The administrative costs of tax compliance : seventh report of session 2003-04, report, together with formal minutes, oral and written evidence

The Committee's inquiry examines the administrative costs of tax compliance placed on business (covering all taxes administered by H.M.

Customs & Excise and the Inland Revenue) and how this has changed over time, as well as the success of steps that have been taken to reduce these costs.

The Committee recognises that reducing compliance costs is only one of a number of objectives for the taxation system; and acknowledges the difficulty in striking a balance between making the system simple to understand and operate, whilst ensuring appropriate checks and balances exist to minimise tax avoidance.

Recommendations made include that the Government should clarify the relative priority attached to the various objectives of the tax system; and that the new taxation department (to be formed by the merger of the Inland Revenue and HM Customs & Excise) should develop a better focused PSA target on compliance costs. Although comparative analyses indicate that UK administrative costs are lower with fewer regulations than most EU countries, the Committee also calls for more accurate calculation of compliance costs to help inform tax system objectives, in light of work carried out in the Netherlands.