George Osborne reveals his axemen for taxmen

• George Osborne is set to announce the new quango. Picture: Getty

Chancellor George Osborne is due to announce the creation of the Office for Tax Simplification (OTS), headed by former Tory Treasury minister Michael Jack and a leading financial analyst John Whiting.

The new independent body will be tasked with helping to give business a boost by tearing up thousands of pages of tax regulations, which the coalition government believes is holding the private sector and the recovery back.

The quango, which is to be set up for an interim period of 12 months, is the brainchild of Margaret Thatcher's first Chancellor, Geoffrey Howe.

It will be asked to produce two reports - the first on simplifying business tax and then a second on business reliefs.

However, the OTS will also have a wider brief of looking into issues which affect personal tax, including an attempt to make tax return forms simpler and less stressful. During the general election both the Tories and the Liberal Democrats pointed out that the book of tax regulations increased from 3,000 to 11,000 pages under the last Labour government.

Ministers are also concerned that the 400 different types of tax relief is overcomplicating the system.

The government has agreed with corporate leaders that the current system is too complicated and off-putting which drives away investment and stops new businesses.

It believes that a simpler tax system is a prerequisite for a private sector led recovery.

Exchequer secretary David Gauke, who will be launching the OTS with Mr Osborne, is expected to say: "The tax system created by the previous government was overly complex and has made the tax affairs of millions of families and businesses across the UK extremely complicated.

"We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal.

The OTS will provide important advice that will help inform us in making the right reforms to the tax system that will help to pave the way to bringing more international business to the UK, which will give our economy the boost it so urgently needs in the years ahead."

However, a spokesman for former chancellor Alistair Darling said that the previous government was working on simplifying tax, including an initiative to make capital gains tax more straightforward.

He also pointed out that the Institute for Fiscal Studies had said the current coalition government had so far further complicated the tax system by changing reliefs and changing the capital gains tax regime in its emergency Budget.

"Setting up this OTS is not a bad thing in itself, but the actions of this government do not suggest they are making things better," he said.

"We all want to simplify tax, but we have to balance it out with fairness."

There are also similarities between the new OTS and the Office of Budget Responsibility (OBR), another quango set up by Mr Osborne to make predictions on economic growth. Both are described as independent, but both are based in the Treasury.

Treasury sources have said that this is to save money and so the two bodies can interact properly with Treasury and HMRC officials.

Critics of the OBR have suggested that its presence in the Treasury building undermines its independence and point to the resignation of the OBR's first chairman Sir Alan Budd, only weeks after it was set up.

There was a guarded welcome from SNP Treasury spokesman Stewart Hosie, a member of the Treasury select committee which is looking at the issues surrounding the OBR.

He said: "I remember we had a tax rewrite which seemed to take ten years. So if this can move things on more quickly then it is to be welcomed.

"But we need to examine its structures, terms and remit before we can see whether it will be able to deliver."

There has been support for the new OTS, coupled with demands that it is allowed to be independent from the private sector.

Richard Baron, Head of Taxation at the Institute of Directors, said: "The important thing now is to make sure that the Office achieves some early successes, and that it goes on achieving.

"Its recommendations must not end up stamped 'too difficult' or 'maybe in the longer term'."

Ian McGowan, the director of tax services at solicitors and asset managers Turcan Connell said: "If successfully established and if it achieves the aims set out in Lord Howe's report, the initiative is to be welcomed especially if, as Lord Howe suggests, the OTS should seek to access the expertise of tax professionals.

"I think most tax accountants and lawyers, as well as the taxpaying public, would welcome this and would appreciate real simplification especially if it removes many of the grey areas which we currently face and leads to greater clarity."

Meanwhile, Isobel d'Inverno, director of corporate tax at Edinburgh law firm Brodie's, said that the new body can "only be a good thing".

"It is long overdue, although I think any thoughts that it can do this work in 12 months is ambitious.

"The problem is that in the past effort to do this have been piecemeal and we need an holistic approach.

"One thing though is that if you were starting with a tax system you would not start from where we are now."

Treasury sources said last night that the new body would be of "minimal cost" with the chairman Mr Jack and tax director Mr Whiting, previously of PriceWaterhouseCoopers not being paid for the job.