Clearview Midlands September 2014 - Issue 154 | Page 37

INDUSTRYNEWS

Cost of compliance continues
to rises for small firms, says FPB
Despite continued government promises
to reduce the amount of time and money
spent on keeping up to speed on regulation
changes, the average micro, small and
medium-sized employer in 2014 has seen
an above inflationary rise of £713 in their
annual compliance bill.
That’s according to research by the Forum
of Private Business (FSB) which puts the
total cost of compliance at more than £19.2
billion – a 4% increase compared to 2013.
Smaller businesses in particular have been
hit the hardest, with the compliance bill for
firms with fewer than nine employees being
the equivalent of £164 per employee – almost
seven times the cost for companies with 50 or
more workers.
The Forum research showed the amount
firms are paying to external contractors
was the major contributory factor for the
rise increasing by 6%, twice as fast as the
internal costs to the business. The employer
support organisation said this was most

likely down to costs associated with the end
of the SME extension to introducing Real
Time Information (the new HMRC payroll
process), auto enrolment and advice on sector
specific regulations.

‘2014 has seen an above
inflationary rise of £713 in
their annual compliance bill’
As in 2013 when the Forum did its last cost
of compliance study, taxation compliance
remained the single biggest outlay for small
firms, followed by employment law, with
health and safety third.
Surprisingly, time as opposed to cost was
seen as the main impact of the regulatory
changes. Almost 40 per cent of businesses
surveyed said the time needed to understand
and implement the various changes had the
most significant impact on their day-to-day
operations, costing firms a total of £38.85

billion in lost opportunities, up by almost £1
billion on 2013 (£984 million).
Commenting on the findings, Phil Orford
MBE, chief executive at 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