22nd October 2015

BIA publishes new overview document as Patent Box implementation gets underway in the UK

In response to the publication of a new consultation by HM Treasury on Patent Box reform, the UK BioIndustry Association (BIA) publishes a new overview document of the forthcoming changes and how they might impact the bioscience sector.

Published in partnership with Confluence Tax, whose Partner and Founder Colin Hailey is Chair of the BIA’s Finance and Tax Advisory Committee, the new overview document aims to make sense of these technical proposals to non-specialists and be a useful guide to biotech CEOs and Finance Directors as they try to navigate how these new changes could impact their business models.

The Treasury document implements new international principles agreed by the OECD/G20 as part of the wider Base Erosion and Profit Shifting (BEPS) project.

The main change that will be implemented to the UK’s Patent Box, as a result of these wider international decisions, is that Patent Box claims will be subject to a ‘nexus’ approach. Put simply, to qualify for the Patent Box tax relief, companies will now need to demonstrate a correlation between the income and their own Research and Development (R&D) expenditure that developed the patent.

Commenting in response to the publication of the new consultation document, BIA CEO Steve Bates said:

“The Patent Box has formed part of a compelling fiscal and tax environment that has supported and helped grow the UK bioscience sector. The BIA has engaged with the international debate and looks forward to assisting the government in ensuring that the reformed Patent Box scheme continues to provide appropriate tax incentives for highly-innovative sectors such as bioscience.”

Colin Hailey, Chair of the BIA’s Finance and Tax Advisory Committee said:

“Understanding the legislative process is one thing, understanding how it would affect specific company formations and deal structure is quite another. The overview paper we are publishing today aims to put these changes in context for the nature of the bioscience sector and the BIA will be working with its membership to explain what Patent Box 2.0 means for them.”

The BIA/Confluence Tax briefing paper Changes to the UK Patent Box: An Overview, October 2015 can be downloaded here and the HM Treasury consultation document Patent Box: substantial activities can be found here.
The consultation closes on 4 December 2015.