STEWART DAVIES, chairman of Darlington Football Club and a senior partner in Haines Watts National Insolvency Practice, has 25 years experience of helping people in financial difficulties resulting from trading problems

Q) My business conducts inhouse research and development (R and D), which can be very costly and I am beginning to feel the financial strain of funding this work. Is there any financial support from the Government which can help me cover the costs of this?

A) The Government has R and D Tax Credits for all businesses in the UK. The R and D tax credit was first introduced in 2000, with a 150 per cent tax credit for small and mediumsized enterprises (SMEs), including a generous payable cash element worth up to 24 per cent of R and D spending for nonprofit makers.

In 2002, the scheme was extended to all companies with the introduction of a 125 per cent tax credit for large companies.

There is also financial support from the European Commission's Framework Programme. SMEs are actively encouraged to carry out research and development with the help of specialist organisations and the EC will pay the specialist organisation to do the high level R and D on their behalf.

The North-East is lucky enough to have a European National Contact Point. Beta Technology Limited, in Stockton, Teesside, is funded by the Government to provide free assistance to North-East companies.

Q) I have just started my own business and I am worried that I will miss out on VAT repayments unless I register.

However, I don't think my turnover will reach the minimum VAT registration threshold. What targets should I be aiming for and can you give me any advice to get the best out of the regulations and repayments available?

A) The current VAT registration threshold is set at £60,000. If your business turns over more than this amount, you must register for VAT and there are penalties for late registration. However, under certain circumstances, you can voluntarily VAT register, even if your turnover has not reached the VAT registration threshold.

There are a number of schemes running for small/start-up businesses to make it easier to manage VAT:

Flat rate Ifyour turnover is less than £187,500, you can pay your VAT as a percentage of your turnover. The flat rate percentage varies depending which industry you are in.

Annual accounting You can apply for this scheme if you have been VAT registered for less than a year and you don't expect your VAT exclusive turnover in the next 12 months to be more than £150,000 or you have been VAT registered for more than a year and you don't expect your VAT exclusive turnover in the next year to be more than A£600,000. This scheme allows you to make one VAT return in a year instead of the usual four. You will have to make interim payments based on your expected VAT liability and then at the end of the year you make a final balancing payment. The advantage of this is that businesses can manage their cash flow with the certainty of paying a fixed amount each month.

Cash accounting Ifyou are having cashflow problems and can't pay your VAT as a result, the cash accounting scheme could help.

You only pay VAT on the payments you receive from your customers, rather than the invoices you issue. It is ideal for businesses whose customers don't pay invoices immediately or if you have bad debts although it also means you can't reclaim VAT on purchases until you pay your suppliers.

If you decide to choose any of the above schemes, you must contact HM Revenue and Customs National Advice Service on 0845 010 9000.

Q) I am experiencing a downturn in my business and need to find a way to reduce my costs without damaging the quality of service to my clients. Which areas would you recommend I look at where this can best be done?

A) Look at reducing costs from external suppliers, eg telephone, electricity, gas. If you put one day aside to doing your research, then you can find a good deal. Remember, these organisations can be flexible with their charging and so the deal isn't right for you until they say no. Make sure they won't go any lower on price before you accept.

Other options you can look at include outsourcing tasks to external organisations that could do them cheaper. Look at streamlining internal processes.

This is usually where businesses make the most savings and that isn't just in terms of finance. Quite often, the streamlining of a process can save time as well, making your business more productive and freeing up capacity to take on more work.

Speak to your accountant or bank about the ways to reduce financial charges. An alternative option is to speculate to accumulate. When business dips slightly, it sometimes means that an aggressive promotional campaign is needed to boost sales and so spending a little could help in the future.