writing. It is also common for licences to be granted, for example, the grant of film rights over a book.

Transactions involving copyright will generally fall to be taxed as income receipts, see BIM50700+. Exceptionally, a transaction may give rise to a chargeable gain or an allowable loss, for example:

  • Gifts of copyright by the author where the decision in Mason v Innes (44TC326) applies, see BIM50745.
  • Disposals of copyright held as an investment by someone other than the author.After establishing the facts you will need to consider whether copyright is a wasting asset within TCGA92/S44 (1), see CG76700+. The following table below sets out the basic provisions for new works. It should be noted that works created before 1 August 1989 are subject to transitional provisions and that the position may differ for some foreign works.
Type of original work Duration of Copyright
   
Literary, dramatic, musical or artistic works (including photographs) created on or after35065 70 years from the end of the calendar yearin which the author or the last remaining author of the work dies.
If authorship is unknown 70 years from theend of the calendar year in which the workwas created or, if during that period thework was made available to the public, 70years from the end of the calendar year inwhich it was first made available.    
  Sound recordings 50 years from the end of the calendar yearin which the sound recording was made or,if not released immediately, 50 years fromthe end of the calendar year in which it wasreleased.
  Films 70 years from the death of the last tosurvive of the principal director, the authorof the film screenplay, the author of the filmdialogue and the composer of the music specifically created for and used in the film.
  Broadcasts 50 years from the end of the calendar yearin which the broadcast was made.
Copyright for repeat broadcasts expires atthe same time as the original.    
  Typographical arrangement of published Editions 25 years from the end of the calendar yearin which the edition was first published.

Guidance on obtaining valuations of intangible assets including copyright is given at CG68300.