PAYE-NIC compliance costs: Empirical evidence from the UK SME economy

This article reports on the findings of an empirical investigation, supported by the Leverhulme Trust and the Federation of Small Businesses (FSB), into the compliance costs incurred by UK firms in administering PAYE. The article starts with a review of the literature and reports on other studies focusing on the impact of compliance costs on business. This is followed by an introduction to the objectives of this research project, the methodology employed and more specifically the statistical analysis (sample = 431) of the results and discussion of key research findings. In conclusion, the article presents the policy implications of the research and outlines a set of recommendations and tax initiatives that will contribute to the amelioration of the disproportionate burden of PAYE-NIC related compliance costs borne by the small business sector in the UK. Copyright © 2005 SAGE Publications (London, Thousand Oaks and New Delhi).