By Jason Theodorou

Chancellor George Osborne plans to streamline the UK tax system to attract more investment from overseas, as part of a bid to raze unnecessary regulations from the statute books. The Chancellor has described the current tax system as a 'spaghetti bowl of reliefs and exemptions' which needs to be untangled.

The tax system will be reviewed by an independent Office for Tax Simplification, which the Treasury will announce later today as a body that will 'analyse potential reform options'.

The new body will conduct a review of business taxation, and look at tax reliefs and allowances. The body will be chaired by former Conservative MP Michael Jack, and directed by tax expert and former PricewaterhouseCoopers partner John Whiting.

The government argues that the tax system became a 'hindrance' to business under the previous Labour government, and that it needs to be made more competitive for small businesses. The Office will examine regulations which hold back small firms in time for the next Budget.

David Gauke, the Exchequer Secretary, will say in a speech later on Tuesday: 'The tax system created by the previous government was overly complex, and has made the tax affairs of millions of families and businesses across the UK extremely complicated'.

The Institute of Directors (IoD) welcomed the creation of the Office for Tax Simplification, but said that the Office would only succeed if it 'had teeth'. The IoD suggested that ministers still needed to take the final policy decisions, but they should not muzzle the Office or overlook its recommendations.

The IoD said that the Office needed to be independent, report it's finding publicly even when this goes against government policy, and invite a detailed response from ministers to all proposals.

Richard Baron, Head of Taxation at the Institute of Directors, said: 'It is a long overdue initiative. The important thing now is to make sure that the Office achieves some early successes, and that it goes on achieving. Its recommendations must not end up stamped ‘too difficult’ or ‘maybe in the longer term’.

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