Crunch time looming for small businesses

Automatic enrolment into a workplace pension is gathering momentum, as thousands of small businesses now work towards their compliance deadlines, says Matthew Mitten of Enrolsme.

A lot has been made of the success so far of automatic enrolment (AE) and there is plenty to be positive about, but with only 3% of the UK’s businesses having staged, there is a long way to go before we can crack open the champagne.

Time is ticking away, and the last minute scramble to comply seems almost inevitable, placing unimaginable strain on advisers and providers alike. Accountants should be putting AE on the agenda for every client meeting this year. Accountants are generally good planners; whereas, many of their clients are unlikely to be so efficient.

Accountants should be putting AE on the agenda for every client meeting this year. Accountants are generally good planners; whereas, many of their clients are unlikely to be so efficient. You only have to look at a typical January scenario, with thousands of accountants rushed off their feet – filing year-end information for clients who have, typically, left it to the last minute.

Fines are a strong incentive to meet the deadline, but at £400 it is unlikely to break the bank; a bit like the £100 slap on the wrist you get for submitting your tax return after 31 January. However, more worryingly The Pensions Regulator (TPR) will insist a business backdates the employer and employee contributions for those who are late – a much stiffer financial penalty. In addition, businesses with more than four employees could be fined £500 per day. This will undoubtedly get their attention.

The failure to comply could have another unforeseen repercussion. If a business is seen as not doing the right thing by their employees, it could find itself at the centre of headlines on social media and in the press. No business wants that kind of publicity.

Read Matt Mitten’s full article on accounting web, by clicking here.