SCHEDULES

SCHEDULE 9Profits from the exploitation of patents etc: consequential

Section 64

1

CTA 2010 is amended in accordance with this Schedule.

2

In section 357B (meaning of “qualifying company”), in subsection (3)(b)(ii), for “section 357A” substitute “ section 357A(1) ”.

3

In the heading of Chapter 3 of Part 8A, after “profits” insert “ : cases mentioned in section 357A(7): no income from new IP ”.

4

1

Section 357C (relevant IP profits) is amended as follows.

2

Before subsection (1) insert—

A1

This section applies for the purposes of determining the relevant IP profits of a trade of a company for an accounting period in a case where—

a

the accounting period began before 1 July 2021,

b

the company is not a new entrant (see section 357A(11)), and

c

none of the amounts of relevant IP income brought into account as credits in calculating the profits of the trade for the accounting period is properly attributable to a new qualifying IP right (see section 357BP).

But see also section 357D (alternative method of calculating relevant IP profits in such a case).

3

In subsection (1)—

a

in the words before Step 1, omit “of a trade of a company for an accounting period”,

b

in Step 2, for “357CC and 357CD” substitute “ 357BH to 357BHC ”,

c

in Step 4, after “routine return figure” insert “ in relation to the trade for the accounting period ”,

d

in Step 5, for “elected” substitute “ made an election under section 357CL ”, and

e

in Step 6, after “marketing assets return figure” insert “ in relation to the trade for the accounting period ”.

5

In section 357CA (total gross income of a trade), in subsection (2), for “section 357CB” substitute “ section 357BG ”.

6

Omit sections 357CB to 357CF.

7

1

Section 357CG (adjustments in calculating profits of trade) is amended as follows.

2

In subsection (1) after “determining” insert “ under section 357C ”.

3

In subsection (4), in the words after paragraph (b), for “section 357CB” substitute “ section 357BG ”.

4

In subsection (6), in paragraph (a)(ii) of the definition of “relevant accounting period”, for “section 357A” substitute “ section 357A(1) ”.

8

In section 357CI (routine return figure), in Step 1 in subsection (1), for “sections 357CJ and 357CK” substitute “ sections 357BJA and 357BJB ”.

9

Omit sections 357CJ and 357CK.

10

1

Section 357CL (companies eligible to elect for small claims treatment) is amended as follows.

2

In subsection (1) for “elect” substitute “ make an election under this section ”.

3

In subsection (6) for “section 357A” substitute “ section 357A(1) ”.

11

In section 357CM (small claims amount), in subsection (1), for “elects” substitute “ makes an election under section 357CL ”.

12

1

Section 357D (alternative method of calculating relevant IP profits: “streaming”) is amended as follows.

2

In subsection (1) at the end insert

in a case where—

a

the accounting period began before 1 July 2021,

b

the company is not a new entrant (see section 357A(11)), and

c

none of the amounts of relevant IP income brought into account as credits in calculating the profits of the trade for the accounting period is properly attributable to a new qualifying IP right (see section 357BP).

3

For subsection (4) substitute—

4

A company must apply section 357DA (instead of section 357C) for the purposes of determining the relevant IP profits of a trade of the company for an accounting period in a case mentioned in subsection (1) if any of the mandatory streaming conditions in section 357DC is met in relation to the trade for the period.

13

1

Section 357DA (relevant IP profits) is amended as follows.

2

In subsection (1)—

a

in Step 1—

i

for “section 357CB” substitute “ section 357BG ”, and

ii

for “sections 357CC and 357CD” substitute “ sections 357BH to 357BHC ”,

b

in Step 4, after “routine return figure” insert “ in relation to the trade for the accounting period ”,

c

in Step 5, for “elected” substitute “ made an election under section 357CL ”, and

d

in Step 6, after “marketing assets return figure” insert “ in relation to the trade for the accounting period ”.

3

In subsection (4), in the words after paragraph (b), for “sections 357CJ and 357CK” substitute “ sections 357BJA and 357BJB ”.

14

1

Section 357DC (the mandatory streaming conditions) is amended as follows.

2

In subsection (8)(a) for “section 357CC” substitute “ section 357BH ”.

3

In subsection (9)(a) for “section 357CC(6)” substitute “ section 357BH(6) ”.

15

In section 357EB (allocation of set-off amount within a group) in subsection (3)(a) for “section 357A” substitute “ section 357A(1) ”.

16

In section 357ED (company ceasing to carry on trade etc) in subsection (2)(c) for “section 357A” substitute “ section 357A(1) ”.

17

In section 357FA (incorporation of qualifying items), in subsection (2), for “357CC(2)” substitute “ 357BH(2) ”.

18

In section 357FB (tax advantage schemes) in subsection (4)(b) for “section 357A” substitute “ section 357A(1) ”.

19

1

Section 357G (making an election under section 357A) is amended as follows.

2

In the heading, for “section 357A” substitute “ section 357A(1) or (11)(b) ”.

3

In subsection (1) for “section 357A” substitute “ section 357A(1) or (11)(b) ”.

20

1

Section 357GA (revocation of election made under section 357A) is amended as follows.

2

In the heading, for “section 357A” substitute “ section 357A(1) ”.

3

In subsection (1) for “section 357A” substitute “ section 357A(1) ”.

4

In subsection (5) for “section 357A” substitute “ section 357A(1) ”.

21

1

Section 357GB (application of Part 8A in relation to partnerships) is amended as follows.

2

In subsection (11)—

a

in the words before paragraph (a), after “Sections” insert “ 357BK, 357BKA ”, and

b

in paragraph (a) after “section” insert “ 357BK or ”.

3

In subsection (12) for “section 357CB(1)(c)” substitute “ section 357BG(1)(c) ”.

22

In section 357GC (application of Part 8A in relation to cost-sharing arrangements), in subsection (3), for “section 357CB(1)(c)” substitute “ section 357BG(1)(c) ”.

23

1

Section 357GE (other interpretation) is amended as follows.

2

In subsection (1)—

a

at the appropriate place insert—

payment” includes payment in money's worth.

b

omit the definition of “qualifying residual profit”.

3

After subsection (1) insert—

1A

In Chapters 3 and 4 of this Part “qualifying residual profit” of a trade, in relation to any accounting period, is the amount obtained by the application of Steps 1 to 4 in section 357C or (as the case may be) section 357DA in relation to the trade for the accounting period.

24

In Schedule 4 (index of defined expressions)—

a

for the entry for “finance income (in Part 8A)” substitute—

finance income (in Part 8A)

section 357BG

b

after the entry for “new consideration (in Part 23)” insert—

new entrant (in Part 8A)

section 357A(11)

c

in the entry for “qualifying residual profit of a trade (in Part 8A)”, in the left hand column, after “in” insert “ Chapters 3 and 4 of ”, and

d

for the entry for “relevant IP income (in Part 8A)” substitute—

relevant IP income (in Part 8A)

section 357BH