On 3 December 2014, the Chancellor of the Exchequer George Osborne will give his annual Autumn Statement to Parliament.
Sadly for Innovative UK Companies, this will include, inter alia, the following proposals to close down the UK Patent Box, so you need to take action now:
1. Closure and Abolition of IP Regimes – to allow time for the legislative process, all existing regimes will be closed to new entrants (products and patents) in June 2016. These schemes will be abolished by June 2021.
2. Grandfathering – to allow time for transition to new regimes based on the Modified Nexus approach(ie tax benefits to be linked directly to R&D expense), IP within existing regimes will be able to retain the benefits of these until June 2021.
Germany has put pressure on the UK Government to close patent Box, because they argue that it is an enticement for companies to move business to the UK by creating an unfair tax regime.
The UK has argued that the Patent Box does not create profit shifting between countries, but the Government has been working with other countries to ensure that multinational companies are taxed in the country of their actual business activities.
The UK has apparently capitulated in the face of German pressure to end the patent box regime, which is a real shame, particularly for small and medium sized businesses with limited patent budgets.
The good news is that companies that are benefiting from Patent Box by June 2016 will be able to continue to benefit until June 2021.
If you have patentable inventions relating to core products, our thought is to find reasons to patent and to accelerate the grant procedures to beat the cut-off. You need to get on with it, because the UK IPO is already behind on its targets!
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