The Patent Box flip
If you’re a successful company, how would you like to reduce corporation tax to 10% on your best-selling products and, in doing so, add significantly to the asset value of your company?
Not just another patent box article
These benefits can be achieved by simply turning the Patent Box process on its head — but before I give away the secret to using the Patent Box scheme in a way you haven’t thought of before, let me set the scene.
Typically, companies that have never looked into patenting their innovations only get involved in the patent ‘game’ when they’re forced to, for example because another company’s patents are causing them problems. A typical scenario is that they come across a competitor’s patent and approach a patent attorney for advice.
The conversation goes something like this:
Company: “Our competitor has patented this (seemingly) trivial modification to their product, but we’ve been incorporating this modification in our product for the last two years. This can’t be right — the modification does provide minor advantages, but it’s such a small change!”
Patent attorney: “Yes, on the face of it I don’t see why they couldn’t patent this. The patent was filed four years ago, before you incorporated the change into your own product.”
Company: “But people have been doing this for years!”
Patent attorney: “Okay, in that case the patent may be invalid. Do some digging and come back with some evidence that predates the patent.”
*several weeks pass*
Company: “Actually, we couldn’t find anything spot on. But it seems so trivial!”
And that’s exactly the point. Small modifications to products can be patented, providing that they offer some benefit in terms of performance, manufacture or another technical aspect.
Many profitable companies have successful products that aren’t covered by patents from which they make good profits. Many successful companies may have had no involvement with patents whatsoever. If this is the case in your company, you might believe that there is no need to get involved with what may appear to be a complex, expensive and drawn-out process.
What if they were able to reduce tax paid on their best-selling products to 10%. Do you think that would be of interest? What if in doing so they could also add (potentially significantly) to the asset value of the company? Surely that would be of interest? That’s exactly what the UK Patent Box regime does.
The Patent Box flip
Usually, when exploring the possibilities of Patent Box, your accountant will look at your profitability and the patents you already have in order to decide whether it’s worthwhile opting-in to the Patent Box regime.
However, this process can be turned on its head — instead, look at your top selling, most profitable products and consider making one or more modifications or tweaks that could be eligible for patent protection. In doing so, your company’s profits derived from your top selling products could benefit from reduced tax and also help your company to increase its value by owning more assets.
It really is that simple — to get tailored Patent Box advice for your business, get in touch with us today.