The increasing volume of the tax handbooks is often cited as a sign that the tax system is becoming more complex, but is that accurate? While the handbooks have added a great deal of useful additional material over the years, not all of that material is legislation. The total page count of the 2010/11 edition of the Yellow and Orange Tax Handbooks runs to 17,795 pages which exceeds that of India and would appear to be the longest tax code in the world. However, excluding duplicated and repealed legislation, non-statutory materials and footnotes, the page count runs to a more modest 5,430 pages.
2009 saw the UK tax code exceed that of India and, at 11,520 pages, become the longest in the world. Many will remember when the Yellow Tax Handbooks were a much more manageable two (or even one!) volumes, instead of the five volumes that there are today. The increasing length of legislation is often cited as a sign that the tax system is becoming more complex, but is that accurate?
In his seminal Hardman lecture, Adam Broke OBE (former President of the CIOT) pointed to length of tax legislation, the language used, the drafting style and the diversity of taxes as all factors in the complexity of our tax code. The interim report on the review of tax reliefs published by the Office of Tax Simplification (OTS) noted that volume of legislation does not necessarily lead to complexity. Reflecting Adam’s point, longer legislation can be clearer and easier to use. The Tax Law Rewrite Project had this in mind: the rewritten acts, which amount to 2,413 pages of substantive legislation, have significantly increased the length of legislation. However, the revised format and use of plain English has made the legislation more logical and readable, at least for those new to tax.
Throughout our reviews on small business, tax reliefs, and pensioner taxation, we have regularly been told that the length was an issue. So we decided to do a small exercise to try to answer the question: what is the real length of the UK tax code?
After all, the handbooks have added a great deal of useful additional material over the years, which is beneficial, but is not legislation. So we have tried to determine the length of unduplicated substantive and administrative provisions in the UK’s tax code (excluding national insurance and tax credits). The 2010/11 handbooks were assessed, and we also consider the length of successive Finance Acts since FA 1965.
To get things started the length of the legislation was estimated by looking at the amount of legislation (including footnotes but excluding repealed legislation) on each page, measured in quarter pages. The actual number of pages in Parts 1a, 1b, 1c, 2 and 3 of the Yellow Book and Parts 1 and 2 of the Orange Book 2010/11 (ignoring blank pages at the start and end and introductory pages), is as follows:
However in addition to primary and statutory material, the handbooks contain other material, eg, indices, list of contents, statements of practice, extra statutory concessions etc.
Excluding the non-statutory material the figures become:
This shows us that 62.8% of the total handbooks represent UK primary and secondary tax legislation.
However, both handbooks contain repealed legislation, transitional and commencement provisions and duplicated provisions, such as Provisional Collection of Taxes Act 1968 s 1. There is also duplicated and revoked legislation included within secondary legislation.
Also included are the various Finance Acts. Where these provisions, as is often the case, comprise amendments to, and insertions into, other Acts which have been amended, only the standalone legal propositions have been included. Duplication goes further still with Rewrite Acts which amounts to 773 pages.
So, a further revision, now excluding duplicated and repealed legislation, produces the following figures:
This table shows that just 39.1% of the books represents unduplicated substantive and administrative law.
Footnotes for each section are also an issue, the length of which varies widely from one line to a page or more, so the exact length of this reference material is difficult to estimate. A pragmatic 10% of the Yellow Book and 20% of the Orange Book figures has been estimated to be non-statutory material, as life is too short to calculate the length precisely.
Adjusting for these notes produces figures of:
Consequently, on this reasonable measure the actual substantive direct and indirect UK tax legislation is about 6,102 pages or 34.3% of the total. Eliminating the duplicated CTA/ITTOIA & ITA material would bring the total down further – to 5,430 pages.
The OTS also considered the length of successive Finance Acts since FA 1965 (which introduced both corporation tax and capital gains tax).
The most obvious trend is the increase in the length of recent Finance Acts. This reflects various major reforms (eg, the introduction of R&D tax credits and the vast amounts of new Pensions rules in FA 2004) and the increasing complexity of business life, leading to new rules, and an increase of anti avoidance legislation. A lengthy Act generally follows a general election where there has been a change in government, although look at the length of F(No.2)A 1979 which brought in a seismic shift from income tax to VAT!
This exercise has been a little light relief from the OTS’s main projects, on small business taxation and pensioner taxation, but what are the real benefits to looking at this? Tempting as it is for the OTS to claim that we have slashed the UK’s tax code by 50%, our main point is that there is more to the ‘length of legislation’ issue than a simple count. While length remains a factor in complexity other factors play a huge part when deciding what should be used as a tool when setting out tax legislation. The OTS will use these findings from this mini-review to help inform us about the starting point in UK tax legislation, for which we are seeking to simplify, through our larger reviews. Indeed, our work on tax reliefs has already gone a little way to reducing the legislative book, but it is clear that there is still a lot for the OTS to tackle.
Caroline Turnbull-Hall and Richard Thomas
This article was written on behalf of the Office for Tax Simplification. Please email the OTS with any comments at OTS@ots.gsi.gov.uk.
