Corporation Tax Act 2010 (c. 4)

[F1 PART 8A U.K. Profits arising from the exploitation of patents etc

Textual Amendments

F1 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)

CHAPTER 3 U.K. Relevant IP profits

Calculating profits of trade U.K.

357CG Adjustments in calculating profits of trade U.K.

(1) This section applies for the purposes of determining the relevant IP profits of a trade of a company for an accounting period.

(2) In calculating the profits of the trade for the accounting period—

(a) there are to be added the amounts in subsection (3), and

(b) there are to be deducted the amounts in subsection (4).

(3) The amounts to be added are—

(a) the amount of any debits which are treated as expenses of the trade by virtue of—

(i) section 297 of CTA 2009 (debits in respect of loan relationships), or

(ii) section 573 of CTA 2009 (debits in respect of derivative contracts), and

(b) the amount of any additional deduction for the accounting period obtained by the company under Part 13 of CTA 2009 for expenditure on research and development in relation to the trade.

(4) The amounts to be deducted are any amounts of finance income brought into account in calculating the profits of the trade for the accounting period.

(For the meaning of “finance income”, see section 357CB.)

(5) In a case where there is a shortfall in R&D expenditure in relation to the trade for a relevant accounting period (see section 357CH), the amount of R&D expenditure brought into account in calculating the profits of the trade for that accounting period is to be increased by the amount mentioned in section 357CH(2).

(6) For the purposes of subsection (5)—

• “R&D expenditure” means expenditure on research and development in relation to the trade,

• “relevant accounting period”, in relation to a company, means—

  (a)

  the first accounting period for which—

  (i)

  the company is a qualifying company, and

  (ii)

  an election under section 357A has effect in relation to it, and

  (b)

  each accounting period that begins before the end of the period of 4 years beginning with that accounting period, and

• “research and development” means activities, other than oil and gas exploration and appraisal, that fall to be treated as research and development in accordance with generally accepted accounting practice.]