In November 2024, HMRC released new compliance guidelines in relation to Patent Box claims, which were effective immediately. These guidelines summarise HMRC’s best practice advice and highlight the key areas HMRC expect businesses to consider before making Patent Box claims. This is a new approach from HMRC in relation to the Patent Box regime and the guidelines were brought in unannounced and without any lead time, suggesting that HMRC are keen to start receiving supporting information as soon as possible.
HMRC are requesting increased disclosure to help them review Patent Box claims more effectively. This supporting information should be submitted alongside the tax return containing the Patent Box claim.
The information request includes (but is not limited to) the following:
- Explanations as to how the claimant company meets the Patent Box eligibility conditions;
- Nature of qualifying income (i.e. which “head” the income falls into);
- Details on the streaming approach;
- Explanation of the Marketing Assets Return treatment; and
- Copy of the Nexus Fraction calculation.
The guidelines provide further details on the specifics that HMRC are expecting to see, and it includes the underlying basis for the approach taken and supporting calculations.
What does this mean for Patent Box claimants?
These guidelines are effective immediately and so all Patent Box claimants should be considering how they can capture these details and how to best present them to HMRC.
Whilst the guidance does not introduce a statutory requirement to provide information, the guidance says that supplying supporting information may help to avoid HMRC opening a compliance check to ask for any missing details (although this is not guaranteed).
The level of detail to be provided to HMRC will depend on the specific facts and circumstances for each claimant company, noting that some fact patterns are more complex than others.
We note that there is no indication at this point in time that this is a move from HMRC towards mandatory documentation for Patent Box claims.
How can PwC help?
PwC can help you to understand these guidelines and determine what is an appropriate level of detail to provide to HMRC. We are also able to support on all aspects of making patent box claims, including any compliance checks raised by HMRC and have significant experience of dealing with such checks across many sectors.
Please reach out to our Patent Box specialists if you have any queries around the new HMRC guidelines, HMRC compliance checks or any broader queries on your Patent Box claims.
