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OTS scrutinises first batch of reliefs

15 Dec 10

Test run of 13 individual reliefs to test the system and invite debate

The Office of Tax Simplification (OTS) has given a taste of things to come, with the announcement of the first tranche of 13 tax reliefs to come under its microscope. The list marks the beginning of a full review of Britain’s 1042 reliefs identified by the body, which is due to deliver a final verdict in the spring.

The preliminary report analyses the 13 tax reliefs and measures them against the review criteria evaluating their effectiveness and relevance. The list includes capital gains tax relief on the disposal of a private residence; VAT relief for charities (on supplies and sales) and R&D tax relief.

Provisional recommendations have been made as to whether a relief should either be retained in its current state, simplified, or be abolished altogether.

Those put forward for abolition are: exemption from benefit charge for late night taxis; vaccine research relief; "Millennium gift aid"; income tax exemption for National Savings Bank Ordinary Account interest; and Luncheon Vouchers.

Candidates for simplification include VAT on supplies to charities and sales by charities; enhanced capital allowances for energy and water efficient technologies; and research and development tax relief.

John Whiting, Tax Director for the Office of Tax Simplification said:
“This is a progress report and we are keen to hear views on how we have analysed the 13 reliefs in this report – especially thoughts on whether if we are approaching this in a way people support, focusing on reliefs that are no longer used, or are too complex and burdensome to be properly effective.

“There is still much to do in reviewing more reliefs before we report back to the Chancellor in full, We’ve had to make some hard choices to give us a manageable list for the next stage, but we welcome feedback from those who use the tax system and ask for their thoughts and ideas on how we can simplify it further.”

The OTS has asked for feedback on the recommendations, so its methodology can be adapted and applied to further reliefs for the final report.

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