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GovGrant: Patents should make money for businesses

Luke Hamm, chief executive of tax credit specialist GovGrant, has urged business owners to monetise their intellectual property (IP) and stop treating it like a medal.

Hamm, whose business helps SMEs claim for the government’s ‘Patent Box’ scheme, has accused policymakers of  ‘woefully under-protecting IP,’ calling for bolder policies policy to ensure business and the wider knowledge economy derives full value from inventions.

The Patent Box scheme is designed to reward companies that develop, retain and exploit patents in the UK. It is administered by HMRC. The tax on profits from patented inventions is reduced to 10%. It may be that the patented element of the product or process is minor. But 100% of a company’s worldwide profits arising from product income should qualify for 10% corporation tax.

“We want to encourage IP and patent creation so we need to bring it down to a focused, easily understood that becomes part of regular discussion in management meetings,” he said.

“Far too often, there is a sharp intake of breath when we respond to the question from business owners: ‘so how much is this going to cost?”

Hamm believes the focus for the IP debate should turn away from cost to value, and that businesses need to understand what they are paying for. He said: “Some businesses are very much focused on the academic challenge of IP, and while a patent is a valuable as a badge they tend to lack the commercial drive to monetise the invention.”

He points out that SMEs only received £43m of the £950m of government support for IP in 2017. “The companies who have patents at the heart of their strategy benefit and they tend to be large sophisticated businesses, not SMEs.

“We must change this and seriously promote the benefits of Patent Box for SMEs. This will only happen if we remove the elitism in IP and replace that elitism with good business sense. Ideas and inventions created by smaller companies need to have the same focus as IP for big businesses.”