Policy paper

OTS everyday tax evaluation paper

OTS publishes an update on reports about simplifying everyday tax for smaller businesses and individuals.

Documents

OTS simplifying tax evaluation note

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Details

The OTS has published an evaluation update paper following its reviews about simplifying everyday tax for smaller businesses and taxation and life events, each published in 2019.

The OTS has carried out its work in the light of the changes in the wider context since the two reports were conducted, in particular recognising the significance of the government’s Tax Administration Strategy, HMRC’s Tax Administration Framework Review and the Single Customer Account.

The OTS considers that in future all new tax policies must take account of digital requirements, both in the public and private sector – as a fundamental part of the policy-making process.

This paper focuses on raising awareness and education about tax, helping those starting out in business and issues affecting small companies. Other areas of interest explored in the two reports will be covered in separate notes to be published early in 2022.

Separately, the OTS welcomes the October 2021 Budget announcement that top-up payments will be introduced to address the difference in outcomes between those using net pay and relief at source pension schemes, which was highlighted in the review of taxation and life events.

Tax awareness and education

The OTS considers that, alongside the HMRC information on GOV.UK, more should be done to actively present tax information to those who need it, for example through third party ‘engagers’ or intermediaries such as conveyancers.

Many of those forming new businesses would also benefit from basic business tax training being provided in the context of relevant vocational courses in universities and further education colleges.

Expanding on their ‘Tax Facts’ programme for schools, HMRC could also look at other ways to engage young people. For example, the communication that 16 year olds currently receive to give them their National Insurance number could also contain an invitation to log on and set up a Single Customer Account.

Help for those starting out in business

The OTS remains concerned that not enough is being done to help those looking to start up in business. In particular people need basic tax information before registering for tax.

HMRC have made it clear that they intend to use the Tax Administration Framework Review as an opportunity to explore much needed reform to various administration processes, including tax registration, and the OTS welcomes this.

The OTS welcomes HMRC’s work to improve the ‘Budget Payment Plan’ and the supporting funding announced in the Autumn 2021 Spending Review.

Issues affecting small companies

The OTS welcomes long-term work between Companies House and HMRC to look at progressing the ambition of companies only needing to file one set of accounts annually with government.

Notes for editors

The OTS is the independent adviser to government on tax simplification, challenging tax complexity to help all users of the tax system; it does not implement changes - these are a matter for government and for Parliament.

The OTS works to improve the experience of all who interact with the tax system. It aims to reduce the administrative burden - which is what people encounter in practice - as well as simplifying the rules. Simplification of the technical and administrative aspects of tax are each important, both to taxpayers and HMRC.

The OTS has previously published an evaluation update on its 2017 VAT review in October 2019, an evaluation and stocktake note on its 2017 Corporation Tax review and 2018 Accounting depreciation or capital allowances review in July 2020 and an evaluation paper on its 2018 review on HMRC Guidance in March 2021.

Press Enquiries only please contact Julie Gillespie, OTS Press Officer Phone 03000 585028

Published 16 December 2021