Board minutes - 22 September 2011

Present
Rt Hon Michael Jack – Chairman
John Whiting – Tax Director
Adam Broke
Teresa Graham
Edward Troup – HM Treasury
Sue Walton – HM Revenue & Customs

Apologies
Dave Hartnett – HM Revenue & Customs

Secretary
Jeremy Sherwood

1. Minutes of the last meeting

The minutes of the 29 June 2011 meeting were formally agreed.

2. Action points from minutes

Office of Tax Simplification Board members to identify potential Consultative members for share schemes and pensioner taxation projects.
OTS to carry out recruitment campaign for secondees to work on share schemes and pensioner projects, and
Adam Broke to draft paper for next OTS Board meeting on identifying areas of intense complexity in the tax system.

All these items would be considered later in the agenda.

3. Update on progress over the summer and project plans/timetables

In July, the OTS team published two technical papers, one on a possible disincorporation relief, the other setting out some ideas to simplify the tax system for the smallest unincorporated businesses.

The OTS team had also jointly commissioned a major research project with HM Revenue and Customs into small businesses’ experiences of the tax system, focusing on HMRC’s administration. Following an open tender process, The Futures Company had been appointed to carry out the project, expecting to report its findings by the end of 2011.

The OTS therefore expected to publish its final report for this strand of the small business review in early 2012, ahead of the Budget.

The other two strands of the small business review – on a possible disincorporation relief and on a simpler tax system for the smallest businesses – were expected to be completed by the end of 2011.

In addition to the research project by the Futures Company (which would focus on the smallest businesses, many without accountants) the OTS was working with the Federation of Small Businesses to insert a number of questions about the tax system in the FSB’s regular survey of its members.

The team was also discussing with accountancy bodies how best to gather evidence for the small business review from their members. The OTS small business Consultative Committee was meeting on 26 September and would hold an initial discussion on the two papers published in July, and discuss the research project.

In July, the OTS team had met a group of operational HMRC staff who carried out enquiries into small businesses. The team was also planning to visit other HMRC offices, including a contact centre that dealt with telephone queries from small businesses.

Also, a further round of meetings with small businesses was being planned for October.

Michael Jack congratulated the OTS team for their hard work over the summer, especially for the two high quality papers published in July.

4. OTS staffing and budget

Jeremy Sherwood reported back on the results of the recent recruitment campaign. Four new secondees had been recruited for the share schemes and pensioner taxation reviews.

He and John Whiting were very pleased with the excellent mix of skills and experience of those who had applied, and noted the continuing support and interest from employers and the tax profession for the work of the OTS.

John Whiting did, however, note one aspect of slight concern: although we had now a good number of secondees, all of them were only offering 2 days a week, rather than the 3/4 days of the initial group of secondees. This would put more strain on OTS management.

In response to a question from Michael Jack, Jeremy Sherwood said he thought the team now had sufficient resources in place to deliver the demanding programme of work planned in the period until Budget 2012.

However, there was a risk that the OTS would be asking HMRC and HM Treasury policy teams for technical and policy analysis of its emerging proposals at a time when those teams would be under other pressures during the Budget process.

Sue Walton said that there was a good ongoing discussion between the OTS team and HMRC and HM Treasury managers aiming to identify and manage these issues, and she would encourage this to continue.

Edward Troup thought that it was important for the OTS to show continual progress, and Ministers were committed to its success in simplifying the tax system, particularly in the context of encouraging growth and removing administrative burdens from individuals and businesses.

In a brief discussion on the OTS budget, Teresa Graham was pleased to see that following the recent appointment process for the permanent OTS Chairman and Tax Director, it was now proposed to pay the Tax Director an honorarium of £12,000 in recognition of the significant time commitment and expertise required for the role.

5. Consultative Committees for new projects

The OTS Board discussed and approved the proposed list of members for the new Consultative Committees. The aim was very much to get a wide cross-section of interest groupings and types of practitioners on the Committees.

In response to a suggestion from Adam Broke, John Whiting agreed to consider whether there was enough representation on the share schemes committee from firms involved in remuneration consultancy.

Michael Jack thought that although the Consultative Committees should reflect a wide range of expertise, they could not possibly reflect every interested party and so the OTS should seek to involve these groups in the evidence gathering process through separate meetings.

Michael Jack also raised another interest group in the pensioner taxation review, journalists who wrote or broadcast on tax matters for pensioners. He suggested the OTS consult this group separately to draw on their experience of the common complexities faced by pensioners.

John Whiting confirmed that this was already being planned.

6. Identifying complexity across the tax system

The Board discussed papers by Adam Broke and the OTS team that pointed to possible methodologies to adopt in beginning the task of analysing the sources of complexity in the tax system. These approaches might also enable the OTS in due course to make recommendations that might prevent complexity occurring in the future.

The Board thanked Adam Broke and the OTS team for their work, and asked them to continue to explore this subject, drawing on any relevant information and analysis HMRC and HM Treasury had available, and report back at the next Board meeting.

7. AOB

John Whiting reported that the Chartered Institute of Taxation had received an invitation from HMRC to join a new forum on employment-related securities.

HMRC had informed the OTS in advance that it was setting up this forum as a long term body to inform its administration of employer related securities. John Whiting asked Sue Walton to make sure this forum did not duplicate the work of the OTS in reviewing share schemes.

John Whiting said that although the media profile of the OTS had been fairly quiet over the summer, there had been a useful article in the Daily Mail about the pensioner tax review, and a number of readers had written in with their views.

These letters would be passed on to the OTS, although it would be made clear that we could not reply to them individually.

The Chairman asked the secretariat to rearrange the date of the November meeting as several members could not make the provisional date. Teresa Graham also asked the secretary to arrange provisional dates for meetings in 2012.

Board minutes - 22 September 2011

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