If your company has elected into the Patent Box scheme, you may recently have received a letter from HMRC asking for more information about your claim. This is known as a “nudge letter”.
At first glance, it might sound worrying. After all, when HMRC writes to you about your tax return, it’s natural to think you’re in trouble. But in this case, there’s usually no need to panic. HMRC’s Patent Box nudge letters aren’t an accusation — they’re a prompt. HMRC simply wants businesses to include enough detail and supporting information when submitting Patent Box deductions in their Company Tax Returns.
In this blog, we’ll explain what HMRC’s letters mean, why they’ve started sending them out, and what simple steps you can take to stay compliant and avoid any unnecessary delays or questions.
What is the Patent Box and why does it matter?
The Patent Box is a government-backed tax relief that aims to keep innovation in the UK. It gives companies that earn money from patented products or technology a lower rate of Corporation Tax — 10% instead of the standard rate.
To get this relief, your business needs to elect into the scheme and calculate how much of your profit comes from those qualifying patents.
To make a claim, your company needs to opt into the scheme and work out what portion of your profit is linked to your patents.
These calculations can get technical, involving detailed records and adjustments.
That’s where HMRC’s nudge letters come in — they’re part of an effort to make sure companies are keeping proper records and calculating their Patent Box claims accurately.
What exactly is a Patent Box nudge letter?
HMRC’s Patent Box nudge letter is a formal communication sent to companies that have made a Patent Box deduction in their Corporation Tax return. The letter highlights that some businesses aren’t providing sufficient supporting documentation for their claims.
The letter refers to Guidelines for Compliance 9 (GfC9) — a piece of HMRC guidance that explains what kind of information businesses should include with their return, how to maintain records, and what level of detail is considered “reasonable and proportionate”.
HMRC also makes it clear that providing this supporting information isn’t mandatory. However, following the guidance will make it far less likely that HMRC needs to ask for additional details or open a formal enquiry into your Patent Box deduction.
Why has HMRC sent these letters?
You’ve claimed Patent Box relief in a recent return.
HMRC sends these letters to all companies that have claimed the relief, not just a few.
Your last claim didn’t include much detail.
If your figures were right but lacked supporting explanations or calculations, HMRC just wants more transparency next time.
It’s part of a wider “check-in”.
HMRC regularly sends what they call “one-to-many” letters — standard messages sent to lots of companies at once. It’s their way of encouraging good compliance habits without launching individual investigations.
So if you’ve received one of these letters, it’s likely because your company has claimed Patent Box relief in a past return, and HMRC wants to ensure your future submissions are well supported.
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What should you do if you receive a Patent Box nudge letter?
1. Read the letter properly
Don’t skim it and move on. Take five minutes to understand what it says. HMRC is very clear about what they’re asking for: supporting information and proper record-keeping.
2. Review your previous Patent Box claim
Look at how you calculated your last Patent Box deduction. Did you include supporting schedules or a summary explaining your methodology? If not, that might be why you’ve received the letter.
3. Prepare to include supporting information next time
HMRC gives you two options for submitting your supporting details:
- Include them with your Corporation Tax computations, or
- Submit a separate Patent Box report as a PDF.
This information might include:
- Details of the patents or IP involved
- How the relevant income and expenses were calculated
- The steps you took to determine qualifying profits
- Any adjustments made under the Patent Box rules
4. Keep proper records
You are legally required to keep records that support the figures in your Company Tax Return. So you should already have most of this information on hand. HMRC’s guidance simply encourages you to share a summary of that evidence proactively to reduce future correspondence.
What happens if you ignore the letter?
Let’s be clear — ignoring HMRC’s nudge letter won’t get you fined straight away. Nothing dramatic happens the next day. But brushing it off completely could invite more attention later.
If HMRC can’t follow how you worked out your Patent Box figures, they might decide to take a closer look. That usually means a formal enquiry where they’ll ask for extra evidence and explanations. The downside? It can slow down your Corporation Tax processing or any repayments you’re due.
And in tougher cases, if HMRC later decides your claim wasn’t right or you didn’t take reasonable care, they can charge interest or even issue penalties. So it’s better to take the hint now rather than deal with a drawn-out review later.
Can you reduce penalties if HMRC finds an error?
If HMRC checks your Patent Box figures and finds something’s off, don’t stress — the outcome depends on how it happened.
If it’s a genuine mistake, they’re generally fair about it, especially if you’re quick to fix things and keep communication open. But if they believe you’ve knowingly filed something wrong, that’s when penalties and interest can pile up.
The smartest thing you can do is be upfront. If you spot an issue before they do, tell them. HMRC is usually much more forgiving when you take responsibility rather than waiting for them to point it out.
How an accountant can help
Patent Box claims can be technical, particularly for companies with multiple income streams or international patents. A qualified accountant or tax specialist can:
- Review your existing Patent Box election and previous claims
- Check that your figures align with HMRC’s guidance.
- Help prepare a clear, concise supporting report.
- Ensure your records meet compliance standards.
- Communicate with HMRC on your behalf if there are questions.
Having professional support not only ensures your claim is accurate but also gives you peace of mind that you’re protected if HMRC follows up.
Conclusion
Review your last claim, make your calculations crystal clear, and keep your documentation in good shape. You’ll save yourself time, avoid unwanted HMRC attention, and make your next tax return run much more smoothly.
And if you’re unsure about anything — whether your figures are right, or how to present your information — speak to your accountant.
At Bradleys, we help innovative businesses like yours manage their Patent Box and R&D tax claims with confidence. If you’ve received HMRC’s letter and want to make sure your next return is bulletproof, get in touch with our tax team today.
