Looking ahead to this week’s Budget Statement, Withers & Rogers is urging the Chancellor not to do anything to water down the Patent Box and ensure that R&D-led businesses in the UK feel the benefit of the tax incentive as soon as possible.
Under the current legislative framework for the incoming Patent Box, any profits from inventions that are protected by a UK patent will be taxable at a significantly lower rate of Corporation Tax – just 10%. However, this reduced tax liability will be phased in and in the coming tax year it will only apply to 60% of the profits from the patented invention, rising to the full 100% in 2017.
According to Withers & Rogers, there could be scope for the Chancellor to extend the benefit by making it applicable to all of the eligible profits from the scheduled date of introduction, which is 1 April 2013.
Adrian Tombling, patent attorney at Withers & Rogers, said:
“R&D led businesses have the potential to drive recovery and create jobs and doing away with the planned profit taper could allow them to feel the benefit of the Patent Box sooner rather than later. Such a move would get a reaction and could encourage businesses to locate more R&D in the UK.”
While the Chancellor has reconfirmed his commitment to the Patent Box, there is concern that he may decide to water down some of the more generous proposals set out in the draft Finance Bill 2012, which was issued shortly after last year’s Autumn Statement.
Adrian Tombling added:
“It will be interesting to see how legislation develops regarding proof of ‘active ownership’ of patents in the UK. Under the current proposals it is possible that a simple decision to renew a patent, as long as it is taken in the UK, could qualify as ‘significant management activity’. This is one area where the Government may decide to tighten the criteria.
“The decision to double the total amount of eligible profits for the ‘small claims safe harbour’ that can be charged at the 10% rate of tax to £1million is also something that R&D-led businesses will be hoping remains.”