The Forum said that small and medium-sized businesses in the UK have seen their annual compliance bill rise £713 in 2014, with the total cost of business compliance exceeding £19.2 billion – up 4 per cent on 2013.
Smaller businesses are facing disproportionate costs, with the average compliance bill for firms with fewer than nine employees equivalent to £164 per employee – almost seven times the cost for companies with 50 or more workers.
External costs were the biggest contributor to rising bills, with payments to external contractors up 6 per cent since the Forum's 2013 survey. The Forum attributed this to the end of the SME extension for the introduction of Real Time Information (RTI) and auto-enrolment.
“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,” said Phil Orford MBE, chief executive at the Forum of Private Business.
“In addition we have seen the increasing need to employ specialists to advise ahead of pensions auto-enrolment.”
The Forum said the time needed to understand and implement regulatory changes is having the biggest impact on business, costing firms a total of £38.85 billion in lost opportunities, up by almost £1 billion on 2013 (£984 million).
Impact on hospitality
Ian Cass, business development manager at the Forum of Private Business, told BigHospitality the hospitality industry has been hit particularly hard by regulatory changes such as RTI and auto-enrolment because of its high proportion of temporary and seasonal staff.
“Understanding the right to request flexible working is also problematic for businesses such as pubs, event caterers, hotels and restaurants who operate unsociable hours, making it more likely that employees will request flexible hours,” he said.
“As such firms have a delicate balancing act to undertake between being supportive to the needs of a single employee and on the other hand the needs of the business as well as being seen to be fair to the other employees.”
One sector specific area of compliance that will have cost implications for the hospitality industry in the near future is food allergy labelling, with new regulations due to come into force at the end of the year.
The Forum has issued guidance on these regulations to help operators stay ahead of the curve when it comes to compliance.
Increases in compliance costs come despite repeated government promises to reduce the time and monetary costs involved with meeting regulatory changes.
In January, the David Cameron told a Federation of Small Businesses conference the government plans to drop 3,000 pieces of ‘unnecessary bureaucracy’ which were getting in the way of small business success.
Last week, the Department for Culture, Media and Sport laid a draft Legislative Reform Order which seeks to deregulate the playing of live and recorded music between 08:00-23:00 before an audience of up to 500 people in licensed premises, with a potentially positive impact for pubs.
However, the Forum said it believes the government is still underestimating the impact of regulatory changes on small businesses. The HMRC estimated the cost of RTI at £120m, for example, when it is in fact more like £311m.
“It’s no wonder small firms are getting increasingly concerned about the cost of pensions auto-enrolment, which by its very nature is going to be hugely more expensive than RTI to set-up, deliver, and also maintain,” said Orford.