F1PART 8AProfits arising from the exploitation of patents etc
F2CHAPTER 2ARelevant IP profits: cases mentioned in section 357A(6)
Pt. 8A Chs. 2A, 2B inserted (with effect in accordance with s. 64(7) of the amending Act) by Finance Act 2016 (c. 24), s. 64(3)
Marketing assets return figure
357BKMarketing assets return figure
1
The marketing assets return figure for a relevant IP income sub-stream is—
where—
NMR is the notional marketing royalty in respect of the sub-stream (see section 357BKA), and
AMR is the actual marketing royalty in respect of the sub-stream (see section 357BKB).
2
Where—
a
AMR is greater than NMR, or
b
the difference between NMR and AMR is less than 10% of the amount of the relevant IP income sub-stream following the deductions required by Step 4 in section 357BF(2),
the marketing assets return figure for the sub-stream is nil.
357BKANotional marketing royalty
1
The notional marketing royalty in respect of a relevant IP income sub-stream is the appropriate percentage of the income allocated to that sub-stream at Step 2 in section 357BF(2).
2
The “appropriate percentage” is the proportion of that income which the company would pay another person (“P”) for the right to exploit the relevant marketing assets in the accounting period concerned if the company were not otherwise able to exploit them.
3
For the purposes of this section a marketing asset is a “relevant marketing asset” in relation to a relevant IP income sub-stream if the sub-stream includes any income arising from things done by the company that involve the exploitation by the company of that marketing asset.
4
For the purpose of determining the appropriate percentage under this section, assume that—
a
the company and P are dealing at arm's length,
b
the company, or the company and persons authorised by it, will have the right to exploit the relevant marketing assets to the exclusion of any other person (including P),
c
the company will have the same rights in relation to the relevant marketing assets as it actually has,
d
the right to exploit the relevant marketing assets is conferred on the relevant day,
e
the appropriate percentage is determined at the beginning of the accounting period concerned,
f
the appropriate percentage will apply for each succeeding accounting period for which the company will have the right to exploit the relevant marketing assets, and
g
no income other than income within the relevant IP income sub-stream will arise from anything done by the company that involves the exploitation by the company of the relevant marketing assets.
5
In subsection (4)(d) “the relevant day”, in relation to a relevant marketing asset, means—
a
the first day of the accounting period concerned, or
b
if later, the day on which the company first acquired the relevant marketing asset or the right to exploit the asset.
6
In determining the appropriate percentage, the company must act in accordance with—
a
Article 9 of the OECD Model Tax Convention, and
b
the OECD transfer pricing guidelines.
7
In this section “marketing asset” means any of the following (whether or not capable of being transferred or assigned)—
a
anything in respect of which proceedings for passing off could be brought, including a registered trade mark (within the meaning of the Trade Marks Act 1994),
b
anything that corresponds to a marketing asset within paragraph (a) and is recognised under the law of a country or territory outside the United Kingdom,
c
any signs or indications (so far as not falling within paragraph (a) or (b)) which may serve, in trade, to designate the geographical origin of goods or services, and
d
any information which relates to customers or potential customers of the company, or any other member of a group of which the company is a member, and is intended to be used for marketing purposes.
357BKBActual marketing royalty
1
The actual marketing royalty for a relevant IP income sub-stream is the aggregate of any sums which—
a
were paid by the company for the purposes of acquiring any relevant marketing assets or the right to exploit any such assets, and
b
have been allocated to the sub-stream at Step 3 in section 357BF(2).
2
In this section “relevant marketing asset” has the same meaning as in section 357BKA.
Pt. 8A inserted (with effect in accordance with Sch. 2 paras. 7, 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 2 para. 1(1)