Chancellor is told to tackle tax labyrinth

HOPES are high that George Osborne will in today’s Budget beef up the organisation in charge of untangling Britain’s labyrinthine tax system.

John Whiting, tax director of the Office of Tax Simplification (OTS), said last night he is ‘hopeful’ his organisation will win more resources and be made independent of the Treasury.

The OTS was set up five years ago with a small staff and is subject to a ‘sunset clause’ so it would not become a permanent quango.

But in its manifesto, the government said it wanted to make it a permanent, statutory body with an expanded role.

In an open letter to the Chancellor, Andrew Tyrie, the newly reappointed chair of the Treasury Select Committee, last month called for the OTS to be ‘more independent’. He yesterday said the natural forum to announce this is the Budget. He said it needed to be protected from becoming a ‘creature’ of HMRC or remaining one of the Treasury.

John Whiting, pictured, said: ‘I think you can say we are hopeful of an announcement.’ He added that the OTS has made more than 400 recommendations for making the tax system simpler and clearer, just over half of which have been taken forward.

He said successes include the simplification of the P11D regime for employee benefits, which has been dramatically streamlined.

Experts argue that the simpler the tax system, the less scope for error and abuse and the more tax that will be collected, which is crucial at a time when the government needs every last penny it can legitimately claim.

The OTS makes recommendations on how to improve the existing system and on possible future changes, including controversial suggestions such as merging income tax and National Insurance, but politicians will still make the decisions. Kevin Nicholson, head of tax at PwC, said: ‘Giving the Office of Tax Simplification more power and more resource could make a real difference to tax policy. Our research shows people want to see greater scrutiny of the tax decisions made by politicians. An independent OTS could also do more radical pruning of the UK’s unwieldy tax code, perhaps reporting annually on what’s been accomplished.’