PATENT TAX BREAK IS STRONG INCENTIVE FOR MIDLANDS BUSINESSES TO INVENT

Tax breaks designed to make the UK a haven for inventors and innovators have been welcomed by a leading Midlands chartered accountant.

 

Praise for the scheme has come from tax specialist Andrew Hartlebury who says the region’s firms must be aware of the new Patent Box incentive - a newly-introduced scheme where profits linked to a patented innovation are eligible for a 10 per cent tax rate.

 

But Mr Hartlebury, partner at Bewdley-based DHJH Chartered Accountants, has urged eligible businesses to seek advice due to a complex 114-page rulebook which could make the scheme ‘hazardous’, particularly for small and medium enterprises who are the ones most likely to feel the benefit.

 

Introduced by HM Revenue & Customs (HMRC) it is hoped that the Patent Box, being introduced gradually over four years, will encourage multinationals and established companies to record their tax in the UK - resulting in more money for public services and less tax avoidance.

 

The new initiative, which relates to any profits derived for patents for products, processes or services, is linked to research and development tax credits and applies to both limited companies or Plcs.

 

Mr Hartlebury said: “Given the tough economic climate it is refreshing to see the new Patent Box legislation being introduced – but speaking to many across the region it is obvious there are many company bosses who are unaware of the benefits or who are scared off by the guidelines.

 

“Overall, the Patent Box offers a strong incentive for companies to innovate and come up with new products and services that Britain can export to the rest of the world. And at the same time it will help encourage foreign companies to invest into the UK and hopefully the West Midlands.

 

“Although the scheme will cost the Treasury £350 million this year, the benefits will be felt by companies who get to keep more of their profits which will help develop new opportunities and create jobs.

 

“As with most tax rules, it is complicated and businesses need to seek advice to make sure that they not only qualify but that they’ve ticked all the right boxes and are giving all the right accounting information to HMRC.”

 

Mr Hartlebury said that eligible firms do not have to own the patent in question but instead must prove UK exclusivity and rights to qualify.

He added: “To qualify for the new tax relief there are pages of detailed criteria that businesses and patent holders need to understand.

 

“They shouldn’t shy away from looking into it. Instead, the region’s bosses should take expert advice on the correct accounting systems required and on the most effective way to submit their eligibility for the lower rate.”

 

DHJH can advise on accountancy systems required for a claim to be made. Its experts will identify the opportunities for companies to reduce their tax bill and advise how to go about submitting claims.

 

Firms looking for advice on the new Patent Box legislation can telephone Mr Hartlebury on 01299 403503 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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