Government urged to act now to get tax system working efficiently

The CIOT has written to the new Chancellor and tax minister warning that the UK’s tax system is being threatened by underinvestment, inefficiency and over-complication.

The Chartered Institute of Taxation’s (CIOT) President Susan Ball has written a letter to Kwasi Kwarteng and Richard Fuller MP, the new Economic Secretary to the Treasury, stating that action needs to be taken in the following areas:

1. Prioritising investment in HMRC to maintain resources and capabilities, improve service levels and increase the effectiveness and efficiency of the tax authority.
2. Reviewing the timetable for the implementation of Making Tax Digital in order to address “unrealistic” expectations that taxpayers are ready to comply with the transition to digital record keeping.
3. Being more ambitious in efforts to simplify the tax system making it easier for HMRC to administer the tax system and for taxpayers to comply with their obligations.

In the letter, Susan writes:

On HMRC investment:

“A properly funded and efficient HMRC is vital to the future of the UK, ensuring that tax revenues are collected efficiently while ensuring that the UK tax authority supports business in the drive to improve growth, productivity and trade.

“However, currently, HMRC’s performance standards are falling badly short and must be improved if HMRC are to play its essential role in supporting taxpayers and businesses.

“The Government should undertake to maintain HMRC’s existing resources and capabilities, coupled with a more ambitious mandate to improve standards of basic performance across the full range of HMRC activities including answering telephone queries, dealing promptly with correspondence, investigation and compliance activity and timely processing of new tax registrations and agent authorisations, as well as ensuring that these improvements are sustained for the remainder of the life of this Parliament.”

On Tax simplification:

“The UK tax system has become far too complicated for taxpayers to understand and comply with. A complicated tax system is far harder to digitalise, as well as making it more challenging for HMRC to administer it effectively.

“In 2010, the Government established the Office of Tax Simplification (OTS) to provide a renewed focus for tax simplification. The OTS does good work, but its most ambitious suggestions have been ignored, and new laws anyway add complexity to the system faster than the OTS can suggest its removal.

“The new administration should undertake a more ambitious tax simplification programme and resist the temptation to make major structural changes to the tax system until this is done.”

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