The Labour and the Conservative parties should have included bringing back the Office of Tax Simplification, clarifying the UK’s anti-avoidance legislation and investing in skills at HMRC in their manifestos, says Phil Blackburn, Senior Tax Partner at Lubbock Fine, chartered accountants and business advisors.
Phil Blackburn says the next Government has an opportunity to make a sharp improvement to Britain’s tax system by making three simple changes, which have not been covered by either manifesto:
- Bring back the Office of Tax Simplification
The Office of Tax Simplification was scrapped as part of Liz Truss and Kwasi Kwarteng’s September 2022 ‘Mini Budget’. Phil Blackburn says that the next Government should reinstate it.
Says Phil Blackburn: “The OTS did excellent work in helping to make tax in the UK easier to understand. A system that’s easier to understand is a fairer and cheaper system to deal with for everyone.”
- Invest properly in HMRC skills and qualifications to help deal with HMRC’s customer service crisis
Phil Blackburn says that much of HMRC’s backlog of investigations and complaints could be cleared far more quickly if HMRC invested in hiring more qualified staff.
Says Phil Blackburn: “A lot of HMRC’s front-line staff struggle to deal with problems outside the most commonplace. That means too many issues end up dragging on for months and even years, costing both taxpayers and HMRC itself money. Those cases can even end in completely unnecessary disputes and litigation.”
“Dealing with other tax authorities like the IRS in the US is a very different experience. Issues are immediately escalated to experts and solved much more quickly. That should be the benchmark for HMRC.”
“It’s disappointing to see that none of these improvements to HMRC were included in either manifesto. Labour has promised more investigations but without greater expertise at HMRC, they won’t be as effective as they could be.”
- Clarify anti-avoidance rules to protect innocent taxpayers
Since 2010 HMRC has amassed a huge range of new powers to investigate and penalise people involved in tax avoidance. This anti-avoidance legislation is drafted very broadly. For example, the General Anti-Abuse Rule (GAAR) allows HMRC to label a very wide range of arrangements as tax avoidance if it chooses to.
Unfortunately, lots of innocent taxpayers end up falling foul of anti-avoidance legislation because it is too widely drafted. Phil Blackburn says that the next Government should tighten the UK’s anti-avoidance legislation to stop this happening.
Says Phil Blackburn: “HMRC’s anti-avoidance powers were drafted too quickly and too broadly. As a result, both taxpayers and HMRC waste money on a lot of investigations that get dropped because nobody did anything wrong. A lot of that could be avoided if the anti-avoidance rules were clearer.”
