PAYE-NIC Compliance Costs:Empirical Evidence From The UK SME Economy

The principles of business taxation are governed by the Adam Smith’s fourth canon of taxation : ‘every tax ought to be so contrived as both to take out and keep out of the pockets of the people as little as possible, over and above what it brings into the treasury of the state’. However, he identified a number of ways in which taxes may fail to meet these requirements and concluded that ‘taxes are frequently so much more burdensome to the people than they are beneficial to the sovereign’. In modern literature these burdens of taxation are classified into three groups: the excess burden of taxation (the impediment of taxation on production), administrative costs (the burden to the public sector of administering taxes), and compliance costs (the costs incurred by the private sector in complying with the tax system)....