How To Simplify The Tax System

 

How to simplify the tax system:

1. Reduce the number of taxes. The UK has a complex tax system with a wide variety of taxes, including income tax, corporation tax, capital gains tax, National Insurance, VAT, excise duties, and stamp duty. Reducing the number of taxes would make the system simpler and easier to understand.
2. Flatten the income tax brackets. The UK income tax system has five different tax brackets, with rates ranging from 20% to 45%. Flattening the income tax brackets would reduce the complexity of the system and make it easier for taxpayers to calculate their tax liability.
3. Remove the personal allowance taper. The personal allowance is the amount of income that you can earn before you start paying income tax. The personal allowance is currently £12,570, but it is tapered away for higher earners. Removing the personal allowance taper would simplify the system and make it fairer.
4. Reduce the number of tax reliefs. The UK tax system has a wide variety of tax reliefs, which can be complex and difficult to understand. Reducing the number of tax reliefs would make the system simpler and easier to comply with.
5. Improve the tax code. The UK tax code is over 100,000 pages long and is constantly being updated. This makes it difficult for taxpayers to understand their tax obligations. Improving the tax code would make it simpler and easier to understand.

These are just some of the steps that could be taken to simplify the UK tax system. By taking these steps, the government could make the system simpler, fairer, and easier to comply with.

In addition to the above, the government could also consider the following:

• Consolidating tax legislation. The UK tax code is currently spread out over a number of different Acts of Parliament. Consolidating this legislation into a single document would make it easier for taxpayers to find and understand the rules that apply to them.
• Using technology to improve tax administration. The government could use technology to improve the way that taxes are collected and administered. This could include things like using online filing and payment systems, and making it easier for taxpayers to get help and advice.
• Working with businesses and taxpayers to improve the tax system. The government could work with businesses and taxpayers to get their input on how to improve the tax system. This could be done through things like surveys, focus groups, and roundtables.

By taking these steps, the government could make the tax system simpler, fairer, and more efficient.

Suffice to say, it won't!

Tax does have to be taxing.

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LITRG's 40 Pillars of Wisdom

 

Given that tax professionals have enough trouble trying to understand tax legislation and deal with HMRC, it is hardly surprising that the hapless taxpayers are completely at sea.

As such, the Low Incomes Tax Reform Group have come up with 40 recommendations  Good Guidance: The importance of effective guidance for unrepresented taxpayers, that they hope HMRC will adhere to in order to help the hapless taxpayers who fund the state and its organs. 

Here are the first 10 recommendations, the full report can be accessed via the link above.

Recommendation 1: The level of technical detail offered by a page of guidance should be immediately clear when landing on a page. 

Recommendation 2: HMRC should publish guidelines to help guidance writers decide what matters and circumstances to include and exclude. 

Recommendation 3: HMRC should consider how their user testing can be expanded to determine whether users get to the right answer, not just whether they find guidance easy to use. 

Recommendation 4: HMRC and GDS should review ‘user need’ requirements from the perspective of unrepresented taxpayers, to ensure they do not represent a barrier to effective guidance being published for this group. 

Recommendation 5: The GOV.UK feedback route which offers a reply to the user should be easier to find. 

Recommendation 6: HMRC should design and implement an ongoing process to help proactively identify areas where guidance is missing, and rectify these areas as soon as they are identified. 

Recommendation 7: Whenever any changes or new policies are introduced, there should be a published guidance assessment to ensure that any associated guidance is as complete as possible. 

Recommendation 8: The search function on GOV.UK should be much improved to ensure users are directed to the most appropriate pages, potentially by working with commercial search engines to improve underlying technologies behind it. 

Recommendation 9: Guidance should always clearly state its intended audience and scope. 

Recommendation 10: Where exceptions apply, links should be provided to more information on those exceptions

I wish the LITRG good luck in trying to get HMRC to implement these, given that had HMRC followed its charter the recommendations would in the main be unnecessary!

Tax does have to be taxing.

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• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

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Baroness Neville-Rolfe Says Tax Complexity Is a "Slow Killer"

Baroness Neville-Rolfe, in a speech on business growth and tax, revealed that the addition of “hundreds of complications” over the past 10 years had doubled the number of words in the tax code.

Estimates put its length now at up to 10 million words. Factor in “a confusing and growing regulatory system in sector after sector” and you have a recipe for dampening business growth, whatever the strength of the underlying economy.

“With a simpler approach, we could have avoided some embarrassment, I refer, for example, to Making Tax Digital, to those trading with the EU who are finding it so difficult to get the tax codes they need to export post Brexit, and to the wretched loan charge fiasco.”

Tax complexity, she said, is a “slow killer”.

Sadly the complexity will continue to increase!

Tax does have to be taxing.

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The £37BN Tax Burden - Whither Simplicity?

HMRC has collected £37bn from brand-new taxes that it has introduced over the last decade, according to UHY Hacker Young.

