Host

Stephen Relf, Tax Technical Manager, ICAEW

Guests

• Lindsey Wicks, Tax Senior Technical Manager, ICAEW
• Ed Saltmarsh, Tax Technical Manager, ICAEW

Producer

Ed Adams

Series Lead

Mark Rowland

Transcript

Stephen Relf: Hello and welcome to the Tax Track, the podcast series from ICAEW, exploring the latest developments in the world of tax. A well-functioning tax system is a vital part of a country's infrastructure, funding the essential services that we all rely on and shaping economic behaviour. And yet, it is widely acknowledged that the UK's tax system is failing, weighed down by decades of accumulated complexity. In this episode, we will draw on ICAEW's latest campaign, How To Build a Better Tax System, to identify what is going wrong and why it matters.

[Teaser audio] Ed Saltmarsh: It really is important for the country that the tax system works and for that to happen, we need the institutions that support the tax system to be supported.

SR: And we'll explore ICAEW's recommendations for how the tax system could be improved.

[Teaser audio] Lindsay Wicks: At the moment, anyone can call themselves an accountant or a tax adviser. They don't have to be part of a professional body. Standards should be strengthened consistently across the market.

SR: I'm Stephen Relf, a Tax Technical Manager at ICAEW. Today I'm joined by two colleagues from the Institute's tax team, Technical Manager Ed Saltmarsh and Senior Technical Manager Lindsay Wicks. Ed and Lindsay, welcome back to the Tax Track.

ES: Hiya.

LW: Hi Stephen.

SR: We are here today to talk about the campaign, How to Build a Better Tax System. This started with a project to update the institute's 10 tenets for a better tax system. These were published in 1999 and are the principles that ICAEW believes should underpin the tax system and against which, tax legislation should be judged. Ed, could you start us off today, please, by explaining what changes have been made to the tenets?

ES: Yes, thanks, Stephen. So, I think it's actually important to start by saying that most of the tenets stayed the same with very minor tweaks. They have, on the whole, stood the test of time. But there have obviously been changes, well, in the world, since 1999, that meant that we felt that some of them should be updated. And so, there were four that changed a bit more significantly. I'll just pick out a couple of them. So previously, one of the tenets was that the tax system should be ‘constant’ and we wanted to change that because we felt that it gave the wrong impression. We don't want a tax system that is constantly bad, for example. So we changed that to ‘stable’. So on the whole, there shouldn't be too many changes to the tax system unless they move us towards a better place.Another one that changed was one of the tenets was that the tax system should be ‘competitive’, and we changed that to ‘efficient’ to talk more about making sure that the tax system doesn't distort taxpayer behaviour. And we felt that actually competitive, that's something that's achieved if all of the other tenants are met. It's not an aim in itself. And so that's why we changed a couple of the tenants.

LW: And the review also prompted a broader question: if we know what the good tax principles look like, why haven't they delivered the improvements that we'd hoped for? These have been in place since 1999.

SR: Yeah, it has been a long time now, hasn't it? And a lot has changed now, as you said. The project didn't stop there, though, did it? As part of that work also identified issues with the foundations of the tax system. And so that 10 tenets workstream became the campaign How to Build a Better Tax System. Could you explain more about how that evolved?

LW: Yeah. So, as I said, if the principles are valid, why hasn't the tax system improved? Prior principles alone are not enough. You can have excellent principles on paper, but still end up with a tax system that's too complex, difficult to administer or frustrating for taxpayers and their agents.

ES: I think that's a really crucial point. Knowing what a good tax system looks like isn't enough to get you there. So, for example, I know that Jamie Dornan looks good, but that doesn't make me look like him. So that's why we identified five institutional pillars of the tax system that essentially support it, which are: policymakers, (so essentially Parliament and the Treasury), the administration, (which is HMRC in the UK), the tax profession (so our members, but also the wider tax profession) and the judiciary. For most people, that would be the tax tribunals, but also, wider tax dispute resolution. And finally, digital infrastructure, the infrastructure that all those other things will rely on in the digital age.

SR: So let's take a little bit of time, then, to have a look at those five pillars and we'll start with policymakers, which you explained as Parliament and Treasury. Now, it is widely acknowledged that we have a very complicated tax system, and I think there's also broad consensus that reform is needed. For example, with regard to VAT and property taxes, how have we got to the position that we find ourselves in?

