"Some highly-innovative SMEs in the region could be missing out on this tax relief opportunity altogether, simply because they arent aware of it. "
James Gray
Innovative businesses in the West Midlands could be making greater use of the Patent Box scheme, with fewer claims originating from this region than some other parts of the UK, according to patent attorneys at the Midlands office of Withers & Rogers in Leamington Spa.
The total number of Patent Box claims submitted by businesses in the region to HMRC in the 2018/19 was 120. This number represents one in ten (10 per cent) of the total number of claims submitted in the same year. The newly-released data is based on partial figures, which will be revised upwards as more data for this fiscal year becomes available.
By far the largest volume of claims are made by businesses in London and the South East, which could be partly due to the tendency of many businesses to have their registered office address in London. Other UK regions account for just 22 per cent of the total claims based on the partial 2018-19 data.
Nationally, HMRC’s partial statistics show that 1,230 companies in the UK claimed £992 million in relief under the Patent Box regime in 2018-19, and based on HMRC forecasts, the total value of claims will rise to £1,130 million, once all the data for the year is accumulated. Much of this value was claimed by large companies and while SMEs1 accounted for 52 per cent of the total volume of claims, they were only responsible for 6 per cent of their total value.
James Gray, partner and patent attorney at the Midlands office of European intellectual property firm, Withers & Rogers, said:
“The overall value of the claims submitted by companies across the UK under the Patent Box regime has been increasing year on year, however most are coming from a relatively small number of large companies. Some highly-innovative SMEs in the region could be missing out on this tax relief opportunity altogether, simply because they aren’t aware of it.
“With the volume of patent applications made to the European Patent Office (EPO) by UK-based companies increasing 6.9 per cent in 2019 to 6,156, it is clear that businesses are investing in innovation and using their intellectual property rights to gain exclusivity rights when bringing new technologies to market. As positive as this is for the UK economy, we would like to see more SMEs in particular boosting their profits by claiming Patent Box tax relief where eligible to do so.”
Manufacturers, including pharmaceuticals, are making the most claims nationally, followed by businesses in the retail and wholesale sector. Some other sectors are making fewer claims than might be expected – for example fintech and the transport sector. The partial data for 2018-19 indicates that 645 manufacturers claimed tax relief under the Patent Box scheme, with a cumulative value of £272 million.
James Gray comments:
“Access to professional advisers who can help businesses to leverage the Patent Box scheme is critical and some smaller businesses may lack such resources. This is concerning as there are many tech-led start-ups and growing SMEs in the West Midlands that could be missing out on the reliefs available.”
