## Patent Box Decision Chart

5.
In addition to qualifying IP rights acquired or applied for before 
1/7/16 , do you have any IP acquired or applied for on or after 1/7/16?
6.
Are any of the qualifying IP rights acquired from a connected company in a country which does not have a Patent Box regime, on or after 2/1/16 (CIRD270200) ?
8.
UNLESS THIS CHANGES,  STAY IN OLD REGIME UNTIL 1/7/2021. FOLLOW calculation at CIRD220110 but start to 
track and trace R&D expenditure from 1/7/16 on IP assets still 
likely to be qualifying on 1/7/2021 per CIRD272000.

## (Track And Trace R&D Expenditure And Acquisition Costs For These Qualifying Ip Rights Per Cird272000)

9. Does the company meet the criteria for Small Claims Treatment (CIRD220470) 
and want to elect into any or all of the Small Claims Treatment elections (CIRD273200, CIRD273100 or CIRD220480)?
10. Elect into the new regime immediately and forgo any grandfathering provision. 
Make election for Global streaming if you want to use a Global stream, (CIRD273200)
11. Split income and expenditure into streams of NON RIPI and global stream. Start 
tracking and tracing R&D expenditure and acquisition costs for this IP per CIRD272000.

## (Continued)

12. Is income from any of the qualifying IP rights 'IP derived income'? 
(CIRD220250) This might be from process patents, leasing, or 
service income for example.
13. Follow the rules at CIRD220251 to ascertain IP derived income 
relating to the Qualifying IP rights in 12. Does the company meet the criteria for Small Claims Treatment (CIRD220470)?
14. Make a small claims election for notional royalties if you want to 
take the appropriate percentage of IP derived income to be 75% 
(CIRD273100)
15. Complete the notional royalty calculation by calculating an 
appropriate percentage of deemed IP income using transfer pricing principles.

## - Streams

16. Can you identify income relating to every qualifying IP right and 
track its related R&D expenditure? The criteria is that you should use the most detailed level that you are able to.
17. (All sub stream(s) at IP level). Split income and expenditure into 
streams of NON RIPI, old RIPI (if applicable - there may be none or an election may have been made to treat all as new) and new RIPI, 
the latter being divided into sub stream(s). CIRD271500 provides Guidance.Track and trace R&D expenditure and acquisition costs at this level per CIRD272000.
18. You are having to stream with at least one stream at 
product/process level or product/process family level. The most detailed level possible should be chosen. Do the sub streams with these products or processes have a combination of old and new qualifying IP rights within them?

## - Streams Continued

19. Use the Core Value or numeric methods of calculation at 
CIRD271600 to ascertain whether the sub streams with products/processes or product/process families can be regarded as being grandfathered or whether they are in the new regime. Track and trace R&D expenditure and acquisition costs for all qualifying IP rights per CIRD272000.
20. (At least one stream is at product/process or product/process 
family level). Split income and expenditure into streams of Non RIPI, old RIPI (if applicable) and sub streams at an appropriate level for qualifying IP rights in the new regime. The Qualifying IP rights grouped together need to be capable of being used for the same or substantially the same, purpose.

## - Stream Adjustments

21. Are there any new qualifying IP rights within the sub streams 
for which income related acquisition payments are required?
22. Remove the income related acquisition payments from 
expenditure in that sub stream.
23. Deduct the expenditure debits from the income in each stream. 
Calculate the routine return deduction for each stream and sub stream with relevant IP income and deduct it from those streams or sub streams. (CIRD220440). Does the company meet the criteria for Small Claims Treatment (CIRD220470)?

## - Stream Adjustments Continued

24. Do you want to make a small claims election for a Marketing Asset 
Return deduction of 25% for any stream or sub stream (CIRD220480)?
25. Make the Small claims elections and apply the Marketing Asset Return 
of 25% to the relevant streams.
26. Apply a relevant Marketing Asset Return deduction to all streams and 
sub streams apart from the stream with no relevant IP income.

## New Regime (Continued) - The R&D Fraction

27. Use the tracking and tracing records to identify direct R&D 
expenditure (D), unconnected party subcontracted R&D expenditure (S1), connected party subcontracted expenditure (S2) and acquisition expenditure (A) for each sub stream. Calculate fractions using the formula (D+S1)x1.3/(D+S1+A+S2), capped at 1, for each sub stream. Does the result provide an incongruous result?
28. Consider whether it is appropriate to make an election to use an 
alternative Value Fraction instead of the R&D fraction per CIRD275500.
29. Multiply each sub stream by the relevant fraction to create a 
figure for each sub stream.

## (Continued) - The Calculation

30. Add the sub stream figures from 29 together with the figure from 
the stream with old RIPI to create a Patent Box profit or loss.
31. The Patent Box loss should be ring fenced and any related 
company's Patent Box profit or any future Patent Box profit 
should be reduced by this amount.
32. Multiply the Patent Box deduction by (MR-IPR)/MR  where MR = 
main rate of CT and IPR = special rate of Patent Box CT (10%) and if before 2017, reduce using the commencement (phasing in) provision at CIRD260170.