1. BRUNEL BUSINESS SCHOOL
COVERSHEET FOR ONLINE COURSEWORK SUBMISSIONS
Module Code <MG3027>
Module Title <Taxation>
Module leader <Majid Aminzare>
Student ID number <1108554>
I understand that the School does not tolerate plagiarism. Plagiarism is the
knowing or reckless presentation of another person’s thoughts, writings,
inventions, as one’s own. It includes the incorporation of another person’s
work from published or unpublished sources, without indicating that the
material is derived from those sources. It includes the use of material obtained
from the internet. (Senate Regulations 6.46)
I confirm that I adhere to the School’s Policy on plagiarism.

2. Critically discuss the government’s new
approach to tax policy making and a number
of proposals set out for improving the
framework for developing legislation and
implementing tax policy .Your work should
be clearly focused on the reforms to the way
tax policy is made to restore the UK tax
system’s reputation for predictability,
stability and simplicity
Module Code: MG 3027
Student Number: 1108554
Word Count: 1500
(Excluding this title page and references)

3. Taxation is a tool used by the UK government to pay for and to support its basic functions
and its public/government expenditure (Lymer and Oats, 2013). These functions include;
managing the economy, regulation, developing society and providing public goods (Lymer
and Oats, 2010). The tax system should benefit the UK by improving the business
environment and attracting multinational businesses and investment to the UK (HMT,
2013).Thus it is important to make the right decision on tax policy.
A competitive tax system facilitates the creation of the greatest possible economic
environment; which is needed for a private sector led recovery and factors greatly in the
reduction of government borrowing (HMRC and HMT, 2010). In addition, a competitive tax
system is important as it ensures that businesses have the funds to invest (EEF, 2010);
therefore positively impacting them. Thus, making the right tax policy and creating a
competitive tax system is important. Taxpayers, tax advisers and authorities benefit from a
rational tax system that is centred upon respectable, less burdensome policy that helps to
manage tax cost (Dee, 1993/1994).
When the new UK coalition government arrived, the current tax system lacked a rational and
comprehensible design (Dodwell, 2012). It was incoherent (Doran, 2010), lacked consultation
and made ad-hoc changes without ample warning (Lymer and Oats, 2013). The tax policy
making process (development, legislation and implementation) caused complexity and
uncertainty, as it was haphazard, reactive and contained insufficiently reasoned and sudden
policy announcements (HMRC and HMT, 2010). Politicisation and short-termism intensified
complexity, making tax unclear and inconsistent (Bassett et al., 2010). There was pitiable
scrutiny of tax legislation and overly frequent changes; thus the tax system needed to be re-
examined and urgently reformed (Bassett et al., 2010).
The UK tax regime had competitively weakened (CRAI, 2010). Thus, the government
announced several structural corporate tax reforms -including CFC reform and reduction of
headline corporate tax rate – to improve competitiveness (HMT, 2010). However, in order for
the reforms to take place effectively, the policy making process needed to change (HMRC
and HMT, 2010).
The Exchequer Secretary to the Treasury, MP David Gauke - issued a consultative discussion
document called “Tax Policy Making: A New Approach”; which was launched at the July
2010 Budget (Doran, 2010; Dodwell, 2012). It allowed the government to engage with
concerned parties and aided in shaping a new approach to tax policy making (Doran, 2010).

4. Accordingly, a number of debate responses where submitted (E.g. CIOT, 2010; HMT and
HMRC, 2010). The debate allowed for a more deliberative process to the making of tax law,
which results in an increased likelihood that higher quality legislation will be made (HMRC
and HMT, 2010). In short, it results in better legislation/reforms and thus, a UK tax system
that is competitive.
The government set out a number of proposals, in the document, to improve UK tax policy
making (HMRC and HMT, 2010). Improvement was needed as the way tax policy was
developed, legislated and implemented contributed overall to complexity and uncertainty
(HMRC and HMT, 2010).
In order to restore predictability, the government proposed that before commencing key
areas of reform in the future, it will set out how future consultation will take place, how the
reforms will be taken forward and propose a timetable for reform (HMRC and HMT, 2010).
These proposals may also improve the clarity/ understanding of the tax policy measures and
increase certainty in tax policy making (HMRC and HMT, 2010).
Consultation /dialogue allows industry to buy in to government objectives and it mitigates
against uncertainty/unpredictability in the tax policy making process (CRAI, 2010). This
means that, consultation improves predictability as industries now know what to expect.
Furthermore, consultation and a structured policy development process allows for more
deliberation (EEF, 2010). As the policy making process is improved, this will in turn improve
the quality of legislation and minimise unintended consequences (EEF, 2010).
Major tax measures - such as, the bank payroll tax and the increase in the top rate of income
tax to 50% - were unexpected; in fact, they were made with little/no consultation (CRAI,
2010). These unexpected tax events increased uncertainty, altered several parties’ perceptions
of the UK fiscal environment and the views of the foreign investors; therefore, greatly
impacting the banking and investment sector (CRAI, 2010).Thus, this example demonstrates
the importance of consultation and how it increases predictability and certainty.
In addition, the timetable is needed as, it is important that plentiful time is granted to set out
comprehensive policy and to permit consultation (EEF, 2010). This lessens the need to
hastily change new measures; which is beneficial, because this haste can cause long-lasting
and detrimental consequences (EEF, 2010). Major reforms should be gradually timed, in
order for them to be assimilated and digested (Meade, 2013).

