Tag Archives: OTS

Finance Act 2015 – new tax reliefs

OTS stand

Now that the 2015 Finance Act has been passed, we’ve updated our master list of tax reliefs. One relief has been abolished – the £8,500 benefits threshold. But seventeen new reliefs have been added, bringing the grand total to 1,156.

OTS list of tax reliefs updated to March 2015

 

Employment status: what comes first?

Grand national

The OTS’s Employment Status report (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/408608/OTS_Employment_Status_report.pdf) is a lengthy document with some 28 recommendations. It is deliberately aimed at the longer-term reform of the area, though there are some improvements (for example in some HMRC procedures) that could be made more quickly.
With such an extensive report – though it is of course a gripping read – we have understandably been challenged by some people in terms of ‘OK, great stuff, but which are the most important recommendations?’ Our response – as might be expected – is ‘all of them’, on the basis that we want the report to be read and considered as a package that could pave the way to significant simplification.
It is also quite difficult to select the ‘most important’ recommendations because much will depend on the approach to simplification that is to be pursued. A discussion among the team that worked on the report couldn’t come to a consensus on a 1/2/3 rating but there was a definite front-runner, with a number of other fancied horses pressing hard.
Followers of the OTS’s work won’t be surprised to hear that we see progressing income tax/NIC alignment as the most important area, including looking at wider issues such as employers’ NICs. Those coming up on the rails are:
• Exploring the statutory employment test idea
• HMRC admin, particularly developing a ‘safe harbour’ approach, possibly using the Employment Status Indicator
• Developing a code of principles on what constitutes ‘employment’, involving all relevant departments (i.e. BIS, DWP as well as HMRC)
That still leaves 20+ other runners jockeying for position and we would stress that we’d ideally like them all to reach the finishing line (which in these terms means being properly considered and taken forward to consultation at least in part). But we’d welcome views on the most important of our recommendations.

What would your 1/2/3 be – or indeed any that you think should fall at an early hurdle? Let us know at ots@ots.gsi.gov.uk .

John Whiting, OTS Tax Director

Autumn Statement 2014 and the OTS

Autumn Statement

It was gratifying to hear the Chancellor give credit to Michael Jack and John Whiting of the OTS in his Autumn Statement speech today.

More importantly, he said the Government accepted “almost all” of the recommendations in our October report on improving the Competitiveness of UK tax administration. After the speech, we received a letter from the Financial Secretary, David Gauke MP, setting out the Government’s detailed response to this and other recent OTS reviews. We will put the letter on our website shortly.

Of course, many of the ideas in that review would be major undertakings with wide ranging impacts on businesses, and should rightly be considered fully in the next Parliament. Examples are closer alignment of accounting profit with taxable profit, and removing the distinction between trading and investment income. In the shorter term, HMRC has accepted our proposals to conduct a post implementation review of RTI (Real Time Information) and to improve assistance to businesses with greater use of email and better telephone services with appropriately trained staff along with many other administrative changes.

It is good to see such a positive reaction to our review of employee benefits in kind and expenses with four major reforms announced:
– abolishing the £8,500 taxable benefits threshold
– introducing a statutory exemption for benefits under £50
– a system of voluntary payrolling of benefits
– replacing the expenses dispensation regime with an exemption for paid and reimbursed expenses.
We expect to see these featured in the 2015 Finance Bill. The Treasury will also soon launch a major review of tax rules for travel and subsistence expenses.

On the downside, the government has decided not to take forward two radical ideas from our review of employee share schemes – the proposals for a “marketable security” and a new employee shareholding vehicle. There simply wasn’t enough interest in the recent HMRC consultation on these ideas, which disappointed us. But overall there has been a good programme of reforms in the share schemes area, so we mustn’t gripe too much.

We are busy carrying out our review of the tax rules for employment status and expect to publish that report in February. We are also putting the finishing touches to a sweeping up report on taxation of business partnerships. And of course, we look forward to seeing the draft Finance Bill when it comes out shortly. One small job will be to update our tally of tax reliefs – currently at 1140, but we noticed a few new ones announced today…

Jeremy Sherwood
Head of OTS

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:

https://www.gov.uk/government/publications/definitions-in-tax-legislation-and-their-contribution-to-complexity

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 ots@ots.gsi.gov.uk

Our new team

OTS standThe OTS team has seen a few changes over the past couple of months. Martin Gunson and Kelly Sizer have now completed their work on pensioner taxation, whilst Sarah Anderson and Tony Page have finished with employee share schemes. A big thank you to all four of them for their effort and dedication in producing their respective reviews.

In their place we have recruited a new team of Theresa Dendy, Tracey Bowler and Suzy Giele to work on our review of employee benefits and expenses. They will be joined by Michael Wilson later in the summer. 

Morwenna Scott has also joined the OTS to work on our tax definitions project. She will work Caroline Turnbull-Hall who returns as a formal secondee having previously worked on our tax reliefs review and the disincorporation relief project.

A new biographies section on our ‘About the OTS’ page has further details on all of our secondees.

Go anywhere and meet anyone…

Motorway lights

The title of this post has become the unofficial OTS motto. In the past we have been as far west as Toronto (see previous post) – Belfast in person – as far North as Aberdeen, South to Exeter, East to Norwich and most places in between. It is now that time of year again and we are looking forward to getting out and about to hear the views of businesses, individual taxpayers, advisers and HMRC alike.

Our review of employee benefits and expenses is now in full swing – we have a team of secondees in place and are starting to plan meetings with interested parties across the UK. This is (hopefully) where you come in.

If you have an interest in the review and would like to feed input into it please contact us at the following email: ots-employee.benefits@ots.gsi.gov.uk We welcome any comments you can make or we will be happy to travel to meet you – especially a local group of businesses or other interested parties –  or welcome you to our offices in central London.

Please note that we only have a small team and whilst we will try to get around as many groups as possible we can’t commit to meet everyone.