A company that elects into the patent box can benefit from a reduced rate of corporation tax of 10% on its relevant profits. The reduced rate is applied by making a deduction on the corporation tax return.  

In a letter sent to companies that have made a patent box deduction, HMRC explains that some companies don’t provide information and calculations in support of the amount deducted. This makes it more likely that HMRC will need to contact the company to request information or to start a formal check of the patent box deduction.  

To help avoid this, HMRC suggests that the company: 

• reads HMRC’s guidelines for compliance 9, and in particular, the sections ‘Information to include with your return’ and ‘Record keeping’; and 
• includes supporting information and calculations when they next submit a company tax return that includes a patent box deduction. This could be done in the accompanying corporation tax computations or by submitting a patent box report in a PDF document.  

HMRC acknowledges that the correct amount of supporting information will “vary for different businesses and transactions, depending on the facts and circumstances”. HMRC recommends that companies “supply a level of detail that’s reasonable and proportionate to the circumstances”. 

HMRC says that it is asking companies to do this “voluntarily” and that by doing so, the company will help HMRC to process deductions, and any tax repayments, more quickly.  

Companies that have questions about the patent box are asked to contact their HMRC customer compliance manager if they have one, or to contact HMRC using the details given in the letter. 

Further information

• Use the Patent Box to reduce your Corporation Tax on profits - GOV.UK