Annex 1: Minor changes in the law made by the Act: Change 23: Patent fees paid: sections 89 and 90
This change sets out the basis on which a deduction is allowed for patent fees. It brings the timing of the deduction into line with the vast majority of deductions allowed in calculating trading income.
Section 83 of ICTA allows a deduction for “fees paid or expenses incurred” in connection with the grant of patents etc. It is thought that the “fees paid” are those paid when a patent application is made. Such fees are incurred only when they are paid. So it is unlikely that business accounts would recognise the fees until they are paid.
There is no doubt that “expenses” include “fees”.
These sections allow a deduction for all expenses on the basis of the amounts incurred. In principle the rule in these sections may allow taxpayers to take a deduction for fees earlier than the ICTA rule.
This change will not alter the amount charged to tax. The most it will do is affect the timing of the tax liability. In a small minority of cases this could mean a different rate of tax being applied, according to individual circumstances. Any overall tax effect is likely to be negligible.