The Office for Tax Simplification (OTS) recently released a report on how taxes on savings income can be simplified. This report found that there are many parts which taxpayers find difficult and confusing, with much of the complexity caused by interactions between the many reliefs and allowances in the system. The suggestions the OTS makes to remedy the complexity include that HMRC should improve guidance on the taxation of savings to help people make more informed choices when deciding how to save or invest their money.
It can be pointed out though, that if for example there was only one form of Isa, as AAT is calling for, it would be considerably easier and require much less work to educate people on how the benefits apply to them. This need for simplification does not only apply to the Isa system. Other taxes are also overlong, such as VAT, which runs to hundreds of pages worth of different rates.
HMRC has had some bad press recently. In May it was reported that around 4 million calls to the organisation’s helpline, mostly from the self-employed, went unanswered last year. It has also come under fire because of it’s spending on external consultants to help complete certain key projects. The CEO Jon Thompson recently admitted that the service is starting to creak under the strain of all the work it has to carry out, which is why the government needs to listen to calls for tax simplification.
HMRC has had its workload increased by Brexit, already having to put Making Tax Digital for individuals on hold as a result of the need to free up staff to prepare for the UK to leave the European Union. This is also the reason they have had to bring in the external consultants they are being criticised for. Instead of being criticised, HMRC needs more support and funding from the government to be able to hire the skilled people needed, to reduce its dependence on external contractors.
AAT members and MPs are united in wanting HMRC to have more support. A recent survey of AAT licensed accountants highlighted that one of the most important changes they would like to see is an increase in the skills, training and number of HMRC tax inspectors and call centre staff; this echoes results from an AAT survey of MPs in December 2017, which showed 73% of MPs believe there is a need to increase the number and skills of HMRC staff.
The OTS report mentions that the department would like to see a full review of the Isa landscape. AAT would welcome this. However, such a review should surely be broadened out to look at all taxes. In a post-Brexit environment there are a number of other areas where simplification could occur, such as with VAT.
I'm tax policy adviser at AAT (Association of Accounting Technicians)