"Patent box can save businesses very significant amounts of corporation tax but in our experience only few smaller companies pursue this tax break. For many SMEs the costs and uncertainties of getting into the patent box regime simply outweigh the benefits."
"Some SMEs develop genuinely exciting inventions but give up on protecting them, potentially making it easy for competitors to imitate them, but also losing out on their patent box opportunity."
"Patent box claims can be challenging to prepare, which puts smaller businesses at a clear disadvantage compared to larger ones,"
"Larger companies can afford more extensive protection of their IP, more sophisticated tax advice and accountancy tools to set up systems to track income relating to relevant patent rights. Small businesses working on tight budgets may not be able to afford that."
The patent box tax relief reduces corporation tax on profits from patented inventions to 10%, down from the standard 25%, potentially saving companies tens of millions of pounds. The relief was introduced to encourage business investment in R&D, patenting inventions and bringing them to market. SMEs generate an estimated 52% of UK business turnover but received only 5% (£100m) of the £2bn claimed last year. High compliance costs and uncertainty over HMRC approval make claiming the relief disproportionately costly for SMEs, deterring some from investing in R&D or protecting inventions. Government action is needed to help smaller companies access the relief and ensure fair uptake.
Read at London Business News | Londonlovesbusiness.com
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