Businesses who benefitted from Patent Box grandfathering rules will need to “get to grips” with the new regime to continue to claim Corporation Tax relief, it has been warned.

The report, published by the Institute of Chartered Accountants in England and Wales (ICAEW), comes after grandfathering rules for the original patent box regime came to an end on 30 June.

Launched in 2013, the Patent Box is designed to encourage companies to commercialise intellectual property in the UK.

Under the regime, a lower rate of Corporation Tax – 10 per cent – can be applied on profits earned from patented goods and services.

But a report, published by the Organisation for Economic Co-operation and Development (OECD), found that the regime constituted a ‘harmful tax practice’, paving the way for new rules and regulations from 2016 onwards.

The new rules require companies to track income, expenditure and research and development (R&D) in “greater detail”.

Existing claimants, however, were permitted to remain under the “old regime” until 30 June 2021.

But from 01 July, all claimants are now required to comply with the “new regime”.

Commenting on the Patent Box regime, the ICAEW said: “Grandfathering rules for the original patent box regime came to an end on 30 June, meaning claimants must now track income and expenditure in more detail to claim.

“Additional information is needed at year end to prepare the necessary calculations.

“The new rules also apply a “nexus” principle, which requires an ‘R&D fraction’ to be added to the calculation, and potentially additional streaming of patent income and expenditure.”

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