On tax policy, to govern is to maintain the status quo

To govern is to choose, wise people like to say when talking about policies which annoy voters but which might make good sense. Today we have another example of what happens when governments don’t choose. The Public Accounts Committee has published another one of its fierce reports on tax, arguing that tax avoidance companies ‘run rings around HMRC’. There’s plenty of criticism in it for HMRC, with the committee finding that HMRC doesn’t know how much it spends tackling tax avoidance, or whether the work that it does do is effective.

But the tax system itself, unsurprisingly, doesn’t get a good review either. The report says that Tax Trade Advisers, who specialise in income tax avoidance ‘told us that the complexity of the tax system contributed to the opportunities for tax avoidance, and that simplifying the tax system could reduce avoidance’. The report added:

‘HMRC said it was always actively engaged in planning future legislation and evaluating existing legislation and that the Office of Tax Simplification (OTS) was working to simplify the tax system, but we understand that there are only six people in the OTS.’