Last week, I looked at the Office of Tax Simplification’s interim report on tax reliefs and exemptions, with the aim of putting some context and a little detail on the background to the report and to explain what the objectives of the review exercise appear to be. The result of such a review is, I think, largely reassuring if compared with some of the more “instant” headlines following the publication of the report.
Of course, despite the fact that the Office of Tax Simplification has stated that the prime (and overarching ) aim of the review is the simplification of the tax system, it is understandable that there will be some concern among planners that in the process of such “simplification”, there will be some removals.
More imminently, the pur- pose of the interim report is apparently to test whether the methodology and criteria to be used to carry out the review of reliefs will lead to sensible results, so,we appear to be at the first stage of the review.
Nevertheless, especially in the light of the strong focus of the Treasury on minimising tax leakage through “unacceptable” tax avoidance, it would be understandable if there were an air of concern among planners in relation to the commencement of this review.
As I stated last week, the OTS has listed 74 (list one) reliefs they plan to include in their final review, 75 (list two) reliefs that will be considered if time permits and 883 (list three) reliefs that will not be pursued in detail at this time. Obviously, planners will have greatest concern over lists one and two.
In considering these lists, it is, however, important to keep in mind the OTS-stated criteria in relation to consid-ering if a particular relief is justifiable or not. Namely, if the relief being considered is:
- Largely historic or has a policy rationale that has weakened over time
- Is not frequently used
- Benefits a small number of taxpayers but may create distortions in the tax system
- Is used by bigger numbers of taxpayers but that are complex for business and/or for HMRC to administer.
It would seem that only if the relief in question satisfies one or more of these criteria will it be at risk.
Below is the Technical Connection selection from lists one and two of the reliefs that may be considered of the greatest interest to advisers in relation to strategies that they design for their clients. If you have a concern over any one of these reliefs, why not apply the above-stated criteria to it to see if, in your view, it falls inside or outside of the “at serious risk” category.