This week saw the establishment of the Office for Tax Simplification. In George Osborne’s words Britain has “one of the most complex and opaque tax codes in the world” and his “dream” is to bring some transparency to this.

The new body, headed up by Michael Jack (a former Conservative minister) and John Whiting (formerly of PwC) will initially look at two areas: firstly, streamlining all 400 tax reliefs, allowances and exemptions; and secondly, looking to simplify the tax system for smaller businesses.

So far, reaction seems to have been mixed on this one. Much concern has been expressed that simplification may act as a means of increasing the tax burden across the board through scrapping reliefs. The cynics among you will no doubt suggest that it’s no coincidence that the government is “simplifying” at a time when it is more cash strapped than ever.

On the other hand, the TUC’s General Secretary, Brendan Barber expressed concern that this is a means of reducing tax for the rich “while ordinary people see services slashed and VAT increased.”

Reality is probably somewhere in between. As the economy grows, small businesses need all the help they can get and simplification of UK tax rules has to be welcomed.

On the other hand our tax system has evolved to produce specific outcomes. A good example here is R&D tax relief which has helped place Britain at the very cutting edge of pharmaceutical and technological developments.

Every action produces a reaction (let’s not forget that when pension contributions were simplified we found ourselves with 120 pages of legislation following protests against extra tax relief for higher rate tax payers) so it will be interesting to see how simple we can make things or whether simplification serves to muddy the waters yet further.

Watch this space…

Office for Tax Simplification George Osborne Michael Jack John Whiting simple relief HMRC Government