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AIA

Patent box rules ‘complex and misleading’

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25th May 2012
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Five in 10 accountants believe that new tax relief rules for “patent boxes” are too complex and could cause confusion among some businesses, a survey found.

From April 2013 any profits from inventions that are protected by a UK patent will be taxable at a significantly lower rate of corporation tax. However the much-publicised rate of 10% will not actually apply until 2017, according to Withers & Rogers, which provides intellectual property services and carried out the survey.

Instead, the actual tax rate that will apply to qualifying profits in the coming tax year will be 15.2%, still much lower than the 23% rate for corporation tax. This is because the tax reduction will be tapered so the 10% rate will only apply to 60% of the qualifying profits in 2013-2014, rising to the full 100% of profits in 2017.

Nearly all (98%) of accountants surveyed thought that the forthcoming patent box legislation will encourage businesses to invest more in UK-based research and development. However, two fifths (43%) said that a significant number of businesses are yet to make any preparation for the new legislation and are in danger of not being ready to take advantage of the lower rate from day one.

Adrian Tombling, patent attorney at Withers & Rogers, said: “Some businesses could end up paying more tax than needed if they don’t prepare now and some businesses may even be unaware that they could benefit at all.”

Michael Jaeger, also a patent attorney at Withers & Rogers, said that for some businesses only part of their profits will be eligible for patent box relief through the exploitation of patented technology, “with the remainder susceptible to the full rate of corporation tax”. 

Companies should track their patented and non-patented sales separately from the beginning of April 2013 so as not to lose any eligible profits, he said. Accounts departments should talk to sales teams and research and development departments about the new patent tax break, he said.

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By androo235
25th May 2012 20:29

how many pages will this wheeze add to the guide....
This, like much of the discussion on this site would be a non-issue under LVT. A well known guide to the UK tax code had grown from 5952 pages in 2001 to 9,866 pages in 2007 when the font size was reduced to stop it going through 10,000 pages http://news.bbc.co.uk/1/hi/business/6981397.stm .

Henry George - Progress and Poverty, landvaluetax.org (Mason Gaffney)

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By Ken Jones
06th May 2013 07:39

 

 

 

This is excellent news for the UK. Perhaps this new tax will encourage execs to look harder at patenting, after all if they license a third party at 10% it looks like the third party will only pay 10% on any profits relating to the patented product, so in essence the licence will cost the licensee nothing.This tax will also apply to foreign patents where the capital flows to the UK. Patenting is international and today both the searching and filing can all be done online.The high fees attorneys charge may be worth paying if you are a corporate and have to employ somebody to do the patenting anyway, but if you are an individual, substantial attorney fees running into thousands, create a very significant barrier. A complete UK patent actually only costs £230 in total, the UK IPO is amazing and fantastically helpful and it is now entirely possible to patent internationally yourself from your laptop, if you know how to go about it. The difficult bit is having something to patent and understanding what is and isn’t patentable. A great cheap Amazon ebook, which tells you how to go about patenting internationally, step-by-step, is DIY Patent Online. It lists all the fees and has links to all the sites you need plus you can read some of it free on Amazon. They also have a web site and unlike most patent site, which are a cure for insomnia, they aren’t trying to sell you any services. Many spout off about patents knowing little about the subject in reality. The only patent that is really worth it’s salt is a Utility Patent – they even call them utility patents in the States but in the UK they are just called Patents. These must have an 'Inventive Step' and must not be ‘obvious to somebody skilled in the art'. These are not ro be confused with US Design Patents (UK Design Registration) or Australian Innovation Patents. which are easy to get and get around. Patenting is challenging when you don't know how but like everything else, once you have the hang of it, it's quite straightforward. Most businessmen are busy building empires with all the costs involved, these are tangible, you can see them. However my moniker is ‘If you can touch it, don’t touch it’. Intellectual Property is the only thing worth having, owning the IP makes you the master, the rest is just overhead, which is an idea well worth disseminating to your clients.

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