The eight new taxes and levies on business cost £7.6bn in 2018/19, up from £7.4bn the previous year, but UHY Hacker Young warned that the success of these new taxes could lead to more.

Clive Gawthorpe, partner at UHY Hacker Young, said:

“Adding new taxes and placing a heavier burden on businesses does not seem to fit in with the Government’s aims to simplify tax.

These new taxes have already brought in billions of pounds in a relatively short space of time. If we want tax simplification shouldn’t we be reducing the number of taxes?

Each new tax adds more and more of a burden on businesses. Given the economic uncertainty perhaps the Government should be holding off on plans for new taxes.”

Tax does have to be taxing.

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Head of Office of Tax Simplification Helps Set Up Tax Haven

Angela Knight has been head of the Treasury's Office for Tax Simplification since 2015, when George Osborne gave her the job, charging her with "simplifying the UK tax system".

VICE reports that since February 2018, Knight has been Deputy Chairman of the Astana Financial Services Authority in Kazakhstan. Her job is to help this board regulate the "Astana International Financial Centre" (AIFC), a tax haven being set up by the President of Kazakhstan.

Does this matter?

Some argue that tax havens facilitate not only tax avoidance (perfectly legal) but tax evasion and money laundering (both of which are illegal).

However, fear not, a spokesperson said:

"The appointment to the Astana Financial Services Authority was fully declared, considered appropriate, and entered on Angela Knight's register of interests. The role in Kazakhstan involves advising the Kazakh authorities on how to improve their governance and financial regulation."

See, nothing to see here at all!

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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Dominic Rabb Proposes Fines For HMRC Blunders

Kudos to Dominic Raab MP who has outlined what should be done about the unmitigated shambles that is HMRC in a new paper for the TaxPayers’ Alliance, recommending ways to simplify the system.

As he notes, the UK tax code is too long and complex. That has facilitated tax avoidance, undermined UK competitiveness and led to the taxman (HMRC) acquiring arbitrary powers. This report sets out five proposals to simplify the tax system, make it fairer and more competitive, and limit the scope for abuse of small and medium enterprises (SMEs) and individual taxpayers.

I most certainly fully support the recommendation that clear financial penalties should be imposed on HMRC to compensate taxpayers who suffer from the arbitrary use of new powers.

However, he has missed out one very necessary reform that I and others have been calling for over the years. Namely that HMRC should have its own ministerial office and cabinet member responsible and accountable for it.

Tax does have to be taxing.

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Osborne's Complex Tax Legacy

Osborne once (2007) called for the tax system to be simpler, in 2010 he set up the Office of Tax Simplification.

Fast forward to the 2016 Finance Act and we see nothing simpler, but in fact an additional 649 pages of complex tax legislation on top of the 11,000-plus pages already in existence

The ICAEW Tax Faculty estimates that during his tenure as Chancellor, Osborne was responsible for 3,896 additional pages of tax legislation.

Some legacy!

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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Whither Tax Simplification?

Now that the General Election is done and dusted, will our political masters address the complex monster that has become the UK tax system?

Will they fark!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Tax System Approaching Chaos

Chaos is now the operative word for our dysfunctional tax system.


The Institute for Fiscal Studies has looked at the system, and notes that there are certain areas where a person can theoretically pay 60%, 70% or even 100% tax.


Paul Johnson, who undertook the research, quoted in the Telegraph argues that our tax regime lacks coherence to a degree “approaching chaos”.

How do these huge marginal rates of tax arise?

It’s because special tax benefits and allowances have been introduced over the years. And then they have been withdrawn again under subsequent means-testing.

Jason Piper of the Association of Chartered Certified Accountants, explained the phenomenon in relation to child benefit.

“The child benefit you get is entirely 'taxed away’ if you earn over £60,000, but all yours if you earn under £50,000. Between those two levels of income you suffer a charge equal to 100pc of your child benefit.”

What ever happened to simplification?


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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Tax Simplification

Catching up with the Finance Bills passed since May 2010 - just the 2,564 pages. So much for tax simplification... pic.twitter.com/5ajJU3Q1fY

— TaxPayers' Alliance (@the_tpa) March 18, 2015

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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What a Whopper!

The Finance Bill received Royal Assent on 17 July 2014 and Finance Act 2014, at 646 pages, is the second longest Finance Act ever.
 
I thought this government had promised simplification?

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Greek Tax Anger Management Courses

My sympathies to the staff of the Greek revenue service, who seemingly have to endure levels of anger and threats of violence that far exceed those endured by their counterparts in HMRC. The situation has become so bad, that Greek tax staff are being put through compulsory anger management courses.

The Guardian quotes Fotis Kourmouris, a senior official at the finance ministry's public revenues department:

"Today, in Greece, everyone is either unhappy or angry when they have to go and pay at the tax office.

There is a lot of negative emotion … in the framework of better customer service, classes in psychological and emotional intelligence had become necessary.

Every employee who deals with customers will attend them over the next six to eight months.

