Patent box ― qualifying companies

Only those companies which meet the qualifying company conditions in CTA 2010, s 357B are able to benefit from the reduced rate of corporation tax which can be applied to patent box profits. See the Overview of the Patent Box guidance note for more background information on the regime. Standalone companies must satisfy conditions A or B, and companies which are members of a group must also satisfy condition C, as follows:

• •condition A is that at any time during the accounting period, the company holds qualifying intellectual property (IP) rights, or holds an exclusive licence in respect of any such rights
• •condition B is that:
• • ◦the company has held a qualifying IP right or exclusive licence (as defined in CTA 2010, s 357BA) in respect of a right
  • ◦the company has received income in respect of an event which occurred in relation to the right or licence when:
  • • ▪the company was a qualifying company, and
    • ▪the company had made a patent box election, and
  • ◦the income falls to be taxed in the accounting period
• •condition C is that the company meets the ‘active ownership’ condition for the accounting period

For the purposes of condition B, a right is a qualifying IP right if it is listed in CTA 2010, s 357BB (see also the Patent box ― qualifying intellectual property guidance note) and the company meets the ‘development condition’ in relation to the right as set out in CTA 2010, s 357BC.

Some of these terms are explained in more detail below.

The company must carry out qualifying development activities in order to obtain the benefits offered by the