Corporation Tax Act 2010 section 357GCZE

Treatment of expenditure in connection with formation of CSA etc.

Section 357GCZE addresses how payments made by a company in connection with entering into, joining, or expanding its share within a cost-sharing arrangement are treated as acquisition expenditure for Patent Box purposes, where qualifying intellectual property rights are involved.

• Payments made to enter into a new cost-sharing arrangement with an IP holder are treated as acquisition expenditure in the R&D fraction calculation
• Payments made to join an existing cost-sharing arrangement where any party holds qualifying IP rights are similarly treated as acquisition costs
• Payments made within an existing arrangement to secure a greater income share or additional rights related to the invention are also treated as acquisition expenditure
• In all three cases, only a just and reasonable amount of the payment is reclassified, preventing circumvention of Patent Box acquisition rules through cost-sharing structures