Tax Update (July 2010)

Plans to simplify Britain's tax system.

The Government has just established the Office of Tax Simplification (OTS) and first to be reviewed will be tax reliefs and small business tax simplification (including IR35).

Michael Jack, who served as financial secretary to the Treasury in John Major's government, and John Whiting, a former tax partner at PricewaterhouseCoopers, have been appointed as an unpaid two-man board, based in the Treasury, for the next 12 months.

They will 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.

Shadow Treasury chief secretary Liam Byrne told the Commons: "Simplification is a good thing."

But he warned that the creation of a new Office for Tax Simplification (OTS) sounded "more like an attempt to grab headlines than real evidence of a push to improve legislation".

Answering an urgent question on 20 July 2010, Treasury Exchequer Secretary David Gauke said a complex tax system created "uncertainty and instability", sending the wrong signal to businesses wanting to invest in Britain.

"A complex tax system also means that businesses end up spending more time dealing with their tax affairs and less time on their core business," he added.

The OTS will be asked first to study around 400 tax reliefs to see how many can be removed.

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