XML 27 R17.htm IDEA: XBRL DOCUMENT v3.24.3
Income taxes
 9 Months Ended
Sep. 30, 2024
Income taxes  
Income taxes

10. Income taxes

During the three and nine months ended September 30, 2024, the Company recorded an income tax benefit of $3.4 million and $3.7 million, respectively, and during the three and nine months ended September 30, 2023, the Company recorded an income tax provision of $2.3 million and $1.1 million, respectively. The Company is subject to corporate taxation in the United Kingdom. Due to the nature of its business, the Company has generated losses since inception and has therefore not paid U.K. corporation tax. The (benefit from) provision for income taxes included in the condensed consolidated statements of operations and comprehensive loss represents the tax impact from operating activities in the United States, which has generated taxable income based on intercompany service arrangements. Deferred tax assets in the United States do not have a valuation allowance against them because of profits that will be generated by an intercompany service agreement.

​

The Company's income tax benefit recognized during the three and nine months ended September 30, 2024 is mainly the result of deferred tax assets in the United States that do not have a valuation allowance against them because of profits that will be generated by an intercompany service agreement, including incremental income tax benefits of approximately $3.5 million recognized during the three months ended September 30, 2024 related to the completion of a U.S. research and development tax credit study. The Company’s income tax provision recognized during the three and nine months ended September 30, 2023 is primarily due to the completion of an assessment, inclusive of an external tax analysis, in the third quarter of 2023, whereby the Company concluded that it is not required to capitalize certain research and development expenses incurred by its U.S. subsidiary associated with contractual research services performed on behalf of its U.K. subsidiary pursuant to an intercompany service arrangement because its U.S. subsidiary does not retain any ownership or rights in the underlying intellectual property resulting from the research services. The change in estimate upon the completion of this analysis resulted in an income tax provision of $2.4 million during the three months ended September 30, 2023.

​

The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realization of deferred tax assets requires significant judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluated all available positive and negative evidence, and weighed the evidence based on its objectivity. After consideration of the evidence, including the Company’s history of cumulative net losses in the United Kingdom, the Company has concluded that it is more likely than not that the Company will not realize the benefits of its U.K. deferred tax assets and accordingly the Company has provided a valuation allowance for the full amount of the net deferred tax assets in the United Kingdom as of September 30, 2024 and December 31, 2023. The Company has considered the Company’s history of cumulative net profits in the United States, estimated future taxable income and concluded that it is more likely than not that the Company will realize the benefits of its U.S. deferred tax assets and has not provided a valuation allowance against the net deferred tax assets in the United States.

​

The Company intends to continue to maintain a full valuation allowance on its U.K. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. The release of the valuation allowance would result in the recognition of certain deferred tax assets and an increase to the benefit from income taxes for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company is able to actually achieve.

​

The (benefit from) provision for income taxes recorded in the condensed consolidated statements of operations differs from amounts that would result from applying the statutory tax rates to income before taxes primarily because of certain permanent expenses that were not deductible, U.K., federal and state research and development credits, as well as the application of valuation allowances against the U.K. deferred tax assets.