You don’t always see the cost straight away.

And we live in a very short-termist, profit at all costs, speed & convenience focused world.

So it’s very hard to miss things when you’re in the thick of it, moving at a million miles per hour!

Compliance problems can creep up, and they rarely shout out loud. They whisper, quietly, over time, chipping away at your business health, your peace of mind, and eventually, your profits.

For many small and medium-sized business owners, compliance feels like a box-ticking exercise. A reluctant necessity. Something you deal with after the important stuff, like chasing leads or paying staff, but these delays come at a price.

And unfortunately, it’s a price many only realise after the damage is done.

So let’s talk honestly about the real cost of ignoring compliance and why doing it right, from the start, is one of the smartest financial decisions you can make.

Just like most business decisions, time spent in planning, is seldom, if ever, wasted.

What do we mean by “compliance”?

It’s not just about sending your accounts to Companies House once a year or filing your Confirmation Statement.

Compliance covers everything your business is legally and financially expected to do, from filing tax returns and paying VAT, to meeting HMRC’s digital record-keeping standards, to staying on the right side of employment and pension rules.

Director roles and responsibilities for Limited Companies are regularly something owners of SME’s miss.

It includes:

• Statutory accounts and corporation tax returns
• PAYE, pensions, and Real Time Information submissions
• VAT registration, returns, and Making Tax Digital (MTD)
• Sector-specific rules (like CIS in construction, or FCA in financial services)
• Deadlines, disclosures, and record-keeping

Miss one step or do it late or wrong and you’ve got a compliance issue on your hands.

The compliance mindset trap

A lot of business owners fall into one of three camps:

1. “I’ll deal with it later.”
2. “It’s fine for now, it hasn’t caused problems yet.”
3. “I can plead ignorance and solve it after the fact.”

All could feel rational in the short term. After all, you’re busy. Clients are waiting. Growth needs attention. But like ignoring a leaky roof because it’s not raining right now, compliance gaps have a habit of turning small cracks into big damage. And it tends to happen at the worst possible time!

So what’s the real cost of letting things slide?

1. Fines and penalties (yes, even accidental ones)

HMRC and Companies House won’t wait for your business to “get around to it.” or just let it slide after the fact.

Miss a filing deadline, submit inaccurate figures, or forget to register for something, and you could face:

• Automatic late penalties
• Interest on unpaid tax (which build over time)
• Investigations, enquiries, or audits
• Loss of certain business statuses (like VAT registration or tax exemptions)

Even small fines add up, especially if they repeat over time, and that’s before you factor in the below.

2. Wasted time and energy fixing avoidable issues

Trying to put things right after the fact is almost always harder, more stressful, and more expensive than getting them right in the first place.

There is a real cost attached to accumulating lots of knowledge at a point in time, vs. building it up over time completing little tasks, often.

You may have to:

• Recreate financial records from scratch, or repeat everything because you didn’t do it right the first time, E.g. VAT treatment on transactions.
• Chase missing receipts or payroll details, E.g. Reaching out to suppliers or employees after relationships may have deteriorated.
• Pay for emergency advice or resubmission. E.g. It’s often much harder and more expensive to find someone available immediately for big tasks.
• Waste hours you could be using to grow your business. This is often the biggest long term cost and most annoying factor for business owners.

It’s like trying to rebuild a house after it’s already flooded, instead of building up flood defences over time. You’ll get there, but it’s messy, disruptive, slow, more difficult, and more expensive.

3. Cash flow uncertainty

Compliance gaps often go hand-in-hand with financial blind spots or listening to the wrong advice from the wrong places or people.

If your records aren’t clean and up to date, or you trust the wrong advice, you might not:

• Know what tax is due or when
• Be confident about how much cash you can reinvest
• Spot mistakes in supplier payments or payroll
• Be able to plan and execute effectively on future business decisions

The result? You hesitate. You underspend. You overpay. You hold back from hiring or launching because you’re unsure what’s safe. I.e. You make the wrong decisions at the wrong time, or no decision when you needed to make one.

4. Stress, worry, and sleepless nights

Not everything in business is logical, transactional, or rational. Fear of the unknown, or getting emotionally attached or anxious about uncertainty is very real. Especially when you know in yourself, that you’ve been winging it for a while.

It all catches up with you eventually!

