Category Archives: Measuring tax complexity

Morwenna’s leaving the OTS, here’s what she had to say…

OTSI’m now coming to the end of my time with the Office of Tax Simplification. I arrived six months ago not knowing what to expect. During my time here I have been privileged enough to work with professionals who are experts in their fields to develop an interesting paper on definitions.

I have been working on the Definitions Project, which is an arm of the Complexity Project. Initially we started with the aim of creating a list of all definitions within tax legislation; it soon became apparent that this would not be attainable in the limited time frame available. Instead we have developed a paper which encompasses general discussion surrounding definitions as well as suggestions on how to create a better system for the future. If you are interested in this area here is a link to the paper:

There have been a number of aspects to my position. I have read a lot of legislation and pulled out over 2000 definitions from a number of Acts. As well as this I have had many opportunities to develop my knowledge base and get a deeper understanding of the tax world. A highlight has to be meeting with Elizabeth Gardiner from the Office of the Parliamentary Counsel and Alice Pilia from the Cabinet Office. It was interesting to understand and appreciate the ways in which legislation is drafted and the process behind this, more about this is discussed in the paper.

I hope you enjoy reading the paper as much as I have enjoyed putting it together, if you have any comments please do not hesitate to email the OTS by clicking here.

Workshop held at Number 11 Downing Street on the 18th July 2013

CIMG0311The OTS marked its third anniversary by holding a simplification workshop at No 11 Downing Street, by the kind invitation of the Chancellor. Over 40 attendees, including MPs, senior government officials, academics, tax agents from practice and commerce, and low income representatives took part in a lively debate about issues arising from the OTS’s work.

The Rt Hon Michael Jack, Chairman of the OTS, began proceedings by welcoming attendees. Following on, David Gauke MP, Exchequer Secretary to HM Treasury, described the OTS role as “vital”, and set out its previous successes; including the completion of four major projects, involving seventeen private sector secondees, and over two hundred recommendations, the majority of which were being taken forward.

John Whiting then chaired a discussion on tax simplification, asking those present for their thoughts on the question at the heart of the debate – what’s the best way to continue to simplify the tax system?

A note of the main points made during the discussion is here: Workshop readout (pdf)

What do you think? We’d be very interested in your comments, either by commenting publicly on this blog or by emailing us at

Comments on our complexity index

Finance Act 2012Following the publication of the OTS complexity index methodology we have received several responses which the authors have kindly allowed us to reproduce here. We are very pleased that the index has helped spark debate and as we look to refine the methodology over the coming months we welcome further views on our approach. Please email us at if you would like to contribute.

 The first response is from Professor David Ulph of St. Andrews University and a former head of HMRC’s analysis unit. His paper provides an excellent discussion on the concept of complexity and how to measure it. Professor Ulph also provides a useful critique of the OTS methodology which we will be looking to refine over the coming months.

Professor David Ulph – Measuring tax complexity

The second response is from Richard Baron of the Institute of Directors (IoD). Richard gives a critique of the criteria in our index and raises some interesting questions about the validity of several of them. Richard also comments on our weighting methodology and whether these should be subjective, arguing that they should not. He also questions whether we could ever get to a ‘robust’ measure of complexity and whether we should really only use the index to spark and stimulate debate.

Richard Baron – The OTS complexity index 

The third response is from one of the members of our Consultative Committee for the Employee share schemes review, David Pett of Pett, Franklin and Co. David’s argument is that simplifications that level the playing field for smaller taxpayers should be given more weight, even if they increase the length of legislation. Larger taxpayers shouldn’t benefit from the tax system just because of their size and ability to pay for better advice.

 David Pett – Tax Complexity

Tax thresholds

ThresholdsWe like counting things in the Office of Tax Simplification. It’s a way of getting a handle on what a massive task tax simplification really is, and helps give us a better idea of where we should direct our efforts. In 2010, we counted up all the tax reliefs in the UK and ended up with a figure of 1,042. Earlier this year, we counted the total pages of tax legislation  17,795  and then counted how many were left when you took out repealed legislation, obsolete rules and duplications  6,102.

Now we have counted the number of monetary tax thresholds, ceilings and other figures in tax legislation – everything that is expressed in pounds or pence (or fractions of pence). We got the idea from our reliefs review, where we found some numbers that hadn’t been changed for many years, but others that were updated pretty regularly. We wanted to explore this further, and see if we could come up with any general themes or lessons for tax simplification.

The paper we are publishing today is the result of this work. It didn’t take long to put together – two or three weeks’ work at most, over the past 3 months. It was a relatively quick job to skim through the 17,795 pages of tax law to list the figures, but rather harder to trace each one back through successive Finance Acts to see when they first appeared and how often they changed since.  We haven’t asked HMRC to check the accuracy of the list, so it comes with a bit of a health warning and if you do find any mistakes, please do let us know.
We hope the article and spreadsheet will be of interest, and not just to tax nerds like me.

Tax thresholds paper

List of numerical thresholds in tax legislation

Jeremy Sherwood, OTS Secretariat

P.S. Our next big counting job is to list and analyse all tax definitions, and we are recruiting a postgraduate student to help us do this – see the OTS vacancies page.

The OTS complexity index

Finance Act 2012Today the OTS publishes a proposed methodology for a tax complexity ‘index’. A paper setting out the methodology can be found below:

OTS Complexity index methodology paper

The aim of the index is:

  • To provide an indication of which areas of tax legislation are considered to be particularly complex compared to others;
  • To develop a tool that will help to prioritise the future work of the OTS; and
  • In the long term, possibly to provide tax policy makers with a methodology to help avoid unnecessary complexity in future and to help prioritise areas for future tax simplification.

To construct the index we have identified seven key criteria which influence the complexity of tax legislation. By scoring each of these criteria out of 5 and the weighting thee scores the methodology gives a complexity index score out of 10. This relative score can be used to rank all of the tax legislation by degree of complexity.

The seven criteria we have used are:

  • Legislative complexity;
  • HMRC guidance complexity;
  • Number of taxpayers impacted by the legislation;
  • Average ability of taxpayers involved in the area;
  • Avoidance risk;
  • Cost of compliance; and
  • HMRC operating costs.

The methodology is intended to spark a debate about what complexity is and how we measure it. We welcome comments and views on the index, especially whether we have included the right measures or if you feel there are others we could add.