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Income taxes | 12 Months Ended
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Mar. 31, 2021
Income taxes |
Income taxes | 14. Income taxes On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in the United States. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property. We evaluated the provisions of the CARES Act and do not anticipate the associated impacts, if any, will have a material effect on our financial position. During the years ended March 31, 2021 and 2020, the Company recorded no income tax benefits for the net losses incurred due to the uncertainty of the realization of such losses. The Company’s net loss before income taxes were generated in the United States and the United Kingdom. Net loss before income taxes for the years ended March 31, 2021 and 2020 were as follows:
|  | Year Ended March 31,
|  | 2021 |  | 2020
United States |  |  | (22,775) |  |  | (12,963)
Foreign (United Kingdom) |  |  | (58,095) |  |  | (39,662)
Total |  |  | (80,870) |  |  | (52,625)
A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the years ended March 31, 2021 and 2020 is as follows:
|  | Year Ended March 31, |
|  | 2021 |  | 2020 |
U.S. Federal statutory income tax rate |  | (21.0) | % | (21.0) | %
State taxes, net of federal benefit |  | (2.4) | % | (1.6) | %
Research and development credits |  | (0.8) | % | 0 | %
Research and development expenses |  | 1.9 | % | 2.2 | %
Return to provision |  | 0 | % | 1.9 | %
Stock compensation |  | (3.9) | % | 0 | %
Foreign tax rate differential |  | 0.0 | % | 2.8 | %
Change in valuation allowance |  | 25.9 | % | 16.0 | %
Other |  | 0.3 | % | (0.3) | %
|  | 0.0 | % | 0.00 | %
Components of the Company’s deferred tax assets as of March 31, 2021 and 2020 were as follows:
|  | Year Ended March 31,
|  | 2021 |  | 2020
Deferred tax assets |  |  |  |  |  |
Federal net operating loss carryforwards |  |  | 7,083 |  |  | 2,450
Foreign net operating loss carryforwards |  |  | 22,195 |  |  | 9,092
State net operating loss carryforwards |  |  | 2,358 |  |  | 1,054
Research & development credits |  |  | 787 |  |  | —
Property, plant and equipment |  |  | 5,068 |  |  | 5,499
Capitalized start-up costs |  |  | 1,597 |  |  | 1,748
Stock compensation |  |  | 4,838 |  |  | 2,526
Accrued expense |  |  | 739 |  |  | 341
Lease liability |  |  | 8,462 |  |  | 8,705
Total deferred tax assets |  |  | 53,127 |  |  | 31,415
Deferred tax liabilities |  |  |  |  |  |
Right of Use Asset |  |  | (13,090) |  |  | (13,998)
Other |  |  | (9) |  |  | (88)
Total deferred tax liabilities |  |  | (13,099) |  |  | (14,086)
Valuation Allowance |  |  | (40,028) |  |  | (17,329)
Net deferred tax assets |  |  | — |  |  | —
As of March 31, 2021, the Company had federal and foreign net operating loss carryforwards of approximately $33,731 and $116,815, respectively, which can be carried forward indefinitely. As of March 31, 2021, the Company had state net operating loss carryforwards of $37,311, which will begin to expire in 2039. As of March 31, 2021, the Company had federal and state research and development carryforwards of approximately $687 and $126, respectively, which will begin to expire in 2041 and 2036, respectively. Utilization of the U.S. federal and state net operating loss carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income and tax liabilities, respectively. The Company has not completed a study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation, due to the significant cost and complexity associated with such a study. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position. Changes in the valuation allowance for deferred tax assets during the years ended March 31, 2021 and 2020 related primarily to the increase in net operating loss carryforwards were as follows:
|  | Year Ended March 31,
|  | 2021 |  | 2020
Valuation allowance as of beginning of year |  | $ | 17,329 |  | $ | 9,396
Increases recorded to income tax provision |  |  | 22,624 |  | $ | 8,047
Increases recorded to income tax provision for equity |  | $ | 76 |  | $ | —
Decreases recorded to income tax provision for equity |  | $ | — |  | $ | (114)
Valuation allowance as of end of year |  |  | 40,028 |  | $ | 17,329
As of March 31, 2021 and 2020, the Company had not recorded any amounts for unrecognized tax benefits. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. As of March 31, 2021 and 2020, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the Company’s consolidated statements of operations and comprehensive loss. The Company files income tax returns in the United States, Massachusetts and the United Kingdom as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state and foreign jurisdictions, where applicable. There are currently no pending tax examinations. The Company is open to future tax examination in the U.S. under statute from 2018 to the present and in the United Kingdom from 2017 to the present. As of March 31, 2021 and 2020, income taxes on undistributed earnings of the Company’s subsidiary have not been provided for as the Company planned to indefinitely reinvest these amounts, had the ability to do so, and the cumulative undistributed foreign earnings were in an overall deficit.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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