Speakers at the London Patents Summit warned the conference about some of the dangers of the Patent Box, which is a new tax cuts scheme for patents starting next year aimed at encouraging innovative high-tech companies to locate in the UK.
Under the scheme, companies of all sizes will be able to apply for a lower rate of Corporation Tax after 1 April on profits earned from patented inventions. The new rate will be 10 percent, down form 20 percent or even higher in some cases.
A key feature of the Patent Box is that it applies to profits rather than gross income and the Government is keen to avoid companies separating out expenses, which are claimed at the full rate of corporation tax, from receipts taxed at the 10 percent Patent Box rate.
The Patent Box relief will be phased-in over a 5-year period, with 60 percent of the relief available in 2013/2014 rising by 10 percent each year until the full relief is available from April 2017.
A company can opt out of the Patent Box regime at any time but will not be able to opt back in for five years after opting out.
The Government is hoping that the benefits provided by Patent Box will encourage multinationals to base their R&D and activities relating to scientific and high-tech intellectual property in the UK, thereby securing the country’s place as a world leader in patented technologies.
However, critics of the scheme speaking at the Summit argued that there could be rise in trivial or meaningless patents as a result of the tax break, with some companies just filing patents to achieve the reduction.
For more information about intellectual property law, speak to our solicitor Chloe Bunn.