George Osborne's tax book example
George Osborne yesterday pledged to make Britain an easier place to do business during his time as Chancellor.
In his speech to the Confederation of British Industry, he promised a simpler tax regime, attacking the record of the last Government.
He told business leaders: "The tax system has become hugely complex over the last thirteen years.
"Since 1997, the tax legislation handbook has more than doubled in length. It is now over 11,000 pages long."
Attacking the complexity of the tax system certainly appealed to his audience. However, what is the source of the Chancellor's claim and is the length of the tax guide an appropriate way to evidence the complexity of the regime?
Full Fact established that there are two publishing companies which produce comprehensive guides to UK tax legislation: Tolley's and CCH. In the world of tax policy, Tolley's has been around the longest and is seen as the most authoritative source. It publishes a yellow handbook for direct taxes like income and corporation tax, and an orange book on indirect taxes such as VAT.
The Chartered Institute of Taxation (CIOT) told Full Fact that the Tolley's guide had, as Mr Osborne claimed, mushroomed in size. In a paper on tax law reform to be published next week the CIOT write: "The UK now has the longest primary tax code, and one of the most complicated, in the world. In 2009, Tolley's tax guide, the handbook of tax legislation, ran to 11,520 pages, a 10% increase on the previous year and more then double the number of pages from 1997."
Although it would be churlish to suggest that the length of the tax handbook is an exact guide to the increasing complexity of the tax regime, it seems reasonable for Mr Osborne to use it as an indicative guide. Independent tax accountant, Gareth Lewis, told Full Fact that the Tolley handbooks are not guides so much as tomes of the relevant tax legislation.
"Tolley's is not a guide as such, but the actual legislation. There's no commentary on the legislation it is literally the legislation, with footnotes and other guidance notes which have been produced by government," he said.
In this respect it seems that a growing size is reflective of the increasing quantity of legislation. Indeed, in 2008 it was reported that Tolley's yellow book would have stretched to five volumes unless the publishers had not changed the page layout and increased the number of words on each page.
Mr Osborne's comments certainly tap into the frustrations and concerns of tax professionals.
Tina Riches, Director, Technical at the CIOT told Full Fact: "When I first started in tax over 20 years ago the yellow book basically fitted in one hand, and a slimline orange book could fit in your pocket.
"Now we've got four volumes of the yellow book and a hefty orange book — and the pages are thinner."
Ms Riches added that she weighed the latest handbooks on the scales and they came in at over eight kilos.
Although the case that Mr Osborne made appears pretty watertight, it is worth noting that one reason why the tax handbooks have expanded is the project to rewrite tax legislation.
Complaints about the complexity of the tax system are not new, and did not begin under the Labour Government.
It was after an amendment to the Finance Bill in 1995 that a Tax Law Rewrite (TLR) project got under way. At that point complaints about the tax system raised concern about the inaccessible language in which the tax laws were drafted.
As a result, the TLR project, introduced by the Conservative Chancellor Ken Clarke has, over the last 14 years, resulted in seven new Acts of Parliament on income, corporation and capital allowances which have produced simpler but longer tax legislation.
But the project is not without its critics. In their 2008 Green Budget the Institute for Fiscal Studies commented that the tax rewrite "uses simpler language but at much greater length and without resolving any of the underlying complexity in the legislation."
It is important to note such mitigating factors, but also not to overemphasise their significance against Mr Osborne's wider claim.
Mr Osborne was not making a controversial point in suggesting the tax system could benefit from simplification. The Tolley's tax handbooks are indeed in excess of 11,000 pages and have increased considerably in length since 1997.
Given that the handbooks are not commentaries but compilations of relevant legislation, their growing size seems like a reasonable way to illustrate the increased complexity of the UK tax system.
The challenge for Mr Osborne, as the new Chancellor, will be reverse the trend.
By Tim Swain