Although the details of the new UK Patent Box regime to come
into force in 2016 are still under consultation, we know the
existing Patent Box regime will cease to be available for patents
filed after 30 June 2016 and for patents filed before then the old
regime will expire on 30 June 2021.
The consultation overseen by HMRC follows from the Organisation
for Economic Cooperation and Development's (OECD) coordinated
multinational effort to address Base Erosion and Profit Shifting
(BEPS). This is tax planning by multinational enterprises that
exploits gaps and mismatches in tax rules to artificially shift
profits to low tax locations where there is little or no economic
activity. This has resulted in a new international framework for
preferential IP tax regimes. The consultation paper seeks views on
how the Patent Box regime should be altered so that it will comply
with this international framework, whilst protecting the
availability of this benefit in order to continue to promote growth
and drive investment in the UK. The consultation closes on 4
December 2015.
After 1 January 2016 new patent acquisitions will not be able to
benefit fully from the transitional provisions envisaged.
Accordingly, it will not be possible to move patents to
jurisdictions that have advantageous regimes from those without
after that date. Transfers of patents after 1 January 2016 will
only benefit from existing Patent Box regime rules until 30 June
2021.
This will not prevent patents that qualify under the proposed new
"nexus" test from being transferred, nor moving the
ownership of the patent within a jurisdiction to a qualifying owner
from a non-qualifying owner/exclusive licensee (so as to
"re-create" the nexus between the owner and the
qualifying R&D expenditure).
Consequently, those who are responsible for managing taxation for
owners or exclusive licensees lacking the required new nexus (that
the qualifying R&D expenditure/acquisition costs was incurred
by the company itself and not by others in its group) should
consider whether to move holdings before the cut off dates to
maximise their "grandfather" rights, and whether
international holdings need relocating.
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.