5. Overall, improving predictability increases London’s competitiveness (CRAI, 2010). It was
found that London’s competitiveness weakened (PWC, 2009) because international
companies where apprehensive about the sustained decline of the UK tax regime (CRAI,
2010).The deterioration was in part linked with the uncertainty/unpredictability of the UK tax
policy development process and regime (CRAI, 2010). Businesses need a predictable tax
system so they can make a confident long-term investment (EEF, 2010). Therefore, if these
proposals work and the tax policy making process is predictable, then there will be a small
improvement to overall competitiveness, especially in London. In short, these measures
decrease uncertainty and thus have a positive effect on the economy.
For better stability of tax reform, the government proposed the following: a published
statement on its approach to consultation, a convention to confirm majority of tax changes at
least 3 months prior to Finance Bill publication, common commencement and announcement
dates and a more strategic approach to tax avoidance (HMRC and HMT, 2010).
In seeking a more strategic tax avoidance approach, the Exchequer Secretary commissioned a
study about introducing a UK general anti-avoidance rule [GAAR] (Lymer and Oats, 2013).
It settled that a narrowly focused GAAR would deter abusive tax avoidance schemes, ease
legal uncertainty, improve the tax system by simplification and increase trust between
taxpayers and HMRC (Lymer and Oats, 2013). However, a new GAAR could increase
uncertainty for some time whilst parties struggle to recognize what it will prevent (Lymer and
Oats, 2013).
Additionally, the proposed convention would sanction pre-legislative scrutiny between the 3
months prior to the Finance Bill publication (Doran, 2010). In short, tax law will have this
period for consultative purposes. Scrutiny of proposed legislation will increase the certainty
of taxpayers in the following year (Doran, 2010), improve tax policy making and results in
better legislation (EEF, 2010).)
In addition, common commencement and announcement dates will also certify stability and
they will: increase discipline in the tax policy making process, improve the management of
the tax code, simplify tax code compliance and boost certainty for businesses (HMRC and
HMT, 2010).
These proposals will provide stability. Stability improves the tax system and therefore, helps
businesses to grow and succeed; thus raising revenue (HMT, 2013). Uncertainty and a want

6. of stability are impediments to the improvement of economic performance (Meade, 2013)
and make business planning harder (Baron and Taylor, no date).
In order to simplify the tax policy making process, the government proposed to: create an
independent office of tax simplification (OTS) and develop a framework for the introduction
of new reliefs (HMRC and HMT, 2010). The chancellor asked the OTS to review how the
government can further advance the UK tax admin’s competitiveness - the UK ranked 10th
overall the World Bank’s ‘Doing Business’ report (OTS and HMT, 2013). The OTS’s
purpose is to scrutinise the existing rules and create proposals for simplification (Lymer and
Oats, 2013). It has started improving the tax system; several of its recommendations where
implemented in the 2011 budget and in 2012, it made several simplification proposals, e.g.
simplifying pensioner taxation. (Lymer and Oats, 2013). Additionally, the OTS has already
discovered 1042 possible reliefs (OTS, 2011).
Overall, the UK tax system is complicated (CB1, 2012); therefore, simplicity is an important
improvement, because a complex a tax system, is difficult to operate and use (Lymer and
Oats, 2013). Additionally, excessive complexity can result in greater chances of tax
avoidance and can lead to confusion/uncertainty (Lymer and Oats, 2013). However, to
implement simplification, the causes of complexity need to be found and there must be a
political and public desire to address it; this is difficult (Lymer and Oats, 2013).
Additionally, simplification shouldn’t weaken the UK tax regime’s predictability or
competitiveness (EEF, 2010).
In addition, the government also made lesser proposals to improve scrutiny, transparency and
evaluation (HMRC and HMT, 2010).
In conclusion, the new approach is paramount to achieving appropriate, targeted and
workable legislation (Redston, 2011), that is underpinned by predictability, stability and
simplicity; which is what a competitive tax system needs (HMRC and HMT, 2010). In
summary, the proposals improve the tax policy making process, framework and system. They
are crucial for the competitiveness of the UK economy. Additionally, they can result in raised
revenue and can encourage investments from multinationals and global businesses.

