The Office of Tax Simplification (OTS) has a Herculean task: to make tax simpler. On the same day, the OTS published its first annual report on Monday 26 June, the independent board also used the opportunity to reflect on the work it has already taken to unpick the byzantine tax system.
The independent board’s mission to detangle reams of tax legislation has resulted in over 450 recommendations over the last six years. Despite the equivalent of 8.5 full-time workers and a relatively slim budget (set at £770,000 last year), the OTS has managed to achieve 14 major projects and produced 40 reports and papers.
A common misunderstanding surrounding the work of the OTS is its powers. The group can only advise the Chancellor but has no authority to actually implement its suggestions. That said, the government has accepted over half of these suggestions over the years.
In its report the OTS outlined some of its key successes:
- The abolition of Class 2 NICs
- A cash basis for calculating tax, rather than accruals accounts for the smallest businesses
- Initiating reforms to eliminate P11Ds
- The reporting of share schemes
The OTS is keen to frame its success not just by the outcomes of its suggestions but by how its way of working has developed, and how this has fed into creating evidence-based recommendations.
Over the years the OTS has refined this approach and established a model that has been welcomed by its key stakeholders of how to consult. The goal of achieving some semblance of tax simplification is conducted through:
- Wide-ranging evidence gathering (customer experience, team experience etc.)
- Consulting a range of stakeholders
- Publishing reports, research and consultations, and through this, engaging with stakeholders on how these recommendations can feed into their future work
- Acting as a catalyst (speaking engagements and webinars)
- Highlighting themes in focus papers
Looking to the immediate future, the OTS will focus its attention on:
- simplifying the corporation tax computation;
- reform paper stamping procedures required for some transactions that attract stamp duty;
- and a final report on VAT.
As for how the group prioritises, the OTS decides on where to focus its resources depending on which measure would benefit the greatest number of people, but it will pick up “quick wins” along the way.
While the OTS pipeline of work is full of legislative framework and the administration of taxes, the group said in the report that it will continue its ongoing work with stakeholders on Making Tax Digital and the gig economy.
Much of the group’s success can be attributed to John Whiting, who led the group from the summer of 2010 until March 2017. Whiting has since passed the reigns to chair Angela Knight and tax director Paul Morton.
The independent board, however, has somewhat been a victim of expectation. It’s hardly surprising considering the coalition government instigated the group with the promise to simplify the tax system. Saddled with this almost unattainable goal, the OTS has come up against criticism from the AccountingWEB community about its progress.
AccountingWEB regular Ireallyshouldknowthisbut summed up the general perception and challenges that face the group. “The irony of the OTS is that since its creation tax has become by a factor of many degrees considerably more complex.
“With the clawback of personal allowance, child benefit, dividend allowance, interest allowance, the new rules on lettings businesses the whole thing is a real mess and increasingly hard to explain to clients.”
Meanwhile, Mel Stride, the newly installed financial secretary to the Treasury, praised the work of the OTS on the release of their report.
“The Office of Tax Simplification makes a valuable contribution to the public debate around tax, supporting the creation of a simpler tax code and challenging the government to deliver it,” Stride said.
How successful do you think the OTS has been in realising its mission to unpick tax complexity?
About Richard Hattersley
Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.