Tag Archives: office of tax simplification

Office of Tax Simplification quotes Star Trek and recommends ending relief for a tax rule that no longer exists

At the time the Conservatives announced their plans for an Office of Tax Simplification it looked to me like a good exception to the general policy of cutting quangoes. Its major report into tax reliefs looks to have justified that belief – because the Office of Tax Simplification has discovered that far more tax reliefs exist than it was expecting.

Yup, you read that right – that tax system is so complicated it turned out to be even more complicated than people who already thought it was complicated expected. Or in its language:

We found 1,042 reliefs,allowances and exemptions; far more than any of our initial estimates.

The OTS’s report also has the distinction of starting its foreword with a quote from Star Trek, even if by Chapter 1 it is back on to more familiar tax quotation grounds with William Gladstone.

The big stories from the review are:

During the review, a number of key themes have emerged:

  • Merging income tax and NIC – this is a long term project of structural reform thatwould deliver major simplification;
  • Employee benefits and expenses – The longer term aim would be to align the treatment of employee benefits, with shorter term aims of simplifying many minorbenefits with a de minimis limit of £100/£500, or amending the current £8,500threshold;
  • Inheritance tax and trusts – the reliefs for inheritance tax are integral to the policyand we consider that a more appropriate approach would be to review the tax as a whole;
  • Capital gains tax, particularly as applicable to companies –the capital gains systems for individuals and companies have drifted apart, with gains by individuals taxed at a lower rate than income to reflect inflation, whereas companies are still required to calculate indexation. Our aim would be to realign the treatments and simplify the tax, but as there are changes in relation to corporate capital gains expected in Finance Bill 2011, this is clearly a longer term project; and
  • Environmental taxes –Both landfill tax and aggregates levy should be reviewed, as both regimes contain basic charging provisions with numerous exemptions and it may be more appropriate to define what is caught rather than what is excluded.

In amongst the details are some great examples of just how much parts of the tax system is in need of simplification, such as the continuing tax break on the first 15pence (yes, pence) of the value of a luncheon voucher given by an employer to staff. As the review says,

The value of this relief has eroded since its introduction in 1946 and is outweighed by the time and cost in providing it.

My favourite, however, is the discovery that there is still a tax relief on the books for a tax rule that no longer exists:

Certain specified and certified instruments were exempt from £5 fixed stamp duty. As the fixed rate of duty was abolished in 2008, the policy rationale is no longer relevant and the relief  has no current application.

Yorkshire drinkers of obscure beer may wish to check section 4.37.

Office of Tax Simplication – Review of Tax Reliefs

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The Office of Tax Simplification is on its way

A Treasury press release tells us:

The Chancellor George Osborne and Exchequer Secretary David Gauke today established the Office of Tax Simplification (OTS).

The Chancellor has appointed a Board of tax experts who will be responsible for leading the work of the OTS over the next year. The Board Members are Michael Jack (Chairman) and John Whiting (Tax Director).

Their responsibilities will be to identify areas where complexities in the tax system for both businesses and individual taxpayers can be reduced and to publish their findings for the Chancellor to consider ahead of his Budget.

The OTS will undertake two initial reviews over the

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A new Conservative quango I quite like

Despite their professed enthusiasm for having a bonfire of the quangos, in practice the Conservative Party keep on announcing new ones – and have rather run in to trouble when pressed to explain what’s going on the bonfire (both points I wrote about here).

The tally of new quangos the Conservatives is now at least 19, which sits rather oddly with the rhetoric about culling them. However, that doesn’t mean all the individual proposals are bad ones.

One in particular which appeals to me is an Office of Tax Simplification.

Regular readers may have noticed my love of tangling with bureaucracy. (I …

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