SME Expert Says £40K Chip Shop Fine is a ‘Brutal Reminder’ of an Unfair System

In response to the case, the Managing Director of Aurora Capital, a specialist in SME finance and support, has criticised what he sees as a system that fails to recognise the operational challenges faced by small business owners:

“This case is a brutal reminder of how unforgiving the system can be for small businesses. Even when owners think they’ve followed the rules, the cost of getting it wrong, or being left in the dark, can be enough to shut them down entirely.

Small firms don’t have compliance teams or legal departments, so they rely on clear guidance and fair warnings. Disproportionate punishments for honest mistakes erode trust and create fear, which is the opposite of what small businesses need in an already tough and uncertain environment.

This isn’t just about one chip shop, and is a stark warning for all small businesses. Fines must be fair and proportionate or one mistake could prove fatal. The current system seems to be set up to penalise and hold back our high streets, when they need to be nurtured and supported more than ever.”

The penalty, issued under the UK’s Right to Work legislation, forms part of an ongoing effort by the Home Office to crack down on illegal employment. Businesses found to have hired staff without the proper legal right to work in the UK can face fines of up to £60,000 per worker, depending on the circumstances.

While the government argues that such penalties are necessary to enforce immigration law, SME advocates say many small business owners lack the legal knowledge or HR infrastructure to confidently navigate the complex compliance landscape.

With the hospitality and retail sectors already grappling with staff shortages, rising costs, and economic uncertainty, critics argue that heavy-handed enforcement risks pushing struggling businesses over the edge—particularly when support and education are lacking.

The incident has reignited calls for the government to adopt a more proportionate, education-led approach to compliance in the SME sector. Business groups have long urged the Home Office to work more closely with small firms, offering clearer guidance and better access to tools that help them meet their legal obligations.

As high streets across the UK continue to recover from the shocks of the pandemic and rising inflation, this case serves as a sobering reminder of how a single regulatory misstep can threaten the survival of an entire business.

For more information on SME compliance and funding support, visit: Aurora Capital.