LW: I think complexity has accumulated over decades. Changes are introduced to address specific issues or political priorities. And tax policy isn't just about collecting taxes and raising the revenues to fund our public services. It's often used to achieve a wide range of other objectives. So, supporting a particular sector or delivering environmental goals, for example. And the system has become increasingly difficult because of all of these different policies possibly pulling in opposite directions. So, if I think about the property market, you know, in the past we've had measures that have been aimed at increasing the supply of private rental property, but then when that supply went up, then first-time buyers find themselves priced out of the market. And the response is often to add different measures to fix a problem, rather than looking at what created the problem in the first place. So we end up with different measures, sometimes in different tax regimes, but all pulling in different directions. And when we have that junction of different definitions for different reasons, that also opens up the opportunity for tax avoidance, for example.

SR: So a lot of this is down really to political instability or political change. And we're always going to have that in a modern democratic system like we have. In that case, then how do we go about fixing tax policy making?

ES: So I think it's important here to recognise that we're not suggesting that politics should be removed from tax policy entirely. It's rightly a matter for elected government to make decisions on tax. But what we are suggesting is that the tax policy making should be split into three separate functions, where you have a tax commission working on a long-term tax strategy, a permanent Office for Taxation which will strengthen technical development of tax policy. But ultimately, the politicians will determine the pace of change.

SR: And recently ICAEW announced that it is establishing an independent body to review the UK's tax system. And that is the future of tax commission. How do these two pieces of work fit together?

ES: I think this is great news because a tax commission is something that we recommended in our ‘building a better tax system’ work, but they have different roles. So this ‘building a better tax system’ is asking whether the conditions exist to deliver a good tax system and what changes are required to make it happen. Whereas the commission is looking at what tax system should sit on top of that. So to use a construction analogy, building a better tax system is asking whether the foundations exist for a building to be built and the tax commission is considering what sort of building will sit on top of those foundations.

SR: Yeah, I think that's a very clear way of thinking about it. Thank you, Ed. So let's move on then to administration and so HMRC. This is another area where the case for reform would seem to be clear. We've become accustomed in recent years to missed targets on customer satisfaction, answering the phone and responding to post. But that said, there have been some signs of improvement in recent data. Are members continuing to report issues with HMRC services?

ES: Yes. So what we're seeing is that actually HMRC's frontline customer service. (if you think about the phone lines and the web chat), the service is improving, the more people are getting through to HMRC on the phone and much more quickly. But the issue isn't now accessing HMRC, it's actually getting resolution. And that's, I think, increasingly been an issue over the last couple of years. So we're currently looking at this again. We published a report on HMRC customer service in 2024 and we're running a repeat of that project at the moment. And we'll be publishing a new report on this on the 8th of December.

LW: And the member feedback does suggest that significant problems remain, particularly where the underlying processes are slow or fragmented or unclear.

SR: HMRC does have its own plans for change. So for example, it did publish a transformation roadmap in July 2025. Is HMRC in the process of fixing itself, do you think?

ES: I think there are some encouraging signs and I think to be fair to HMRC, progress is always going to be slow in such a large organization. And the transformation roadmap does point broadly in the right direction. There are some sensible ambitions in there around digitalisation and service improvement. We have concerns that it's a little bit of a statement of ambition and not necessarily a delivery plan. And I think some of our members aren't convinced that there's enough in there for agents in particular.

LW: Yeah. And I think the key question is whether it can successfully tackle the root causes of poor service and deliver change at the pace that people really need. Will those new services tackle the issues? Quite often we see big programmes get most of the way there for most of the population, but there's still a few edge cases that need a different route and we never have a post implementation review to fix those remaining issues. There's always a little workaround needed somewhere.

SR: So you've hinted at this, but in that case, what changes would we like to see?

ES: For me, I think, as Lindsay mentioned, it's more focus on underlying issues, like, it's very welcome that people can now get through on the phone. But actually, what would be more welcome is removing the need to contact HMRC in the first place. And that's going to be dependent on improvements to those underlying processes and speeding up processing times of applications, returns, refunds, etc.

LW: And the digital services that HMRC is creating need to be designed around real world taxpayers and agent journeys. And if a service works for taxpayers but not their authorised agent, it just doesn't work. The agent needs to see and do what their client can do, otherwise, that causes significant issues. And if the service is for something complex where taxpayers are most likely to want to be represented by an agent, it's imperative that the agent journey works.

