Corporation Tax Act 2010 section 357BHC

Mixed sources of income

Section 357BHC deals with how to treat income streams that combine qualifying intellectual property (IP) income with other non-qualifying income, whether arising from bundled sales or from agreements covering multiple matters.

• Where a qualifying IP item and a non-qualifying item are sold together as a single unit for a single price, the proceeds are treated as "mixed income" requiring apportionment.
• A "mixed agreement" is one that covers both qualifying IP matters (such as the sale of a qualifying item, the grant of qualifying IP rights, or a qualifying disposal) and non-qualifying matters (such as the sale of other items, the grant of other rights, other disposals, or the provision of services).
• A just and reasonable apportionment must be made to identify the portion of mixed income or mixed agreement income that is properly attributable to qualifying IP activities — that portion is treated as relevant IP income for Patent Box purposes.
• However, if the portion of income attributable to the non-qualifying matters is trivial in proportion to the total mixed income, then all of the income is treated as relevant IP income.