CIOT says tax code complexity risks serious malfunctions

The Chartered Institute of Taxation (CIOT) has issued its representations paper for the Budget 2002. The paper warns that complexity in the tax code has reached the point where there is a danger of serious malfunctions in the operation of the tax system.

The primary issue in the CIOT's budget representation is 'simplification.'

'This affects tax authorities in their administration and taxpayers in meeting their obligations and understanding their rights,' the paper says.

'The CIOT urges the Government to address these issues without further delay, suggesting that the matter of simplification should be dealt with in two ways:

1) Reviewing, simplifying and consolidating existing legislation;

2) Ensuring that new policies and legislation are drafted with simplification in mind.'

The Institute's budget representations look at complexity in general, as well as other issues, including the problems faced by those completing personal self-assessment tax returns.

John Whiting, CIOT President, commented on how IR35 had come to be included in the representation.

He said, "Our recent survey of consultations pointed to IR35 as an example of a change where steps were missed out of the ideal consultation process with what can best be termed 'unfortunate results.'

"We have previously called for the Revenue to revisit their guidance in the area (the employed v. self-employed issue). Many people - especially of course those involved with IR35 - need to make judgements of their status and there is a need for the available guidance to be as up to date, clear and balanced as possible."

Vincent Oratore, Chairman of the CIOT's Technical Committee, said:

"We focus on the special problems that complexity brings to small businesses acknowledging the role that such businesses play in the 'enterprise and productivity' this Government wants to encourage.

"We are aware of the work on simplification which is already being done in this area, but feel that it is not going far enough.

"Knowing the Government's stated aim of making 'the UK the best place in the world to start and run a business,' we also suggest various individual areas of tax legislation which we think should be modernised in the next Finance Bill and which we believe would help to achieve this aim."

The Institute says it is looking forward to the consultation process which begins with the Budget and ends with the enacting of the Finance Bill. It is urging the Government that 'all that can be done is done to make this process as smooth, efficient and open as possible.'

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Richard Powell, UKTECH