We are not only trying to improve relations but break the vicious cycle. Tax offices blame citizens [for the country's fiscal woes] and citizens blame tax offices for all their problems. It is important that trust is rebuilt."

While the rich and well connected are perceived to get off scot-free, Greek tax inspectors have found themselves at the sharp end of popular rage. In recent months visiting auditors have been chased out of remote villages, hounded out of towns and booted off islands by an increasingly desperate populace.

Trifonas Alexiadis, vice-chairman of the national association of employees at state financial services said:

"We've had multiple cases of violence at tax offices by angry members of public, including physical assaults; shots were fired in one case, and one attacker came with an axe."

A series of new tax laws has further fuelled public anger. Since the outbreak of the Greek debt crisis, close to 30 new levies have been introduced by governments desperate to augment empty state coffers.

Standing in line on the first floor of a graffiti-splattered tax office in central Athens, an accountant Heracles Galanakopoulos said:

"They produce a law that nobody understands and then produce another three to explain it. By the time people get here they are really very angry.

I spend at least five or six hours a day reading up on all these new laws and still can't keep up. Anger management is a nice idea but in a system that is so absurd it's not going to make a jot of difference."

Let us trust that our politicians take note, and start to make good on their "promises" to simplify our tax system!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



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HMRC Simplicity Awards

On the 3rd of December HMRC presented awards to those who, in the opinion of the judges, have helped make the tax system more simple and transparent.

Members of the judging panel included recent British Accountancy Awards Outstanding Contribution winner Paul Aplin, Tax Aid's Rosina Pullman and Taxation's Mike Truman. HMRC's panel members were Jim Harra, Ruth Owen and Jennie Granger.

The recipients were:

- Public Protection Division of Blackpool Council - for its support of the Blackpool Holiday Industry taskforce launched in July 2013;

- Karen Thomson, Chartered Institute of Payroll Professionals and member of HMRC's Administrative Burdens Advisory Board - for helping to ensure that the impact of Real Time Information (RTI) on employers and their payroll processes was minimal;

- Philip Paur, Deloitte - for his contribution to the development and delivery of HMRC's policy and operational delivery on expatriate taxes;

- Brian Palmer, AAT - for his dedication to transparency, including being instrumental in driving HMRC's decision to publish information about post and contact centre performance.

The awards were presented by David Gauke, who is quoted by Accountancyage:

"There is some excellent work going on between HMRC and the tax community. By listening to and working with tax professionals HMRC can make the tax system in the UK as simple and transparent as possible."  

A fair way to go though methinks!


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Tax Simplification? - My Arse!

As per Andrew Neil:

"Tolley's Tax Handbook, the bible of British tax, now 11,500 pages long. Doubled under Gordon Brown. And still growing under G Osborne."

Whatever happened to the Orifice for Tax Simplification?

As per Gauke in July 2010:

"The tax system created by the previous government was overly complex and has made the tax affairs of millions of families and businesses across the UK extremely complicated.

We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal."

However, as I noted at the time:

"..politicians by their very nature abhor 'simplification' as it makes them 'redundant' in the eyes of the voters."

Some two and half years on and nothing has changed for the better!

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Size Matters!

Congratulations to George Osborne for outdoing himself this year, with the size of the Finance Bill 2012.

It weighs in at a stonking 686 pages (across three volumes, 227 sections and 38 schedules.), the largest in history.

How the fuck are HMRC and other tax professionals meant to work their way through that and understand it?

Was it not the policy of this government to simplify taxes?

Tax does have to be taxing.

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TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Bread

"Ironically" despite claims by the government that it wishes to "simplify" taxes, George Osborne's recent budget has rather muddied the waters and left HMRC and taxpayers scratching their heads over a number of matters eg 20% VAT on hot takeaway foods ("above the ambient air temperature at the time they are provided to the customer").

This has caused some confusion over what to do with bread, normally considered a basic food (and not subject to VAT), when it is served warm.

Therefore HMRC have launched a public consultation "VAT Addressing Borderline Anomalies", that seeks to discover a.o. the exact definition of bread.

- What is bread?

- Is a croissant bread?

The consultation document states:

"For a number of years, the borderline between hot takeaway food (standard-rated) and cold takeaway food (zero-rated) has been the subject of litigation, with some retailers arguing that the purpose of heating their food products is to improve their appearance or to comply with health and safety regulations, rather than to enable them to be consumed hot.

So, although many retailers and takeaway outlets charge VAT on the sale of hot chicken products, hot pies and toasted sandwiches, some retailers and bakery chains sell similar products zero-rated."

Greggs has already threatened to take legal action if HMRC tries to label its food as 'hot' and subject to VAT.

So much for simplification!

Tax does have to be taxing.

UK EXPATS: Reduce tax on UK Pensions
HMRC QROPS provider. Unlock your UK pension and access a 25% lump sum today.

Quote ID code "ABC" when contacting a QROPS specialist.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"