Office of Tax Simplification
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20 July 2010
The Chancellor George Osborne and Exchequer Secretary David Gauke today
established the Office of Tax Simplification (OTS).
The Chancellor has appointed a Board of tax experts who will be responsible
for leading the work of the OTS over the next year. The Board Members are
Michael Jack (Chairman) and John Whiting (Tax Director).
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 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 Government is committed to making the UK the most competitive country in
the G20 and to reducing the complexity in the tax system. Over the past decade,
the tax code doubled to more than 11,000 pages and the UK slipped from 7th to
13th in the World Economic Forum’s Global Competitiveness Index between 1997 and
2009-10.
This trend needs to be reversed, and the OTS is an important part of making
the tax system work better for the taxpayer.
Chancellor George Osborne said:
“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
families and businesses across the UK extremely complicated. We need to sort out
this mess.
"Two years ago I promised to create the Office of Tax Simplification. Today,
we’re delivering on that promise. With its independent, expert advice it will be
a permanent force for a simpler tax system.
“Simpler, more competitive taxes will help us show the world that Britain is
open for business.”
The Rt Hon Michael Jack, the Chair of the OTS, said:
"Entrepreneurship should never be stifled because of an overly complex tax
system. That's why I am delighted that the Government have committed themselves
to looking at ways to simplify the tax system, with an initial focus on small
businesses.
“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, the Tax Director of the OTS, said:
"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.
“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."
Notes
1. Full details about the Office and its work are available on its
website.
2. The establishment of an Office of Tax Simplification was proposed by Lord
Howe’s working party in the 2008 report Making Taxes Simpler. The June Budget
confirmed the Government’s intention to establish the Office.
3. The Office has been established as an independent Office of the Treasury.
Full details about the Office are set out in its
published framework document.
4. OTS reports will be published on the website
5. Rt Hon Michael Jack (Chair) and John Whiting (Tax Director) have been
appointed on an interim basis to lead the Office for the first year. Permanent
appointments will be made through full and open competition during 2011.
6. The Chair and Tax Director, and members of committees established to
support its work, will not be paid for their work for the Office. They will be
supported by a small secretariat, including tax experts from within HMRC and the
Treasury and externally funded secondees from the tax and legal professions.
7. The Rt Hon Michael Jack served as the Member of Parliament for Fylde
between 1987 and 2010, following a career in business. He served in a number of
ministerial posts, including as Financial Secretary to the Treasury from 1995 to
1997. During his time as Financial Secretary, he was responsible for
establishing the Tax Law Rewrite project, which was tasked with rewriting the
UK’s direct tax legislation in clearer and simpler language.
8. John Whiting was appointed as the first Tax Policy Director of the
Chartered Institute of Taxation (CIOT) in 2009, following a long career with
PricewaterhouseCoopers (PwC) where he was a tax partner for 25 years. John is a
past President of the CIOT and a regular speaker and commentator on a wide
variety of taxation topics, as well as being a member of the first-tier Tax
Tribunal. He was awarded the OBE in 2008 for services to the tax profession.
9. Tax Reliefs Review: The Office has been commissioned to review a list of
all reliefs, allowances and exemptions within the taxes and duties administered
by HM Revenue & Customs (HMRC) and identify those reliefs that should be
repealed or simplified to support the Government’s objective for a simpler tax
system. The Government is particularly interested in identifying reliefs that
are largely historic, not frequently used, create distortions in the tax system
or are complex for business or HMRC to administer. The Office has been asked to
produce an interim report by late Autumn 2010 and a final report with
recommendations to the Chancellor ahead of Budget 2011.
10. Small Business Tax Simplification Review, including IR35: The Office will
provide an initial report to the Chancellor by Budget 2011 that identifies areas
of the tax system that cause the most day-to-day complexity and uncertainty for
small businesses and recommends priority areas for simplification. Once the
Government has considered the initial report the Office will be asked to produce
specific recommendations on tax simplification for small businesses. As part of
the initial report, the Office will also explore alternative legislative
approaches to IR35. IR35 (the intermediaries legislation) is legislation
introduced in 2000 to counter avoidance of tax on employment income where
workers receive payments from a client via an intermediary (usually a personal
service company) and the relationship between the worker and the client would
otherwise be one of employment.
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