SR: Okay, so moving on then, to the tax profession. And I think similar to tax administration and HMRC, this is an area that is already undergoing quite significant change. So, for example, we have mandatory registration of tax advisers with HMRC, which is in the process of being phased in. And we have that new sanctionable conduct regime which came into effect earlier this year in April 2026. Do we think that these changes will fix the problems?

LW: Well, they are significant reforms. We had a whole package in Finance Act 2026, but they only really address part of the challenge. The tax advice market is complex and the underlying issues are broader than registration alone. For example, members of professional bodies can face extensive oversight and sanctions, while other advisers might operate under very different standards. You know, some bodies have training, qualifications, continuing professional development, professional standards, oversight, professional indemnity, insurance redress, but that's not necessarily visible to the people buying their services. And this fragmented market means that a professional body might exclude a member because they're not meeting those standards. But actually that member can still operate. They might not be able to call themselves an ICAEW chartered accountant, but they could still operate as an agent in the tax market. And mandatory registration does give HMRC the power to also stop them from interacting with HMRC services. But that doesn't mean that they can't operate in the shadows. You know, they might not. They might be able to give advice but not actually interact with HMRC. So it's not a complete solution. And sanctionable conduct, that's really hard because it's broadly defined and it carries significant penalties. It's defined as doing something with the intention of bringing about a loss of tax revenue. But the penalties can be really disproportionate. They're not based on the amount of the fee that an advisor is charging, they're based on a percentage of loss of tax revenue. So, again, this could potentially affect people's access to advice if advisers don't want to take on the risk of giving that advice.

SR: Yeah, we have talked about sanctionable conduct in an earlier episode of the Tax Track, and obviously that is a significant change for the tax profession. But as you've explained, despite these changes, problems do remain. What is ICAEW suggesting to fix them?

LW: Well, we recognise that the tax profession is a critical part of the UK's tax infrastructure. The tax system only operates if taxpayers can access competent and trustworthy advice at a reasonable cost. We think there needs to be greater protection for professional titles. At the moment, anyone can call themselves an accountant or a tax adviser. They don't have to be part of a professional body. Standards should be strengthened consistently across the market. The sanctions regime should be more proportionate. The goal is a framework that protects taxpayers, supports goods, advisers and targets poor behaviour effectively. At the moment, a lot of these measures are about being a stick to stop bad actors, but there's not really a carrot to encourage good tax advice. And that goes back to having parity of services for agents, for example, in HMRC systems.

SR: Moving on to the next pillar, judiciary. I was quite surprised to read in the policy paper of significant delays in the first year tribunal. What is causing these problems?

ES: It's firstly really important to note the impact that those delays have. As cases take longer, uncertainty increases for businesses and individual taxpayers and that affects investment decisions, cash flow, and that can have a really negative impact on the UK economy. But I think most people see the tribunal delays themselves as the problem. Actually, I think they're probably a symptom of a wider problem. More tax disputes should be resolved earlier in the process so they don't get to the tribunal in the first place.

SR: I think most people would agree with that. But I suppose the question then is how do we do that? How do we resolve these disputes earlier in the process?

LW: I think we need to look at the entire dispute resolution system and it almost starts with the first letter that comes out at the start of an inquiry. Often that's got a 30-day deadline to respond, but it doesn't arrive until 14 days into that window. So the first thing you're doing is calling HMRC to request an extension which goes back to the it causing demand on HMRC's administration, the point that Ed made earlier. But there needs to be a focus on resolving the disputes at the earliest appropriate stage. You know, quite often we hear from our members about the fact that if you get 12 or 18 months into a dispute, often the HMRC officer will change and a fresh pair of eyes means that they might ask the same questions or new questions. And that delays the whole process. We want HMRC caseworkers to be empowered to settle disputes at the earliest opportunity.

ES: I think regarding the tribunal themselves, we've seen some reforms already to tribunal processes under the new president of the of first tier tribunal, but I think there is possibly more that could be done there to identify opportunities to improve efficiencies. I think also better monitoring of cases. So that we can identify where the delays and bottlenecks in the tribunal system are appearing and then resolve that issue.

SR: So the final pillar that we'll look at today is digital infrastructure. Now, that seems potentially quite broad. Ed, what exactly are we looking at here?

ES: Digital infrastructure is definitely broad. It's definitely broader than HMRC because it includes any party that feeds data into the tax system. So that could be companies house, the Department of Work and Pensions, online marketplaces, or any of the organisations that interact with businesses at the border, like Border Force and Defra. And it includes software and digital tools that businesses and taxpayers use to run their affairs and most importantly, how those systems interact.

