Why the Chancellor should take some simple steps to making our lives easier

A chancellor has his pledges, policies and whims. The parliamentary draftsmen have to turn them into law, often at speed. Result: misery. Sheena Sullivan suggests way of making life simpler for those using the tax system.

Tax simplification is like peace on earth and goodwill to all men: everyone sees it as a good thing but achieving it seems to be an unattainable objective.

In the UK we have a history of complex tax legislation. The 1918 Income Tax Act consisted of 239 sections and seven schedules and contained all of the main provisions relating to the taxation of income. The 1996 Finance Act had almost as many sections, 41 schedules and more than twice as many pages. The '93, '94 and '95 acts were each of similar length. In fact, in the last three years alone, there has been more than 1,000 pages of new tax legislation. Certainly, anyone who has tried to struggle with a personal tax return for 1996/7 will testify that tax legislation could be much clearer and more precise.

The complexity and volume of tax legislation does not lust result in onerous administration, it also leads to uncertainty which in turn inhibits the smooth operation of the country's economy. Even professional advisers are sometimes unable to identify the exact tax implications of a particular proposed transaction. Tax simplification would enable decision makers to predict the tax implications of their decisions with greater certainty and would remove some of the current restraints on business decision making.

Complex tax legislation is driven by a number of factors. The increasing complexity of today's business world, combined with the changing landscape of our daily lives and the impact of the political process, have all played a part in creating complicated and extensive tax legislation.

Parliamentary draftsmen do not set out to produce ambiguous and complicated legislation however. More often than not, the resulting legislation is complex because it is produced under tremendous time pressure, and in secret and suffers from an absence of adequate parliamentary procedures for review and amendment of enacted legislation.

The Inland Revenue has concluded that the only practical way of achieving simplification is by ordering the tax legislation more logically and expressing it in a clearer style. Arrangements for the progressive rewriting of the entire body of direct tax legislation have now been specified, preliminary work completed and rewriting begun.

Rewriting the tax law is clearly a huge project as there are more than 6,000 pages of direct tax legislation. My concern however is that it can only have a limited effect. Without policy simplification there cannot be a simple tax system. Our tax legislation could be better drafted but it could not be made simple without changing the underlying policy.

In his pre-Budget report on 25 November, the Chancellor spoke of the Government's commitment to a national debate on creating a fairer tax system. A fairer system requires a simpler, more straightforward tax regime. Certain areas are crying out for reform. As first steps we should look at

simplifying the bewildering combination of restricted tax allowances, personal tax allowances for the elderly and multiple tax rates such as the tax rate on dividends faced by the lower-paid sections of the population who cannot afford professional advice;

integrating the tax and NIC systems involving administration by a single agency which would save public money, eliminate the burden of double accountability and interference for employers and reduce the time spent on employee taxation;

abolishing capital gains tax which is a complex system raising relatively little tax;

simplifying inheritance tax.

Whilst I welcome the move to a national debate and will seize the opportunity to contribute, I issue a word of caution. It is vital that any proposed changes to the tax system arising out of the wide range of tax reviews currently in progress do not further complicate a system which is fast becoming unintelligible and unworkable. None of us expects to see peace on earth and goodwill to all men in our lifetime, but surely we could aspire to tax simplification

Sheena Sullivan is tax partner at the accountants Pannell Kerr Forster.

Arts and Entertainment
Blackman: Landscape of children’s literature does not reflect the cultural diversity of young people
booksMalorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
musicReview: Wembley Stadium ***
Arts and Entertainment
‘Dawn of Planet of the Apes’ also looks set for success in the Chinese market

film
News
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight

tv
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Chocolat author Joanne Harris has spoken about the financial struggles most authors face

books
Arts and Entertainment
A scene from How To Train Your Dragon 2

Review: Imaginative storytelling returns with vigour

film
Arts and Entertainment
Josh Hutcherson, Donald Sutherland and Jena Malone in Mockinjay: Part 1

film
Arts and Entertainment

film
Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv
Arts and Entertainment
A waxwork of Jane Austen has been unveiled at The Jane Austen Centre in Bath

books
Arts and Entertainment
Britney Spears has been caught singing without Auto-Tune

music
Arts and Entertainment
Unless films such as Guardians of the Galaxy, pictured, can buck the trend, this summer could be the first in 13 years that not a single Hollywood blockbuster takes $300m

tv
Arts and Entertainment
Miley Cyrus has her magic LSD brain stolen in this crazy video produced with The Flaming Lips

music
Arts and Entertainment
Gay icons: Sesame Street's Bert (right) and Ernie

tv
Arts and Entertainment
Singer Robin Thicke and actress Paula Patton

music
Arts and Entertainment
The new film will be shot in the same studios as the Harry Potter films

books
Arts and Entertainment
Duncan Bannatyne left school at 15 and was still penniless at 29

Bannatyne leaves Dragon's Den

TV
Arts and Entertainment
The French economist Thomas Piketty wrote that global inequality has worsened

books
Arts and Entertainment
David Tennant and Benedict Cumberbatch

TV
Arts and Entertainment
Ben Affleck plays a despondent Nick Dunne in David Fincher's 'Gone Girl'

film
Arts and Entertainment
Pete Doherty (L) and Carl Barât look at the scene as people begin to be crushed

music
Arts and Entertainment

tv
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

    How Saudi Arabia helped Isis take over northern Iraq

    A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
    The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

    The evolution of Andy Serkis

    First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
    You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

    You thought 'Benefits Street' was controversial...

    Follow-up documentary 'Immigrant Street' has got locals worried
    Refugee children from Central America let down by Washington's high ideals

    Refugee children let down by Washington's high ideals

    Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
    Children's books are too white, says Laureate

    Children's books are too white, says Laureate

    Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
    Blackest is the new black: Scientists have developed a material so dark that you can't see it...

    Blackest is the new black

    Scientists have developed a material so dark that you can't see it...
    Matthew Barzun: America's diplomatic dude

    Matthew Barzun: America's diplomatic dude

    The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
    Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

    Meet the 'Quantified Selfers'

    From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
    Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
    Mrs Brown and her boys: are they having a laugh?

    Mrs Brown and her boys: are they having a laugh?

    When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
    Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

    Otter man Gavin Maxwell's bitter legacy

    The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
    Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

    Joanna Rowsell: 'I wear my wig to look normal'

    The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
    Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

    Bill Granger's quick and delicious marinades

    Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
    Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

    Anyone but Argentina – why Brazilians don’t love their neighbours any more

    The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
    The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

    The Open 2014

    Time again to ask that major question - can Lee Westwood win at last?