A cross-bench group of MPs have criticised the chancellor’s decision to disband the Office for Tax Simplification, saying the UK’s tax system is an obstacle to “economic dynamism”.
In a report released today (June 16), the Treasury Committee called for more accountability of government efforts to simplify the UK’s “overcomplicated and burdensome” tax system.
The committee has tabled two amendments to the finance bill, which is due to be read in parliament on Tuesday.
The first seeks to prevent the abolition of the OTS, and the other requires the Treasury to report to the Treasury Committee annually on tax simplification, should the OTS be abolished.
The committee said the decision to disband the OTS, an independent body responsible for advising on tax simplification, risks signalling that it is not a priority for the government.
If the OTS is disbanded, the committee wants the Treasury to report to it each year, outlining the steps it is taking to simplify the tax system, covering new and existing taxes.
Harriett Baldwin, chairperson of the committee, said: “It is widely acknowledged – including by the chancellor – that our tax system is over complicated, confusing and inefficient.
“It contains numerous cliff edges which disincentivise work, business growth and personal development.”
There are over 1,180 separate tax reliefs in the UK system, as well as what the committee called “cliff edges” which are “littering” the tax system, such as the VAT threshold for small business.
At an evidence session earlier this year, Bill Dodwell, tax director at the OTS, said the tax code is longer than it was in 2010, and on average there has been a new tax introduced each year.
As part of the “mini” Budget last September, former chancellor Kwasi Kwarteng announced that the OTS will be shut down, saying this would boost economic growth and simplify the tax system.
The OTS was set up in 2010 by then-chancellor George Osborne to identify where areas of complexity in the tax system can be reduced, and at the time the tax code came to 11,000 pages.
It is an independent office of the Treasury.
FTAdviser has reached out to the Treasury it had not received a response at the time of publication.
sally.hickey@ft.com
