In A change of tack from the usual public lobbying that accompanies the run-up to the Chancellor’s Budget, I would like to make a plea for George Osborne to use this annual event to start the process of simplifying the tax system and introducing more transparency to his accounts.
You could forgive taxpayers and, indeed, even tax advisers like myself for feeling somewhat overwhelmed in trying to navigate a safe passage through the existing UK tax system. As I look here from my desk, I stare at eight volumes of tax legislation stretching to more than 25,000 pages of text, with the situation only getting worse. Last year’s Finance Act stretched to 229 sections and 39 schedules for what was a relatively modest Budget.
In addition to simplification of the system, more Budget transparency would not go amiss.
We often hear of tax changes that will not occur for another 12 months, such as last year’s 45p rate announcement, which will not take effect until April. As well as adding to the existing mountain of legislation, this creates further complexity and opens the door to loopholes and grey areas. This can also result in a game of cat and mouse between the taxman, who wants to maximise revenues, and the taxpayer who, in the vast majority of cases, wants to pay no more than what they interpret to be their fair share.
As we have seen in well publicised cases involving celebrities and multinational companies, the consequence of this approach is that it creates a level of mistrust and a blurring of the lines between what is perceived as acceptable and non-acceptable tax planning. We now have a system that is so complex that it is difficult for a taxpayer with a modicum of detailed financial affairs to be sure that he or she can navigate their way safely to file their own tax returns accurately.
While we have to acknowledge that we live in a complex world requiring ever changing priorities and solutions, a more simplified tax code and fewer changes may instil greater faith in the system. However, with a Treasury simply fixed on increasing tax yields, this may simply be a pipe dream for some time to come.
• Peter Young is a tax partner at Johnston Carmichael.