OTS examines claims and elections: Can they be made easier?
By Philip McNeill, Head of Taxation (Tax Practice and Owner Managed Business Taxes)
27 March 2020
Are claims and elections time consuming or difficult to administer? Could there be an easier way to make claims? Are any particularly easy, or troublesome? Philip McNeill notes that the OTS is conducting a review and would like your views.
The Office of Tax Simplification (OTS) has made a call for evidence to find the answer. An earlier scoping document set out three key areas of interest:
- Employee expenses
- Capital allowance claims made outside a tax return, and
- S198 claims for allocating property sale proceeds between fixtures and buildings
With a list of 15 questions, the OTS is primarily concerned with how the administration of certain claims and elections might be simplified.
Topping the list
Comments to ICAS so far suggest that top of the list of concerns are High volume repayment agents making employee expense claims, and Gift Aid claims.
High volume employee expense claims
There are a number of possible solutions for the High volume repayment agents question. Should employers be able to make basic employee expenses adjustments for standard claims via the payroll? This would mirror the treatments of benefits in kind; while benefits add to the employee’s tax bill, expenses claims would reduce it.
Alternatively, has the time come to abolish the small fixed rate deductions which have not kept pace with the actual costs? Commentary on an employee expense claim for cleaning - Down the drain: can you get tax relief for cleaning your trousers? - highlighted some of the hurdles for employees making claims for laundry.
Gift aid losses
With Gift Aid, taxpayers may be missing out by failing to claim additional relief due, for example on gifts by higher and additional rate taxpayers. Scottish intermediate rate taxpayers may also miss claiming the additional 1% they are due.
Pension problems
The interaction of pensions with devolved taxes brings complications. Employees may obtain 20% basic rate tax relief at source, but Scottish intermediate rate taxpayers (paying 21% Scottish income tax) are entitled to claim an additional 1%. Are they losing out?
Higher and additional rate taxpayers are also due additional relief, but are perhaps more likely to be in self-assessment or, given the larger amounts involved, more likely to make a claim.
Your views
Give your views by joining the discussion on CA Connect, or via icas-tax@icas.com.