Small business owners' attitudes on VAT compliance in the UK

The aim of this study is to gain an understanding of the factors involved i n value added tax (VAT) compliance. It draws on previously acquired social psychological knowledge in respect of income tax compliance. Three groups o f business people were interviewed (10 restaurant proprietors, nine floorin g/furnishing proprietors and eight builders who are registered for VAT purp oses). The findings show that there are a number of similarities with incom e tax compliance, with factors such as equity and sanctions emerging. Of so me importance would also seem to be the psychological phenomenon of mental accounting. Participants vary in the way they perceive the VAT monies colle cted. Some view it as belonging to the business (or themselves), whilst oth ers perceive it as money belonging to H M Customs and Excise. It is possibl e that the different ways of mentally accounting for VAT money influence co mpliance. Crown Copyright (C) 2001 Published by Elsevier Science B.V. All r ights reserved.