Corporation Tax Act 2010 section 357BN

Small claims treatment

Section 357BN provides a simplified "small claims" route for companies with modest IP profits, allowing them to elect for alternative methods of calculating their Patent Box benefit instead of following the full computational rules.

• A company carrying on a single trade may use small claims treatment if its qualifying residual profit does not exceed the greater of £1,000,000 or the relevant maximum (up to £3,000,000, shared among associated companies)
• Three elections are available: a notional royalty election, a small claims figure election, and a global streaming election — each offering a simplified way to determine the IP profit eligible for the reduced Patent Box tax rate
• Where qualifying residual profit exceeds £1,000,000, a company is blocked from making any of these elections if it failed to make the same election in a previous accounting period within the last four years when the Patent Box rules applied
• The relevant maximum of £3,000,000 is divided equally among associated companies that have elected into the Patent Box, and is proportionally reduced for accounting periods shorter than 12 months