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Former TSC chair Lord McFall calls for tax simplification to tackle avoidance

Former Treasury select committee chair Lord John McFall has called on the Government to cut the tax code to “the same length as War and Peace” to reduce tax avoidance.

Speaking in a debate on tax avoidance in the House of Lords this afternoon, Government chief whip Lord Newby said the coalition had invested over £1bn in reducing tax avoidance.

But Labour peer Lord McFall said a simpler tax code and referring schemes that could be used to avoid tax to the Treasury for some form of approval would yield better results.

He said: ”Tax avoidance is tax avoidance whether aggressive or not [and by using the term aggressive tax avoidance] we are encouraging complexity which is to the benefit of sharp witted accountants and lawyers.

“The Tolley’s tax book is now 20,000 pages long. I would suggest to the minister to have two ambitions: a tax book the same length as War and Peace at 1200 pages and [ensure] these tax avoidance schemes are referred to the Treasury first of all to determine whether they are tax avoidance. That would eliminate the complexity.”

Newby said the Government established the Office of Tax Simplification to help reduce complexity in the system, but that it “clearly got a long way to go.”

He added: “The tax avoidance industry has got the message and the number of schemes that have been notified to HMRC which are potential avoidance schemes has fallen 75 per cent in the two years from 2010.”

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