The report, by mid-tier firm PKF, revealed there were low confidence and awareness levels amongst SME employers on a wide rage of issues including the Human Rights Act and staff stress.
SMEs also studied the controversial IR35 tax rules, which only one quarter of employers are aware of, with one eighth of them taking action of some kind.
One in five respondents said they were not confident their business would stand up to Inland Revenue scrutiny.
Of employers surveyed, almost one third said they were not fully conversant with the latest PAYE and NIC regulations, and 34% regard managing the records required for the annual P11D return as ‘tedious and time consuming.’
But one of the greatest concerns picked out by the survey was recruitment. Finding the right staff continues to prove onerous with just 16% saying they were finding it straightforward to enlist the right personnel.
‘The results paint a dismal message of low confidence, low awareness and poor preparation for new regulations,’ said PKF chairman John Wosner.
And Wosner reckons tackling poor skill levels should be a key priority for the government.
‘These are a major barrier to the success of SMEs,’ he said.
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