John Whiting has been appointed as the first Tax Director of the Office of Tax Simplification. He is looking for your help to simplify the tax system, as he explains here.

It’s said there are only two certainties in life: death and taxes. I’d add a third: taxes will be complicated. But we’d like your help to make them less complicated.

The Office of Tax Simplification (OTS) was established on 20 July this year to provide the Government with independent advice on simplifying the UK tax system. We don’t have power to change anything, just to recommend. Final decisions have to rest with the Chancellor of the Exchequer. After all, we might well conclude that a major simplification would result if we abolished income tax. The Government has to be able to say ‘nice idea but we need the money, so… no’. 

Of course, we will be aiming for sensible, practical recommendations that will be hard to refute.

The OTS has a small staff and I want to co-opt many other people to give ideas and input. In particular I want to gather experiences and suggestions from businesses and their advisers. I hope articles such as this one will also generate feedback (our contact details are at the end).

I’d better emphasise that I don’t believe we can ever have a truly simple tax system in the UK. We live in an increasingly complex world and tax must, to a degree, reflect that, especially if we want a fair system. Fairness tends to pull against simplicity. But the system can be simpler, both administratively and technically. Above all, we can commit to doing things in an easier, more straightforward way.

We have to grapple with two aspects of complexity in my book:

• Complex laws that are difficult to interpret and create uncertainties
• Complex procedures that take people a long time and a lot of effort to comply with.

Both aspects need to be tackled but in many ways it is the second that has the potential to pay the biggest dividends. To me, tax is a tripartite arrangement and a simpler tax system will generate dividends for all three sides – taxpayers (both business and individuals), tax advisers and HMRC.

To start with, we are tackling two areas. One of which is about as intractable as any in the tax system – the taxation of small businesses. 

This review specifically includes the IR35 provisions. Readers in CIS will have become involved with IR35 if they are working through a personal service company or partnership in such a way that they would be an employee if it weren’t for that company or partnership. 

The Government has already said it wants to replace IR35 with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed, nor restrict labour market flexibility. 

If you have been involved in IR35 you might suggest it be abolished all together. But would that open the door to abuse? What is it about IR35 that readers really see as the problems? We have our ideas – but what do you think?

There are also wider issues. For example:

• Many people – and the businesses hiring them – would welcome an easier way to decide whether they are employed or self-employed. How about a checklist? Say 10 criteria. Pass seven (say) or more and you are an employee.
• There are significant tax differences between operating as an employee, self-employed or as a limited company. Should we eliminate (or reduce) these? How about combining income tax and national insurance contributions?
• invite you to let us know what are your real areas of difficulty with the tax system. What aspects of it really cause problems or just take too much time to deal with? I would welcome comments and suggestions. 

Would small changes really help? Or do we need some radical changes to the tax system? 

Of course, if your contributions included ideas for solving the problems, that would be even better. 

I can’t make any promises, but I do want to make sure we have a wide-ranging look at small business taxation. I don’t want just to add another piece of sticking plaster to the system, even if it is one marked ‘simple’. 

Our second project is to tackle the multiplicity of tax reliefs. There’s a huge number of them, all undoubtedly helping someone. But are they efficient and / or effective? Are there any that are just too difficult to claim to make them worthwhile? Do they really deliver value for money for the government? 

That may start to sound as if I have a brief to abolish tax reliefs but that isn’t the role of the OTS. What we need to look at is whether the reliefs are working properly. 

I know from a survey I was involved with over a number of years at PricewaterhouseCoopers that some of the business tax reliefs we studied aren’t known about or claimed as widely as might be expected, so that does suggest there may be a better ways of achieving the objectives. 

Having long campaigned for a simpler tax system, I’m delighted to be given the chance to take the OTS forward. I hope we can start to make a difference. But we will need help and we really do want, and will welcome, your experiences, ideas and input.

John Whiting and the OTS team can be contacted by email at: ots@hmtreasury.gsi.gov.uk or you can write to them at: GC04, 1 Horse Guards Road, London SW1A 2HQ.

John Whiting

John Whiting became the first Tax Policy Director of the Chartered Institute of Taxation in July 2009, following a long career with PricewaterhouseCoopers. He has just been appointed Tax Director of the new Office of Tax Simplification.