We’ve worked with business owners who were constantly worried about “that HMRC letter” arriving. Or the one email from their accountant that might say, “We’ve found a problem.”

We’ve certainly come across those who’ve left it so long, and have so much work to resolve a HMRC investigation, that they cannot find anyone willing to do it in a short space of time. They also do not have the time or competence to do it themselves, and are concerned it will ultimately paralyse or destroy their business.

This takes a large mental toll. It makes decisions harder. It makes running your business less enjoyable.

5. Reputational damage and lost opportunities

If you’re late on payroll, get flagged by HMRC, or have overdue returns on your public Companies House record, word can get out. Suppliers notice. Employees talk. New clients check. Existing clients pick up on the chaos.

You may also be blocked from certain contracts, tenders, or funding opportunities if your compliance record isn’t clean, and you can’t pass straightforward credit checks or due diligence.

This is especially true if taking on loans or investment, as lenders and investors will ask for recent paperwork, and lots of it. So if it’s not there, it can lead to very real delays in bringing cash into the business. Often at very much needed times.

It’s not just about following rules and being compliant. It’s about being seen as a business people can trust, and interact and exchange quickly and effectively with.

Why is this more common in small and growing businesses?

Because the pressure is high and the resources are limited. You’re wearing ten different hats and spinning ten different plates all at the same time. You’re chasing cash. You’re chasing clients and prospects. You’re moving fast.

It’s easy to assume “I’ll fix this when we’re bigger.” or when you have more resources. But the irony is: you’ll grow faster and more safely if you sort it now.

As with many things in life, there will never be the perfectly right time to do it.

Compliance is like a good foundation on your home. You don’t notice it when it’s solid and working as it should. But if it’s broken and unstable, everything else starts to wobble: your plans, your confidence, your growth. Your business goals and success.

Common compliance mistakes we see (and fix)

Here are just a few issues that cross our desk regularly:

• Missing VAT registration, even though the turnover passed the threshold months ago
• Director loans drawn improperly, triggering unexpected tax bills
• Late or missed payroll submissions, risking penalties and unhappy staff
• CIS deductions handled incorrectly, leaving money on the table or causing fines
• Accounts not filed on time, damaging credit scores and limiting funding options
• Bookkeeping conducted incorrectly for a long time, and not having the resources to correct it
• Lending and investment decisions delayed, from weeks, to months, to occasionally years, whilst due diligence paperwork gets compiled retrospectively

Most of these could and should have been prevented by putting the right systems and support in place, at the right time.

How do you stay on top of compliance without drowning in admin?

We understand. You didn’t start a business to spend your life on tax codes and filing deadlines.

Here are a few tips which can potentially help:

1. Don’t DIY, especially on the critical stuff

Use an accountant who doesn’t just tick boxes but helps you understand what’s due, when, and why. Someone who keeps an eye on thresholds, red flags, and future risks, not just what’s due this week.

2. Embrace simple tech

Modern accounting tools like Xero, Dext, and BrightPay can automate much of the heavy lifting, reducing errors, saving time, and creating real-time visibility.

3. Have regular financial check-ins

Treat compliance like a regular health check. It’s not a once-a-year panic. It’s an ongoing conversation, and it’s easier when it’s built into your monthly or quarterly rhythm. The best accounting relationships are those with open and honest communication, with questions and answers from both sides.

Compliance is the quiet protector and silent hero of your business

It isn’t glamorous. It doesn’t make the headlines. But it keeps your business safe, clean, and confident. It underpins the most successful organisations.

It allows you to:

• Say yes to new opportunities, without hesitation
• Make decisions backed by real data
• Sleep at night knowing the financial “what ifs” are covered
• Present a professional, trustworthy image to investors, clients, lenders, and your team

Most importantly, it frees you up to focus on the bigger strategic picture and vision, so you’re not constantly looking over your shoulder, wondering what might bite you next.

Final thought

Putting off compliance is like skipping oil changes for your car. It works – until it doesn’t!

Then the bill is bigger, the damage deeper, and the disruption worse.

That’s where a professional Chartered Accountant can help.

At RedBrick, we help businesses build their financial home on solid foundations, quietly, consistently, without drama. So they can focus on what really matters.

Whether you need help fixing old issues, staying on top of today’s responsibilities, or preparing for what’s next, we’re here.

For a better home for your business finances, email: hello@redbrickaccounting.com