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Intangible Assets can be used to protect a business and raise
money. In addition, structured management of IP can lead to tax
benefits and monetary gain.
Placing IP in a tax beneficial regime is not a new concept,
however the schemes that are being introduced into the
UK will be attractive for many businesses. The new Patent Box
together with the existing R&D Tax Credits scheme bring new
perspectives on how to realise value from intellectual property.
Coller IP and James Cowper are joining forces to run a series of
seminars starting in September to introduce new ideas on how
businesses can prepare themselves for and benefit from these
schemes. Please email
jmaguire@collerip.com if you would like further information on
these seminars.
In summary the two schemes are:
R&D Tax Credits
To qualify a company must carry out R&D which seeks to
achieve an advance in knowledge or capability in a field of science
or technology. The R&D must be related to a company's trade
– existing or intended – and two regimes apply,
one for small companies and one for large:
SMEs can claim for 100% of capital expenditure and from 1st
April 2012, 225% of revenue expenditure. This means that for every
£100 of qualifying costs the SME makes, it can have the
income on which it pays corporation tax reduced by £125 in
addition to the £100 it spent. A payable cash credit is
available if the SME is loss making in the relevant accounting
period at a claim rate of 24.75%. This credit can be used to pay
for IP fees although sadly IP costs do not qualify for tax
credits.
The costs that qualify include
staffing costs, software licences relating to R&D, consumables
including utilities, externally provided workers (new rules) and
subcontracted R&D (for which there is a 65% restriction).
Large companies can claim 100% of capital expenditure and from
1st April 2012, 130% of revenue expenditure.
Patent Box
Royal Assent for the Patent Box is anticipated in August 2012
with legislation coming into force in April 2013. There are a
number of eligibility criteria to qualify for the Patent Box, in
that the company must own intellectual property rights through
patents or exclusive licensing agreements, have performed
development activity in relation to those rights, be actively
managing the IPR and have received income which is deemed relevant
to the IPR held by the company.
Companies that qualify will receive a 10% corporation tax rate
(introduced on a graduated scale) on net profits attributed to
patents, whether the income arises within the UK or worldwide.
There are a number of practicalities to take into account when
choosing to elect into the Patent Box and other IP schemes. A
company's IP strategy therefore needs to look at the strategic
options available and take account of the various monetary
benefits.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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