A leading consultant from London Bridge accountancy firm Azets has urged the government to reverse its ‘ill-conceived’ decision to axe the Office of Tax Simplification (OTS).
Associate director John Hiddleston has written to the Chancellor Jeremy Hunt MP and Financial Secretary to the Treasury Victoria Atkins MP to call for a rethink.
The OTS was abolished by the then Chancellor Kwasi Kwarteng in his ill-fated mini-Budget last September with its mandate instead delegated to the Treasury and HMRC.
But Mr Hiddleston, who has more than 35 years’ experience in tax, has warned that an independent body is vital to tackle an ever-increasing paperwork burden – especially for entrepreneurs.
He said: “Tax can be hideously complicated at times, even for tax experts.
“Although the OTS has had some successes, the tax system has become ever more complicated since its introduction. It is estimated that the tax code has gone from 5,000 pages in the 1990s to more than 25,000 pages today.
“This is not the OTS’ fault. It tried its best but never had the power to overrule politicians.
“The HMRC and government say they remain committed to tax simplification yet abolishing the only body that had a mandate to achieve this appears ill-conceived and counterproductive.
“The OTS should be reinstated or a new body established as a matter of urgency, with a clear remit to get to grips with tax simplification in a meaningful and productive way.
“If anything, the new body should be beefed up and given greater powers, perhaps even along the lines of the Office for Budget Responsibility (OBR).
“Our Byzantine tax rules have long acted as a barrier to entrepreneurialism and economic growth.
“A new ‘beefed up’ OTS’s first remit must be to redesign a simpler version of the tax system for small entrepreneurs so it is incredibly straightforward for them until they reach a certain size.
“Furthermore, appointing one or two genuine entrepreneurs to the OTS’s panel to sit alongside the usual figures from the tax profession would be a significant step forward.
“Leaving tax simplification to officials within the Treasury and HMRC will probably just result in it foundering on the rocks of shifting priorities and political indifference.
“Meanwhile businesses and entrepreneurs will continue drowning in the increasingly complex sea of ‘red tape’.”
The OTS was set up in 2010 as an independent body to advise the Chancellor and provide feedback from consultations with industry, taxpayers, professional bodies and advisors.
It came after a major drive from the mid-1990s onwards to rewrite much tax legislation following a landmark report to Parliament in 1995 entitled ‘The Path to Tax Simplification’.
There are 5.5 million small businesses in the UK with a combined turnover of £2.3 trillion, according to the government.
Mr Hiddleston welcomed changes announced in the Chancellor’s Spring Budget to simplify the tax system for smaller businesses and consultations to pave the way for future reform but said the government needed to go further.
He said: “Steps taken in the Budget, notably in areas of payroll, cash basis reform, tax guidance and forms for small business, administration and customs procedures are welcome but a dedicated body would give these and other initiatives a much greater chance of success.”