ICAS contributes to OTS strategy debate
The Office of Tax Simplification (OTS) has asked for views on its high level strategy ‘Simplifying Tax for the Future’ and, in its response, ICAS has given its support to the OTS proposals, along with a number of further comments, writes Charlotte Barbour, Director of Tax.
A forward looking role
A key issue is how to prevent further complexity from being introduced and a forward looking role is needed for the OTS. One of the frustrating aspects of the OTS’s good work is that whilst it examines existing law with a view to simplification measures, the Government is introducing further complexity in each new Finance Act. ICAS has called for this mismatch to be addressed.
The impact of devolution on taxes and tax collection need to be considered
Devolution is driven by the desire to locate tax powers with local accountability, which is important and to be respected, but the downside is that differing taxes bring in complexity. There is a role for the OTS in assisting devolved jurisdictions to be aware of potential complexities and how to minimise these.
The OTS consultation paper was published before the EU referendum had taken place but Brexit is now a key part of the wider background in which the OTS will be working. Clearly, it is too early to consider the more detailed elements of this but from a tax simplification point of view there will be both opportunities and risks. One risk is that change in itself frequently causes complexity and uncertainty; this should not be overlooked when determining how far to pull back from EU-driven tax rules.
Digital does not necessarily equal simplification
ICAS supports the overall objectives of Making Tax Digital but making processes digital does not necessarily simplify the tax system for taxpayers. For example, quarterly reporting is likely to impose onerous requirements on businesses where accounting processes are generally on an annual timescale. And for a significant proportion of the population who are ‘digitally vulnerable’ the move to digital will produce complications: for such taxpayers ‘simplification’ may require personal contact with the revenue authorities. Nor does digital address the complexities of the underlying taxes.
There is a need for greater public understanding of tax to improve the quality of public discussion about who pays tax, how much they pay and tax avoidance. The OTS is ideally placed to provide independent explanation and analysis to enhance public understanding of the issues.
An OTS roadmap
The OTS should have its own roadmap of what it seeks to achieve over the following, say, five years; and it should have a role to play in developing other tax roadmaps. The Business Tax Roadmap issued in March 2016 would have benefited from OTS input.
Working with the OTS
The ICAS Tax Committee has noted that its members have always found the OTS to be a body that works hard at consulting, and for ICAS it has always been a very positive and valuable experience. We look forward to continuing to work with the OTS.