Bevan Kidwell Collaborate With Parisi Rax To Summarise The New Patent Box

Online, October 22, 2012 (Newswire.com) - Bevan Kidwell has collaborated with good friends at Parisi Tax to summarise the (10%) on qualifying income from qualifying patents. This is new regime which will be introduced in April 2013 which will mean that companies effectively pay corporation tax at 10% on qualifying income from qualifying patents (and certain other qualifying IP) instead of the main rate of corporation tax (23% from 1 April 2013).

What is the Patent Box? The patent box has been introduced by the Government along with the improvements to the R&D tax regime to make the UK a more attractive destination for companies to be based.

What IP will benefit from the Patent Box regime? The patent box is available for patents granted by the UK Intellectual Property Office, European Patent Office and patents granted by certain other EEA countries. It also applies to certain medicinal or plant protection rights but it does not apply to copyrights or other IP rights.

Exclusive licences to exploit patents may also qualify if they are exclusive (against everyone including the developer) in at least one jurisdiction as well as the sale of products which include the patented invention. The regime is generous in that the preferential treatment will be available for income generated from pending patents but only once the patent has been granted.

In all cases the company (or a group member) must have made a significant contribution to the development of the patent concerned. Where groups of companies are involved there are further rules about "active ownership" which must be satisfied by the IP holding company (to ensure it is not a passive IP holding company).

What income will qualify? The types of income which may qualify include income from the licensing of patents, the sale of patents and the sale of products including the patented invention. In addition, where non-patented goods or services are provided using a patented process, it will be possible to apply the Patent Box to a notional royalty relating to the patented process.

How will the Patent Box profits be calculated? The mechanism for calculating the profits will broadly be prescribed by legislation. Companies will need to ensure that systems are in place to capture the data necessary to undertake the calculations, and some information for prior years may also need to be extracted.

What should companies be doing now? Although the new regime does not come into force until April 2013 there are things that companies should be doing now and these include:-

• Checking that the company has obtained patents for all relevant inventions;
• Reviewing all licensing agreements to check that the terms give the necessary exclusivity and the right to exploit the patent;
• Checking that the significant contribution to development test is satisfied;
• Where there is a group of companies, reviewing current systems to ensure that the IP holding company satisfies the active ownership test;
• Ensuring that systems are in place to monitor income and costs relating to the relevant patents/goods/services;
• Reviewing the IP holding structure of the group to see if IP should be held in the UK.

For more information regarding the patent box, please contact Jean Bevan on [email protected]