In principle, the Office of Tax Simplification is very good news. It is in everybody’s interests for tax legislation to be simply written and easy to understand. It also makes sense to take a hard look from time to time at tax law as it stands, so that irrelevant and impenetrable legislation can be removed.
In principle, the Office of Tax Simplification is very good news. It is in everybody’s interests for tax legislation to be simply written and easy to understand. It also makes sense to take a hard look from time to time at tax law as it stands, so that irrelevant and impenetrable legislation can be removed.
I have 4 volumes of tax legislation, statutory instruments and official statements on my desk relating to the current tax year alone, with the biggest volume running to over 8,400 pages. Based on the sheer amount of paper involved, there should be a lot of room for the Office of Tax Simplification to make improvements!
UK taxes have been through a comprehensive process of rewriting over the last few years, with mixed success. It is certainly the case that much of the work carried out was effective in simplifying language and making the law less intimidating to interpret. On the other hand though, the team responsible for the rewrite tended never to use one word where ten would do, and the size of the taxes acts has grown significantly as a result.
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The recent rewrite of tax legislation did not attempt to address difficulties in the way tax laws work – it just set out the problems a bit more clearly. If the Office of Tax Simplification is given the power to go further and take steps to clarify baffling or illogical bits of legislation, it can do a great deal of good.
The Office of Tax Simplification is a very welcome departure from what tax professionals have become used to. The tax laws have become so complicated that it can often be impossible to provide any sort of clear advice. In the recent past, we have even been in the position when HMRC has refused to follow its own published guidance. Hopefully, if OTS recommendations are enacted, this will not happen again.
I am especially pleased that the OTS will be looking at personal taxation after addressing small businesses. As a specialist in advising individual taxpayers, and especially foreign individuals living in the UK, I am often frustrated by the lack of clarity in the way the law works. I really hope that the OTS takes a hard look at areas such as residence, where it is currently almost impossible to give a simple answer to many clients who just want to know whether or not they are liable to pay tax here.
Louise Somerset, Tax Director, RBC Wealth Management
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