As part of a six-month project to identify and measure the factors responsible for tax complexity, the Office of Tax Simplification (OTS) has published analysis of the use of definitions for three tax acts: the Inheritance Tax Act 1984, Taxation of Chargeable Gains Act 1992 and Corporation Tax Act 2010, following a six-month review period.

The review found that different definitions were used for the same term in tax and, on the basis of the sample, there were sometimes no obvious reason for this. It became apparent as the project progressed that definitions develop in accordance with what is needed at the time.

The OTS also stated that it would not be practical to reduce the numerous definitions to a smaller number of streamlined or common definitions as this could result in unintended consequences. As a result, the review team said that the most appropriate way forward is to focus on future definitions and try to identify features of a 'good' or helpful definition.

The OTS said that a 'good' definition will try to encompass clarity; focus on essential features; the use of an existing definition where possible; avoid circularity, figurative or obscure language; and be affirmative rather than negative.

It suggests improving the current tax definitions by introducing a tagging system for definitions in online data to create an online resource and the development of guidance for policy makers to summarise what makes a good and a poor definition.

The OTS paper is available HERE