TaxSource Total

Here you can access summary of the key current tax developments in Ireland, the UK and internationally as reported by Chartered Accountants Ireland

The report of key tax developments are displayed per year, per month, by Ireland, the UK or International and by report title

Office of Tax Simplification tackles tax complexity

In its first report under the new UK Government, the Office of Tax Simplification (OTS) has published a report on tax complexity, including lessons learned over the past five years.

Four key principles have been identified for making sure new tax measures are as simple as possible:

  • Ensure the proposed tax measure meets the policy aim
  • Focus the measure carefully
  • Design the measure to meet the aim
  • Maintain the measure properly

A complexity index has also been finalised comprising of a spreadsheet tool for analysing and measuring the relative complexity of the UK tax system. It will be used by the OTS to identify future projects and for monitoring changes in complexity in different areas of tax.

The spreadsheet divides the tax system into 107 discrete areas. It then assigns to each area values for ten different complexity factors, six for “intrinsic complexity” and four for “impact of complexity”.

Combining these factors using roughly equal weightings creates two numbers between one and 10 for the relative complexity of the tax area: one for intrinsic complexity and one for impact of complexity. 10 is the most complex, one the simplest. The spreadsheet can then be sorted by these numbers in descending order to find the most complex areas of the UK tax system.

The values for the complexity factors have been provisionally filled in by combining the professional judgments of five OTS staff. As this group does not have experience of every single part of the tax system, some of the values may be inaccurate. The OTS proposes to ask a wider group of people to complete the spreadsheet over the next few months.

The Government had previously promised an expansion in the remit of the OTS. The Summer Budget on 8 July confirmed this. The OTS is to be established on a permanent basis with an expanded role and capacity. The new expanded OTS will be put on a statutory footing in Finance Bill 2016, and will advise the government on how to deliver a simpler tax system, providing independent advice on options for addressing existing complexity in the tax system.

The terms of reference for the next OTS reviews on the closer alignment of income tax and NICs and the taxation of small companies were recently published.