21st May 2015

The man charged with coming up with ideas to simplify the UK tax system has thanked people in the North East for their contribution towards informing his recommendations.

Newcastle-based chartered accountants, business advisers and tax specialists UNW brought John Whiting OBE, tax director of the UK Office of Tax Simplification (OTS), to the North East to speak to company bosses and private clients at a recent seminar.

The OTS was set up early in the Coalition government to review the tax system and suggest how it could be simplified.

It officially came to an end when Parliament was dissolved in March but as the new Conservative government’s manifesto commits to “establish the OTS on a permanent basis and expand its role and capacity”, staff are hopeful if will continue for a further five years.

“I would have loved to have had the power to change the tax system but our brief was only to make recommendations,” explained Mr Whiting, who previously spent 25 years as tax partner at PricewaterhouseCoopers and is a non-executive director of HM Revenue & Customs.

The recommendations framed by the OTS were based on evidence gathered from businesses, individuals, academics, HMRC and others.

“I know some of you in the North East have contributed. We use what people tell us and come up with ideas but we also have to have regard to the revenue implications. For example, we could make simple recommendations like abolish income tax but clearly there has to be a balanced package,” he said.

Four and a half years ago, the OTS found there were 1,042 different tax reliefs and it recommended 40 be abolished. Although 43 were dropped, the total has since increased to 1,156.

“Nobody will know what they all are. It’s an exemplar of what’s complex about the system,” said Mr Whiting.

The OTS made 402 recommendations in the last Parliament, including 60 “big picture” changes.

“We are interested in simplifying the system technically, for example chopping out bits of legislation, but we’re almost more interested in the administration side. In other words, if it’s easier to fill the form in it doesn’t really matter about the underlying method,” Mr Whiting explained.

It has suggested the penalties imposed for late payment of tax to be reviewed.

“A lot of late payment penalties didn’t seem to be working. We looked at if they were really promoting behaviour change. A £100 penalty for self-assessment late payment may be money for the government but you also need to ask if it’s worth it,” he said.

A full HMRC consultation to reform the penalty system is now underway.

The OTS also looked at how it could cut the 4.5 million people filing in P11D expenses form every year – half a million of which are for expenses under £100 – and came up with a plan that would cut it to just one per cent of the total.

Lee Muter, employment taxes partner at UNW, said: “Taking out P11Ds would be a fantastic simplification, The OTS reports are worth reading. They are really well written and come up with a lot of sensible recommendations.”

The seminar in Newcastle also saw experts from UNW explain imminent changes to the tax system, for example the end of employer administered childcare vouchers from this autumn, and further changes due in April 2016.

“We can advise any business owners on how they can best prepare for changes in 2016 and we will be watching closely for any post-election changes,” said Mr Muter.

In his independent assessment of the impact of the most recent tax changes, UNW corporate tax specialist David Ward reflected that incentives to invest in plant, fixtures and fittings were helping businesses in the region.

“Support for disadvantaged areas including business property renovation allowance relief, which awards additional grant money or additional tax relief if you’re converting or renovating empty business premises, has also been very good for the North East,” he added.

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