Driving Innovation and Growth for Manufacturers using Patent Box Tax Relief

Driving Innovation and Growth for Manufacturers using Patent Box Tax Relief

In today's fast-paced market, manufacturers strive to maintain a competitive edge by driving innovation and fostering growth. One powerful tool that incentivises research and development (R&D) efforts is the utilisation of Patent Box tax relief. By leveraging this tax incentive, manufacturers can reinvest saved funds into further innovation, ultimately leading to the development of new technologies, processes, and products. But how can manufacturers successfully achieve this?

Building a Strong Relationship: How to Claim Patent Box

The process of claiming patent box tax relief can often seem daunting and technically complex, discouraging many from applying. It involves dealing with technical formulas and conducting separate calculations for each individual patented product or intellectual property right. However, with the support and guidance of a knowledgeable accountant, there's no reason why manufacturers cannot maximise the benefits of this tax relief.

Our team is dedicated to working in partnership with you, ensuring the claiming process is as seamless and effortless as possible. By following three simple steps, we have assisted numerous manufacturing clients in optimising their R&D activities and reaping the significant benefits of Patent Box tax relief. Allow us to share one example and the steps we followed.

The Haines Watts Process: A Case Study

Technical Assessment: Identifying Eligibility

One of our manufacturing clients faced a common challenge that many of you reading this might encounter: determining what is eligible for Patent Box tax relief. Having previously worked with this client on their R&D claims, we discovered they held a patent for a significant component of their work. However, they were uncertain whether they could claim for the patented component alone or for the larger product that incorporated the patented component.

Working in close partnership with the client, we unravelled the complexities of the legislation and performed profit calculations. Through this process, we determined that claiming for the larger product, which included the patented component, would yield a more lucrative option under the Patent Box scheme.

Forensic Accounting: Unveiling the Value

Forensic accounting plays a pivotal role in identifying relevant income streams derived from intellectual property (IP) and validating the allocation of costs. We worked closely with our client's technical team, thoroughly assessing the product in question. During this analysis, we discovered that the IP was incorporated into the final product and encompassed the overall project, including the patent. As a result, it qualified as qualifying IP income.

To accurately qualify income and expenses related to the qualifying IP within each project, we developed a bespoke methodology. This enabled us to capture the necessary data and document the relevant results and information in a comprehensive report, which we successfully submitted to HMRC.

Making the Election: Maximising Tax Benefits

Finally, we seamlessly incorporated Patent Box tax relief into our client's corporation tax computation. We provided supporting evidence and analysis to HMRC, ensuring a smooth and efficient claiming process. Our client was then able to realise their total tax savings and receive the tax benefits they were entitled to.

Since engaging with this client on Patent Box tax relief, we have successfully submitted five claims on their behalf. Through our support and guidance, the savings in tax relief has empowered and enabled them to strengthen their investments in further innovation and product development, propelling their growth in the market.

Partnership for Success

By building strong relationships with our clients and leveraging the power of Patent Box tax relief, manufacturers can drive innovation and foster growth in their organisations. Our case study demonstrates how the Haines Watts process—comprising a technical assessment, forensic accounting, and making the election—can be tailored to individual manufacturers' needs and yield substantial benefits.

We are committed to supporting manufacturers in optimising their R&D activities, unlocking the full potential of Patent Box tax relief, and propelling them towards success. With our expert guidance, seamless processes, and dedicated partnership, you can maximise your tax savings, reinvest in innovation, and secure a competitive edge in the market.

Contact us today to embark on a journey of driving innovation and growth for your manufacturing business.