Tax Simplification – Report Summary

This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.

Author: Treasury Committee

Related inquiry: Cliff edges in the tax and benefits system

Date Published: 16 June 2023

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Summary

The Chancellor appears to agree with us that the tax system is overcomplicated and the trend of ever more complication must be reversed. He has, however, chosen to proceed with his predecessor’s decision to abolish the Office of Tax Simplification (OTS), the body established in 2010 to give advice to the Chancellor on simplifying the tax system. Disbanding the independent champion for simpler tax risks signalling that simplification is not a priority for the Government. However, the most important factor in securing tax simplification in practice would be the Chancellor taking, and acting on, the personal responsibility for simplification that he has pledged.

The complex tax system is an obstacle to economic dynamism. Its morass of tax reliefs and exemptions create compliance burdens and confusion. Its ‘cliff edges’, which at worst leave someone worse off by earning more money, create disincentives to work or grow a business.

The Government’s performance against its stated intention to simplify the tax system must be subject to public scrutiny. As the parliamentary body tasked with considering the performance of the Treasury and HM Revenue and Customs, we are a core component of that accountability. Should the Government proceed with abolishing the OTS, we recommend they report to the Treasury Committee annually on steps taken to simplify the tax system, covering both new and existing taxes. Such reports should set out performance against tax simplification metrics, compare the complexity of the UK tax system with other countries and set out what the Treasury has done to understand taxpayer needs for tax simplification.