Corporation Tax Act 2010 section 357E

Company with relevant IP losses: set-off amount

Section 357E identifies a "set-off amount" where a company that has elected into the Patent Box regime has relevant intellectual property losses in a trade for an accounting period, rather than profits against which the special deduction could be applied.

• Where a company has elected into the Patent Box under section 357A but has relevant IP losses rather than profits, no deduction can be claimed for that period.
• Instead, a "set-off amount" is created, equal to the total relevant IP losses for the trade in that accounting period.
• The set-off amount preserves the benefit of the IP losses so they can be taken into account in later periods or against other amounts.
• Transitional rules applied for Financial Years 2013 to 2016, reducing the relevant IP profits or losses to a specified proportion as set out in paragraph 8(3) of Schedule 2 to Finance Act 2012.