The Future of Taxation in the UK
ICAS publishes its policy paper Future of Taxation in the UK, which makes recommendations for addressing key issues affecting taxation in the UK.
The ICAS Tax Board
Tax is at the heart of what we do – in the broadest sense most citizens will pay tax; in a narrower sense it’s a core part of many accountants’ remit. ICAS statistics suggest that approximately 40% of the working membership either work, or have an interest, in tax.
In ICAS, tax policy and representational work is undertaken by the Tax Board and its five tax committees (Indirect tax, International and large business taxes, Scottish taxes, Private client, and OMB taxes)
Future of Taxation in the UK
Recently, the Tax Board has been debating and fine tuning its views on the Future of Taxation in the UK. There has been considerable uncertainty in recent years, for businesses and individuals, following the outcome of the EU referendum and the prolonged Brexit process. The election of a new Government has ended one phase of Brexit, with the UK formally leaving the EU at the end of January 2020. However, it has not ended uncertainty as no agreement has yet been reached on the precise nature of the UK’s future relationship with the EU.
The coronavirus pandemic has added a whole new layer of uncertainty. However, it may also present the Government with an opportunity to generate public support for tax reform to address some of the issues mentioned in this paper. This has previously been difficult to achieve but the aftermath of the pandemic, with strong public support for the NHS, might be the ideal moment for a public debate about who should pay tax and how much they should contribute.
At the same time there have also been significant changes in the business and broader societal environment, most notably linked to increasing digitalisation and developments in AI. Older ‘bricks and mortar’ businesses have struggled to compete against new global online businesses. The growth of the ‘gig’ economy has presented opportunities for some but led to exploitation of others and the government provision of coronavirus support schemes has shone a light on these trends.
Taxation sometimes struggles to keep up, both in policy terms and in tax administration. International discussions are in progress to try to resolve how to tax the digital economy; in the meantime some jurisdictions, including the UK, are introducing unilateral interim Digital Services Taxes. Taxing workers in the gig economy also presents challenges. The legislation dealing with tax administration has not kept up with digital developments and is no longer fit for purpose.
The UK also has an overly complex tax system which individuals struggle to understand; adequate support from HMRC can be hard to obtain. The UK government and HMRC have enjoyed considerable success in reducing tax avoidance in recent years. However, there remains a perception that there has been widespread abuse, which contributes to a sense of unfairness.
The ICAS Tax Board has put forward recommendations for addressing key issues affecting the future of taxation in the UK – and the benefits we believe will flow from adopting them.
The Future of Taxation in the UK examines the following topics:
- Tax and the common good
- Making effective tax policy
- Devolving tax powers across the UK
- Professional relationships – regulation of the tax profession?
- Improving tax administration
- Going digital
- Agents and taxpayers: working together with HMRC
- Corporation tax and multinational enterprises
- Income tax, NICs and workers
- VAT in a post-Brexit environment
- Environmental taxes – adapting to changing conditions
These recommendations were agreed by the ICAS Tax Board in 2020 and inform the work of ICAS Tax. However, they will be reflected upon and revised to reflect economic, social and political developments.
Contribute to the debate
ICAS members are invited to contribute to this debate – please give your views on the recommendations in ‘Future of Taxation in the UK’ by emailing tax@icas.com. or login to the CA Connect forum, an area exclusive to members, where thoughts may be shared and discussed with fellow members. There are also opportunities to join ICAS tax committees to discuss these recommendations and many other tax policy and practical matters – email tax@icas.com to find out more about being a committee member.
