In a letter to Chancellor George Osborne, Tyrie says the government should act on a commitment in the Conservative’s pre-election manifest to establish the OTS on a permanent basis and ‘expand its role and capacity’.

Tyrie writes: ‘In a nutshell, the OTS needs demonstrable independence, a strong voice with the expectations of more visible leadership, and the ability to develop its work over a longer period.’

When the OTS was set up, Tyrie admits he was not an enthusiast for the new body, believing that HMRC’s own central policy unit could act as a ‘office for tax simplification’, but says that now the OTS exists it should be a given ‘a fighting chance of doing a  good job’.

Part of the reason for Tyrie’s change of heart is his view that ‘simplification needs a stronger ally’. In his letter he says that over the last 10 to 15 years, HMRC has come under increasing political pressure which has ‘reduced its leadership’s effectiveness in tackling the simplification agenda.’

Tyrie says the OTS as it is currently set up is limited to making recommendations for simplifying the tax system but is not able to link the specific objective to a wider purpose. He says work carried out by the Treasury select committee in the last parliament suggests the OTS should be a statutory body with a reporting line to Parliament and an independent leader, a situation he describes as ‘a long way from its current position.’

Under the proposals, which Tyrie says he has discussed with a number of people including John Whiting, the OTS tax director, the OTS would be required to produce an annual review of the tax system to be laid before Parliament. This review would assess whether the tax system is getting simpler or more complex.

The OTS would also probably have a duty to report on the government’s progress on meeting its recommendations and should also respond to ‘reasonable’ requests from either the Treasury or Parliament.

The changes would require additional resources, which Tyrie suggests could be provided via secondees from HMRC and the private sector.

However, he cautions that care must be taken to avoid the OTS being perceived as ‘a lobby group of the business community’. It should also not be seen as an extension of either HMRC or the Treasury, or develop into an all-purpose think tank, and should avoid becoming what Tyrie calls ‘an academic research centre producing theoretically attractive but impractical proposals’.

The OTS was originally set up by Osborne in July 2010 after the coalition came to power to carry out reviews of tax rules in order to provide expert advice to the Chancellor on options to improve and simplify the UK’s tax system. It has since looked at a number of areas, including small business taxation, pensioner taxation, share schemes, employee benefits and expenses, and tax reliefs.

However, there has been criticism that despite various proposals on simplification of business expenses and R&D releifs for example, many of these were rejected or only adopted piecemeal under the coalition government.