Finance Act 2016

Section 64

SCHEDULE 9 Profits from the exploitation of patents etc: consequential

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.”, and

(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”.