Patent Box and Modified Nexus – what you need to know
The current Patent Box regime was introduced in April 2013 and many companies have made claims. Patent Box provides effectively a 10% tax rate to reward UK companies that are exploiting patented IP rights.
Concerns were raised a few years ago that Patent Box and other Intellectual Property (IP) regimes could be considered harmful tax practices if companies are able to benefit without good substance in the relevant country. Following a review of all IP Regimes, a modified UK IP regime (Nexus) will apply, phased in from June 2016. The new regime will limit benefits based on the proportion of relevant UK R&D undertaken as a proportion of global R&D. Companies should take action to understand whether they can qualify for the old and/or new regime and the benefits of each.
How we can help you
- Compare the old and new regimes and how these apply to your business, enabling informed choices to be made;
- Map income to patented products, spare parts, working collaboratively with our engineers and technical specialists who understand your business;
- Analyse accounting records to establish how much income will qualify;
- Prepare claims and supporting documentation to meet the requirements of HMRC;
- Negotiate and help agree your claims with HMRC;
- Develop a method to help you compile claims in-house on an ongoing basis;
- Review existing claims to ensure they are optimised and robust to HMRC scrutiny;
- Assist with identifying patenting opportunities where you haven't previously pursued a strategy of patent protection;
- Advise on the accounting aspects of patent box (current and deferred tax);
- Advise on optimising your IP ownership globally, including legal and structuring aspects working with our Legal team;
- Assist with transfer pricing aspects of claims – brand and notional royalty aspects, streaming and profit attribution to maximise claims;
- Consider the interaction of Patent Box with the new loss and interest deductibility rules that apply from 1 April 2017;
- Consider an IP company where centralisation is commercially attractive and patent box claims can be further optimised.
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