Patent Box initiative goes live
This month saw the Government launch a ‘technology friendly’ initiative to encourage innovation. Named Patent Box, the initiative provides generous tax relief for products and services that embody a patent.
Patents are being increasingly seen as an opportunity for innovators to increase profitability in an ever competitive global market.
This scheme is the latest in a range of UK Government initiatives designed to provide support for science and engineering which are seen as key strategies to overcome global recession.
Whilst many have welcomed the move, research suggests that overseas companies may have been first to recognise the potential value of Patent Box, as there have been significant increases in the number of UK patents filed by US, German and Japanese companies.
Additionally, in a sign that the Patent Box launch was not perhaps as visible as it could have been, patent filings by UK businesses showed no growth as yet.
Patent Box may have wider implications than domestic innovation, for example if some R&D activity is currently being carried out overseas, it may be worth rethinking this. The reduced tax liability that now applies to profits generated by such investment activity, when it is backed by a UK or European patent could be sufficient to persuade some corporates to relocate their R&D activity in the UK.
The Patent Box has only just gone live and businesses will be hoping for further, detailed guidance on the eligibility of profits from patented inventions.
As part of the process, HMRC will be seeking to validate applications and thus block any tax avoidance that may arise in the early stages.