Treasury will report annually on tax simplification progress

Treasury will report annually on tax simplification progress

Jun 25, 2023

Following lobbying by MPs, Treasury officials will write to the Treasury Committee once a year with an update on progress on government efforts to simplify tax rules

This follows harsh criticism by members of the cross-party Treasury Committee about the decision to abolish the Office of Tax Simplification (OTS), announced by the one-time Chancellor Kwasi Kwarteng at the mini-Budget last September and endorsed by Chancellor Jeremy Hunt at the Budget last November.

The OTS was responsible for reviewing tax rules and producing reports on simplification of tax rules. However, it is being abolished as part of the latest Finance Bill.

During Treasury questions, financial secretary to the Treasury Victoria Atkins told the chair of the Treasury Committee Harriet Baldwin that a report will be sent to the Committee once a year setting out what progress has been made on tax simplification.

The decision came in response to Baldwin’s proposed amendment to the Finance Bill.

‘What the Committee is asking for in our new Clause 2 is for the Treasury to report to the Committee annually on the Chancellor’s promise to simplify taxes,’ Baldwin said.

In future HMRC and the Treasury will take joint responsibility for assessing whether tax rules are straightforward and for working towards simplification of the hugely complex tax code.

‘In the spirit of agreement and cooperation if I commit today to write to the Treasury Committee once a tax year, including this tax year, on the subject of tax simplification so that the committee may look at that report, decide how the government of that day is doing, and of course call ministers to account in front of the committee itself,’ Atkins said.

Baldwin welcomed the announcement and went on to stress the type of information the report should contain.

‘It should be annual, should include international comparisons where available, and should set out what the Treasury has done within that year to simplify taxes for our constituents,’ said Baldwin.

The announcement will be welcomed by the Chartered Institute of Taxation (CIOT) which has been critical of the abolition of the OTS and supported calls for an annual Treasury report.

John Barnett, chair of the institute’s technical policy and oversight committee, said: ‘Parliament needs to take a close interest in tax simplification, especially with the Office of Tax Simplification (OTS) set to be abolished, and the Treasury Committee needs to be at the heart of that.

‘We welcome the committee’s call for the government to report annually to it on the steps it is taking to simplify the tax system.

‘As well as questioning ministers and officials on such a report it would make sense for the committee to invite tax professionals and others with relevant insight and expertise to contribute their assessments of progress towards simplification, to get a rounded picture.

‘Tax simplification is something everyone says they want but delivering it in practice has proved challenging. The more that can be done to focus the attention of ministers and senior officials on simplicity the better.’