RTI drives rising compliance costs

The total cost of compliance for small and medium-sized enterprises (SMEs) now stands at more than £18.2 billion, according to research by the Forum of Private Business.

Its Referendum 204 report: the cost of compliance survey, which questioned 4,000 forum members, found that SMEs now pay 11% more to external providers of payroll and tax support compared with two years ago, which the organisation has largely attributed to the introduction of real-time information (RTI) reporting.

The research showed that taxation compliance remained the single biggest outlay for small employers, followed by employment law, and health and safety.

Robert Downes, policy adviser at the Forum of Private Business, said: “Our research shows little has changed in terms of what’s costing small employers the most for compliance costs.

“The stand-out surprise though has to be the huge increase in spend on external contractors.

“We believe this is largely down to RTI, and organisations having to pay a payroll specialist to manage their employees’ pay-as-you-earn (PAYE) bills. But, by contrast, employers are paying out slightly less on internal compliance managed in-house.

“The logic here seems to be to pay an expert to do a job they can no longer do themselves, for whatever reason that may be.”