A well-functioning tax system is not just a mechanism for raising revenue. It is a piece of national infrastructure – as vital to economic life as roads, energy, or broadband. When it fails, the consequences are felt across the whole of society.

Right now, the UK tax system is failing. Not catastrophically, not all at once, but steadily and in ways that are becoming harder to ignore. HMRC’s customer service has deteriorated to the point where routine queries go unanswered for weeks – if not months and years. 

Complexity is layered on complexity: marginal income tax rates can quietly spike to 60%, or higher; reliefs taper in ways that even experienced advisers find difficult to follow; and policy is repeatedly developed with little thought given to how it will actually be implemented. The tribunals are overloaded. The technology is outdated.

This is the backdrop to ICAEW’s decision to launch a major new programme of work: a thorough reassessment of what the UK tax system should look like, what institutional structures are needed to support it, and where the gaps between aspiration and reality are most acute.

Why now?

The immediate trigger for this work was the 25th anniversary of ICAEW’s ten tenets for a better tax system, first published in October 1999. Those tenets set out the principles against which all tax legislation should be judged – and have been a touchstone for ICAEW’s tax policy work ever since. 

But 1999 was a different world. Making Tax Digital (MTD) did not exist. HMRC had not yet been created from the merger of the Inland Revenue and HM Customs & Excise. The gig economy, cryptocurrency, and AI were not factors in tax administration. The OECD’s base erosion and profit shifting (BEPS) project had not reshaped international tax.

The tenets needed updating. But in undertaking that exercise, which you can read more about here, something more significant became apparent: revising the principles, however carefully, would not be enough. Even the best-designed tenets can only do so much if the institutions responsible for delivering them are not functioning properly. That insight is what distinguishes this project from a simple refresh of existing policy positions. ICAEW is not just asking what the tax system should look like – it is asking whether the conditions exist to deliver it and what changes are required to make it happen.

The five institutional pillars

The project introduces the concept of five institutional pillars – the structural foundations on which a functioning tax system depends. These are:

1. Policy-makers: the legislative and executive bodies that design, enact, and review tax policy to align with public objectives (eg, HM Treasury; Parliament).
2. Administration: the operational arm of the tax system, responsible for collecting revenue, enforcing compliance, and supporting taxpayers (eg, HMRC).
3. Digital infrastructure: the systems and technology that enable effective, secure, and user-friendly tax administration and data management. Examples include HMRC’s enterprise tax management platform-based and legacy systems, One Login for Government and Companies House systems.
4. Judiciary: the independent dispute resolution system that interprets tax law, resolves conflicts and upholds taxpayer rights (eg, the tax tribunals and higher courts).
5. Tax profession: tax professionals play a vital role in interpreting complex rules, supporting compliance, and advising on reform. A strong, ethical, and well-trained profession is essential to the system’s integrity.

The verdict on all five pillars is stark. Tax just isn’t working.

Policy development is increasingly incoherent – measures intended to attract skilled individuals, for instance, are routinely undermined by other tax treatments that pull in the opposite direction. 

HMRC’s operational capacity has deteriorated significantly; its own Charter commitments are regularly unmet in practice. 

The technology underpinning tax delivery remains fragmented and difficult to navigate. 

The tribunal system is under severe strain, with delays that undermine taxpayers’ ability to access timely justice. And the tax profession operates in an environment where growing regulatory and administrative pressures make good advice increasingly difficult to give. 

These are not peripheral concerns. They are failures at the heart of the system. 

What comes next

The programme of work will unfold in phases. This first introductory paper will be followed by a series of papers, one for each institutional pillar, drawing on input from ICAEW’s Tax Faculty Board, its tax committees, and the wider institute. The aim is not merely to document problems, but to make focused, practical recommendations that can actually be acted upon. In future, we will not only judge tax reform against the revised tenets but also assess whether the conditions exist to deliver it – and press for change where those foundations are lacking. The pillars of the tax system may be creaking but ICAEW Tax Faculty’s project to help rebuild them starts now.