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HMRC internal manual

Corporate Intangibles Research and Development Manual

Patent Box: new regime: Are my qualifying IP rights in the old or new regime? CTA10/ s357BP

S357BP CTA10

New IP

  • If a company is a new entrant then all its qualifying IP rights will also be regarded as new.
  • If a company is not a new entrant but has qualifying IP rights which are new qualifying rights, it enters the new regime. There are different ways of treating new IP rights depending on conditions under which they are acquired (there are separate rules if they form part of a transfer of a trade see CIRD240160) or are combined with old IP rights (see CIRD271600) but the first step is to identify whether they are to be regarded as new. The qualifying IP rights are new if they meet any one of the following conditions:

A : the right was granted or issued to the company in response to an application filed on or after the relevant date.

B : the right was assigned to the company on or after the relevant date

C: an exclusive licence in respect of the right was granted to the company on or after the relevant date.

In most cases the relevant date will be 1 July 2016, which is the start of the new regime.

 However, in the following circumstances the relevant date will be 2 January 2016. This is when the person or company who assigned the right or granted the licence:

  • was connected to the company at the time of the assignment or grant, as defined in s1122 CTA 2010 and
  • was not within the charge to corporation tax at the time of the assignment or grant and was not liable to a foreign tax designated in Treasury regulations for the purposes of this section and
  •  the main purpose, or one of the main purposes, of the assignment of the right or the grant of the licence was the avoidance of any foreign tax

The countries which have a foreign tax designated in these Treasury regulations are:

Belgium, China, Colombia, Cyprus, France, Hungary, Israel, Italy, Liechtenstein, Luxembourg, Malta, Netherlands, Portugal, South Korea, Spain, Switzerland (Canton of Nidwalden) and Turkey

If there is any doubt about whether this restriction should apply the company should approach their CCM or Incentive and Reliefs Team.


Old IP

Other qualifying IP rights, which were acquired, assigned or applied for before the relevant date can be regarded as being within the old regime and will not be subject to the R&D fraction until they enter the new regime. Allowing these qualifying IP rights to remain in the old regime is for a transitional period only and once the company also has new IP rights the old IP rights will be grouped into a separate sub-stream within the new calculation shown at CIRD275500 and the company will be required to stream rather than use the proportional split (formulaic approach) for this old IP. All qualifying IP rights will enter the new regime by 1 July 2021.