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 for Editors
Full details about the Office and its work are available on its website.
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.
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.
OTS reports will be published on the website.
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.
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.
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.
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.
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.
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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