If I take an existing font and alter it using Inkscape for example, am I in breach of copyright?
I think there are two issues here
a) What you mean by modifying a font
b) What you mean by breaching copyright.
When you buy or download or acquire a font, it usually comes with a licence, telling you what you can and can't do with it. It is a contract between the creator/seller/distributor and you.
Most licences let you modify characters you have created with that font, for example stretch or squash them. Some licences will even allow you to modify the font files themselves, for example, create a squashed version of the font that you can use to type squashed text.
But none of this has anything to do with copyright, unless you are planning to redistribute the font or claim it as your own creation. It simply a licencing issue.
I would suggest that ANY font an be altered without violating copyright as long as you alter it ENOUGH. By enough I mean that it must become your original work. So you could take a font and edit every glyph so that the original is completely unrecognizable. In that case you are merely using the original as a blank canvas.
At issue is the concept of a derivative work.
United States Copyright Act in 17 U.S.C. § 101:
A “derivative work” is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a “derivative work”. (emphasis added)
17 U.S.C. § 106 tells us that only the copyright holder can produce a derivative work.
So, back to the ENOUGH question. You will need to modify the font such that it is no longer derivative of the one you copied.
US Copyright Office Circular 14: Derivative Works: "a derivative work must be different enough from the original to be regarded as a "new work" or must contain a substantial amount of new material"
The copyright infringement gets you in trouble if you get sued. And if you get sued the judge is going to look at case law. A judge or jury will decide if your new font is too close to the font you altered. But that's the rub, right? Are you really going to end up in court over this? If you are worried about getting sued, you need to alter the font until you are not! There are a bunch of different tests that are applied differently in various jurisdictions but the general test is that of substantial similarity and, again, there is no clear line.