Source · Select Committees · Treasury Committee
Recommendation 2
2
Rejected
Paragraph: 9
Undertake comprehensive review of existing tax reliefs for simplification and ease of adherence.
Recommendation
We recommend that the Government undertake a comprehensive and systematic review of existing tax reliefs to look for opportunities for simplification. In doing so, they should in particular look for ways of making it easier for taxpayers to adhere to the rules.
Government Response Summary
The government rejects the recommendation for a comprehensive and systematic review of tax reliefs, arguing it would not be an effective use of resources and would create significant uncertainty. It states it is already committed to simplifying the tax system and keeps all tax reliefs under review.
Paragraph Reference:
9
Government Response
Rejected
HM Government
Rejected
The Government is already committed to simplifying the tax system and keeps all tax reliefs under review. In March, the Chancellor set out to the Treasury Committee his commitment to simplifying the tax system, and that he is taking personal responsibility for this work. The Chancellor has set a clear mandate to his officials to focus both on the simplicity of new tax policy design and on simplifying the existing tax rules and administration, asking for tax simplification to be considered ahead of every fiscal event. The Government therefore welcomes the Committee’s intention to monitor this but considers that most tax reliefs work well—in many cases specifically making tax simpler for citizens and businesses, and where issues exist review is already underway (e.g. Research and Development Tax Credits). The Government does not therefore feel a review of the kind recommended by the Committee would be an effective use of limited resources. While simplification is one of the Government’s key objectives, it needs to be balanced against other important objectives of tax reliefs, such as supporting growth and employment. A full review of all tax reliefs would impose significant uncertainty on the tax system, putting revenue at risk and altering business behaviour whilst they waited for such a review to conclude. It is worth noting that previous NAO and PAC reports on reliefs have focused on non-structural reliefs which are primarily designed to support government economic and social policy. Constant reviews would essentially be creating uncertainty for taxpayers, particularly for those industries which benefit from such reliefs such as Full Expensing, the Annual Investment Allowance, R&D Tax Credits, Draught Relief, Film Tax Relief, Video Game Relief and Theatre Tax Relief. Any sudden ambiguity around the operation of the reliefs, due to a widescale review, would unlikely be welcomed by the manufacturing sector, hospitality sector, the creative industries and many other sectors which utilise vital government reliefs.