Businesses invested in machines. Those machines manufactured good. Governments keen to encourage investment in modern machines devised capital allowances and tax relief against companies' tax to help businesses think long term. There is nothing much to show for these assets other than pieces of paper or information and, as intangibles, they do not qualify for tax concessions. Nor, given their classification as capital, can their cost be written off against current spending.
Intangibles tend to get the worst of both worlds.
The mobility of intangible capital also leads to a high degree of sensitivity to different international tax regimes. In the US, relief for the cost of investment in such intangibles is available over 15 years. Multinationals that have bought British brands or patents can purchase through a US subsidiary and license back to the UK to take advantage of this relief. Step in the Government in 1998 with a first stab at reform. Last week a third consultation paper was released, having taken on board representations from companies.