The  cost  to  our  exchequer  of  tax  complexity  is  highlighted  by  the  government’s  recent   attack  on  “umbrella”  companies  set  up  by  employees  wishing  to  shelter  behind  a   corporate  veil  to  avoid  PAYE  and  national  insurance  levies.  The  Treasury  slapped  a  £1   million  fine  on  the  Ministry  of  Defence  for  its  failure  to  ensure  that  all  their  “off-­‐payroll”   workers  are  meeting  their  tax  obligations.

It  is  obvious  that

the  complexity  of  our  patchwork  tax  system  acts  as  a  breeding  ground   for  abuse

the  complexity  of  our  patchwork  tax  system  acts  as  a  breeding  ground   for  abuse. Anti-­‐avoidance  efforts  merely  generate  more  loopholes.  By  contrast,  the   simplicity  of  a  low  single-­rate  tax  regime  optimises  collection  since  there  is  little   incentive  to  evade.

The  citizens  of  several  Eastern  European  countries,  notably  Russia,  Slovakia,  Latvia  and   Bulgaria,  enjoy  the  transparency  and  certainty  implicit  in  low  single­‐rate  personal  and   corporate  tax  systems  that  enable  their  governments  to  avoid  the  cost  of  employing   armies  of  civil  servants  to  chase  evaders.  In  every  case  the  introduction of such a system  has  resulted  in   substantial  gains  –  in  terms  of  revenue-raising,  reduced  costs  of  collection  and  fewer   prosecutions.

Tax  compliance  in  the  UK  has  become  an  industry  in  itself.  Instead  of  being  free  to  focus   productive  energies  on  real  work,  management  is  increasingly  devoting  time  to  acting  as   a  quasi‐governmental  tax-gathering  agency.

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