IP Tax Consultants
IP Structuring

Own your IP in the right place, at the right time

How your intellectual property is held, licensed, and developed determines how much of your profit qualifies for Patent Box relief. We make sure the structure is right before the claim is made.

Structure determines eligibility

Patent Box relief is not simply a function of owning a patent. The legislation requires that the company making the election owns or exclusively licences the qualifying IP, and that the income attributable to that IP is correctly identified within the corporate structure. Get the structure wrong and relief is reduced or lost entirely.

IP structuring is the work that happens before a claim is prepared. It ensures that your patents are held in the right entity, that any inter-company licensing arrangements are correctly documented, and that your R&D expenditure is attributed in a way that maximises the nexus fraction.

Stage 1

IP Ownership Review

Confirm the right entity holds the right IP.

IP held in the wrong entity can disqualify an otherwise valid Patent Box claim entirely.

The company claiming Patent Box relief must own or exclusively licence the qualifying IP. Where IP is held in a holding company, a subsidiary, or by an individual founder, the structure may need to be adjusted before a claim can be made or before the full benefit is available.

1

Ownership mapping

We map your current IP ownership across the group, identifying where patents, applications, and know-how are legally held.

2

Eligibility gap analysis

We identify any ownership or licensing gaps that would reduce or prevent Patent Box relief under the current structure.

3

Restructuring options

Where changes are needed, we set out the available options, including IP assignments, exclusive licences, and cost-sharing arrangements, with a clear analysis of the tax consequences of each.

4

Implementation support

We work with your legal advisors to ensure any restructuring is correctly documented and that the tax treatment is consistent with the commercial arrangements.

Stage 2

Nexus Fraction Optimisation

Maximise the proportion of IP income that qualifies.

A poorly structured nexus fraction can reduce Patent Box relief by 30–50% compared to an optimised position.

The nexus fraction determines what proportion of your qualifying IP income is eligible for the Patent Box rate. It is calculated by reference to R&D expenditure, and the way that expenditure is attributed across the group has a direct and significant impact on the relief available.

1

R&D expenditure analysis

We analyse your R&D spend, both in-house and contracted, and assess how it is currently attributed for nexus purposes.

2

Fraction modelling

We model the nexus fraction under your current structure and identify where changes to attribution or contracting arrangements would improve it.

3

Contracting structure review

We review your R&D contracting arrangements, particularly where work is outsourced to connected parties, and advise on structuring that preserves nexus fraction value.

4

Ongoing monitoring

We track the nexus fraction year on year and alert you when changes to your R&D spend or contracting arrangements require attention.

Stage 3

Group Licensing Arrangements

Ensure inter-company licences are correctly structured and documented.

Undocumented or incorrectly priced inter-company licences are one of the most common causes of HMRC enquiries into Patent Box claims.

Where IP is licensed between group companies, whether to a trading subsidiary, an overseas entity, or a joint venture, the terms of that licence affect both the Patent Box calculation and the transfer pricing position. We ensure the arrangements are commercially sound, correctly priced, and properly documented.

1

Licence review

We review existing inter-company licence agreements to assess whether the terms support the Patent Box position and are consistent with arm's length pricing.

2

Transfer pricing alignment

We work with your transfer pricing advisors, or provide initial guidance ourselves, to ensure royalty rates are defensible under OECD principles.

3

Documentation

We prepare or review the supporting documentation required to evidence the commercial basis for the licensing arrangements.

4

Cross-border considerations

Where IP is licensed to or from overseas entities, we identify any withholding tax, treaty, or BEPS considerations that may affect the structure.

Is your IP structure costing you relief?

Many businesses are claiming Patent Box on a structure that could be significantly improved. Book a free 20-minute consultation and we will review your position and identify material additional relief.