What’s the biggest challenge facing the UK’s Small businesses?
Is it getting finance from the banks to fund expansion plans, or could it simply be the difficulty of competing with bigger and more established businesses? Well, according to new research from the Forum of Private Business it’s compliance: compliance not just with tax laws, but also employment laws and Health and Safety regulations. Most accountants have been aware for some time that many SMEs have been struggling to cope with the growing burden of compliance: what they probably didn’t really appreciate is the staggering scale and cost of the problem.
The Forum of Private Business found that the UK’s small firms have faced soaring compliance costs over the last few years.
The research found that SMEs have experienced above-inflationary increases to their annual compliance bills. SMEs are paying £713 more in 2014, with the total cost of compliance now totalling £19.2 billion, which equates to a 4% increase on 2013. The smallest firms, that is those with fewer than 9 employees, appear to have been hit the hardest, with compliance bills working out at roughly £164 per employee – that’s 7 times the cost paid by firms with in excess of 50 employees.
The Forum of Private Business’ research found that the principal contributory factor for the increase in compliance costs was payments to external contractors which have increased twice as quickly as internal business costs. However, in terms of actual costs incurred, the Forum’s research showed that the biggest single outlay for SMEs was still tax compliance, followed by employment law and health and safety. The biggest concern for the researchers was that the regulatory changes were impacting ambitious small businesses. SMEs were having to spend more time trying to understand and implement the raft of new compliance regulations, rather than concentrating on their core business. The forum believes the compliance changes create unnecessary barriers to everyday operations, and could be costing SMEs up to £38.85 billion in missed opportunities.
Commenting on the new study, Phil Orford MBE, chief executive of the Forum of Private Business, said:
“Our research shows little has changed in terms of what’s costing small business the most for compliance costs, with external costs continuing to be the main contributory factor.”
“We believe this is largely down to the introduction of RTI, following the end of the small business extension, and firms having to pay a payroll specialist to manage their employees’ PAYE bills. In addition, we have seen the increasing need to employ specialists to advise ahead of pensions auto-enrolment.”
Is your business wasting unnecessary time dealing with compliance issues? If it is, then why not speak to the accountants at Steven Glicher? We can assist you with all aspects of corporation tax compliance and planning. For further information about corporation tax self-assessment or any other small business tax advice.
For further information call Steven Glicher accountants on 0161 485 8007.