A UK Government decision could open the door to people avoiding paying all the tax they are due or stopping them paying tax all together.
In a Scottish Parliamentary question, Kenneth Gibson MSP asked what the potential impact on Scotland will be of the closure of the UK Office of Tax Simplification (OTS).
Scottish Finance Minister Tom Arthur MSP replied:
“Whilst the OTS is a UK Government body, many of the taxes within its remit apply across the whole of the UK, including Scotland.
“The OTS provides an independent and objective perspective on taxes such as Inheritance Tax and Capital Gains Tax, which apply in Scotland and are widely considered to be complex and in need of reform.
“One of the principles of good tax policy making set out in the Scottish Government's Framework for Tax is ‘convenience’, which states that ‘tax policy should be as simple, clear and straightforward as possible and opportunities to streamline the tax system should be taken where they arise.
“The UK Government's decision to close the OTS contrasts with this principle and the Scottish Government's approach to tax policy. The closure was announced without consultation or notice and has led to bodies such as the Chartered Institute of Taxation to call for the decision to be reversed – a call the Scottish Government agrees with.”
Commenting, Kenneth Gibson added:
“It is widely accepted that the more simple tax law is, the more likely people and businesses are to comply and pay what they owe.
“Only yesterday, the Office for Budget Responsibility told the Finance and Public Administration Committee that tax avoidance is already an eye-watering £35 billion a year.
“Chancellor Jeremy Hunt MP should be retaining and strengthening the powers of the OTS to demonstrate its commitment to simplification. Abolishing it sends the opposite message.
“Simplification of the tax system should be a priority. The current complexity makes the more difficult for HMRC to administer effectively at exactly the time the Treasury needs to gather every penny of tax due to help the country weather this Tory cost of living crisis.”