12th April 2009 - Making Money

WITH A RAFT OF NEW LEGISLATION ABOUT TO COME INTO FORCE THAT COULD RADICALLY IMPACT YOUR BUSINESS, BEING PREPARED IS THE KEY TO A SMOOTH TRANSITION, SAYS Dave Howell

Each year a range of new legislation comes into law on April 6 and October 1. Last year nearly 60 pieces of regulation came into force. The impact that these new laws have on the small business sector should not be underestimated. Dealing with laws, regulations and other additional red tape has been an annual problem for many smaller enterprises. You can see the current crop of regulations that will come into force this year on the Business Link website at tinyurl.com/3p6bhr.

With the economic climate taking a downturn, business support organisations are urging the government to delay some of the legislation that is planned to alleviate the burden that this will place on small business. John Wright national chairman at the Federation of Small Businesses, says: “The cost of new laws to small businesses this year is huge. Small businesses should be concentrating on keeping jobs, rather than spending time and money carrying out paperwork. The FSB demands that the government reconsider all regulation that will cost small firms and help our small business community thrive. This is no time to hold small businesses up with extra costs and burdens. The government should wait until October to see if the economy is in a stronger position to cope with this added pressure.”

BE AWARE
New regulation and legislation is coming. The government’s annual legislation release has become a fact of business life for all enterprises. “The first thing a small business owner can do to comply with new legislation is, quite simply, to ensure that they know about it says Steve Sherlock, director of business insurance specialist Coverzones. “Recent research from the Institute of Directors showed that when a new piece of legislation is enacted, the vast proportion of SME owners are unaware that anything has changed. Raising your awareness is simply a question of being proactive and planning ahead - even something as easy as signing up for the regulation email alert service on the Business Link home page can make a difference.

It can seem as though you are fighting a relentless tide when any new legislation is considered. Rebecca Ferguson, a partner at law firm Davenport Lyons, advises: “Small businesses - and large ones - have had to embrace many new legislative and fiscal changes over the past few years. At times it has been hard even for professional advisers to keep abreast of the requirements facing their clients. For large businesses there is usually the safety net of in-house specialists and/or external advisers to turn to. For small businesses such advice is often not an option. The advice to them, therefore, is to keep reading the newspapers In order to keep track of new legislation as it is being adopted and implemented, but in particular to take advantage of the reams of information and assistance now available online. Most government departments have extensive guidance published on their websites that is specifically designed to aid small businesses and the self-employed. There is no better place to turn to for a bit of’self-help’ in these over- legislated times:’

With each year’s new raft of legislation, the devil is always in the detail. One example is the Health and Safety Offences Bill that has raised the maximum fines that could be levied against an offending business by 400 per cent to £20,000. Says Sheila Sheldon, director of European operations at Michael C Fina, a leading employee incentive, reward and recognition company: “While these fines could well be devastating to many businesses, prevention, as they say, is always better than the cure. Organisations will need to ensure not only that training is comprehensive and engaging so that all employees understand its now elevated importance, but also, more importantly, that staff then put their training into practice on an ongoing basis.” Smaller enterprises often ask if the costs of employing a consultancy firm to advise them of each year’s new legislation is money well spent. Andrew Pearce, managing director of telecoms company Powwownow, believes this all depends on how deep your pockets are: ”A lot depends on how much you wish to spend. There are various organisations that you can pay a retainer to for them to advise on things such as HR and health and safety. Even some banks have their own schemes, but this can be expensive. One clever way is to get so know one of the smaller accountancy practices, and because they are close to the ground and very practical they will often give you the most useful advice for relatively small fees and a lot of it for free.”

RED TAPE
The amount of red tape that businesses have to navigate has continued to grow, despite the government’s claim that the burden of red tape has reduced over the past few years. There does seem to be a stark mismatch between the perception of red tape by small businesses and the reality. “My personal view is that the burden on small businesses is still too great in many areas;’ says Lisa Richards, partner at Midlands accounting and business adviser Smith Cooper “This can mean that an owner- manger may find their attention distracted from the commercial aspects of their business. Iris not only the level of red tape, but also the frequency of changes under the guise of simplification, which causes the most difficulty for small businesses:’

Says Steve Sherlock: ‘Quite frankly, the government’s claims are based on statistical nonsense. Its stated ambition was to lower the cost of existing red tape from £14billion and it claims to have reduced that figure by £800million - can you name a single business that has noticed? For
each process that’s been taken away, the government’s managed to match it with the introduction of additional bureaucracy. The material volume of legislation has not changed, just shifted. The net impact is nil.”

There seems little desire to delay or modify the new regulations that are due to come into force shortly. Looking closely at the legislation that will impact on your enterprise could reveal some shocking results that may require radical changes to your business. Says Lisa Richards: “A key change for businesses, and one to pay close attention to, will be the change to filing deadlines for companies to tile their accounts at Companies House, This is being reduced from 10 months after the year-end down to nine months for private companies for accounting periods commencing on or after April 6, 2008. This, combined with an increase in late filing penalties up to a maximum of £1,500, which will be doubled if a company is late in two consecutive years, can make non-compliance very expensive for the small business".

It seems that the government-stated regulatory publishing schedule isn’t likely to be relaxed any time soon. Depending on your market sector, some new regulations may be irrelevant, with others having far- reaching consequences. Says Sheila Sheldon: “Businesses in sectors such as transportation, manufacturing, healthcare and construction, where the health and safety risks are higher than average, are going to be particularly affected by the latest changes in health and safety legislation. However, health and safety is increasingly regulated and stringent across all aspects of industry and is an area of paramount importance for businesses of all sizes. The threat of such increased fines should mean that installing a preventative reward and recognition scheme linked to staff health and safety compliance should be a priority for any business.

Planning for the implementation of any new piece of legislation Is sensible and cost-effective. No two businesses are the same, so carrying out an assessment with your advisers about which of the new pieces of legislation must be complied with is essential.

Don’t delay - act now.

Making Money