The government should rip apart current tax laws rather than try and implement a 10-year tax strategy that won’t work, say leading tax and advisory firm Blick Rothenberg.
Nimesh Shah, CEO at the firm said: “Tomorrows so called ‘Tax Day’ will see the Treasury unveil a number of consultations and the Chancellor present his vision for tax in the UK. The reality is that it will always be challenging to get this off the ground when short-term politics dictates tax policy.”
He added: “The government would have more success to rip apart the existing tax law and start all over in order to have a system which is fit for the modern world.”
Nimesh said: “Whilst the Treasury is clear that Tax Day will be focused on the government’s tax administration strategy, Tax Day could still sneak in proposals for future tax rises, including harmonising the National Insurance regime for the self-employed, a review of capital gains tax (following last year’s Office of Tax Simplification review) and property taxation.”
He added: “The official line from the Treasury is that a number of tax consultations will be published as part of the government’s 10-year tax administration strategy.
“Normally, these consultations would be published at the time of the Budget – however, because of the early Budget date set by the Chancellor, I don’t believe that HMRC and the Treasury had the time to publish everything as they would normally have done.”
Nimesh said: “The government are setting themselves high aspirations with their 10-year tax strategy to introduce a truly revolutionary tax reporting and collection system with the objective to close the £31 billion tax gap – the difference between the tax that should be paid and what is actually paid. Sounds fantastic but isn’t this what Making Tax Digital was set out to do? If the government wants to have a transformational tax agenda, tax simplification needs to be at the core of the strategy.”
He added: “Successive governments and Chancellors have failed to deliver on an efficient tax reporting and collection mechanism because tax policy has been dictated by short-term political desires which have resulted in a lengthy and unwieldy tax code – the UK has the longest tax code in the world. The digital and simplification strategies have simply not been able to keep up with tax legislation, and new systems have become redundant even before they have been introduced.”
Nimesh said: “Rishi Sunak wanted to be a transformational Chancellor when he was given the job just over a year ago, but his own aspirations will have been dampened by the pandemic and now the requirement to raise taxes to address the resulting cost, and to manage the political message before the next general election in 2024.”
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