Office of Tax Simplification: Permanent establishment - CIOT comments

By Technical Team on 03 Feb 2016

The CIOT submitted comments on the draft legislation published on 9 December 2015, which will provide for the permanent establishment of the Office of Tax Simplification in statute, set out its functions and make provision for its governance and operation.

The OTS was established in July 2010 to give independent advice to the government on simplifying the UK tax system. Its objective is to reduce tax compliance burdens on both businesses and individual taxpayers. Notwithstanding the OTS’ efforts, the increasing quantity and complexity of legislation shows no signs of abating. By way of illustration, the average number of pages of additional legislation in each year’s Finance Act(s), since 2010, is nearly 550, with a peak of 687 pages in Finance Act 2012. Further, the increased devolution of taxes to Scotland (e.g. Land and Buildings Transaction Tax), Wales and Northern Ireland, means that it is even more important for legislation to be simple and easy to understand.

With that in mind, we welcomed the measures to put the OTS on a statutory footing. To try and stem the ever increasing quantity and complexity of legislation, we recommended that the measures went further than proposed, including:

  • Measures to ensure that the OTS has sufficient resources and funding, not only to undertake the projects it is instructed to undertake by the Chancellor of the Exchequer, but also those which it wishes to undertake on a proactive basis.
  • That the OTS should not only be required to report annually on its own performance, but that it should also report upon the complexity of the tax system and increases or decreases in complexity year-on-year; helping identify a ‘direction of travel’ in the tax system.
  • That the OTS should scrutinise proposed legislation that it identifies for review. Historically the vast majority of the OTS’ work has been on legislation already on the statute books, and so publishing commentary on proposed legislation, from a complexity perspective, will highlight the importance of minimising complexity in new legislation.

We also recommended that the senior personnel at the OTS, in particular the Chair and Tax Director, are adequately remunerated for the time they spend in undertaking their non-Board-duties; as opposed to the relatively nominal sums which are paid at present.

We offered to enter into further dialogue with HM Treasury on this matter, and we shall report any further developments as they arise.

The full CIOT submission can be found here.

Technical Team

Downloads