All private companies in the UK are required to comply with the government regulations. Small businesses are more at a loss over this for being bootstrapped. If they don’t get a nod from the FCA, the money they invested would be washed down into the drain.
Cost of compliance
Individual companies can’t see the big picture. Had they been able to, they’d know the total cost of compliance goes past £18 billion. That’s right! A survey done by the Forum of Private Businesses in the UK revealed that companies in the UK with less than ten employees splurge almost £164 on each employee.
Help from an expert
To reduce the growing cost of compliance, private firms in the UK need expert’s help. You might doubt this and think the company itself can handle all compliance related issues, but the truth is it can’t.
The regulations may change any time. The impact of regulatory changes on businesses, especially small businesses has been detrimental. The survey mentioned above revealed that nearly 40% businesses don’t find enough time to understand the regulations and ended up losing opportunities The total cost of the lost opportunities was £38 billion.
The main compliance categories include taxation compliance, employment law compliance, health and safety compliance, data protection compliance and competition law compliance.
Tax schemes are labyrinthine in most countries, not exclusively in the United Kingdom. Health and safety regulations are easy to follow. The outlay may be a headache for small businesses, though. Let’s have a detailed look at each of these categories.
The HM Revenue and Customs or HMRC looks after tax compliance related affairs. Most large companies have in-house accountants, who face HMRC queries. Small business owners face HMRC queries themselves.
In the case of a check, an HMRC rep may visit your home or place of business. Or, you might get called instead. Refusing to visit or to send information might result in paying a penalty unless you produce a reasonable excuse such as being seriously ill, etc.
Things that HMRC check include taxes paid by the small business owner, the self-assessment tax return, company tax return, business accounts and calculations of tax, PAYE records and return.
Employment law compliance
The problem for most employers is they don’t keep up with the constant changes in this domain, and miss out on new legislations for small businesses. This might result in non-compliance.
Regarding the laws, the British Chamber of Commerce (BCC) applauded the laws as the building block to create a flexible labour market. However, some criticised the policy to let bad employers off the hook so easily by lowering the payout for unfair dismissals. Hence, there are mixed reactions.
The existing legislations include a voluntary contract between the employees and the employer to ensure employees have a stake in the company and receive tax-free shares as benefits. The legislations also include employment tribunal fees, and inadmissible status of evidence of negotiations before a termination in an unfair dismissal claim.
Health and safety compliance
The legislation presupposes employers have duties to their employees. Compliance with the legislation involves assessing several risks. There are service providers who are specialised in risk assessment, reviewing the health and safety policy and etc. They can audit a company’s health and safety arrangements, and point out the loopholes.
After getting the audit report and the safety recommendations, employers implement the measures, deemed necessary by the auditor. They do that by delivering the duty to the most competent people, setting up emergency procedures, and offer training to employees.
Data protection compliance
A small business has the right to protect all the data that it considers essential for its functioning. But it needs to comply with the law, which requires it to make sure that it is collecting only those information, which it needs for a specific business related purpose.
The company is legally compelled to protect information about its clients, employees and suppliers. Apart from protection, it also needs to ensure all the information are relevant and updated. The best thing for a company to do is to know how much data he is allowed to hold and for how long. He also needs to allow other see the information upon request.
Competition law compliance
The purpose of the law is to save businesses and consumers from anti-competitive behaviour. By complying with the law, a business sends out the message that it believes in healthy competition.
Every small business needs to avoid anti-competitive agreements, abuse of power that stems from occupying dominant positions and cartels such as fixing price, limiting the volume of production, and engaging in rigging.
Complying with the law is not easy. The technicalities are slippery slopes. The risk is mostly palpable for partnership companies. It’s wise for a business to seek legal consultation to make sure its business model is competitive enough.
Small business owners are always busy. To make sure they are complying with the law, they first need to understand the law better. That part is time-consuming and risky as well. Seeking professional assistance would be the best option for them.