The UK tax system is “overcomplicated” and an “obstacle to growth”, according to members of the Treasury committee.
In a report published on Friday (16 June), the committee called for a simplification of the tax system, claiming the Government’s decision to close the Office of Tax Simplification has made matters worse.
With over 1,180 tax reliefs and numerous thresholds currently in place, the system has become more complex over time. This can create greater compliance burdens for taxpayers, potentially disincentivising people to work or grow their businesses.
To address these issues, the committee made several recommendations to the Government.
Firstly, the Treasury and HMRC should produce annual reports to the Treasury committee updating on its progress in tax simplification.
These reports should measure performance against tax simplification metrics, compare the complexity of the UK tax system with other countries, and set out what the Government has done to understand taxpayer needs.
Chancellor, Jeremy Hunt, should also take “personal responsibility” for securing a simpler tax system.
In response to the committee’s report, the Treasury said:
“Tax simplification remains a priority for this Government and is considered central to our work, as seen with the recent abolition of the pensions lifetime allowance.”
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