Calls for overhaul of UK tax system ‘long overdue’

The appeals from the Treasury Committee to scrutinise the UK Government’s tax system are “long overdue,” according to Katharine Arthur, head of private client at haysmacintyre.

The UK’s tax system is an obstruction to economic vitality, creating compliance burdens, confusion, and disincentives to work or grow a business, as stated by the cross-party Committee of MPs in a recent report.

The Committee’s conclusion is that the Chancellor’s choice to dissolve the Office of Tax Simplification (OTS), an independent body that provides counsel on tax simplification, runs the risk of conveying that it is not a priority for the Government.

Harriett Baldwin, MP and chair of the Treasury Committee, said: “Disbanding the office established to champion tax simplification risks signalling the Government is not serious about the task at hand.

“Action needs to be taken, and public scrutiny of Government efforts is vital. That’s why we’re calling for the Government to report to our committee each year on the success of the Treasury’s tax simplification efforts.”

Arthur echoes this view and states that closing the OTS looks like another “ill-conceived decision”.

“Leaving aside the revolving door of disastrous tax changes last year, the Government has made seemingly little progress towards simplifying the system.”

“Now it’s time to see whether the Government is ready to act,” Arthur adds.

Two amendments issued by committee

Two amendments have been tabled by the committee members. The objective behind these amendments is to either maintain the office or to compel the Treasury to report its approach to simplify new and existing taxes directly to the committee.

Arthur said the Treasury Committee’s efforts to bring the Government and Jeremy Hunt to account and demand action to create an efficient tax system system will be a “sigh of relief for taxpayers and advisers alike.”

“Now it’s time to see whether the Government is ready to act,” Arthur states.

According to the report, there are more than 1,180 distinct tax reliefs available, along with several ‘cliff edges’ scattered throughout the tax system, including the tax-free childcare threshold and the VAT threshold for small businesses.

“If the last year in tax has taught us anything, it is that confusion does not breed confidence and that we are at a point where the system is buckling under its own weight, reform is nigh,” Arthur said.