The Office of Tax Simplification (OTS) has released its first annual report, stating that digitisation of the tax administration means its remit ‘has never been more important’
In its report for 2016/17, the OTS said it has a ‘full and challenging programme ahead’, with reviews on corporation tax computation and stamp duty due in the summer, and a VAT review in autumn.
Other work being considered includes Making Tax Digital (MTD), capital allowances, patient capital and the gig economy.
‘Our longer term work programme will continue to evolve and develop; we always welcome views and suggestions. The challenges of the digital economy and how new technology might be harnessed to simplify the experience of using the tax system will certainly feature,’ it stated.
In its 2016 report into the gig economy, the change in working patterns was identified as an area where the Treasury's tax take could be adversely impacted. The fall in take was attributed to the transient nature of contractors’ work with clients, and that some will be taxed via PAYE and some will not. The OTS has suggested those providing ‘platforms’ for gig work will need to check the people they engage with have a relationship with HMRC.
‘As the opportunities and risks of Brexit approach, the economy and ways of working change and as technology and the digitisation of tax administration develop, the involvement of the OTS with its simplification remit, has never been more important,’ the report said.
‘At the same time, it has to be recognised that while the OTS offers advice on simplification, the government will always need to balance ease of administration, economic and political factors, avoidance and other considerations in determining whether to take proposals forward. The role of the OTS is to propose and to stimulate discussion and debate as well as to make specific recommendations.’
The OTS was made a permanent independent office in 2015, before it was put on a statutory footing last autumn in the Finance Act 2016.
Its budget for 2016/17 was £770,000, of which the pay element was £588,000.
It has conducted 14 major projects and produced more than 40 reports between 2010 when it was formed, and 2016. The office has put forward 450 recommendations, of which more than half have been accepted, with a quarter still under consideration.
Key changes it has driven include the introduction of cash basis of accounting for calculating tax; reforms to remove P11Ds; the abolition of Class 2 NICs; and streamlining the reporting of share schemes.
John Whiting, who led the OTS from its inception in 2010 as director, stepped down in March 2017. He was replaced by Paul Morton.
The OTS' annual report is here.
Report by Kevin Reed