Corporation Tax Act 2010 section 357EA

Effect of set-off amount on company with more than one trade

Section 357EA deals with how a set-off amount arising from relevant IP losses in one trade is allocated against relevant IP profits from another trade carried on by the same company in the same accounting period.

• This section applies where a company has a set-off amount for one trade and also carries on at least one other trade in the same accounting period.
• The set-off amount is reduced by any relevant IP profits arising in the other trade during that accounting period, but cannot be reduced below nil.
• To the extent that the set-off amount absorbs relevant IP profits from the other trade, those absorbed profits lose their entitlement to the special lower tax rate under the Patent Box regime.
• Any remaining set-off amount after this allocation may be carried forward or matched against profits elsewhere in the group under subsequent sections (357EB to 357EE).