CIRD220480 - Patent Box: relevant IP profits: elections for small claims treatment: small claims amount: MAR
CTA10/s357BNB
This election affects the calculation of the Marketing Asset Return which is step 5 of s357BF
The legislation provides two possible methods for determining how much of the QRP of a company for an accounting period represents profit from qualifying IP rights and how much relates to brand and marketing assets.
The simpler of these two methods is the small claims treatment and provided that the company is eligible, it allows the company to elect to adopt a formulaic approach.
For the company to be eligible to elect for small claims treatment then S357BNB stipulates the relevant IP profits for the accounting period to be the lower of two amounts:
- 75% the sum of the QRP of all the company’s sub-streams; or
- the small claims threshold (£1 million).
As with the relevant maximum, (CIRD220470) where there are associated companies for which a Patent Box election has effect for the relevant accounting period, or the accounting period is less than 12 months long, the threshold should be proportionately reduced.
A company with QRP of less than £1 1/3m may of course believe that it does not in reality exploit any marketing assets or the value of any marketing assets is only small. If it is able to demonstrate that this is so, applying the provisions at S357BK to S357BKB may be relatively straightforward and it may choose not to elect for small claims treatment and make no deduction.
Conversely, it is possible that a company with QRP in excess of £1 1/3m may still wish to opt for small claims treatment to make the RP calculation simpler, provided that it does not exceed the relevant maximum or wish to claim any more than £1 million as relevant IP profits.