Osborne sets up Office for Tax Simplication to review reliefs and business taxes

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George Osborne announced plans to simplify Britain's "spaghetti bowl" tax system yesterday. The Chancellor is hoping to unravel the "complicated and opaque" process by creating an Office for Tax Simplification (OTS).

It will have the task of making the 11,000-page tax code both shorter and simpler for individuals and companies to negotiate.

Mr Osborne said: "We have one of the most complicated and opaque tax codes in the developed world – it has got more complicated and more opaque in the last 10 years. It is a spaghetti bowl of reliefs, exemptions and allowances which makes our tax system less competitive that it should be. I want to create a simpler tax code, a more competitive tax code which says to the world that Britain is open for business."

The new office will also be asked to study about 400 tax reliefs to see how many can be removed, both to simplify the system and fund tax cuts elsewhere.

Michael Jack, who served as financial secretary to the Treasury in John Major's government, and John Whiting, a former tax partner at PricewaterhouseCoopers, have been appointed as an unpaid two-man board, based in the Treasury, for the next 12 months. They will be able to draw on expert advice from tax lawyers and consultants, and support from Treasury officials.

The OTS will write two reports for the Chancellor within the next year – on tax reliefs this autumn and on business taxes ahead of the spring 2011 Budget. The first reviews will begin in early September.

Robert Macro, a tax lawyer at Dawsons, said the new system would not provide "overnight miracles". "This new body will certainly help trim the fat around the edges but it won't in any way make Britain a low- tax jurisdiction," he added.

The Trades Union Congress said: "If the OTS closes loopholes and bears down on tax avoidance, it will be welcome. But the worry must be that this is simply a softening-up exercise for tax cuts for the rich, while ordinary people see services slashed and VAT increased."