Red tape proves bad for business

Small businesses fall foul of regulations more easily

Small businesses in Scotland are losing more time to red tape than firms in the UK as a whole, according to a report.

The national average for dealing with administration on regulations, legislation and tax currently stands at 12 weeks.

But research by LexisNexis found the corresponding figure north of the border is 13 weeks.

Among the Scottish respondents, 81% identified health and safety regulations as the most time-consuming.

Businesses could highlight more than one area and tax legislation, 69%, and data protection, 53%, were also identified as particularly time-consuming.

Michael Thewlis, head of IRS Research, said the report identified a major area of concern.

He said: "An alarming finding of our small business monitor conducted for LexisNexis was the number of people who cited, indeed specifically mentioned, the issue of red tape as a reason why they would not recommend someone to start their own business."

Hardworking small businesses can easily fall foul of the law if they do not keep track of their regulatory requirements Jemma Macfadyen LexisNexis

Jemma Macfadyen of LexisNexis said companies have to constantly keep on top of developments, with 22 UK regulations coming into force this year alone.

She said: "Hardworking small businesses can easily fall foul of the law if they do not keep track of their regulatory requirements.

"As employees and customers become increasingly litigious, and the UK Government and Scottish Parliament impose more and more legislation, individual directors are becoming increasingly likely to face law suits and even prosecution for failing to comply.

"The current options for the sources of advice are either professional consultants, which some small firms cannot afford, or surfing the internet, which can be a hit-or-miss affair."

LexisNexis, in partnership with Cobweb Information, have launched a new web-based service, Red Tape Buster, to give businesses access to legal advice and compliance checklists.

Almost 600 small business across the UK were interviewed for the research.