1. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 The three great corporate tax reliefs  The R&D tax credit regime (R&D)  The Patent Box Regime (PB) – but limited time  The Substantial Shareholding Exemption (SSE) Dr Andrew Jupp FCA Jupp Consulting andrew@juppconsulting.co.uk +44 (0) 7775 433 914

2. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 R&D tax credits  Enhanced tax deductions for qualifying R&D costs (much more widely defined than you would expect) to reduce taxable profits or enhance losses  For SMEs tax relief is 225% of original costs (rising to 230% wef 1/4/15)  For “large” companies there are two alternatives - relief is 130% of original cost or an expenditure credit (worth c.10% - rising to 11% wef 1/4/15)  Loss-making SMEs can “sacrifice” the carry forward of losses and claim a repayable cash tax credit of c. 11% of the enhanced expenditure (no PAYE restrictions)

3. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 What is R&D?  “ a project that seeks to achieve an advance in science or technology….. through the resolution of scientific or technological uncertainty”  2004 DTI (now BIS) Guidelines on R&D  But in practice far wider application

4. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 What is R&D? Much wider than you think (forget about white lab coats – although this may apply to many of you!) The projects needs to  Extend overall knowledge or creativity  Create a process, material device, product or service that incorporates or represents and advancement  Make an appreciable improvement to an existing process, material, devise, product or service through scientific or technological changes  Uses science or technology to duplicate the effect of existing process, material device, product or service in a new or appreciably improved way

5. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 Common pitfalls  Incorrect costs claimed (only staff and consumables)  R&D “lost in accounts” – specific disclosure/accounting note is very helpful  Capitalised R&D (does not prevent, but often missed)  Employees/externally provided workers/subcontractors  Two year time limit missed  Poor presentation to HMRC

6. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 How to maximise claim  Claim annually as part of CT return  Claim can be back-dated to within 2 years of end of AP, but re-opens assessment window  Need detailed report to support claim  R&D “specialist” units  New guidelines for SMES to make it clearer and simpler!

7. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 The Patent Box Regime  New regime wef from 1 April 2013  Closed for new entrants from June 2016 and ending completely June 2021)  Profits arising from UK or European Patents (may not need Patent for legal protection but can still get tax benefit)

8. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 What do you need to do?  Identify IP that might qualify for Patent Box (both existing and planned IP)  Decide and agree best formulaic approach, to remove things such as marketing spend, routine expenses, R&D  Agree calculation methodology  Submit Patent Box self assessment return with appropriate calculations  Act now whilst still an opportunity

9. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 Substantial Shareholding Exemption “SSE”  Seeks to replicate the Dutch “Participation Exemption”  Avoids UK CT on the disposal of qualifying subsidiaries  Makes disposals of assets in separate subsidiaries more tax efficient than sales of assets out of subsidiaries  Gives much more flexibility if done early and in correct way  No down-side other than minimal increased compliance costs

10. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 TOP CO Bunch of assets / products / IP

11. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 TOP CO Bunch of assets / products / IP Taxable gain / income Sell one product Gives capital gain / income in Top Co

12. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 TOP CO Sub 1 Sub 2Sub 3Sub 4 Each subsidiary holds separate asset

13. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 TOP CO Sub 1 Sub 2Sub 3Sub 4 Each subsidiary holds separate asset  Sell Sub 1  Subject to conditions no income or gains crystallises  Profits kept within group

14. © NuAge Vision 2014 Email: admin@nuage-vision.comadmin@nuage-vision.com Webwww.nuage-vision.com Tel:+44 (0) 7803 122 583 +44 (0) 7553 040 928 What does SSE give?  Only one layer of corporate taxation (only when profits paid out to shareholders).  Makes UK a very attractive and flexible place to invest in.  Can reconstruct existing companies / groups to get there (watch losses).  Need 10% shareholding for 12 months prior to disposal.  Upfront structural planning vital.