Meaningful tax simplification requires a clear plan, focused resource, accountability, and investment, say the professional bodies.
On 5 April 2023, ICAEW together with the Chartered Institute of Taxation, Institute of Chartered Accountants of Scotland, Association of Taxation Technicians and Low Incomes Tax Reform Group, wrote to the Financial Secretary to the Treasury (FST). The letter outlined nine processes that the professional bodies consider are needed to enable the Treasury and HMRC to focus on simplicity in tax policy and administration.
The professional bodies met the FST to discuss simplification on 10 May 2023 and have held two subsequent meetings with officials from HMRC and HM Treasury.
The professional bodies recognise that complexity – in both the UK tax administration system and tax legislation – is a key issue for their members, especially when combined with the challenges they face in getting help from and engaging with HMRC customer services and systems. Although the simplification package announced at the Spring Budget 2023 was a step in the right direction, members of professional bodies would welcome simplification that has a much broader impact across the taxpayer population. This would help reduce compliance burdens and increase much desired certainty.
The professional bodies sent a further joint letter to the FST on 15 September. That letter set out next steps, including:
- formation of a regular discussion group (HMRC is working on the terms of reference for the group);
- a request for publication of a plan or roadmap to signal government intention and commitment to tax simplification;
- requesting thoughts on each of the nine recommendations set out in the original letter.
The letter also expressed concern that without a clear plan, focused resource, accountability, and investment, it is going to be very difficult to deliver meaningful simplification and build trust that simplification is genuinely being embedded in the policy making process and given adequate weighting.
The nine processes that the professional bodies consider are needed:
- Identify the characteristics of tax simplification.
- Ensure someone is accountable for delivery of tax simplification.
- Include simplification declarations in tax information and impact notes.
- Gain external input to policy design and implementation.
- Seek feedback from a broad range of stakeholders.
- Ensure HMRC and Treasury engagement groups include tax simplification as a standing objective.
- Increase awareness and improve guidance.
- Allow time for development and integration of systems.
- Adopt a consistent approach across tax regimes.
ICAEW’s Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.