A tax system that needs to be clearer

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The Independent Online
Trying to make our excessively complicated tax system easier to understand is a noble and no doubt worthwhile cause. Certainly tax experts everywhere gave a broad welcome to yesterday's report on simplifying the legislation. Complex language and rules put an excessive burden on personal and corporate tax payers alike.

However, although the project is undoubtedly far-ranging - it involves more than 40 people spending five years on a complete rewrite of the legislation - it is difficult to see what will be achieved from this alone, apart from a crystal award from the plain English campaigners.

The document and the supporting paper produced by the Revenue form just one part of a general push to reform the tax system. The latest development comes just a few weeks after the Tax Law Review Committee, which includes a seconded Revenue official among its membership of parliamentarians, lawyers, academics and tax practitioners, came to much the same conclusion - that the tax system needed to be clearer if it was to be properly understood.

Meanwhile, Peter Wyman, a tax specialist at the accountants Coopers & Lybrand, has recently agreed to head a Department of Trade and Industry deregulation taskforce group which is looking at moving towards a merger of income tax and National Insurance.

What none of these manoeuvres deals with, however, is the growth in tax avoidance, which has become a booming industry despite the assertion that Britain's low rates of tax are a disincentive to spending a lot of money on tax advice. The complexity of the tax system is fertile soil for this blossoming profession.

The Revenue has got that front covered too, however. A consultation paper which was slipped out a few weeks ago is seeking views on whether Britain should follow the likes of Canada, Australia and New Zealand in introducing a general anti-avoidance provision.

Practitioners are convinced that such a measure - centred on the idea that transactions carried out solely for tax reasons are barred - is unworkable. But just because they have got their way on simplification does not mean their views will prevail on that issue too.