Thursday, 22 July 2010

Government sets up OTS to simplify Taxes

The Government has announced that it has set up the Office of Tax Simplification with the view to simplify taxes in the UK.

The tax system in the UK is so complex that businesses have been complaining that it is a liability to the UK economy.

The OTS was welcomed by business groups and accountants, on two conditions: one that it is genuinely independent, the other that ministers are prepared to act.

The OTS is to be manned by a group of tax experts, lawyers and civil servants, to identify problem taxes and reliefs and recommend solutions. The OTS will deliver two reviews before the next Budget; one will be on small business tax simplification, including the IR35 on the tax treatment of contractors, the second on the system of tax reliefs.

The Government says that, despite no official commitment of ministers to the OTS, close public interest will be enough to create politicla pressure on the government to respond to recommendations.

(Our comment: The tax system is crying not just for simplification of the rules but for a radical overhaul, but we have heard this before! In our opinion, simplification starts from the HMRC, putting their house in order, making their operations more competent and efficient (so that it doesn't take a month to open a letter)and accountable to the taxpayer for their errors. Usually, politicians change things round for their own benefit; for example, I am wondering, could it be that they want to simplify tax rules as an excuse to introduce a general ("blanket") anti-avoidance rule? Can I remind my readers that the Emergency Budget last month mentions anti-avoidance several times?)

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