SR: So there is a lot of going on in this space at the moment. We're still getting to grips with making Tax digital, which came in April, and there's a lot on the horizon, including e-invoicing from April 2029. So is the problem here that these changes don't go far enough, or perhaps that they're taking too long to deliver?

ES: I think the challenge is not a lack of change, it's that the changes are all being designed and delivered separately. So different parts of government, and I guess understandably, the private sector as well, can pursue sensible objectives without considering how that individual project fits within the wider tax ecosystem. And this leads to duplication, fragmentation and an inconsistent user experience. So we think that success should be measured by whether a project actually makes a taxpayer's life easier.

SR: Some very positive ideas there, but how do we go about putting them into practice?

ES: I think we need a shared set of design principles for digitisation across any party that interacts with the tax system and encourage organisations to design services around actual taxpayer journeys.

LW: And you need to involve all relevant parties in agreeing the standards. And what you want to avoid is something that has the potential to either innocently or deliberately create large errors. You want to facilitate getting tax right efficiently and cost effectively for all parties in the tax ecosystem.

SR: So, Lindsay, as I think you and Ed have demonstrated today, this is quite a broad and quite an ambitious campaign. How are you getting these messages across?

LW: We've got a dedicated how to Build a Better Tax system hub on icaew.com. And that includes a series of thought leadership papers, articles and videos on each of the pillars that we've talked about today.

SR: And how can people get involved in this?

ES: So the work that we've done so far has been in collaboration with a small number of ICAEW volunteers and we want more members to get involved. We don't see what we've published as the end of the discussion. It's really just the start. So we want members to help us refine and prioritise the ideas for reform. And there have been surveys published alongside some of the articles, so I'd encourage people to complete those.

SR: And sticking with the surveys for a moment, what has the initial feedback been like? Are people broadly supportive of what we're seeing?

ES: Yeah, I think overall people have been really positive and supportive of the direction of the project. I think people have responded really well to the idea that a good tax system depends on strong institutions. Needless to say, not everyone agrees with every recommendation, but that's kind of the point. We want to generate that discussion.

SR: So Lindsay, what comes next?

LW: Well, the works already influenced ICAEW's budget submission for 2026, but we will be hosting a breakfast roundtable on the 9th of November where each of these pillars will be discussed in more detail by a wider group of ICAEW members and other stakeholders.

SR: And if you're listening to this episode after the event on the 9th of November, please do check the show notes for links to articles where we will provide a summary of the discussions at the event. So a final question for both of you. A lot of work has gone into this campaign and we'll continue to go into it. But what does success look like, Ed?

ES: For me it's a greater recognition that the tax system is vital national infrastructure, which you mentioned at the start of this episode. It really is important for the country that the tax system works and for that to happen we need the institutions that support the tax system to be supported. So I think success would be moving the debate beyond individual tax measures and towards the long-term coherence and health of the tax system as a whole.

LW: And we'd like to see practical reforms adopted across the spectrum of the five pillars, whether it's improvements to policymaking, administration, digital infrastructure, the profession, or dispute resolution. Ultimately, success is a tax system that's more stable, coherent and easier to navigate for taxpayers, businesses, advisors and HMRC.

SR: Well, thank you Ed and Lindsay, that's been very informative. I think, as I've already mentioned, clearly a lot has been done on this campaign already in identifying the problems and also in making recommendations for change. And it's also clear that there is still much more to come as more people join the discussion and hopefully, as the recommendations are taken forward. Many thanks Ed and Lindsay for your contributions.

LW: Thank you.

ES: Thank you, Stephen.

SR: And thank you for listening. All of the topics we've discussed today are covered in more depth in the articles linked in the show notes. If you found this useful, then don't forget to subscribe so you never miss an episode. You can rate and share the podcast too. We'll be back next month with the next tax track. In the meantime, why not check out the sister podcast from ICAEW? Accountancy Insights provides business, finance and accountancy analysis, while each episode of Behind the Numbers offers a deep dive into a selected topic. And there's also the Students’ Podcast aimed at young professionals to keep up with the latest developments in tax. Please make sure to subscribe to our weekly TAXWire newsletter. Tax faculty members also have access to our in-depth podcast Tax Line articles. Thank you for listening.