No end for rewrite.

If Ethan Hunt, hero of the Mission Impossible movies, ever thought his work was getting a little difficult, he might give a thought to the men and women staffing the Tax Law Rewrite Project. Five years after starting their mission to rewrite tax legislation so that we can understand it, the team is nowhere near finishing and has carefully warned that it can in no way predict how much longer it will take. The team had confidently said, when it started in 1996, that it would only take five years to complete the work. Last week however saw the project publish only its first complete work, the Capital Allowances Bill, and just a couple of weeks ago it chose to expand its task by rewriting PAYE legislation. They might be considered gluttons for punishment, but the project has a serious side. Lord Geoffrey Howe, chairman of the project’s steering committee, speaking at the launch of the new Bill at Somerset House, last week, said: ‘It is half a century since Albert Einstein was reported as saying “the hardest thing in the world to understand is income tax.” One wonders what Einstein would make of it today.’ If Einstein could not understand it, then it’s obvious that tax law is in need of some clarification. It should come as no surprise that once the project began it became clear it would need much more time. At the Bill’s launch Lord Howe, Nick Montagu, head of the Inland Revenue and Neil Munro, director of the project, all commented on the time it was taking to get through the work. The briefing papers put out by the project team clearly state that putting a deadline on the work is impossible. It says there is ‘no current estimate because it is impossible to predict how long the work will take until all the details have been thoroughly researched and analysed.’ Munro said there had been serious thought given to how the whole thing could be accelerated. ‘One way of speeding up would be to cut back on the process of consultation, because it is very time consuming,’ he said. But that was thought inappropriate. ‘Because I think it’s an important part of the process and we get a lot of good ideas from private sector professionals involved in the consultation,’ he added. Another factor extending the project is its stated aim of not just rewriting, but restructuring the legislation too. This means taking the legislation apart and putting it back together ‘in a more logical order’. This is an immense undertaking in addition to that of providing more understandable language. Munro is clear that he does not want to skimp on the project and won’t cut corners. And it’s with good reason. There are two major traps the team must avoid. First, in rewriting to create clarity, care must be taken to not inadvertently change the law itself. Secondly, and perhaps most controversially, the team must not become involved in ‘simplifying’ our tax regime. If there is criticism of the rewrite project, it is that it is almost pointless without tackling the vexed subject of simplifying the system. But simplification is the province of the Revenue’s political masters, though the project team publicly professes the need. Lord Howe recognises the problem openly. He said: ‘Indeed the work of the project is drawing attention to the crying need for such simplification. As the project makes the legislation clearer, so it exposes to full public scrutiny the hideous complexity of some of the underlying policy. ‘In our recent reports we have been drawing attention to tax topics which cry out for simplification – or excision. We shall continue to do so.’ And if making the legislation clearer seems daunting, even greater efforts will be needed to address the enormous complexity of the system. REWRITING HISTORY February 1997 – First meeting of the steering committee, chaired by Lord Howe, to discuss its role in the rewrite project. July 1997 – Publication of the first exposure draft on the trading income of individuals. July 1998 – Second tranche of rewritten clauses is made public in another exposure draft and six more are planned within 12 months by the Revenue. October 1998 – Rewritten legislation for capital allowances published for consultation. June 1999 – Sixth exposure draft is published. More drafts are to follow. July 2000 – First draft Bill on capital allowances is published. MISSION FOR CLARITY The project was set up in 1996 to rewrite all, or most, of the UK direct tax code – more than 6,000 pages of legislation, enacted over the last 200 years. The project is currently working on income tax and capital allowances. The main features of the project are that it intends to restructure legislation into a more logical order. It is not just a ‘Plain English’ makeover. However, the rewrites will use shorter sentences, clearer signposts to related provisions and more consistent definitions. It is also innovating with more reader aids such as tables, formulae and method statements. The project will not be involved in changing the main tax policies but will mean full consultation with the users of tax legislation. Tax system in ‘worst state ever’ Warning to ‘tax planning industry’

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