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CIOT responds to inquiry on tax after coronavirus

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Responding to the House of Commons Treasury Committee’s inquiry into the future of the tax system after coronavirus, the CIOT makes a number of observations with emphasis on the importance of full and open consultation. In a separate response, the Scottish and Welsh Technical Committees consider the interaction between devolved and reserved taxes. The inquiry is due to close on 7 December 2020.

The Treasury Committee invited views on how the UK tax system will need to change to address the challenges of the post-coronavirus economic environment. Key to the review is the extent to which tax reform can (and should) meet these challenges. The CIOT responses highlight the following:

  • the UK government should address post-Covid challenges head on, setting out a roadmap for the development of tax policy accompanied by open and widespread consultation;
  • the different tax treatment of individuals depending on their employment status needs to be addressed (either moving towards a level playing field, or reforming the existing distinctions) with increased focus on making compliance easier for self-employed individuals;
  • the tax system needs to address the taxation of MNEs, particularly through the OECD pillars and also by tackling abuse of intra-group charges for intellectual property;
  • the use of tax policy to influence behaviours needs to be reconsidered; for example, the UK needs a long-term strategy for environmental taxation;
  • VAT should be simplified to smooth out the ‘seemingly illogical borderlines and differences in treatment’; and
  • in relation to devolution, proactive co-operation between the UK and regional governments (including forewarning of planned changes) would improve the policy-making process; the CIOT highlights some of the complexities resulting from partial devolution of income tax.
Issue: 1506
Categories: News