7. References
Baron, R. and Taylor, C. Tax – Making the UK Competitive. Available at:
http://www.iod.com/mainwebsite/resources/document/policy_paper_tax_uk_competitive.pdf
(No date) (Accessed: 04/02/14).
Basett, D., Haldenby, A., Nolan, P. and Parsons, L. (2010) ‘Reality check: Fixing the UK’s
tax system’, Reform . Available at:
http://www.reform.co.uk/client_files/www.reform.co.uk/files/Reality%20check.pdf
(Accessed: 03/02/14).
CBI (2012) Tax and British Business: Making the Case. Available at:
http://www.cbi.org.uk/media/1456721/tax_and_british_business_making_the_case.pdf
(Accessed: 03/02/14).
[CIOT] The Chartered Institute of Taxation (2010) Tax Policy Making: A New Approach –
Response by the Chartered Institute of Taxation. Available at:
http://www.tax.org.uk/Resources/CIOT/Documents/2010/11/CIOT%20Tax%20Policy%20M
aking%20response%20200910.pdf (Accessed: 03/02/14).
[CRAI] CRA International (2010) Taxation of the Financial Services Sector in the UK:
Predictability and Competitiveness. Available at:
http://www.crai.co.uk/uploadedFiles/Publications/Taxation-of-Financial-Services.pdf
(Accessed: 03/02/14).
Dee, N. (1993/1994) 'Room for improvement in UK tax policy and practice', International
Tax Review, 5(1), pp. 11-13. Available at: http://search.proquest.com (Accessed:
03/032/14).
Dodwell, B. (2012) ‘Tax Policy-Making in the UK’, British Tax Review, 3. Available at:
https://www.taxpublications.deloitte.co.uk/tis/dtp.nsf/0/D7EFB3C078E4A1BA80257A4C00
36250D/$file/BTR_Dodwell.pdf (Accessed : 03/02/14).
Doran, L. (2010) ‘Tax Policy in the UK New Government, Fresh Start?’, Accountancy
Ireland, 42(5), ABI/INFORM Global, pp.72 -74.

8. EEF (2010) Tax reform for a balanced economy. Available at:
http://www.eef.org.uk/NR/rdonlyres/E55238CE-8FB5-466C-949C-
C8F63A623F3E/16934/EEF_Tax_Reform_Manifesto.pdf (Accessed: 03/02/14).
[HMRC and HMT] HMRC and HM Treasury (2010) Tax Policy Making: A new approach.
Available at:
http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/dig
italasset/dg_188582.pdf (Accessed: 03/02/14).
[HMT] HM Treasury (2010) Budget 2010. Available at:
http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/dig
italasset/dg_188581.pdf (Accessed: 04/02/14).
[HMT] HM Treasury (2013) Policy: Making corporate taxes more competitive. Available at:
https://www.gov.uk/government/policies/making-corporate-taxes-more-competitive
(Accessed: 03/02/14).
[HMT and HMRC] HM Treasury and HMRC (2010). The new approach to tax policy
making: a response to the consultation. Available at:
http://webarchive.nationalarchives.gov.uk/20130129110402/http:/www.hm-
treasury.gov.uk/d/tax_policy_making_response.pdf.pdf (Accessed: 03/02/14).
Lymer, A. and Oats, L. (2013) Taxation Policy and Practice. 20 edn. Birmingham, UK:
Fiscal Publications.
Meade, J.E. (2013) The Structure and Reform of Direct Taxation (Routledge Revivals).
London: Routledge.
Office of Tax Simplification [OTS] (2011) Review of tax reliefs: Final report . Available at:
http://webarchive.nationalarchives.gov.uk/20130129110402/http:/www.hm-
treasury.gov.uk/d/ots_review_tax_reliefs_final_report.pdf (Accessed: 03/02/14).
Office for Tax Simplification [OTS] and HM Treasury [HMT] (2013) Competitiveness of UK
tax administration review: terms of reference. Available at:
https://www.gov.uk/government/publications/competitiveness-of-uk-tax-administration-
review (Accessed: 03/02/14).

9. PricewaterhouseCoopers LLP [PWC] (2009) Total Tax Contribution of UK Financial
services- Second edition. Available at: http://www.cityoflondon.gov.uk/business/economic-
research-and-information/research-publications/Pages/the-total-tax-contribution-of-uk-
financial-services-second-edition.aspx (Accessed: 04/02/14).
Redston, A. (2011) The Hitchhiker’s Guide to tax policy making. Available at:
http://www.taxation.co.uk/taxation/articles/2011/01/19/21560/hitchhiker%E2%80%99s-
guide-tax-policy-making (Accessed: 03/02/14).