Corporation Tax Act 2009 (c. 4)

Part 9 U.K. Intellectual property: know-how and patents

Chapter 3 U.K. Sales of patent rights

Charge to tax U.K.

912 Charge to tax on profits from sales of patent rights U.K.

(1) The charge to corporation tax on income applies to profits from sales by a company of the whole or part of any patent rights.

(2) Subsection (1) applies in the case of a non-UK resident company if the patent is granted under the laws of the United Kingdom.

(3) In this Chapter “patent rights” means the right to do or authorise the doing of anything which, but for the right, would be an infringement of a patent.

913 Profits charged under section 912 U.K.

(1) A company's profits from the sale of the whole or part of patent rights are—

(a) any capital sum comprised in the proceeds of sale, less

(b) the deductible costs.

(2) The deductible costs are—

(a) the capital cost (if any) of the rights sold, and

(b) any incidental expenses incurred by the company in connection with the sale.

(3) If—

(a) the company acquired the rights sold, or the rights out of which they were granted, by purchase,

(b) the company has previously sold part of the purchased rights, and

(c) the proceeds of that sale, after deducting any incidental expenses, consisted wholly or partly of a capital sum,

the capital cost is reduced by that sum.

(4) References in this Chapter to the capital cost of patent rights are to any capital sum included in any price paid by the company to purchase—

(a) the rights, or

(b) the rights out of which they were granted.

(5) This section needs to be read with sections 924 (relief for expenses: patent income) and 926 (contributions to expenditure).