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BBC’s Panorama & the Patent Box (IP – Hit or Miss?)

Keltie LLP

K2 IP Limited

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panorama logoIn the last couple of weeks, in the context of the UK’s patent box tax regime, this ipcopywriter has twice heard mention of a Panorama programme that discussed the patent box. In both cases the opinion expressed of Auntie Beeb’s current affairs show was as low as a World Champion limbo dancer.

So what was wrong with the programme? IPcopy decided to investigate.

The Panorama programme is currently still available on iPlayer here. The (shortish) segment on the patent box starts 10m 30s in to the programme and you can jump to this part of the programme here. The programme was billed as follows:

The government says it is cracking down on tax avoidance and evasion, but does the tough talk really stand up to scrutiny? Panorama goes undercover in the City to investigate the truth about UK tax policy. The programme discovers how London is still home to the tax avoidance industry and how new laws could allow big companies to avoid billions in tax.

The first indication that Panorama wasn’t really interested in presenting a balanced view came right at the beginning of the patent box segment when the presenter informed us from his Union flag bedecked Mini Cooper that patent box is “one of the most controversial tax breaks”  that the UK government* is offering. Hang on, what?

Clearly the programme makers started with a certain point of view and then crafted their show to support this view. Some friendly talking heads (Mike Lewis of Action Aid and Rachel Griffith of the Institute of Fiscal Studies) were wheeled out in support of the view that patent box is only here to benefit “big business” in the UK and that it should be renamed “Cut in Corporation tax for large companies”. I’m going to be honest with you Rachel, that’s not a very catchy title!

Meanwhile the Tax Minister, David Gauke MP, was badgered by the programme’s presenter Richard Bilton into giving a “yes or no” answer to a question that couldn’t really be answered in this manner. [On this particular issue it is noted that in order to qualify for patent box companies must meet development and active ownership conditions.]

Despite the programme synopsis focussing on London the show then travelled all the way to Northern Ireland to find a small business owner who thought that patent box was a bad idea and that it would only benefit big business. Seriously, Panorama, couldn’t you find anyone closer to home?

A report by Cambridge IP was also briefly referenced which apparently showed that 60% of all European patent applications filed in 2011 by UK entities came from only 50 companies. I’m not sure what this was meant to show? The actual numbers of patent filings were not given but, for all we know the same report could show that there are hundreds or thousands of UK entities in the remaining 40% which to my mind means that there could be hundreds or thousands of UK entities that could benefit from patent box once their patents grant!

What was surprising was the complete and utter lack of any semblance of balance. I didn’t see a single tax specialist being interviewed about patent box. No patent attorneys were interviewed. No one from the UKIPO was present and, at least as far as the patent box segment seemed to go, no one from HMRC was interviewed. Highly disappointing!

For the record it should be noted that, although the patent system can be complicated and expensive, it is possible to mitigate those costs (within the context of getting a patent through for patent box) by potentially choosing a UK patent filing over a European application and by potentially filing a patent application of narrower scope to try and reduce the number and amount of UKIPO objections.

The other criticism levelled at the patent box regime was that it was only useful for the big boys. However, the patent box regime includes a small claims treatment and provided that a company is eligible, e.g. because its qualifying profits are below £1,000,000, the small claims track allows the company to elect to adopt a formulaic approach. This is of benefit to SMEs!

If you’re a patent attorney or tax specialist with more than a passing interest in the patent box regime I encourage you to watch the programme and, in particular, the segment from 10 minutes 30 seconds. Just try not to get too wound up by the less than unbiased approach taken by the programme makers!

Verdict: IP Miss (think “shoots for goal but hits corner flag”!)

Mark Richardson 15 October 2013

*The programme seemed to be criticial of the Coalition’s efforts to address corporation tax concerns. However, the patent box was actually first proposed by the previous government back in 2009.

Further reading

IPcopy’s Patent Box Q&A

HMRC on patent box

 

IP- Hit or miss?

This article is part of an occasional series of articles that takes a light-hearted look at IP as it appears in the media (films, TV, news reports etc) as an excuse to talk about different IP topics. A vague rating of “IP hit or miss?” may also be given depending on how well the particular IP concept has been incorporated into the media in question.

Previous “IP – Hit or miss?” article – New Zealand has not banned “software patents”


1 Comment

  1. Nick White says:

    I do have reservations about the Patent Box but this programme is symptomatic of the poor quality of journalism in the UK around intellectual property issues. It was laugh out loud silly at times!

    I agree it’s a big IP Miss!

    Just a “small” point, while we are on tax. ALL of the costs incurred by a business in securing its intellectual property rights are a tax deductible business expense.

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