By Daniel Hunter
Smaller businesses risk missing out on a valuable tax break because they fear that the financial and administrative cost of claiming will be prohibitively high, warns KPMG in the UK.
And as a result, they may fail to claim a special, discounted tax rate of just 10 percent on profits arising from the exploitation of patented (or patentable) innovation available under the so-called 'Patent Box' regime coming in from 1 April 2013.
“The Patent Box regime is an extremely attractive tax break for businesses with qualifying profits," Jonathan Bridges, associate partner at KPMG in the UK, and lead adviser on Patent Box claims, said.
"Many large businesses with significant intellectual property based profit streams are already closely examining the potential tax benefits it may bring them. But we have noticed that many smaller businesses do not appear to have considered what savings are available to them from the Patent Box’s 10 percent tax rate.”
According to KPMG, many small to medium sized businesses wrongly assume that it may not be economic for them to claim the tax breaks available under the Patent Box regime because they believe that the advisory costs they will incur and the administrative burden of filing a claim will outweigh the cash benefit.
In response to this misconception, KPMG has launched 'Patent Box Express' to advise smaller businesses on making Patent Box claims under a fixed pricing model.
“Small and medium sized businesses are sometimes concerned that the costs and hassle of claiming a tax relief might outweigh the financial benefits," Jonathan Bridges explained.
"We’ve tried to make it simpler for them to access the very valuable statutory relief (the patent box regime) under the appropriate circumstances. Under Patent Box Express, a business with relevant intellectual property profits of £100k per year could be looking at a tax saving of around £6k to £12k. If their relevant profits are £250k or more, annual savings are upwards of £30k — equivalent perhaps to an extra member of staff.”
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