New body to oversee simplification of UK tax laws welcomed

News - Tax

Written by Ray Clancy

Wednesday, 28 July 2010 10:08

The decision by the UK government to simplify the country’s tax system has been welcomed by finance professionals.

The Chancellor George Osborne and Exchequer Secretary David Gauke have set up the Office of Tax Simplification (OTS) with a board of tax experts who will be responsible for leading the work of the OTS over the next year.

Their responsibilities will be to identify areas where complexities in the tax system for both businesses and individual taxpayers can be reduced and to publish their findings for the Chancellor to consider ahead of his next Budget.

The OTS will undertake two initial reviews over the coming year. They will focus on tax reliefs and small business tax simplification (including IR35). The OTS will publish the initial findings from their work on reliefs in late autumn and on small business tax by the 2011 Budget.

The OTS will also draw on external expertise from the tax and legal profession over the coming months. These experts will focus on specific areas of complexity in the tax system and provide additional advice to the OTS.

‘The previous Government took a complex tax system and made it even worse. A decade of meddling and intervening has made the tax affairs of millions of people and businesses across the UK extremely complicated. We need to sort out this mess. Simpler, more competitive taxes will help us show the world that Britain is open for business,’ said Osborne.

The new chairman of the OTS, Michael Jack, said that entrepreneurship should never be stifled because of an overly complex tax system. ‘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,’ he added.

The Chartered Institute of Taxation (CIOT) tax policy director John Whiting has been appointed as OTS tax director to work one day a week. ‘I’ve 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 said.

‘In our complex world 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,’ he added.

CIOT president Vincent Oratore said the OTS could play a crucial role in making the tax system simpler, more certain and more transparent. ‘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,’ he explained.

He added that there is also a pressing need for improvements in the parliamentary process for scrutinising new and existing tax laws. ‘The CIOT will be continuing to press for improvements in this area, including the setting up of a Joint Committee on Taxation,’ he added.