UK's R&D Tax Relief Scheme

12 Months Ended

Dec. 31, 2019

Other Income and Expenses [Abstract]

UK's R&D Tax Relief Scheme

U.K.’s R&D Tax Relief Scheme

We conduct extensive research and development activities that benefit from U.K.’s small and medium-sized enterprises (SME) R&D tax relief scheme. Under this tax relief scheme, a SME has an option to receive an enhanced U.K. tax deduction on its eligible R&D activities or, when an SME entity is in a net operating loss position, can elect to surrender net operating losses that arise from its eligible R&D activities in exchange for a cash payment from the U.K. tax authorities. As the tax incentives may be received without regard to an entity’s actual tax liability, they are not subject to accounting for income taxes. Amounts recognized by us for cash payment claims under the SME R&D tax relief scheme are recorded as a component of other income after an election for tax relief has been made by submitting a claim for a discrete tax year and collectability is deemed probable and reasonably assured.

Other income for 2018 included $10.1 million for claims related to our 2015 and 2016 U.K. tax years. As of December 31, 2019, we have made similar elections and submitted two individual claims for refundable cash credits related to our 2017 and 2018 U.K. tax years. Amounts submitted for reimbursement for qualifying expenditures incurred in 2017 and 2018 are higher than claims received for prior tax years due to increases in qualifing expenditures incurred in those periods. We have not recorded a receivable for these refundable cash credits at December 31, 2019 as collectability was not probable or reasonably assured. For our 2019 tax year, we have not yet decided whether to seek tax relief by surrendering some of our losses for refundable cash credits or electing to receive enhanced U.K. tax deductions on our eligible R&D activities. Under U.K’s tax legislation, there is a two-year window after the end of a tax year to seek relief under this scheme.