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HMRC internal manual

Corporate Intangibles Research and Development Manual

Patent Box: supplementary: revocation of a Patent Box election

CTA10/S357GA and s64(10) and (11) Finance Act 2016

A company may revoke an election into the Patent Box regime by giving notice to an officer of Revenue and Customs.

The notice must specify the first accounting period of the company for which the revocation is to have effect.

The notice must be given on or before the last day on which an amendment of the company’s tax return for that accounting period could be made under FA98/SCH18/PARA15. As with an election into the Patent Box, in practice this means within 12 months of the fixed filing date of the return for the first accounting period for which the company wishes the election to no longer have effect.

The revocation has effect in relation to the accounting period specified in the notice and all subsequent accounting periods of the company, and will apply to all trades of the company.

The old regime has the requirement that a company that elects out of the regime is effectively prevented from electing back in for a 5 year period. S357GA(5) provides that a s357A(1) Patent Box election does not have effect for any accounting period of the company that begins before the end of the period of 5 years beginning with the day after the last day of the accounting period specified in the notice revoking the election.

However, if a company had elected into the old regime and then subsequently revoked that election, s357GA(5) will not have effect to prevent the company from electing in again for the accounting period ending on 30 June 2016 or any subsequent accounting period.

This is to allow a company to change its mind about the revocation given the knowledge that the new regime has been brought in, and the company may elect back in for the accounting period straddling 30 June 2016 to allow the old IP assets to be grandfathered into the old regime.

The usual time limits of 2 years following the end of the Accounting Period apply.

There is no provision for a revocation of a S357A(1) election to be made ‘late’ as it  is made whenever it is made. It relates to the election, so is unconnected to the CT return (even if made within it). This is why there cannot be a ‘late claim’ under SP05/01 (or at all).