simon-crookstonDespite the Chancellor proposing a further £2 billion in Research and Development (R&D) support in his Autumn Statement, specialists at national audit, tax and advisory firm Crowe Clark Whitehill,  believe South East businesses are already failing to make the most of existing tax benefits for innovation on offer.

The benefit of Patent Box is a much lower rate of tax on those products, or any product containing the patented part, than the standard rate of tax which will be 10% from 1 April 2017. As a bonus there is the R&D tax credit system, which can be utilised while developing the product before it can be patented. Patent Box has been developed to encourage innovative high-tech companies and those developing and using patents in their products.

Despite the attractions of the significantly reduced tax rate, HMRC’s recently published statistics indicate that last year, only 700 businesses took advantage across the country. While the South East may account for the largest number of successful applications for Patent Box support, with 115 companies, they only secured £18.6 million of relief. This compared to the 70 London companies who unlocked £196.8 million of relief.

Simon Crookston, Partner at Crowe, which has offices in Maidstone and Tunbridge Wells, said: “Patent Box suffers from the perception that it is complicated to apply for and take advantage of, but recently we’ve seen growing interest from firms on how to take them through the process, especially as many start to plan for their new trading relationships with the EU and further afield.

“Once Patent Box status has been approved, the company can benefit from tax savings throughout the life of the patent, which can be significant. By not applying, local innovative firms are missing out on what is a major financial benefit for the cutting-edge work they are already doing.

“What many fail to understand is that a patent, which can protect a business’ long-term future and ultimate value, can be secured for in the region of £3,000 and should therefore be considered a priority.”

Patent Box, and its tax regime, has also been an important factor in attracting overseas investment to the county, and when combined with R&D tax credits it makes the UK a very tax-efficient location encouraging innovation.

Paul Wookey, Chief Executive of Locate in Kent, said: “Patent Box, combined with R&D tax credits and the lowering of Corporation Tax, continues to be an important fiscal advantage which helps in attracting high growth companies to the country. Alongside the commercial regime, it improves the competitiveness of the UK to international business.”

“We would also urge many more Kent companies to consider the financial opportunities presented by Patent Box and to take expert advice on how to apply.”

Darren Rigden, an audit Partner at Crowe, said: “We recently advised Havelok Ltd, a subsidiary of Iceland Seafood Barraclough Limited, on Patent Box after it was awarded a patent in 2015 for its ‘cook from frozen’ product.

“The product has  both operational and product quality benefits for the foodservice outlets it sells to. It’s great to see that the government is supporting innovation across all industries through the R&D and Patent Box initiatives. Companies need to understand that these reliefs are available to a wide range of sectors, and not just to companies who employ people in white lab coats!”

Crowe provides audit, tax and advisory services for many industries. For more information call 01622 767676.


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