Most of the recommendations the institutes suggest through their Better Budgets report are aimed at HMRC and Treasury to enable a Budget that has fewer measures but which are more thoroughly though out.

The institutes' 10 suggestions are as follows:

One annual event

The institutes want the Chancellor to stick to the commitment of a single annual fiscal event as it will encourage a more professional approach to tax policy making.

Having fewer events mean that there will not be a need for ad hoc change and will lower the perception that chancellors have no clear sense of direction for individual areas of tax policy.

Priorities for tax policy

Chancellors should state their priorities and approach to the tax system early on. The report said: ‘While the uncertainties about revenue probably rule out a full-blown, long-term tax strategy, and some flexibility to respond to events should be retained, this would help to guide external contributions to the tax policy debate.’

Extend the road-map approach

A road-map approach should be used for tax to help businesses and individuals in planning and in enabling them to engage with government. The road-map would help explain the government’s reforms and would warn about potential changes. It could either be based around individual groups of taxes or take a more thematic approach, for example around housing.

Early consultation

Government should consult earlier on proposed changes to tax policy, this may lengthen timescales but will allow stakeholders to engage on a range of options. There should also be more regular calls for evidence on a particular policy problem.

More active approaches to consultation

The standard method of consultation is to issue a document and invite responses but HMRC and the Treasury should follow the OTS’s approach and develop new ways of engaging stakeholders to ensure that they hear from people who do not usually contribute to tax policy making. This could include focus groups and engaging difficult to reach groups.

The report states: ‘The Treasury could learn from other countries and other departments on how opening up issues can help to improve the quality of public debate and prepare the ground for future policy change.’

Prepare for future reform

The report said: ‘Independent reviews, commissioned by government, can prepare and expose the analysis behind tax choices in such areas, open up options that are currently too sensitive for discussion without ministerial commitment, and actively engage the public on some of the major issues facing the tax system in the future.’

Capability gap

The capability gap in tax policy making could be addressed by:

• Supporting moves to encourage deepening tax expertise in the Treasury and policy professionalism in HMRC;
• Finding ways of better tapping into external expertise; and
• Keeping the split of responsibilities between the Treasury and HMRC under review.

Overhaul internal processes

Enhancing internal capacity needs to be combined with an overhaul of internal processes. Some ways to reduce the irregularity between tax and spending, to ensure that measures are implementable are to:

• Make the Budget process more collective;
• Introduce expert early challenge;
• Make the Treasury permanent secretary accounting officer for Budget measures; and
• Introduce more challenge to Treasury/HMRC assessments of the impact of tax measures.

Enhance Parliament’s ability to scrutinise tax proposals

Tax legislation is often highly technical so parliamentary debate is often between HMRC and specialist external advisers through parliamentary surrogates. Parliament has to be better equipped to hold government to account for the way in which the tax system as a whole is functioning.

This could be by creating more transparency around Finance bills and the documentation; improving the scrutiny of the Finance Bill and increasing the support given to Parliament on tax issues.

Enable evaluations of tax measures

HMRC should make sure that tax measures are achieved at a reasonable cost. The report states: ‘the NAO has drawn attention to the lack of systematic effort put into evaluating the impact of tax measures. More systematic post-implementation reviews, ideally conducted independently of government, could then form the basis of scrutiny in Parliament.’

Jane Ellison’s response to the report is available here - Treasury chief Ellison pledges ‘steady, predictable tax regime’

Better Budgets: making tax policy better is avilable here.