The cost to businesses of switching to Real Time Information (RTI) is double that predicted by HMRC, according to research by the Forum for Private Businesses (FPB).
Prior to its launch, the Revenue estimated the impact of RTI would require £120m spend by small businesses, but a survey of 4,000 members of the FPB puts the total figure at close to £311m.
Robert Downes, FPB policy adviser, said: "Government number crunchers never seem to get their sums correct, so it's no wonder small firms are getting jumpy about the cost of pension auto-enrolment, which by its very nature is going to be hugely more expensive than RTI to set-up, deliver and also maintain."
The cost of compliance study by the FPB found that spending on tax compliance by firms has risen significantly since the study was last conducted in 2011.
"We believe this is largely down to RTI, and firms having to pay a payroll specialist to manage their employees' PAYE bills," said Downes.
"By contrast businesses are paying out slightly less on internal compliance managed in-house. The logic here seems to be to pay an expert to do a job they can no longer do themselves, for whatever reason that may be."