Abstract

The burden of tax compliance is claimed by businesses to be an onerous task. In the time since the pioneering 'Hidden Costs of Taxation' study was published by Cedric Sandford in 1973, the field has developed to the extent that there now exists a widespread research and professional interest in the magnitude, determinants and consequences of tax compliance costs. This study uses recent UK survey data (1,449 usable questionnaires) to test the influence of eight hypothesised variables, identified from prior literature, on VAT compliance costs. We extend the work of previous researchers by reporting separate results for (i) mandatory or core VAT compliance costs, and (ii) total VAT compliance costs. The findings from the study suggest that increased compliance costs are associated, inter alia, with increased turnover, newly registered businesses, increased complexity and higher perceived psychological costs.