In one instance, a company I worked for hired a consultant to do the application. This consultant basically interviewed everyone on the technical team and tried to coax us into saying every piece of functionality was novel and innovative, whether it was true or not. I came out of that meeting feeling so dirty that I wanted to shower for a couple of hours.
My other experiences were working in companies (or knowing of other people in other companies) who were applying for and getting SRED money where the R&D innovations were at best questionable.
As someone who works in tech, I want programs like SRED to work. On the other hand, being a taxpayer and seeing how some companies are getting SRED money for arguably undeserving R&D work makes me think SRED is a complete waste of taxpayer money.
This benefit needs to be abolished, as the number of tax dollars being sunk into it is ridiculous. For the few percent of businesses that might actual merit such a benefit, oh well. Compete in the market like everyone else without assistance. The difference between a deserving business and a business that will lie and twist words to save 15-35% on salaries is impossible to determine accurately. Too many liars and fraudsters have destroyed the system, so kill the program and nobody benefits.
It's why I advocate for a lower hard cap as well. With a hard cap, it's likely that the total amount paid out is well under $4B, which means we can then go on and address how we can better distribute funding and change the evaluation process to not be as restrictive.
All you are saying is true except the conclusion in the last sentence, which may be a valid point but doesn't follow from the other facts.
Some companies document everything and end up being rejected for a random formerly unknown minutia, whereas other companies document less, and ultimately get approved for a bad claim.
Anyone I've talked to who's even been close to the process (a claimant, a technical contact, an interviewee, an administrator) have had traumatic experiences with the process.
And in many cases there are web development or design agencies claiming and getting SRED, achieved purely by hiring consultants who know how to spin things.
To begin with under the definition of what the program considers claimable, in the strictest sense, most software work doesn't actually qualify, but the program is so poorly administered that most of them are able to successfully claim it anyways so they try, however you are always under the risk that your claim will be denied or clawed back.
Adding to this problem for startups, first time claimants have a much higher chance of being audited, as well as any time a claim increases significantly over the previous year (think high growth company). If an audit goes poorly enough you can also have previous years claims clawed back.
Then there is the time wasted in preparing and submitting, the pedantic time tracking that startups implement which is a drag on development teams in order to file these claims.
Finally, because the process is confusing and daunting enough most companies will hire a SR&ED consultant to file the claim for them where they will likely pay around 20% of the total claim.
In short, SR&ED is a great program for consultants to siphon money from tax payers but a terrible program for funding innovative startups.