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Office of Tax Simplification goes on tour

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Tax experts will take to the road next month to find out how and where the complexities of the tax system are causing an administrative burden for small businesses. Richard Baron, Head of Taxation at the Institute of Directors, said the Office of Tax Simplification is ‘very well-placed to come up with something better than the current dog’s dinner of IR35’.

The OTS announced the appointment of four private sector tax experts and reported ‘good progress’ on its first two reviews, dealing with tax reliefs and small business tax.

The private sector secondees are Thomas Byng, Senior Manager at Deloitte; Kate Cottrell, Director of Bauer & Cottrell, a provider of IR35 contract review services; Partha Ray, Senior Tax Manager at BDO; and Caroline Turnbull-Hall, Senior Manager at PwC.

They join the OTS’s Tax Director John Whiting, its Chairman Michael Jack and three officials from HMRC and the Treasury.

The OTS will publish a full list of tax reliefs next month, together with the proposed review criteria. It expects that this will attract analysis and comment from a range of tax system users. The first report on tax reliefs will be published shortly afterwards.

Work on the small business tax simplification review is under way with an interim report due by Budget 2011, it added. As part of the initial report, the OTS will explore ‘alternative legislative approaches’ to IR35 intermediaries legislation.

IR35 'has become the problem'
The Institute of Directors said the rules need to be simplified to lighten the burden on business, but it ‘is very important that the Government should accept the OTS’s recommendations when they appear, or give very good reasons for rejecting them’.

Anything else would indicate that the Government is not fully committed to tax simplification, the IOD said. ‘IR35 was introduced in 2000 as a solution, but it has itself become the problem. It burdens business people with lengthy tax investigations that very often produce no result for the Revenue.’

It added: ‘The key thing is to ensure that new tests to determine tax treatment can be applied mechanically. Vagueness must be banished. And there needs to be an initial screening test, to take as many businesses as possible out of the scope of the successor to IR35 before they have to get down to the detailed tests.’