Is the Office for Tax Simplification a success?
The Treasury is conducting a five year-review of the Office of Tax Simplification, as it is required to do by law. Will anything change, asks Wendy Bradley
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An excellent overview of the current status and core questions for the Review to tackle (even though no doubt it will duck most of them as usual).
FWIW:
* fishing from a wider of pool of 'interested parties' is essential - but a lot more could be achieved in this area simply by paying for research that incorporated the breadth of people/businesses affected (not just informal groups - which I enjoy but cannot be comprehensive); and
* reviewing the metrics (and control) of TIINs is more than just a missed opportunity, they are grossly abused by HMRC (akin to the 'value justifications' used for the old PFI projects). At the very least it should be mandatory that all financially-related assumptions are stated transparently, so that whole chunks of costs can't be swept under the carpet as anecdotal assumptions.
I am by nature a pragmatist, but making OTS an office within the Treasury was either a big mistake or a cynical manoeuvre worthy of Yes, Minister. It needs teeth or claws, which will only happen if it regains independence from government. Not necessarily full independence, it could for instance be directed by Parliament via PAC (or some new select committee) - and be answerable to it?
If the PAC, and by extension parliament, can't hold HMRC to account then what meaningful contribution can the OST make regardless of its composition or its independence?
Being the ever cynic, there is no incentive for HMRC to simplify the tax system. Ambiguity and penalties are just too lucrative.
As a tax practitioner my knee-jerk reaction would be "you must be joking. From my perspective the system and rules becomes increasingly complex every year !"
However - I think the article is great in that it steps back and asks the right questions - what do we mean by success, and how will we recognise it ? How do we give the OTS the power to be more effective ? (I am sure they shudder at each budget announcement !)
Good article and food for thought !
The OTS said get rid of IR35. HMRC said no etc. etc. etc.
It's there as a publicity stunt just like "agent Strategy" and "working together".
In the five years under review tax has gotten more complicated.
Either the OTS has failed or the OTS does not have the power to enact meaningful change. Whichever it is, the OTS we have currently is pointless, so I suppose a better focus for the review would be which recommendations from the OTS have been followed and which ignored.
If there's more being ignored than followed then give it some power, if more followed than ignored then it's useless. Either way some change is required, because we definitely need tax simplification, just not this Office of Tax Simplification.
I'll not tolerate a bad word against the OTS..........I mean they have saved Accountancy students from learning about the 15p exemption for luncheon vouchers.
I'll not tolerate a bad word against the OTS..........I mean they have saved Accountancy students from learning about the 15p exemption for luncheon vouchers.
Genius
The OTS has been either (a) ignored when it comes out with anything sensible, or (b) used by politicians to drive through their hobby horses. Its genuine successes are few and far between.
The tax system has become considerable more complex in the past 5-10 years.
We now have:
1. Daft nil rate bands and cliff edge taxes for dividend and savings incomes
2. Round sum allowance for expenses for property and sole traders (so you often have to work out out both ways)
3. Cash and accruals accounting to be computed for sole traders/property tax (again doing it twice)
4. Ridiculous CGT reporting in year which is a huge time drain
5. Transferrable married couples allowance for a pittance, along with repayable child benefit
6. Class 2 NI abolished then not abolished leaving a broken system
7. Agents being actively excluded
8. Different bands of student loans which never work properly at the end of the loan
9. HMRC replacing front line staff with call centres and referrals rather than just "doing stuff" there and then. See Corporation Tax rebates as a prime example
10. Tax payers being forced to increasingly engage with the hated personal tax accounts which not everyone can set up
And coming over the horizon, the bonkers thing of all - MTD for income tax.
The OTS seems to have done virtually nothing to really influence any of this, or reverse the flow.
In a word... no.
It's an abject failure. Is HMRC is now so powerful that it is effectively unaccountable to anyone let alone an elected government?
How else could an organisation as dysfunctional as HMRC continue to exist, in the form in which it does, were it not so?
What other government body affects the lives of British subjects so significantly and yet regards itself as being above and beyond criticism despite the track record?
Who, with any awareness of the significance of HMRC in the daily life of every British subject, could disagree?