As the UK’s unemployment figures escalate to 1.64 million, the highest level since 1997, it is glaringly evident that support for small businesses must be stepped up. With 4.8 million* SMEs registered in Britain, job roles should be aplenty – but too much red tape is preventing them from taking on more staff, and ultimately being successful. The AAT, the leading professional body for accounting staff, is encouraging the government to cut through the bureaucracy to give SMEs a real chance to thrive.

An estimated 500,000** people start up new businesses each year, so the less red tape they have to battle through the better. They must currently file returns for Income Tax, National Insurance, VAT, PAYE and Corporation Tax. With the pressure of running a business, deadlines can easily fall off the radar and employers could face crippling penalties. Late submissions of VAT returns face a surcharge of 15 per cent per quarter of unpaid VAT, which amounts to a massive 60 per cent APR annually. For small to medium enterprises, adhering to all tax regulations is just the tip of the iceberg.

Rob Alder, AAT’s Business Development Manager, said: “Even a recession is not discouraging people in starting up a business. However, statistics show that 25 per cent will fail their first year*** and for many, the reasons boil down to excessive rules and regulations imposed upon them. If these barriers are reduced, not only will SMEs be likely to employ more people but they will have better odds of survival.

“The AAT has 2,805 self employed Members in Practice, who in turn have a total of 274,633 clients – many of which are small businesses which require accountancy services. If these enterprises cannot flourish, that will have a massive impact on our members. We urge the next party that wins the general election to ensure the success of SMEs is a priority for the next few years.”

Other regulations include filing accounts to Companies House, registering under the Data Protection Act, keeping on top of Working Time Regulations, legal responsibilities to employees, drafting a health and safety policy, assessing the risks within a workplace and in some cases, putting in place money laundering controls. In order to protect their enterprise, SMEs must also purchase business insurance to cover employers’ liability, public liability, product liability, property and equipment, business interruption, key personnel, income and legal action. Not all are compulsory, but the wider the protection, the less risk there is to the business. With all of these hurdles to jump over, it’s vital that entrepreneurs are not disheartened from taking a risk.  

•    Statistic from the Federation of Small Businesses *
•    Statistic from the Federation of Small Businesses **
•    Statistic from Barclays Bank***