Over a thousand tax reliefs – five times as many as expected – have been identified by the panel charged with simplifying the “spaghetti bowl” of tax rules for the Treasury.
The Office of Tax Simplification will seek to identify the reliefs and allowances that are too complex, burdensome or irrelevant, reporting back to the Treasury later this year. It published the complete list of 1,042 allowances and tax reliefs on Monday, along with an invitation for feedback from those who use them.
Attention is likely to focus on obscure-sounding allowances such as “angostura bitters relief”, which ensures a reduced rate of excise duty for an ingredient in pink gin. John Whiting, tax director for the Office of Tax Simplification, said odd-sounding reliefs were bound to be looked at closely although he was wary about being prejudiced. “What strikes me as daft might be seen as vital to somebody else.”
Mr Whiting said that at the launch of the project in the summer, he had expected to uncover a couple of hundred reliefs. He said people would be surprised by the sheer number of reliefs in the tax system, but he added that there was no target for the reliefs that needed to be axed.
Criteria for considering the abolition of a relief include factors such as cost of administration and the complexity and length of the tax legislation it requires.
Separately, Revenue & Customs set out its intention to deliver real-time information for the pay as you earn system by April 2014 in its business plan published on Monday. It said the move would support tax collection and the introduction of universal credits, which is an important plank of the government’s welfare reforms.
The business plan said a move to raise £7bn of additional tax revenues by spending £900m was based on targeted campaigns and interventions, specific actions to tackle offshore avoidance and evasion, preventing avoidance before it happens, tackling organised criminals and fraud and improved debt collection.
The plan was criticised by the Institute of Directors on the grounds that details of this proposal would not be published until April. Richard Baron, head of taxation at the IoD said that detailed plans should have been in place before the money was allocated. “We should be very concerned that key parts of the HMRC’s business plan do not yet exist and are only promised.”
But the IoD welcomed the proposal for the pay as you earn system which it said could help reduce the administrative burden of PAYE. “Overall the sentiments in the business plan are worthy, and the intentions are the right ones. In some areas, specific big tasks that will clearly take several months to perform are identified. Those tasks are sensible ones that could deliver real improvements, and the timescales are reasonable.”