ICAS response to HMRC/HMT consultation Patent Box - substantial activities

ICAS response to the HMRC and HM Treasury consultation Patent Box: substantial activities

ICAS has responded to the HMRC and HM Treasury consultation document ‘Patent Box: substantial activities’.

4 December 2015

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ICAS recognises that the proposals attempt to incorporate the OECD requirements without unnecessary complexity.  However we have concerns about the impact on smaller companies, which are already deterred by the complexity of the existing rules, particularly the aspects involving notional royalties and the use of transfer pricing principles.

The ICAS response suggests a number of possible simplifications to the new regime.  Additionally to assist small companies ICAS suggests that HMRC should extend the Advance Assurance scheme for R&D claims to cover Patent Box to try to ensure that innovative small companies are not excluded from using it.

ICAS also expressed concerns that even larger companies which already use Patent Box may have difficulties dealing with the transitional rules as currently proposed, particularly where they have a product which incorporates both old regime and new regime patents.

The overall effect of the new regime is likely to be to reduce the attractiveness of UK Patent Box.  The take up of Patent Box to date has also been below the original predictions.  ICAS therefore sees scope for improvements and extensions to the regime to maintain and enhance the attractiveness of the UK Patent Box.  For example Patent Box could be extended to cover US Patents which are currently excluded or the phasing in period for the current regime could be ended so that companies can obtain the full benefit of the 10% rate earlier.

Click here to see the full ICAS response.


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