Member Article

No will, no way for tax simplification

Since the Office of Tax Simplification began its work, the number of pages of tax legislation has increased rather than decreased. This could indicate that there was nothing that could be trimmed away or it might mean that the Government just cannot get its collective head round the concept of simplification.

Take the current consultation on trivial benefits as a case in point. Back in February the OTS suggested that the current administrative practice of not taxing trivial benefits of a welfare nature provided by employers to employees should be codified as a statutory exemption.

What do we get? Four months later, a consultation from HM Revenue & Customs with nine questions about the definition of a trivial benefit plus a consideration of anti-abuse rules and the possibility of legislation next year. This in the context of a proposal that would avoid tax and NICs of less than £28 per year for a basic rate taxpayer and under £34 for a higher rate taxpayer. Or which, in reality, should have little, if any cost since employers are already treating a bouquet of flowers to a hospitalised employee and the occasional bottle of champagne to celebrate a wedding as too trivial and too personal to be treated as earnings.

If employers have to monitor the number of occasions, the aggregate cost and the individual cost of each and every trivial benefit that they provide to their staff, the whole issue is going to become an administrative burden inversely proportionate to the values at stake. That is not simplification.

Is this the just desserts of a tax-planning industry that pushed its luck too far or the over-cautious approach of a tax administration that has had its metaphorical fingers burnt in the past?

Lesley Fidler is Employee Benefits Director at Baker Tilly.

This was posted in Bdaily's Members' News section by Baker Tilly .