There is no shortage of commentary on the increasing complexity of our tax system. While some of that complexity is undoubtedly inevitable, there are some matters which would benefit from a fresh look with a blank piece of paper. These are mostly where multiple changes have been implemented to existing legislation or certain rules are used to serve more than one purpose. Add to this certain key life events, such as starting a new job or retiring and taxpayers can find themselves very confused or even unknowingly disadvantaged. With changes mounting, will it get any easier?
This is a trend not lost on the Office of Tax Simplification (OTS) which on 11 October 2019 issued a report considering whether the tax system adds unnecessary complexity when taxpayers are tackling certain key life events. For example, new parents have an array of new responsibilities to get their heads around when a baby arrives (mostly not tax-related).
They may decide, quite reasonably, to not add ‘Complete Child benefit application’ to their to-do list – perhaps even more so if their earnings are above the threshold so they would ultimately have to repay it all anyway. However, are they aware that by not applying for this (even if they later choose not to receive payment), this means that they can lose out on national insurance credits towards the state pension? The OTS report does set out recommendations to improve the position and even if taken, the Government needs to keep this principle in mind when implementing new changes.
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