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RTI is largest cost of compliance for businesses

12th July 2013

The new real time information (RTI) process for calculating PAYE has been identified as one of the biggest drivers of costs to businesses, research by the Forum of Private Business (FPB) has found.

Small and medium sized enterprise (SMEs) are paying 11 per cent more to external providers of payroll and tax support compared with two years ago; most likely down to the introduction of RTI, the FPB said.

The average SME now spends substantially more on compliance costs compared with two years ago, with the total cost standing at £18.2 billion - an 8.5 per cent increase compared to 2011.

This comes despite falling health and safety costs, the FPB said, and the Government's ongoing drive to cut red-tape regulations for businesses.

The FPB's policy adviser, Robert Downes, said: "Our research shows little has changed in terms of what's costing small business 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 firms having to pay a payroll specialist to manage their employees' PAYE bills, but by contrast businesses 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," he said.