THE OFFICE OF TAX SIMPLIFICATION should operate independently of the Treasury and have a greater role in shaping taxation’s economic purpose.
That’s the view of Conservative MP and chairman of the Treasury Select Committee Andrew Tyrie (pictured), who has written to the chancellor to advise on expanding the body’s role and capacity.
Expanding the OTS was part of the Conservatives’ manifesto during its election campaign, and was confirmed by financial secretary David Gauke this month.
Currently, the OTS’s role is limited to making recommendations to simplify the UK’s tax system, something “not linked to any wider purpose”, Tyrie said.
The six-strong body, led by former CIoT tax policy director John Whiting, should “improve the efficiency of the tax system by simplification,” Tyrie wrote, adding “Simplification requires certainty. Certainty should therefore be central to the work of the OTS”.
OTS independence ‘pivotal’
The independence of the OTS is pivotal to its success, the MP for Chichester said, noting the “structural support for its independence needs to be sufficiently robust to protect it from a number of means by which its independence may be compromised”, such as potential to be perceived as a business lobby group.
In order to achieve those ends, Tyrie suggested the Office for Budget Responsibility offers a useful model, with a statutory base, a clear line of accountability to parliament, a mechanism to entrench the independence of the body’s leader with a ‘double lock’ on their appointment and dismissal, and a small board.
While he agreed the OTS requires greater resource, a vast increase may not be necessary, he said.
“Much could be achieved by securing secondees from HMRC and from private sector firms,” he wrote. “HMRC should, in any case, have a duty to provide the OTS with support.”
The OTS launched a project in November 2014 to review employment statuses in the UK, and also to delve into the workings of the tax penalty system. It reported in March that there were too many variations of tests for employment, and a definition of self-employment in law was lacking.
The OTS has also called for the merger between income tax and National Insurance.
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