Tax on small barrels (4)
I believe the answer is:
vats
'barrels' is the definition.
'tax on small' is the wordplay.
'tax' becomes 'VAT' (British sales tax).
'on' means one lot of letters go next to another.
'small' becomes 's' (abbreviation - e.g. clothes size).
'vat'+'s'='VATS'
(Other definitions for vats that I've seen before include "Large open vessels for storing liquids" , "Brewing vessels" , "Large tubs" , "Large casks" , "Tanks" .)