Partner Article

How well do you know your IP assets?

David Lant, an associate at Newcastle-based law firm Sintons, looks IP assets and how businesses can best look after them.

You know your business. You know your turnover, profit and loss. You know your brand and your products. But do you know the value of your IP assets?

IP assets – which comprise copyright, trademarks, registered rights, patents and designs – can most probably add more value and benefit to your business than you may think.

Not only can proper assessment of your IP assets add to the value of your business, and help it to flourish – thus attracting potential investment and enabling expansion – it can also enable you to qualify for tax relief schemes introduced to help the UK’s creative industries flourish.

The business benefits of registering your product or design through copyright, trademark or patent are well-documented. They enable you to legally protect your own ideas and products from rivals and allow you to stay ahead of competitors, ensuring that they cannot encroach on your IP territory.

But the value of your IP assets is perhaps less well realised. Regular assessment of the IP value of your business is advisable by a professional advisor, to chart whether it affects the underlying worth of your venture and whether that may lead to tax benefits.

Last year, various new measures were introduced by the UK Government to benefit businesses in the creative industries, and to help them secure tax benefits and reductions in some situations. Many still do not realise such schemes are in place, but it is certainly worth giving some consideration to, as for some companies, there are significant financial gains to be made.

The areas of in which tax benefits can be gained are:

Patent Box

This scheme, which came into being on April 1, allows UK companies to apply for a reduced rate of corporation tax, down to 10%, for profits attributed to patents. The full benefit of the regime will be phased in over the next four years, starting at 60% and reaching 100% from 1 April 2017. The Patent Box allows a company to count worldwide profits for anything that is linked to a UK patent. However, the patent owner (or exclusive licensee) must also contribute to the development or commercialisation of the patented technology.

Interaction with Film Tax Relief

The proposed creative sectors tax relief is expected to use a similar model to the existing Film Tax Relief - where a payable cash rebate of up to 20% or 25% of core film production expenditure can be claimed.

Interaction with existing R&D tax relief

The Patent Box will run alongside the existing R&D tax relief scheme. For early stage work, companies can claim a tax credit as a deduction based on R&D spending. Once development has resulted in profit-making activities then the company can elect into the Patent Box. Companies will need guidance in deciding whether to claim R&D tax relief or a creative sector tax relief in any given tax return.

Many companies, of all stages of development and maturity, are potentially eligible for creative tax relief - so it is advisable to look into the options available. In the first instance, however, it is important to ensure your IP assets are all protected legally so that such tax benefits can be accessed.

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