Several tax leaders have brought into question the Government's delivery of a simpler tax system.
Members of the Association of Tax Technicians (ATT), the Chartered Institute of Taxation (CIOT), the Institute of Chartered Accountants in England and Wales (ICAEW) and others have submitted a list of proposals to HMRC in reaction to the abolishment of the Office of Tax Simplification (OTS).
First announced in September 2022, the abolition of the OTS has now been legislated in the Spring Finance Bill 2023. In response, the governing groups have offered insight into how they think HMRC should continue on its path to tax simplification without the OTS.
The signatories said:
"In our view, the Office of Tax Simplification achieved a significant amount and, with greater ministerial support, could have done even more, so we regret the Government's decision to abolish it. Nevertheless, the clear mandate given to officials in the Treasury and at HMRC to focus on simplicity in tax policy and administrative design is positive.
"We want to see tax simplification embedded as promised, and we offer our support to help officials realise this aim."
The letter outlined the processes the bodies said were needed:
- identify the characteristics of tax simplification
- ensure someone is accountable for the delivery of tax simplification
- include simplification declarations in tax information and impact notes
- gain external input to policy design and implementation
- seek feedback from a broad range of stakeholders
- ensure HMRC and Treasury engagement groups include tax simplification as a standing objective
- increase awareness and improve guidance
- allow time for the development and integration of systems
- adopt a consistent approach across tax regimes.
The letter follows shortly after members of the House of Commons treasury committee tabled an amendment to the Finance Bill. The amendment would see the treasury annually report to the committee on tax simplification should it pass and if the OTS is abolished.
OTS and the growth plan
Former Chancellor Kwasi Kwarteng first announced the planned closure of the OTS during his growth plan speech on 22 September.
The then Chancellor said that, for the tax system to achieve growth, it needed to be simpler.
Kwarteng said:
"I'm hugely grateful to the Office of Tax Simplification for everything they have achieved since 2010.
"But instead of a single arms-length body which is separate from the Treasury and HMRC, we need to embed tax simplification into the heart of Government.
"That is why I have decided to wind down the OTS and mandated every one of my tax officials to focus on simplifying our tax code."
At the time, tax leaders were confused and surprised at Kwarteng's decision, citing the OTS's accessibility for stakeholders and professional bodies alike.
John Barnett, chair of the CIOT's technical policy group, said at the time:
"If tax simplification is to be truly embedded across government, the OTS should be given a revised watchdog role: scrutinising new proposals and considering whether they introduce unnecessary complexities into the tax system."
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