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Contractors face higher tax compliance costs, AAT says

The Association of Accounting Technicians says that small business owners and other self-employed Brits pay too high a cost when it comes to tax compliance.

So it’s true that sole traders like contractors might take home more pay than a traditional employee for certain jobs, but that doesn’t mean that they’re not subject to higher compliance costs – or at least that’s what the AAT says. In fact, a new survey by the accounting experts says that SMEs – which include sole traders and self-employed Brits – end up bearing the brunt of tax compliance within the country.

The AAT’s figures, if they’re accurate, are particularly damning. Large-scale firms in the UK pay around £100 million towards tax compliance every year according to the study, yet SMEs spend £9.9 billion on the same thing on an annual basis. That’s an eye-watering gap if you ask me – and likely if you ask anyone else – and the AAT can’t seem to figure out why smaller-scale business are paying such a massive discrepancy.

The AAT says that the tax system needs to be simplified in order to make it more equitable. If you ask me, it’s going to take more than a little bit of tinkering with tax regulations in order to remove the ridiculous £10 billion tax burden that SMEs are labouring under, despite the fact that they contribute so much to the recovering economy. I’d love to see something down about this where larger firms take the brunt of the burden instead of the other way around – and I’m very much interested in finding out why we can’t go after major multinationals that do business in the UK yet are permitted to pay nearly nothing in corporation tax every year by using completely transparent tax avoidance schemes.

Why do companies like Amazon, Starbucks and Google get off Scot-free while contractors and sole traders are being crushed under the weight of this ridiculously large tax burden? Well, short answer is of course that these companies are rich and powerful and can afford to buy their way out of nearly anything. If contract workers had the same amount of political clout as multinationals,  you better believe the tables would be turned right quick!


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