At least 280 anomalies in the tax system are costing taxpayers up to #1bn a year, it has been claimed.
A new report from the Chartered Institute of Taxation focuses on a myriad of ‘valid’ items of expenditure which do not attract tax relief, even though they have been incurred in connection with a taxable income or gain.
These items are dubbed ‘nothings’ in the report because they ‘do nothing but harm to businesses and can be unfair and capricious to individuals’.
The institute commissioned the report to put pressure on the government to simplify the tax system.
John Whiting, chair of the institute’s tax administration sub-committee and head of direct tax at Price Waterhouse, said taxpayers were losing ‘hundreds of millions of pounds’ – possibly up to #1bn a year.
He added: ‘While many of the nothings are deliberate revenue-raising or political moves, too many are accidents of history.’
Tax consultant Daron Gunson, who researched the report, said: ‘The present piecemeal approach to dealing with nothings is unsatisfactory – a more radical approach is needed.’
The report highlights, for example, how a bank or building society can get tax relief in the form of capital allowances if they build a strong room, but a jeweller or casino does not share the same right.