PAYE RTI News
RTI adds to cost burden for small firms
July 16, 2014
In research published by the Forum of Private Business into the cost of compliance, RTI was found to be a key contributor to the increased financial burden on small businesses. In line with findings from previous years, compliance with tax legislation represented the biggest cost for small firms, with 43% of businesses surveyed reporting that they had encountered issues with the end of the relaxed reporting arrangements for small businesses. RTI legislation was found to impact businesses particularly in terms of the time taken to understand, implement and comply with regulations.
The report also found that when comparing internal and external costs, “external costs of compliance are increasing at a faster rate than internal costs, with payroll costs again a key external cost for those businesses given an extension to RTI compliance.” Specific concerns related to RTI included dealing with bank holidays and other absences and the cost of hardware. One business did however state that RTI had improved over the last year.
Chief Executive at the FPB, Phil Orford MBE, said that the findings demonstrated that external costs have remained a significant part of the costs to small businesses, and attributed this to RTI, saying: “We believe this is 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.” HMRC estimates put the cost of RTI to businesses at £120m before the change was launched, however FPB research shows that the cost is more than double that at £311m.
The FPB research found that in spite of promises from Government to reduce the cost and time needed to keep up with regulatory changes, there was an above inflation rise of £713 in compliance costs for SMEs and micro businesses. Orford commented that “Government often underestimates the impact of regulation on businesses, so 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.”
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