Scientific Advancement for R&D Tax Credits and Patentable Inventions: Do my projects have patentable subject matter?

Given the significant changes to the R&D Tax Credits scheme currently proposed by Government, it is worthwhile to consider Patent Box as a valuable alternative.

Here we compare how HMRC assesses Scientific Advancement for R&D tax relief, versus how the UK Intellectual Property Office examines the patentability of an invention.

We hope this will give you to knowledge you need to identify patentable subject matter within your R&D Projects.

          1)  Projects that qualify for UK R&D Tax Credits

For a UK company to qualify for R&D tax relief, HMRC requires that their R&D projects:

  • Are not readily deducible by a Competent Professional*;
  • Generate an advance in the overall knowledge or capability in a field of science or technology (rather than just in the company’s own state of knowledge or capability)
  • Make or attempt to make an appreciable improvement to an existing process, material, device, product or service through scientific or technological changes.

*The Competent Professional is someone with several years’ experience in the industry, and can be in a managerial position, a problem solver, or a member of R&D Staff.

Not every R&D Tax credit application is assessed, and if HMRC requires more information or evidence to substantiate the claim, an Enquiry can be initiated which can take up to 6 months to finish. We have experienced Consultants who can advise you on this.

       2)  Inventions that could be protected by UK Patent Applications

For a UK Patent Application to proceed to Grant:

  • A patent specification needs to be drafted, preferably by a Patent Attorney and based on a full Invention Disclosure and filed at the UK IPO.
  • A patentable invention must be new and inventive over what was publicly available up to the day before the patent application is filed. This also means the invention should not already have been made public.
  • Inventive step is assessed by a Person Skilled in the Art, who is a legal construct and an expert technician, who has access to all relevant publicly available documents. It is important to note that he or she is not an inventor.

There are different approaches to assessing Inventive Step: e.g. the European Patent Office “Problem Solution” approach and the UK IPO “Pozzolli test” (both of which will be dealt with in another blog). The Person Skilled in the Art may be considered a technical expert who is managed by a Competent Professional (see above). The Competent Professional can therefore invent patentable subject matter.

Prosecution of a patent application to grant can take up to 4 years and 6 months from the earliest filing date but is usually a bit quicker. However, there is a way to prosecute a patent application within 12 to 18 months, using the UKIPO Green Channel. Using this process also allows you to quickly take advantage of the UK Patent Box which provides a reduced Corporation Tax of 10% on profits made from products or services in which the patented claimed invention is an integral part.

As you can see there is a higher and stricter bar for patentable inventions compared to the R&D that qualifies for Tax Credits. However, as experts in Innovation Funding and IP Strategy, ABGI have regularly identified patentable subject matter in R&D Tax Credit projects and advised clients accordingly.

We can help you protect, optimise, and monetise your IP. Our IP Specialists will create a plan that is completely bespoke to your business, right for your individual organisation and its specific goals. If you would like to learn more, please get in touch ip@abgi.co.uk.