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UK tax law is not yet en route to becoming straightforward and the coalition government must take the lead in easing the framework’s complicated nature, according to an influential cross-party group of MPs.
In its newly published report on last month’s Budget, the Treasury select committee suggests that the measures announced by Chancellor George Osborne ‘may not lead to a net simplification’ of the country’s tax set-up, but it also recognises that ‘it is very difficult to simplify an already complex system’.
While the committee acknowledges that ‘the increase of complexity has certainly been slowed’, it also warns that of ‘much more work is needed on the tax system before it can be said to be moving towards simplification’. And although the work of the Office of Tax Simplification should be applauded, ‘the primary duty for securing simplification should lie with the government in its design and administration of the tax system’.
The MPs’ document also stresses that, contrary to media reports, Mr Osborne ‘is not proposing to merge National Insurance and income tax’ but is in fact merely considering the ‘alignment of the operational aspects of these two revenue streams’ – a change that is ‘a modest one’ and ‘falls well short of the more fundamental merger that had been anticipated in the press in advance of the Budget speech’.
The committee goes on to welcome the expansion of HMRC's administrative burden reduction target to include wider taxpayer compliance costs.
‘It is crucially important that the wider costs placed on the economy by the tax system are taken into account, and we will monitor the commitment that any increase in administrative burdens in the tax system will be met by equal reductions elsewhere in the tax system,’ states the report, which raises concerns about making online tax filing mandatory without appropriate allowances being made for the ‘significant minority’ that does not have reliable access to the internet.
‘We agree with the Minister for the Cabinet Office [Francis Maude], who has stated that “Every single government service must be available to everyone, no matter if they are online or not”, and expect that principle to be respected in the forthcoming consultation document,’ says the select committee.
