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Chancellor tackles tax maze

20 July 2010

A new body is to tackle the entire UK tax system with the aim of making it simpler and less of a "spaghetti bowl", the Chancellor, George Osborne, announced today.

The Office for Tax Simplification (OTS) will seek to cut the burden on business and attract foreign investment

Mr Osborne said that Britain had "one of the most complex and opaque tax codes in the world", and his dream was that people "might actually understand the tax laws which they were being asked to comply with".

The OTS is to be chaired by Michael Jack, a former Conservative Treasury Minister, and will have as its director John Whiting, formerly of PricewaterhouseCoopers and now tax director at the Chartered Institute of Taxation. Both posts will be unpaid.

First steps

It will begin by conducting two reviews. One will examine the 400 different tax reliefs, allowances and exemptions in the system to see how they can be streamlined; the other will look for ways to simplify the tax system for small businesses. However tax credits will be outwith its remit as these are regarded as part of the benefits system.

The OTS will only look at taxes collected by HMRC. It will not concern itself with the rates at which tax is levied.

Treasury minister David Gauke said: "The Office for Tax Simplification will provide important advice that will help inform us in making the right reforms to the tax system that will help to pave the way to bringing more international business to the UK, which will give our economy the boost it so urgently needs in the years ahead."

The OTS's remit covers UK taxes and duties administered by HM Revenue and Customs, but it will not deal with tax credits or taxes administered by other bodies nor will it have any influence on setting tax rates.

Business leaders generally welcomed the idea, but Richard Baron of the Institute of Directors said that the new body would be judged by its results.

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