Corporation Tax Act 2010 section 357CI

Routine return figure

Section 357CI explains how to calculate the routine return figure, which represents the level of profit a company would be expected to earn from its trade if it did not benefit from qualifying intellectual property rights or other unique intangible assets.

• The routine return figure is calculated by totalling all routine deductions (as defined in sections 357BJA and 357BJB), applying a 10% mark-up, and then apportioning the result to reflect the share attributable to relevant IP income.
• The 10% mark-up uses a cost-plus approach to estimate the arm's-length return a trader would earn without exploiting unique intangible assets, recognising that only a proportion of actual expenses feeds into the routine return estimate.
• Where another group member incurs expenses on the company's behalf that would have been routine deductions had the company incurred them itself, those expenses must also be included in the calculation, regardless of whether they have been recharged or reimbursed.
• Where group expenses are incurred on behalf of more than one company, a just and reasonable apportionment must be made to determine the amount attributable to the Patent Box company.