Here is a rather delightful fact. For 13 years between 2010 and 2023 Britain had a quango called the Office for Tax Simplification. You may never have heard of it, but it really did exist. Its annual report for 2021/22 shows that it was chaired by someone called Kathryn Kearns and had a budget of £1.057 million, £868,000 of which was paid in staff wages. But here’s the thing. In 2010, when it was founded, Tolley’s Tax Guide – the accountant’s bible – ran to 867 pages. The 2023 edition – the year the Office for Tax Simplification was wound up – ran to, er, 1,020 pages.
No one should have a shred of sympathy for her
Governments cannot help themselves. They love announcing their bonfires of red tape, but when it comes to it everything they do makes life more difficult for the rest of us. Worse, ministers seem to expect our sympathy when they are personally ensnared by the rules that they have themselves created.
Angela Rayner is not only a government minister, she is Housing Secretary. She might not have direct control of fiscal policy but she should surely have a good knowledge of the taxation surrounding housing, and have some clear input into it. And yet she now complains that she couldn’t understand the rules, and neither, she says, did her lawyers. Verrico & Associates, the conveyancing firm in Herne Bay, Kent, have publicly replied that it was never part of their remit to study the implications of the trust which Rayner set up to deal with her disabled son’s care. Her team have been briefing that she received advice on the purchase from three different professionals. Yet the Housing Secretary says she only found out the true situation when she hired a leading KC to give an opinion.
Hang on a moment. Are we all supposed to run our house purchases via a KC to check we have got all the sums right? If so, that is going to add another stonking bill to the already unreasonable cost of stamp duty. Surely there is a very straightforward moral to this: the tax system is far too complicated.
But what chance is there of Rachel Reeves taking that on board and actually doing something about it? Not great, I fear. Even if she were minded to, it isn’t hard to guess what would happen. She would set up a latter-day Office for Tax Simplification which would be as successful as the last one.
The tax system is so complicated partly because vested interests want it to be so. When the government wants to consult on proposed tax changes, it tends to go and speak to accountants, who of course like to promote the idea that the tax system is too complex for ordinary mortals to understand and that we need to employ their services if we are to avoid falling foul of it.
If we really want a simpler tax system, the Chancellor needs to cut out the accountancy firms and speak only to taxpayers. It shouldn’t be impossible for ordinary people to understand how much tax they owe and when. Indeed, no tax should ever be lumbered on the population unless it is perfectly simple to understand. Look how the Baltic states started from scratch after their independence in the 1990s: with flat taxes. Estonia showed the way in 1994 with a single-rate income tax – now 20 per cent – and Latvia (25 per cent from 1997) and Lithuania (33 per cent from 1994) followed suit, proof that simplicity is possible should politicians choose it.
It ought to be added that Rayner and other Labour figures had no sympathy when Boris Johnson and others fell foul of the tortuous Covid rules which they had themselves imposed on the population. Quite right. And no one should have a shred of sympathy for her now. If ministers want to avoid falling into tax traps like that which caught out Rayner, it is in their power to make the rules simpler.
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