Cost of compliance for UK SMEs has rocketed

The Forum of Private Business stated the cost of compliance for SMEs in the UK is continuing to soar. Even though the Government has made promises to reduce the amount of money and time that businesses have to spend on compliance measures, over the past two years costs for SMEs have still increased according to the Forum of Private Business.

The FPB estimates that the SMEs spend about £18.2bn in compliance measures every year which almost a nine percent increased when compared to figures from 2011. Additional research from the Forum reveals that firms are paying about 11% more too external providers for tax and payroll support when compared to 2011.

According to the FPB, this is most likely due to the fact that the HMRC payroll process called Real Time Information was introduced making all firms with employees change the way their payroll process worked. In the past two years since the FPB conducted its compliance study it round that the largest outlay for SMEs in the UK is still taxation compliance followed by employment law and then by safety and health compliance.

Robert Downes the Forum’s policy advisor stated that their research shows that not much has been changed when it comes to the costs of compliance for small businesses and their cots but it is surprising that their they are now spending more on contractors from outside of their business to meet compliance matters.

He went on to say that they believe this is due to the RTI and firms are now choosing to have a specialist handle their employee’s payrolls so that they do not have to worry about compliance issues. Therefore, it is actually costing them more because they have to hire a contractor in order to remain in compliance.