What SMEs Should Expect from a Funded IP Audit (And How It Impacts Your IP Contract Strategy)

Discover how a UK IPO-funded IP audit can help SMEs strengthen their IP contract strategy, identify risks, and maximise the value of their intellectual property.

For small and medium-sized enterprises (SMEs), intellectual property (IP) is often one of the most valuable yet under-managed business assets. Trade marks, designs, copyrights, and even trade secrets play a critical role in defining competitive advantage. However, without a clear understanding of what IP you hold and how it is protected, your business could be exposed to risks, lost opportunities, and undervalued assets.

That’s where an IP audit comes in. More specifically, SMEs in the UK can now access a UK Intellectual Property Office (UK IPO) funded IP audit — a low-cost, high-impact intervention that can help build the foundation of your IP strategy and shape your future IP contracts.

What is a UK IPO-Funded IP Audit?

A UK IPO-funded IP audit is a structured review of your business’s intellectual property assets, protection gaps, risks, and commercial potential. The audit is delivered by an approved IP specialist and is partially funded by the UK government.

Under the current scheme (2025/26), eligible SMEs can receive £2,250 in funding toward the cost of an IP audit, with a £750 contribution required from the business itself. The audit value is fixed at £3,000 including VAT.

What Does the IP Audit Involve?

The audit process is collaborative and tailored to each business. The IP advisor will typically:

• Identify IP assets – including registered trade marks, designs, copyrights, and any unregistered rights (e.g. know-how or trade secrets).
• Review existing IP contracts – such as licensing agreements, confidentiality clauses, employee IP clauses, and third-party supplier terms.
• Assess ownership and registration gaps – ensuring core IP is properly assigned and protected.
• Spot potential risks – including infringement exposure or inadequate contractual coverage.
• Evaluate commercialisation opportunities – such as licensing, franchising, or partnerships.
• Recommend strategic next steps – including registrations, updates to IP contracts, or enforcement actions.

How Does This Affect Your IP Contract Strategy?

An often-overlooked benefit of an IP audit is the insight it provides into your IP contract landscape. Here’s how it can enhance contract strategy:

• Clarifying ownership: If IP is not formally assigned to the business via appropriate contracts, it may not be legally owned by the company.
• Updating clauses: Many SMEs rely on outdated templates. IP audits can reveal missing or vague terms around use rights, sublicensing, and liability.
• Supporting growth plans: Contracts should align with how IP is intended to be used — whether through expansion, licensing, or sale.
• Preparing for funding or acquisition: Investors routinely assess IP ownership and protection. A post-audit contract review strengthens due diligence readiness.
• Identifying new risk areas: As legal and technological landscapes shift (e.g. AI-generated content), audits can help flag outdated contract provisions.

What Will You Receive?

A completed IP audit typically results in a detailed IP Audit Report, including:

• An inventory of your IP assets
• A summary of your IP-related contracts
• A risk and gap analysis
• Recommendations for legal, commercial, and contractual improvements
• A practical implementation roadmap

This report can guide legal strategy, investment planning, and day-to-day IP management.

Who Can Access the Scheme?

To qualify for a funded IP audit:

• You must be an SME based in the UK (under 250 employees and turnover below €50 million)
• You must apply through a regional business support partner (e.g. Innovate UK EDGE)
• You may choose your preferred audit provider from approved professionals

The full process generally takes 4–6 weeks, from application to the delivery of your final audit report.

Why SMEs Shouldn’t Miss This Opportunity

A funded IP audit offers significant value for a modest cost. It allows businesses to:

• Understand and document their IP portfolio
• Strengthen IP contracts and reduce legal ambiguity
• Avoid potential disputes or infringement issues
• Support monetisation or licensing strategies
• Prepare for investment, sale, or expansion

Crucially, it helps SMEs implement IP contract strategies that are commercially sound, legally compliant, and aligned with growth objectives. However, to fully realise these benefits and avoid costly oversights, it’s essential to engage legal professionals with expertise in intellectual property law and contract drafting. Their guidance ensures your audit findings are translated into enforceable, future-proof IP contracts tailored to your business needs.

By treating the audit not just as a compliance exercise but as a strategic tool, SMEs can better protect and leverage one of their most important business assets: intellectual property.