Azets: Scottish SMEs hit with £42m compliance costs thanks to audit threshold stagnation
Scottish SMEs have been hit with an estimated £42 million of unnecessary compliance costs – an average of £7m per year - due to the audit exemption threshold failing to rise in line with inflation since it was introduced in 2016, according to Donald Boyd, an SME growth expert from accountancy and business advisory firm Azets.
The additional costs have denied Scottish businesses the opportunity to employ 220 staff on an average salary of £31,500 during those six years, or to invest in productivity. The currnt audit exemption threshold of £10.2m was introduced in 2016 and if it had risen in line with inflation would be around £14m nowadays.
Azets estimates that around 460 SMEs in Scotland with a turnover of between £10m-£14m have been impacted by the stagnant threshold. Across the UK 7,975 companies would be exempt from audit costs if the threshold had risen with the RPI.
Donald Boyd, partner at Azets, said: “By freezing the audit exemption threshold for turnover, even more pressure is being heaped on Scottish SMEs, many of which are fighting just to keep the lights on.
“It is our job to support and champion SMEs, particularly through periods of economic crisis. These unnecessary compliance costs have prevented SMEs from investing in their staff and in their businesses and should be amended as soon as possible.”