The 'Tax Simplifier' series aims to make the case for a much simpler tax code with practical recommendations for policy change. Blogs are published twice a week, on Monday and Thursday. Read David's previous blog on tax complexity. You can follow David on Twitter @TaxSimplifier.
Tax is a technical subject. It is right to enquire whether those responsible for tax policy and administration are fully equipped for the task.
Until recently there was a dearth of people with tax expertise at the top of HMRC. Board members were primarily seen as managers, and specialist tax knowledge was held to be of subsidiary importance. But recently HMRC have been considerably strengthened by the appointment of senior tax specialists as Non Executives, and Commissioners (including a new post of Tax Assurance Commissioner) to oversee the settlement of large and sensitive tax cases.
But at lower levels HMRC is under resourced. A recent report by the House of Lords Economic Affairs Committee said that HMRC were under-resourced to deal with the complex tax affairs of multinationals and relied too heavily on secondments from the Big Four Accountants.
And very many members of the public have regular experience of unanswered phone calls and long delays to correspondence on their day to day tax affairs.
Of course tax simplification would really help solve these problems.
But there is also real concern that the appropriate level of tax experience is missing within the Treasury, who now have prime responsibility for tax policy.
There is plenty of talent there, but many of the staff are young, have minimal relevant experience or training in tax, and move on before they can develop more insight into the problems inherent in the tax code.
These points were brought home in a tough report published in 2010 by the Tax Law Review Committee of the Institute of Fiscal Studies. The paper ,“Tax policy making in the UK” said that the Treasury are staffed by highly intelligent individuals but that they lack tax knowledge. They even see it as an advantage not to be “encumbered by prior knowledge of the issues”!
The House of Lords Committee report also recognised that HM Treasury was under-resourced and complained that that the Treasury also relied too heavily on secondees from the Big Four to develop tax policy.
The Government machine for producing and implementing tax policy is often criticised. It would do better if it were better resourced with its own tax experts.
David Martin enjoyed a career spanning 23 years as a tax lawyer within a large City Law Firm, latterly as Head of the Tax Department, before taking early retirement in 2002. During that time he advised both company and individual clients. He now lives a less pressurised life in Devon with his wife and two daughters and maintains an active interest in tax law.