Following consultation, provisions are to be made in the Patent Box regime to allow for cases where research and development (R&D) is undertaken collaboratively between two or more companies in a cost sharing arrangement
The purpose of the provision is to ensure companies are ‘neither penalised nor able to gain an advantage’ by organising their R&D operations in this way.
The legislation is to be revised to provide a narrow the definition of what constitutes a cost-sharing arrangement and ‘better align the treatment of payments into, and payments received from, a cost-sharing arrangement by the company’, the Treasury said in an overview of the legislation.
The Patent Box allows companies to apply a lower rate of corporation tax to profits earned after 1 April 2013 from patented inventions.
In September 2016, the HMRC released statistics showing that in 2013-14, 700 companies claimed relief under the Patent Box with a total value of £342.9m.
The changes will take effect on or after 1 April 2017 and will be included in the Finance Bill 2017, the government said.
HMRC's Patent Box data can be viewed here.
The overview of legislation is included in the Overview of tax legislation and rates here.
