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Tax simplification needs scrutiny, says Committee

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In a new report, the cross-party House of Commons Treasury Committee has again questioned the government’s decision to abolish the Office of Tax Simplification. Concluding that the UK tax system is overcomplicated, creating ‘compliance burdens, confusion and disincentives to work or grow a business’, the Committee suggests that disbanding the OTS sends out the wrong message around the Chancellor’s intentions: ‘Disbanding the independent body responsible for advising him on, and championing, tax simplification risks signalling that it is not a priority for the Government.’

The committee notes that, regardless of whether or not abolition goes ahead (which now seems almost certain), the key priority in moving towards a simpler tax system will be for the chancellor to take personal responsibility for simplification, as he seems to have pledged in his previous written reply to the committee.

In its conclusions that government performance on simplification must be subject to public scrutiny, the committee recommends that the government should report annually on steps taken to simplify the tax system.

Commenting on the report, Katharine Arthur, Head of Private Client at haysmacintyre, said: ‘Leaving aside the revolving door of disastrous tax changes last year, the Government has made seemingly little progress towards simplifying the system. Against a backdrop of calls for reform, the abolition of the Office of Tax Simplification looks like another ill-conceived decision.

‘Looking ahead, the Treasury Committee’s efforts to bring the Government and the Chancellor to account – and demand action to streamline a burdensome and confusing system – will no doubt be a sigh of relief for taxpayers and advisers alike. Now it’s time to see whether the Government is ready to act.’

Members of the committee had separately tabled two amendments to Finance (No 2) Bill 2023 at report stage: the first to remove clause 346 which abolishes the OTS, and a second which, should the OTS indeed be abolished as planned, would require the Treasury to report annually to the committee on efforts made to simplify the tax system. In the event, neither amendment was successful.

Issue: 1624
Categories: News
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