Whiting says full NI/income tax merger is unlikely

THE HEAD OF the review into tax simplification has said that he does not expect there to be a full merger of the National Insurance and income tax systems, but steps towards that would produce simplification in itself.

John Whiting’s Office of Tax Simplification review into small businesses called on the government to set out a timetable by the end of the year that charts a move towards an integration of the systems. However, he told Accountancy Age that it is unlikely a full merger would happen.

“We would like to have the chancellor say he is up for this,” he said.”Let’s make a serious commitment by the end of the year. I do not think we will get to a complete merger. But as you plot it through there is a heck of a lot we can do to synchronise things.”

He suggested that the government should consider smoothing out the differences between the systems, put NI onto an annual basis like PAYE and remove its contributory principle. “All these would simplify, even if you don’t feel you can get enough gas to amalgamate them because of difficulties with pensions and the like,” he said.

Work and pensions secretary Iain Duncan Smith this week set out plans to implement a flat rate state pension. Whiting said this was coincidental but added “it takes away one of the great barriers to integration”.

“To a greater or lesser extent, we are all pushing in similar directions,” he added. “The Mirrlees Review looked at the theoretical end and concluded it would make sense. We’ve done the bottom-up, going round talking to businesses, finding out what causes problems, and it makes sense. To the likes of [business secretary Vince] Cable and Duncan Smith, it makes sense.”