Improving UK tax competitiveness: a call for evidence from the OTS

The UK, as an open, trading economy needs to be competitive in many directions and its tax system is no exception – indeed, many would say it’s one of the most important features of the UK’s competitive ‘offering’. The chancellor has stated the government’s ambition for the UK to rank within the top five in the World Bank’s Doing business report within three years and he has asked the Office of Tax Simplification (OTS) to carry out a project to recommend ways of improving the competitiveness of the UK tax administration to contribute to that goal.

With our partnerships and employee benefits and expenses reports published in January, we have been spending some time in the last month or so developing our terms of reference for the competitiveness project and holding initial discussions with some businesses and individuals. That has led us to publish a short paper with the Budget, which we have termed Competitiveness review: Initial thoughts and call for evidence.

As always with our projects, we depend on input from those involved with the area we are looking at. So, although we indeed have some initial thoughts on what could make the UK’s tax administration more competitive, we want to hear from businesses and their advisers with their views – that will be the evidence we need. We are open for comments until 30 June and would particularly welcome invitations to discuss the issues raised by our project with groups during the next couple of months.

The focus of our project is the three main business taxes: corporation tax, payroll taxes and VAT. Although we have particular regard to the SME sector, we are interested in views and experience from all sizes of business. Also, the OTS is well aware that the majority of UK businesses are unincorporated, so income tax for unincorporated businesses is within our scope. Much of this will be building on our previous work in the area.

Our paper outlines the World Bank project, which depends on three ratings for a case study company: its total tax rate; the time it takes to comply with its main tax responsibilities; and the number of tax payments it makes. We discuss some points on those three main business taxes, which underpin the World Bank case study and some aspects of HMRC’s support. We then, in Chapter 3, pose some questions (though we do not want to constrain contributors), including:

• Which taxes are most difficult for you and why? Which do you find easiest?
• Over the past five years, has it become easier or harder to understand your tax obligations? Please give examples of good or bad changes.
• Over the past five years, have you had to spend more or less time and money complying with your tax obligations? It would be helpful to have specific examples.
• How easy or difficult do you find calculating and generally managing corporation tax, payroll taxes and VAT for your business? Any difficulties with other taxes?
• Are there any adjustments you make which you feel take up large amounts of time compared to the tax at stake? How would you improve matters?
• What has your experience been of contacting HMRC? Have you been able to reach an adviser, and when you have, have they been helpful? What about the website and guidance?
• What could HMRC do to improve any of the difficulties you have had with it?
• We are focusing on the UK’s tax system, but are interested in lessons from other countries. Do you have any experiences of other countries’ tax systems – positive or negative – to contribute to our project?

In summary, we’re interested in hearing about all aspects of dealing with the business tax system and in some ways the key question that (surely!) everyone will have a view on is our final one: if you could suggest any one way of simplifying the tax system to make it more competitive, what would it be?

Input to the competitiveness project can be sent by email. All the OTS papers and reports are on the OTS’s website.