Expanding rewards for innovative companies
While the tax giveaways in the Chancellor’s Autumn Budget stole the headlines, a significant amount of his much-anticipated presentation focused on the ways he hoped to improve the nation’s productivity performance and outlook.
Ramping up the UK’s productivity is essential to drive growth, create jobs and re-balance the economy for longer term stability and prosperity, and Philip Hammond’s speech touched on many areas from infrastructure improvements to technology adoption and upskilling workforces for the future.
From what he said, it remains clear in the eyes of the government that among those leading the fight against the productivity challenge will be risk-taking, innovating companies of all sizes who every day are pushing the envelope in terms of creating new exciting products, processes or business models.
It is for such companies that supportive and highly incentivising schemes such as the HMRC’s R&D Tax Credits or Patent Box were created in the first place. They provide substantial cash injections back into organisations so they can reinvest in new staff or equipment in order to continue their growth.
MPA has a proven track record in working with innovative businesses across many sectors to help secure valuable cash injections on the back of their research, innovation and development activities. Applying our in-depth sector-driven knowledge in order to extract the precise information that will present a claim’s case appropriately for HMRC, MPA has, to date, secured over £150 million of financial benefits for our clients.
MPA delivers Patent Box support
Building on this proven success, MPA offers support for more than just R&D tax credits, further expanding on the financial reward available to innovative companies through HMRC’s Patent Box regime.
Like R&D tax credits, the primary aims that lies behind the Patent Box relief scheme are to incentivise and reward companies for their entrepreneurship, inspiration and business bravery.
The regime, put simply, rewards innovative businesses by reducing Corporation Tax to 10% of profits earned from their patented inventions and equivalent forms of intellectual property. What’s more, it can be used in conjunction with an R&D tax credit claim for the same project and when done so can produce a cash windfall that could have a significant bottom-line impact for a business.
The good news is the use of the Patent Box regime is on the rise as companies come to realise the positive and practical impact it can have.
But, there is still a long way to go to ensure that all qualifying organisations benefit.
Innovating for business growth
Latest figures from the Intellectual Property Office point out that only 17% of companies protect their most valuable innovation with a patent. This year, just over 1,000 Patent Box claims have been lodged, a tiny overall fraction when considering that there are upwards of 130,000 innovation active companies in the UK.
MPA is committed to helping companies reverse this trend, especially as just 3% of businesses using the R&D Tax Credit scheme, according to HMRC, are maximising their return by claiming for Patent Box in conjunction.
When looking at the data, it’s also clear to see a number of regional disparities exist. For instance, firms in the North East claim the smallest amount of Patent Box relief, a scenario which is echoed in Scotland.
This reduced uptake presents a real opportunity for accountants and financial advisors. When working day-to-day with their client base, they should be alerting them to the financial rewards on offer from HMRC by simply packaging their innovation story and proof points and presenting it as a compelling case.
However, in such a specialist area, there are many potential pitfalls when generating a claim that must satisfy all the criteria set out by HMRC. For the uninitiated, it could be time-consuming, onerous and complex. This is just one reason why an accountant or financial advisor may not be comfortable handling this area of funding.
That is why in such instances, accountants should look to partner with MPA and help provide a robust and inclusive service to their clients. Accountants have the ongoing client relationship, but MPA can deliver the specialist expertise to guarantee that the claim will be ultimately successful. This partnership allows accountants to offer clients an enhanced service in the complex areas of innovation funding.
A win-win situation
Both the Patent Box and R&D Tax Credit schemes are complicated, therefore like many other areas of business life, the smart business move is to outsource such claims to those who are well practised in their generation and effective delivery.
MPA employees come from the worlds of IT, engineering, life sciences, computing and manufacturing, and fully understand the subtle complexities of language and technicalities that inhabit such sectors. They are skilled in extracting the evidence from organisations that will position their innovating activities in the best possible light so that HMRC are ready and willing to reward through a tax credit or Patent Box windfall.
It is this industry-led expertise that helps set MPA apart. With the expansion of our service to include Patent Box submissions, we are now ideally placed to help firms both large and small reclaim cash benefits from a government only too willing to reward innovating companies with the brightest growing futures.
MPA is aligning itself with the requirements of UK innovating businesses. The addition of the Patent Box service to our comprehensive current offering will allow companies to maximise their return on investment in innovation, secure their growth plans and actively contribute to a more vibrant and productive UK economy from which we all will benefit.