Act now to get tax system working effectively, says Chartered Institute of Taxation

The Chartered Institute of Taxation (CIOT) has written to the new Chancellor and tax minister warning that the UK’s tax system is being threatened by underinvestment, inefficiency and over-complication. CIOT President Susan Ball has identified three areas where the CIOT feels action is needed to prevent the tax system from becoming ‘less efficient, harder to comply with and less effective in both raising revenue and supporting taxpayers’.

They are:
1. Prioritising investment in HMRC to maintain resources and capabilities, improve service levels and increase the effectiveness and efficiency of the tax authority.
2. Reviewing the timetable for the implementation of Making Tax Digital in order to address ‘unrealistic’ expectations that taxpayers are ready to comply with the transition to digital record keeping.
3. Being more ambitious in efforts to simplify the tax system making it easier for HMRC to administer the tax system and for taxpayers to comply with their obligations.

Susan Ball, above, writes: ““A properly funded and efficient HMRC is vital to the future of the UK, ensuring that tax revenues are collected efficiently while ensuring that the UK tax authority supports business in the drive to improve growth, productivity and trade. However, currently, HMRC’s performance standards are falling badly short and must be improved if HMRC are to play its essential role in supporting taxpayers and businesses.

“The Government should undertake to maintain HMRC’s existing resources and capabilities, coupled with a more ambitious mandate to improve standards of basic performance across the full range of HMRC activities including answering telephone queries, dealing promptly with correspondence, investigation and compliance activity and timely processing of new tax registrations and agent authorisations, as well as ensuring that these improvements are sustained for the remainder of the life of this Parliament.

“The investment required to sustain these improvements is urgent and essential, not just for taxpayers but for the sustainability of future government revenues, so should not be put at risk by any new wider public spending cuts or constraints.”

On making tax digital, she says: “Digitalisation offers the best way to improve the efficiency and effectiveness of the tax system, improve HMRC’s performance and enable it to provide better support for taxpayers trying to do the right thing. “However, there are serious concerns that the timetable announced to achieve this is becoming unrealistic.

“The Government should undertake an early review of the current MTD programme and its implementation timetable in the light of the lessons learned since its announcement in 2015, and the current digital landscape. It is more important to get this right than stick to previously announced timescales.”

SME Publications/ SME XPO 2024

Tax simplification

“The UK tax system has become far too complicated for taxpayers to understand and comply with. A complicated tax system is far harder to digitalise, as well as making it more challenging for HMRC to administer it effectively.

“In 2010, the Government established the Office of Tax Simplification (OTS) to provide a renewed focus for tax simplification. The OTS does good work, but its most ambitious suggestions have been ignored, and new laws anyway add complexity to the system faster than the OTS can suggest its removal.

“The new administration should undertake a more ambitious tax simplification programme and resist the temptation to make major structural changes to the tax system until this is done”.

In the letter Susan Ball emphasises CIOT’s keenness to work with the new Government, HMRC and other professional bodies to effect improvements in the UK tax system, focusing initially on the three priority areas identified in the letter. She adds that CIOT would welcome the opportunity to meet with ministers to discuss the issues raised.

SME Publications/ SME XPO 2024