The Forum of Private Business (FPB) has found that small firms are spending more time and money on complying with regulations, despite the Government's attempts to reduce legislation.
In a recent survey, 84% of Forum members reported an increased in time spent complying with legislation since 2009, when the organisation's 'cost of compliance' survey took place.

And costs have increased too, with 67% being forced to spend more money on external consultants to help them avoid legal pitfalls.

Based on data provided by members who took part in the survey, the total annual costs of compliance for the UK's SMEs is £16.8bn - £11bn in internal costs and £5.8bn for hiring external contractors. This translates to £14,200 per firm on average, said the FPB.

The Forum's head of campaigns Jane Bennett said: "Despite several government initiatives - some more effective than others - it is clear that we are heading in the wrong direction as far as reducing regulation for small business owners is concerned. We simply want these measures to work properly and for the voices of the UK's business owners to be clearly heard."

According to the survey, tax regulation was deemed to be the most costly area of red tape, leaving smaller employers with a bill of £5.1bn per year. Employment law was second at £4.2bn, followed by health and safety law at £3.8bn.

The Government launched its 'red tape challenge' website in April, giving the public and small businesses a chance to have their say on regulations affecting their everyday lives.

The Regulatory Policy Committee, which was established to ensure legislators take full account of the impact of regulation in small businesses, is set to publish a paper on the effectiveness of Whitehall's regulatory impact assessments in March 2012.