CIOT urges strengthening of OTS role on new policy scrutiny
The Office of Tax Simplification (OTS) should have a greater role in scrutiny of new tax proposals, says the Chartered Institute of Taxation (CIOT). This could include the development of a formal simplification framework against which the OTS can measure government proposals, and score its own recommendations.
The Institute wants the Government to look at formally embedding a role for the OTS in the five stage tax policy development process.
In its submission to the Government’s Review of the Office of Tax Simplification, CIOT also argues for:
- Requiring government formally to respond to all OTS reviews and recommendations within a prescribed period, indicating in detail which recommendations will be taken forward
- Expanding the OTS’s role so that it includes post-enactment review of new legislation – perhaps two to three years after implementation
- Periodic revisiting by OTS of proposals from its earlier reviews, to identify recommendations that were not taken forward and to consider whether they should be revisited, revised or dropped
John Barnett, Chair of the CIOT’s Tax Policy and Oversight Committee, commented:
“The OTS has done a lot of good work since it was launched 11 years ago. For example, cash basis reporting has made tax reporting simpler for many small unincorporated businesses. Reforms to employee expenses and inheritance tax reporting have led to genuine improvements in these areas.
“However, few people would say the tax system as a whole is simpler now than when the OTS was created. Partly this reflects a failure by government to act on – or in some cases even to respond to – OTS recommendations. In our submission we argue that the Government should have to respond formally to all OTS reviews – not just those requested by the Chancellor – within a reasonable time period, and that they should have to respond to every recommendation, as they are obliged to do with select committee reports.
“But the bigger challenge is that, while the OTS has had a positive impact on the existing tax system, new tax legislation has been working in the opposite direction, making the system more complicated. Unless the Government makes simplification central to tax policy making, the work of the OTS is likely to continue being dwarfed by the mountain of new complex tax legislation and processes.
“For this reason we argue in our submission for an enhanced role for the OTS in the scrutiny of new tax policy. The introduction of a formal framework for tax simplification which the OTS can use to score its recommendations and government can assess potential policy against would be a useful step. Integrating tax simplification into the Tax Consultation Framework and decision-making process, with a formal role for the OTS, and the resources to match, would underscore the importance of stemming the tide of ever greater complexity.
“We see the work of a strengthened OTS fitting into three areas going forward: scrutiny of new tax measures, periodic revisiting of its earlier recommendations, and a continuation of the existing cycle of reviews of policy areas. The latter might usefully include pensions tax and a review of employee benefits and expenses in light of increased working from home.
“The OTS has been influential in its 11 years but ultimately the success or otherwise of efforts to simplify the tax system depends on ministers. OTS needs direct access to ministers to put its case (as we recommend), but ministers also need to recognise that tax simplification is not something they can delegate to the OTS – it requires their engagement and they need to be willing to amend or drop otherwise attractive proposals if the complexity cost is too high.”