IN TERMS OF

FINANCIAL INCENTIVES , HALF OF THE

RESPONDENTS SAY ADDITIONAL

GOVERNMENT GRANTS WOULD

ENCOURAGE THEM TO

INNOVATE . firms have seen more and more cuts to the government support in the past year , from scrapping the Help to Grow : Digital Scheme to downscaling support for Growth Hubs .

April ’ s cuts to the R & D Tax Relief Scheme for SMEs – a scheme that had been very successful in encouraging start-ups and driving innovation previously – have also impacted small firms ’ ability to invest in innovation .

FSB research shows 64 % of small firms which applied for R & D tax relief in the last three years have improved cashflow for their business , while over a half ( 55 %) increased their investment in R & D .

Two-fifths have used the tax credits to increase their investment in future projects , and more than a third of recipients say it has led them to undertaking projects that would not have happened otherwise .

Government cuts to R & D tax relief , even for R & D intensive firms , are self-defeating , especially when countries such as France and the US are going in the opposite direction .

We have also been hearing first-hand from small businesses about HMRC ’ s unnecessarily harsh clampdown on R & D tax relief recipients , forcing them to spend hours or even days to dig up evidence for approved claims dated back not only months but also years .

Clamping down on genuine abuses of the system is one thing , but HMRC causing needless stress and anxiety for firms which have claimed in good faith often on the advice of expert intermediaries is another . There needs to be a review on HMRC ’ s compliance activities and , while ensuring that it accepts genuine cases for relief , it should not be heavy-handed , aggressive or inconsistent .

An entrepreneur-led approach

Close to a third ( 28 %) of small firms want help with implementing new ideas or modernising their business . More than a quarter ( 26 %) want

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Intelligent SME . tech