The Chancellor
George Osborne and Exchequer Secretary David Gauke today
established the Office of Tax Simplification (OTS).
The Chancellor has appointed a Board of tax experts who will be
responsible for leading the work of the OTS over the next year.
The Board Members are Michael Jack (Chairman) and John Whiting
(Tax Director).
Their responsibilities will be to identify areas where
complexities in the tax system for both businesses and individual
taxpayers can be reduced and to publish their findings for the
Chancellor to consider ahead of his Budget.
The OTS will undertake two initial reviews over the coming year.
They will focus on tax reliefs and small business tax
simplification (including IR35). The OTS will publish the initial
findings from their work on reliefs in late autumn and on small
business tax by the 2011 Budget.
The OTS will also draw on external expertise from the tax and
legal profession over the coming months. These experts will focus
on specific areas of complexity in the tax system and provide
additional advice to the OTS.
The Government is committed to making the UK the most competitive
country in the G20 and to reducing the complexity in the tax
system. Over the past decade, the tax code doubled to more than
11,000 pages and the UK slipped from 7th to 13th in the World
Economic Forum’s Global Competitiveness Index between 1997 and
2009-10. This trend needs to be reversed, and the OTS is an
important part of making the tax system work better for the taxpayer.
Chancellor George Osborne said:
"The previous Government took a complex tax system
and made it even worse. A decade of meddling and intervening has
made the tax affairs of millions of families and businesses across
the UK extremely complicated. We need to sort out this mess.
"Two years ago I promised to create the Office of Tax
Simplification. Today, we’re delivering on that promise. With its
independent, expert advice it will be a permanent force for a
simpler tax system.
"Simpler, more competitive taxes will help us show the
world that Britain is open for business."
The Rt Hon Michael Jack, the Chair of the OTS,
said:
"Entrepreneurship should never
be stifled because of an overly complex tax system.
That's why I am delighted that the Government have
committed themselves to looking at ways to simplify the tax
system, with an initial focus on small businesses.
"Simplification in a complex world is a real challenge,
but it's one that has to be addressed if the tax system
is not to hinder the economy's ability to grow."
John Whiting, the Tax Director of the OTS,
said:
"I've long argued that
we need a simpler tax system in the UK, so I'm delighted
to be given the opportunity to take forward the
Government's commitment in that direction.
"In our complex world a truly simple tax system for all
is probably impossible, but working towards a simpler system will
help all who deal with it: taxpayers, especially the
unrepresented, tax advisers and tax authorities."
Notes for Editors
1.Full details about the Office and its work are available on its
website:
http://www.hm-treasury.gov.uk/ots
2. The establishment of an Office of Tax Simplification was
proposed by Lord Howe’s working party in the 2008 report Making
Taxes Simpler. The June Budget confirmed the Government’s
intention to establish the Office.
3. The Office has been established as an independent Office of
the Treasury. Full details about the Office are set out in its
published framework document:
http://www.hm-treasury.gov.uk/ots.htm
4. OTS reports will be published on the website
5. Rt Hon Michael Jack (Chair) and John Whiting (Tax Director)
have been appointed on an interim basis to lead the Office for the
first year. Permanent appointments will be made through full and
open competition during 2011.
6. The Chair and Tax Director, and members of committees
established to support its work, will not be paid for their work
for the Office. They will be supported by a small secretariat,
including tax experts from within HMRC and the Treasury and
externally funded secondees from the tax and legal professions.
7. The Rt Hon Michael Jack served as the Member of Parliament for
Fylde between 1987 and 2010, following a career in business. He
served in a number of ministerial posts, including as Financial
Secretary to the Treasury from 1995 to 1997. During his time as
Financial Secretary, he was responsible for establishing the Tax
Law Rewrite project, which was tasked with rewriting the UK’s
direct tax legislation in clearer and simpler language.
8. John Whiting was appointed as the first Tax Policy Director of
the Chartered Institute of Taxation (CIOT) in 2009, following a
long career with PricewaterhouseCoopers (PwC) where he was a tax
partner for 25 years. John is a past President of the CIOT and a
regular speaker and commentator on a wide variety of taxation
topics, as well as being a member of the first-tier Tax Tribunal.
He was awarded the OBE in 2008 for services to the tax profession.
9. Tax Reliefs Review: The Office has been commissioned to review
a list of all reliefs, allowances and exemptions within the taxes
and duties administered by HM Revenue & Customs (HMRC) and
identify those reliefs that should be repealed or simplified to
support the Government’s objective for a simpler tax system. The
Government is particularly interested in identifying reliefs that
are largely historic, not frequently used, create distortions in
the tax system or are complex for business or HMRC to administer.
The Office has been asked to produce an interim report by late
Autumn 2010 and a final report with recommendations to the
Chancellor ahead of Budget 2011.
10. Small Business Tax Simplification Review, including IR35: The
Office will provide an initial report to the Chancellor by Budget
2011 that identifies areas of the tax system that cause the most
day-to-day complexity and uncertainty for small businesses and
recommends priority areas for simplification. Once the Government
has considered the initial report the Office will be asked to
produce specific recommendations on tax simplification for small
businesses. As part of the initial report, the Office will also
explore alternative legislative approaches to IR35. IR35 (the
intermediaries legislation) is legislation introduced in 2000 to
counter avoidance of tax on employment income where workers
receive payments from a client via an intermediary (usually a
personal service company) and the relationship between the worker
and the client would otherwise be one of employment.
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