So what exactly do we mean by compliance? We might defer to the Fair Tax Mark’s definition and say that, in terms of tax, compliance is “paying the right amount of tax (but no more) in the right place at the right time, where ‘right’ means that the economic substance of the transaction accords with the declaration made for taxation purposes”.
The challenge for contractors, freelancers and small businesses is that compliance can be costly. According to research by AAT, SMEs in the UK spend around £10bn annually on compliance. Given that in the UK, 95% of businesses have fewer than 10 employees and 75% have no employees at all, it seems that a considerable burden of compliance is placed on the part of the business population who are least equipped to handle it.
