Business leaders call for simpler tax system

The Institute of Directors (IoD) has called for the introduction of a simpler tax policy to help with the administrative burden of the current tax system.

The business organisation praises some recent HMRC improvements such as getting processing online, but each time improvements are introduced, the complexity of tax policy stands in the way of making big advances.

A recent National Audit Office study suggests that a typical tax error costs the recipient around £300. Not only are there significant error rates, but there appears to a "very variable quality of advice". Once again, the business group suggests that it would be easier to give accurate tax advice if the rules were simpler.

The IoD also claims that the Government is using imperfect legisation, with HMRC taking on the role of arbiters over the allocation of a supposedly fixed tax burden, implementing the Government’s intentions rather than Parliament’s. The IoD says this is constitutionally unacceptable.

Richard Baron, Head of Taxation at the IoD, said:

“HMRC have a tough task, and they are doing many useful things to help taxpayers. But the big prizes can only be won if the Government recognises the importance of simpler policy to good administration."

“This is not just a day-to-day practical issue. Control over who pays what is being moved away from Parliament to HMRC, because precise legislation for the challenges generated by the existing system is impractical. But since 1689 it has been central to our constitution that Parliament, not the Government, holds the purse-strings."