Committees

Treasury Committee calls for Chancellor to explain reasons for closing Office of Tax Simplification

13 March 2023

The Treasury Committee has called for the Chancellor to explain why he believes the Office of Tax Simplification (OTS) should be abolished.

The OTS was established in 2010 to provide independent advice to the Chancellor on making the tax system simpler.

Former Chancellor Kwasi Kwarteng announced the closure of the OTS in last autumn’s ‘mini-budget’. Unless the Government reverses this decision, the office will be formally disbanded when the post-Budget Finance Bill is approved by Parliament this spring.

In a recent evidence hearing, the Chair of the OTS argued against the closure, claiming the Government would “lose a champion for simplification”.

The Committee asks the Chancellor to outline the thinking behind the decision to proceed with the closure of the OTS, what analysis supports its closure, and whether he believes the tax system is now successfully simplified.

In separate correspondence to the Committee, the leadership of the OTS set out key potential opportunities for tax simplification. This includes the £85,000 threshold at which businesses must register and charge VAT on sales, an “unusually high” threshold which “impacts businesses at a key point in their development”, because small businesses “limit their turnover” to remain below the limit which could be “damaging to economic growth”.

Chair's comments

Commenting on the correspondence, Harriett Baldwin MP, Chair of the Treasury Committee, said: 

“As a Committee, we’ve heard evidence that the Office of Tax Simplification achieves far more than it costs. The UK has a hugely complex tax system, with over one thousand tax reliefs in existence.

The Chancellor should think twice before forging ahead with a potentially unnecessary closure.”

The inquiry

  • The Committee launched its inquiry into ‘tax reliefs’ in July 2022. Further information, written evidence submissions and oral evidence replays, can be found here.
  • The Committee took oral evidence from the Chair and Director of the Office of Tax Simplification on 1 March. Further information, a video replay and transcript, can be found here.

Further information

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