Nigel Holmes, Director of Tax at innovation funding specialist Catax (a Ryan company), explains the benefits of the Patent Box tax relief scheme (sponsored content)
The UK is rightly proud of its innovation heritage, but it is important that the systems dedicated to protecting intellectual property are world-leading too.
Yet new analysis of World Intellectual Property Organisation data, by Catax (a Ryan company), shows that companies and individuals wanting to protect their innovations with a UK patent face waits of over 18 months before any action is taken on their applications.
Patent law is complex, and the process can be very involved, but this performance is poor when compared to countries that deal with a greater number of applications.
A slow process
The patent application process differs around the world, but generally involves determining whether the claimed innovation is novel, not obvious, and industrially applicable.
Applicants in the UK typically wait 570 days before any action is taken by the patent office. This places the UK 50th out of 64 countries for its lengthy delay.
China receives the highest number of patents in the world, but it takes its patent office 375 days to act. The United States, which has the second-highest number of applications, takes marginally less time than the UK, at 507 days.
Brazil is the only country receiving more patent applications than the UK to take a longer amount of time to respond.
Lithuania takes the shortest amount of time to respond to applications, with waits of just 12 days. Similarly, Spain takes 19 days, though both countries receive significantly less applications, with 90 and 1,434 apiece.
Although the UK still ranks poorly for time taken to respond to patent applications, most recent figures show an improvement from 2020. It took the patent office 750 days on average to respond during that year – the longest time applicants have had to wait since UK data started being collected in 2016.
If the UK really wants to walk the talk on delivering innovation-led growth, it needs to speed up this process.
Patent Box remains underused
Meanwhile, HMRC data shows uptake of the Patent Box, a form of tax relief available to companies that make profits from exploiting patented inventions, remains low. Despite more than 89,000 Research and Development (R&D) tax relief claims being made in 2020/21, projections suggest that just 1,535 companies made the Patent Box claims over the same period.
Yet many companies embarking on R&D will also be making innovations that are capable of being patented.
It is important that companies embarking on innovation understand the patent process and the associated tax reliefs and get specialist advice from the outset.
As a patent attorney or IP lawyer, you’ll be aware that achieving a patent can be expensive for many innovative businesses, depending on the complexity of the invention and other factors. But did you know that the cost of obtaining a UK patent could easily be outweighed by the tax reduction from a Patent Box claim?
The Patent Box allows businesses to receive a lower effective corporation tax rate of 10% on profits earned from their patented inventions and certain other IP rights, for the lifetime of the patent.
But not enough companies are prioritising patents and the Patent Box as part of their innovation strategy.
How Catax can support your clients
If you have a client that is embarking on patenting an invention or already holds a patent, Catax can support you in ensuring that they are making the most of their patents by utilising the Patent Box tax relief.
To discuss how we could work together to add value to your clients, you can get in touch by calling 0300 303 1903 or emailing enquiries@catax.com.
When Catax becomes Ryan
In 2022, Catax was acquired by Ryan LLC, the largest firm in the world dedicated exclusively to business taxes. Come late spring, Catax will be rebranding as Ryan, further expanding our services for our clients. In addition to our tax relief and grant funding expertise, we will deliver some new service offerings with the support of Ryan, who have been experts in their field for over 30 years. Additional services will include, VAT compliance, VAT consulting, VAT recovery, tax transformation, tax technology and cost management.
CATAX
Catax House,
3 Scott Drive,
Hale, Altrincham,
WA15 8AB
0300 303 1903
www.catax.com
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