Punishing small businesses in the autumn statement is a mistake

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In these difficult economic times, beleaguered businesses need to feel that they have the government’s support (Reuters)

The autumn statement represents a tricky balancing act for the chancellor, Jeremy Hunt, who must weigh the need for spending cuts and tax rises to reduce the nation’s fiscal deficit, against the dangers of discouraging investment and business growth in the UK, particularly in a post-Brexit world.

Cutting the small or medium-sized enterprise (SME) research and development tax relief scheme would provide savings for the Treasury, but it could also be deemed somewhat contradictory, given the scheme’s encouragement of small business innovation and growth, together with the accompanying impression it gives of the UK as a hub for investment in science and technology.

If there is a temptation to target the scheme, it is hoped that it would be reformed rather than abandoned altogether. Such reforms should reduce the potential for fraud and incentivise the most effective spending.