Keeping up with ever-changing regulations and compliance requirements can be daunting for small businesses, but it is essential for avoiding costly consequences. Non-compliance with regulations can result in penalties such as fines, profit skimming, and even imprisonment. Moreover, the effects of non-compliance may extend to the entire parent company, causing irreparable damage to reputation and trust among business partners and customers.
For instance, the recent changes in tax-avoidance legislation have posed a significant challenge for private-sector employers. In addition, effective from April 2021, private-sector employers have to follow the same rules as the public sector concerning IR35, also known as the ‘off-payroll working rules.’ This regulation leaves private-sector employers with a difficult choice: continue to treat contractors as contractors and risk a hefty fine if HMRC takes a different view or treat them as employees with the additional costs and responsibilities involved.
To minimize the risk of being non-compliant, businesses should adopt internal controls such as appropriate organizational policies and procedures, regular risk assessments, internal audits, and independent statutory audits and process updates. In addition, maintaining accurate documentation of all these processes is crucial to provide proof of compliance in case of regulatory audits.
In conclusion, while keeping up with ever-changing regulations and compliance requirements can be challenging for small businesses, it is crucial to ensure compliance to avoid costly penalties and loss of reputation and trust among business partners and customers. In addition, adopting internal controls and maintaining accurate documentation can help minimize the risk of being non-compliant.