.png)
.png)
The Office of Tax Simplification has been established by Chancellor of the Exchequer George Osborne and Exchequer Secretary David Gauke.
‘Two years ago I promised to create the Office of Tax Simplification’, said Mr Osborne. ‘Today, we’re delivering on that promise. With its independent, expert advice it will be a permanent force for a simpler tax system.’
A board of tax experts will be responsible for leading the work of the office over the next year. The board will be chaired by the Rt Hon Michael Jack, and John Whiting will be its tax director.
The office will draw on external expertise from the tax and legal profession to focus on specific areas of complexity in the tax system and provide additional advice.
The aim of the office is to identify areas where complexities in the tax system for both businesses and individual taxpayers can be reduced. Its initial reviews will focus on:
- tax reliefs, particularly those which are largely historic, not frequently used, create distortions in the tax system or are complex for business or HMRC to administer; and
- small business tax simplification, to include IR35.
The initial findings on reliefs will be published in late autumn and those on small business tax by the 2011 Budget.
The Rt Hon Michael Jack said, ‘Simplification in a complex world is a real challenge, but it's one that has to be addressed if the tax system is not to hinder the economy's ability to grow.’
John Whiting said he had ‘long argued that we need a simpler tax system in the UK, so I'm delighted to be given the opportunity to take forward the Government's commitment in that direction’.
He added that ‘a truly simple tax system for all is probably impossible, but working towards a simpler system will help all who deal with it: taxpayers, especially the unrepresented, tax advisers and tax authorities’.
Welcoming the creation of the Office of Tax Simplification, Vincent Oratore, president of the CIOT, said:
‘This new body could play a crucial role in making our tax system simpler, more certain and more transparent. The CIOT has long called for simplification of the UK’s tax rules, and argued that a new body needs to be set up to review our existing stock of tax laws and their effectiveness.’
Mr Oratore is pleased that John Whiting is the first tax director of the OTS, as ‘John has a record second to none in explaining our labyrinthine tax system in an understandable way, and in working up the sorts of reforms that the system needs’.
He went on: ‘Simpler tax laws would mean an easing of the administrative burden on business, individual taxpayers – especially the unrepresented – and tax collectors.
'They would make the tax system more transparent and more comprehensible, and therefore more likely to command public and business confidence. They would also mean fewer loopholes and distortions, leading to fewer unintended consequences and fewer opportunities for tax avoidance.’
However, he warned that ‘there is also a pressing need for improvements in the parliamentary process for scrutinising new and existing tax laws’, adding that the institute ‘will be continuing to press for improvements in this area, including the setting up of a joint committee on taxation.’
Anneli Collins, head of tax policy, at KPMG said it would be ‘no mean feat’ to simplify the legislation ‘as there are layers upon layers of tax rules to consider and even the smallest change to a single area runs a risk of unintended consequences somewhere else’.
She said that business is very keen for tax reform but added ‘what will be crucial in this process is that the reforms are comprehensive and that business has a chance to consider all possible options.
'Now is the time for radical thinking, the time to ask just what tax rules could be scrapped in favour of what changes elsewhere. Rearranging the deckchairs won’t do it. But a truly radical approach stands a chance of success.’
