UK Plans To Simplify Tax Rules

July 20, 2010 Taxation in UK

George Osborne, MP (Shadow Chancellor of the Exchequer)The UK Government is set to create a new think-tank charged with investigating and recommending reform changes to the nation’s tax system, which is currently deemed too complex to be optimally efficient.

On July 20th the Chancellor of the Exchequer George Osborne is scheduled to officially announce the creation of a national Office for Tax Simplification (OTS). The OTS will be charged with investigating and reporting on issues within the UK tax system, with the ultimate aim of forming recommendations reforming and simplifying the country’s tax laws. John Whiting, former tax partner of PricewaterhouseCoopers , and Michael Jack, ex-financial secretary to the Treasury, will head the new office. The OTS will not be given any legislative powers to alter, introduce or remove tax policies, and will only provide the Government with opinions and recommendations on how to cost-effectively instate a simpler tax system and fulfill the Coalition Government’s promise of the UK taxes “more competitive, simpler, greener and fairer.”

Within its first 12 months of operation, the OTS is expected to submit a report on possible reforms to national tax breaks and business taxation. According to George Osborne, the initial investigation into Britain’s 400 various business tax breaks has the potential to greatly reduce compliance costs for UK based businesses.

The UK Institute of Directors (IoD) has already commented on the establishment of the Office, saying it “warmly welcomes” the possibility of the OTS. Richard Baron, Head of Taxation at the Institute of Directors, stated that the UK tax code is currently on of the most complex among advanced economies and that “…its time to put tax simplification ahead of the endless tweaks that have been designed to appease special interests and Revenue zealots.” He added that, while the development of the OTS is a positive step, the Office “…must have teeth” in order to be effective. He proposed that the OTS needs to be completely independent, report publicly on all of its recomendations, and the Government Ministers need to openly explain their reasoning if they choose to reject an OTS proposal.

Photo by Ewan McIntosh