October 2009 - Will the govt. and regulators just give SMEs a break?

A consistent theme in surveys of small and medium sized enterprises (SMEs) over the past few years is the excessive burden they face from regulation and red tape. It usually scores 3rd in a list of barriers to growth after economic conditions and difficulty in raising finance.

A Federation of Small Business survey showed that an average SME spends 7 hours every week coping with red tape; and a Federation of Private Business survey revealed that the cost to SMEs of compliance was £9.3 billion each year and an average firm spent 34 hours per month dealing with regulatory matters.

With so many SMEs struggling in the present economic climate, it is essential that the Government deals urgently with reducing the regulatory burden on the SME sector. Given the importance of SMEs to the UK economy, this should be a key strategy to any economic recovery plan.

Whilst some of the red tape comes from UK Government initiatives, most originates in the EU. Parliament however does still have scope to determine how EU Directives are translated into UK Legislation. Then there is the question of how regulation is implemented on the ground. It often transpires that an EU Directive that is supposed to be applied uniformly across Europe is regulated much more strictly in the UK than in other European States. This directly affects the competitiveness of the UK economy.

Regulation is a necessary element of a modern economy. It is right that there are rules to protect health and safety, employees and consumers, and that certain industry sectors (such as financial services, food production and construction) have their own set of rules, but these must be implemented fairly and consistently, and proper help and guidance given to SMEs to help them comply.

Some regulations are so complex that firms need to employ experts just to advise on how to comply. Often different regulators, or arms of government, conflict with each other – Fire Officers for example insist that a door is kept closed whereas Health & Safety Officers insist it is kept open.

Another area of concern is that ‘strict liability’ is usually applied by the regulations – it is not a defence to explain that this was a one-off breach and you generally comply: either you breached the regulations or you didn’t. We have acted for many clients that have stringent systems in place to ensure compliance but a simple mistake by an employee caused a breach that led to prosecution. It should be a defence in most regulations that the firm had reasonable systems in place and had cause to believe they were working.

Our plea to the Government is to take immediate action to ensure that Red Tape is kept to a minimum and regulation is imposed fairly, proportionately and consistently. Real steps should be taken by Government to help SMEs deal with regulations and simple plain-English advice given on exactly what they need to do to comply.

If you need help in dealing with the various regulators, contact Cousins Business law here or call Cousins Business Law on 0845 003 5639.

All businesses will shortly be receiving notification of the revised rateable value of the premises they occupy.

The rateable value is the starting point for calculating your business rates liability for your premises. The other part of the calculation is the Uniform Business Rate. The Government has yet to announce the figure for Uniform Business Rate and whether there will be any transitional relief to avoid the shock of a sudden increase in business rates.

The new ratings will come into effect on 1st April 2010 and may result in higher business rates liabilities for businesses as the valuation exercise which was undertaking in order to calculate the new ratings is based on rental values on 1st April 2008.

As soon as you receive notification of the new Rateable Value for your premises, you should consider whether it might be appropriate to appeal against the assessment when it comes into effect in April. A local Chartered Surveyor should be able to advise you on your chances of success and most work on a ‘no win, no fee’ basis so that you only have to pay them a fee if the appeal is successful.

Having a business dispute go to court, whether it’s with a member of staff, a supplier or customer, must be every business owner’s dread. In a tough economic climate there tends to be less tolerance of mistakes and increased stress created by financial pressures. Some would say money worries even encourage some unscrupulous souls to join the compensation culture and look to ‘sue’ those around who that fail to deliver.

Going to Court is a difficult and costly process for any business, but of course it is not the only way to tackle the problem.

Over the next few ezines we’ll explore the pros and cons of a number of forms of Alternative Dispute Resolution and indicate where they might be most suitable. This month let’s consider mediation, perhaps the most common forms of ADR and see how it compares with taking your case to court.

With mediation the process is confidential, ‘without prejudice’, flexible, and only binding if the parties agree. The mediator is a trained professional facilitator, skilled in identifying the strengths and weaknesses of each party’s case, and in moving the parties towards a settlement.

Going to Court does deliver finality, with the judgment binding on both parties. The same can be true in mediation, where the parties agree at the outset how an agreement will be formed and whether or not they will be bound by it. The crucial difference in mediation however is that there is no judgement. Instead the mediator’s job is to bring the parties to a consensual agreement.

In court cases all relevant documents have to be disclosed and witnesses can be called upon to give written evidence or be summoned to attend court. This is not the case with mediation where the parties (and sometimes their lawyers) meet with the mediator and are given an opportunity to put their side of the case and state what they want by way of resolution.

Perhaps one of the main advantages of the court process is the power of the courts – to grant an injunction to prevent or enforce certain actions, and to order that costs are paid by the party deemed to be ‘in the wrong’.

Mediation is a much less draconian approach. Article continues on the Cousins Business Law website.

Next month we look at arbitration and adjudication, considering their merits for the construction industry and other disputes.

Subscription

Cousins Business Law Update is published monthly.  An archive of back issues is held on our website – here.

If you no longer wish to receive Business Law Update you can unsubscribe here.

©2009 Cousins Business Law. All Rights Reserved. No unauthorised copying, extraction or other use is allowed except with our prior written permission.