The not-for-profit consultancy says a number of possibilities lie in store for the UK’s tax system and argues that Brexit provides the opportunity for a ‘culture shift’ on tax policy.

It may also provide a generational opportunity to apply more rigorous, ‘systems thinking’ to the tax system, ironing out some of the inconsistencies and contradictions between individual tax measures that have resulted from years of incremental and piecemeal changes implemented by successive governments.

CoVi states: ‘This could result in a simpler and fairer tax system, assist a competitive business climate and help attract investment.’

The report makes a number of proposals, including introducing a coherent ‘theory of change’ which underpins tax policies. It suggests a joint sub-committee led by the Treasury and the department for business, energy and industrial strategy (BEIS) outline an industrial strategy tax roadmap to 2030. There is also a case for a ‘sunset clause’ to be applied to all new tax reliefs outlined in such a roadmap, so that the impact proposed is time-bound and subject to a review within a three to five-year period for example.

CoVi proposes that the Chancellor commissions a comprehensive review of tax reliefs prior to the UK’s formal exit from the EU, potentially conducted by the Office of Tax Simplification (OFT). In the longer term, this might be extended to a review of the opportunities for tax simplification more broadly.

In the short term, the think tank proposes that tax policy implementation is subject to additional scrutiny mechanisms via parliamentary select committees, rather than the main challenger role resting solely with the Treasury select committee and the public accounts committee, and that more resource is provided for this.

In the longer term it advocates a review of government structure and apportionment of responsibilities when it comes to tax policy making.

The report states: ‘With increased national competencies on tax, it may be more effective for tax measures to be assessed and implemented as a joint effort between the Treasury and other government departments, similar to other policy instruments.’

John Cullinane, CIOT tax policy director said: ‘The proposal for an industrial strategy tax roadmap is a good one. Enabling businesses to plan ahead with greater certainty about future tax policy should encourage investment and help counteract some of the uncertainty generated by the Brexit process.

‘Having the Treasury and the Business department collaborate on such a roadmap would be beneficial. Too often the two departments carry out their policy thinking in overlapping silos, despite obvious cross-over.’

Cullinane also said the suggestion that select committees, including those not traditionally looking at tax policy, could take on a greater tax scrutiny role had a lot of potential.

‘Thinking about spending-like tax reliefs alongside grants, subsidies and other measures administered by spending departments would be an aid to judging the most effective way to achieve the policy outcomes being sought by government, which might be tax, spending, regulation or some combination of these,’ he said.

However, Cullinane warned there was little time before Brexit to launch a comprehensive review of tax reliefs, as CoVi wanted, while the OFT was unlikely to have sufficient resource to meet such a tight timescale.

Responsible tax: New rules for Brexit Britain? Is here.

Report by Pat Sweet