A well-functioning tax system is not just a tool for raising revenue; it is a piece of national infrastructure - as vital as roads, energy, or broadband. In the UK, where economic resilience, fairness, and long-term investment are critical to national priorities, the strength of the tax system has never mattered more.
This project to revisit ICAEW’s Ten Tenets and reinforce them with clearly articulated institutional pillars aligns directly with ICAEW’s Direction 2030 strategy. The strategy sets out to ensure the profession remains relevant, trusted, and resilient, and tax is a core part of that vision. By providing a refreshed framework for what a better tax system looks like and identifying the institutional and environmental conditions required to deliver it, this work contributes directly to ICAEW’s goals of thought leadership, strong public interest advocacy, and sustainable economic progress.
Purpose of this paper
This paper is intended as a scoping document. It sets out the rationale for revisiting ICAEW’s Ten Tenets for a Better Tax System and introduces a framework for strengthening the institutional foundations that support them. It does not seek to provide detailed policy prescriptions, but rather to provoke discussion, shape priorities, and guide the next phase of ICAEW’s tax policy activity.
Why now?
The UK tax system is under growing pressure. Rapid digitalisation, declining service levels at HMRC, increasing complexity, and a lack of coherence between policy and implementation have all contributed to a system that is struggling to meet the needs of taxpayers and the economy. At the same time, global developments, from Base Erosion and Profit Shifting (BEPS) to artificial intelligence (AI), are reshaping the international tax landscape. These pressures make it essential to revisit the foundations of our tax system and ensure they are fit for the future.
Why the tax system matters for growth
A well-designed and effectively administered tax system is essential infrastructure for a modern economy. It underpins long-term productivity by funding the public services and goods - such as infrastructure, education, and healthcare - that make growth inclusive and sustainable.
Tax also shapes economic behaviour. It influences decisions across the economy including how businesses and individuals spend, save and invest. When taxes are poorly designed, they create confusion or distort incentives. When well-designed, they can direct economic activity toward national goals.
Just as physical infrastructure gives people confidence to build and invest, the tax system underpins economic confidence. A system that is stable, transparent and fair allows businesses and individuals to plan, and comply with as well as trust in the rule of law. If the system is seen as unpredictable, it discourages investment. If it is seen as unfair, it undermines legitimacy.
Finally, countries with outdated infrastructure are left behind, and this includes their tax system. A modern, efficient tax system is a source of competitive strength. A clear, digital and internationally coherent tax system would make the UK more attractive to global capital, talent and enterprise.
ICAEW’s Ten Tenets for a Better Tax System
In October 1999, ICAEW published its Ten Tenets for a Better Tax System – the factors we believed should underpin the UK tax system. It was suggested that all tax legislation should be judged against these tenets and exposed when it failed to live up to them.
ICAEW stated in its Ten Tenets that the tax system should be:
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1. Statutory
Tax legislation should be enacted by statute and subject to proper democratic scrutiny by parliament.
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2. Certain
In virtually all circumstances the application of the tax rules should be certain. It should not normally be necessary for anyone to resort to the courts to resolve how the rules operate in relation to his or her tax affairs.
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3. Simple
The tax rules should aim to be simple, understandable and clear in their objectives.
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4. Easy to collect and to calculate
A person’s tax liability should be easy to calculate and straightforward and cheap to collect.
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5. Properly targeted
When anti-avoidance legislation is passed, due regard should be had to maintaining the simplicity and certainty of the tax system by targeting it to close specific loopholes.
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6. Constant
Changes to the underlying rules should be kept to a minimum. There should be a justifiable economic and/or social basis for any change to the tax rules and this justification should be made public and the underlying policy made clear.
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7. Subject to proper consultation
Other than in exceptional circumstances, the government should allow adequate time for both the drafting of tax legislation and full consultation on it.
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8. Regularly reviewed
The tax rules should be subject to a regular public review to determine their continuing relevance and whether their original justification has been realised. If a tax rule is no longer relevant, then it should be repealed.
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9. Fair and reasonable
The revenue authorities have a duty to exercise their powers reasonably. There should be a right of appeal to an independent tribunal against all their decisions.
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10. Competitive
Tax rules and rates should be framed so as to encourage investment, capital and trade in and with the UK.
Revising the tenets
Over the past 25 years, the UK tax system has seen significant changes, due to both domestic and global developments. Internationally, influences include Brexit, the UN's sustainable development goals (SDGs), Organisation for Economic Co-operation and Development (OECD) and G20's BEPS initiatives, and the common reporting standard for financial account information exchange. The rise of cryptocurrencies, AI advancements, and changes in the gig economy and remote working have further complicated tax administration.
Domestically, notable changes include the merger of two revenue departments into HMRC and the creation and abolition of the Office of Tax Simplification. The system now features a general anti-abuse rule, and disclosure obligations for tax avoidance schemes. HMRC relies more on nudges and prompts for compliance, but PAYE struggles with HMRC having to issue end-of-year reconciliations showing under- and over-payments to more than seven million taxpayers, and reliefs like R&D tax relief are growing more complex.
Digitalisation has shifted administrative burdens to taxpayers and their agents. Key developments include real-time information (RTI) reporting in 2012, making tax digital (MTD) for VAT in 2019, MTD income tax for sole traders and landlords in 2026, and mandatory payrolling of benefits in kind in 2027, along with plans to digitalise inheritance tax. However, HMRC's IT systems lag behind, causing declining customer service levels.
These changes present challenges for the UK tax system: increasing complexity, rapid digitalisation, shifting administrative burdens, poor customer service, and misalignment between tax policy and economic reality. Updating our original tenets to reflect new priorities is essential to shaping a better tax system.
Therefore, in light of these significant changes to the tax landscape since 1999, we have undertaken a careful review of the original Ten Tenets to ensure they remain relevant, practical and aligned with today’s challenges.
Our approach to this review was guided by three objectives:
- Clarity and consistency: each tenet now follows a uniform format – title and two sentences – to improve coherence;
- Modernisation: we have updated the language to reflect contemporary tax policy concerns and to ensure inclusivity (‘his or her’ to ‘their’); and
- Relevance and focus: some tenets have been broadened to address emerging issues (eg, digital administration), while others have been narrowed to avoid overlap and sharpen their focus.
The revised tenets
Further to our revisions, the proposed ten tenets state that the tax system should be:
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1. Statutory
Tax legislation should be enacted by statute and subject to proper democratic scrutiny by Parliament. A clear statutory basis ensures legitimacy, accountability, and public trust in the tax system.
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2. Certain
As far as possible, the application of tax rules and compliance processes should be certain. Taxpayers should not normally need to resort to the courts to understand how the rules apply to their affairs.
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3. Simple
The tax system should be easy to understand for all taxpayers and advisers. Complexity undermines trust, creates unfairness and discourages compliance.
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4. Easy to administer
Tax liabilities should be straightforward to administer for HMRC, agents and all taxpayers. Taxes should be designed to work effectively in a digital environment, while remaining accessible to those with limited digital capability.
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5. Properly targeted
Anti-avoidance rules and other targeted measures should be proportionate, clearly defined, and carefully scoped to achieve their policy objective without undermining simplicity or certainty. Poorly targeted measures add complexity and uncertainty, harming compliance.
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6. Stable
Changes to the tax system should only be made when clearly justified by economic, social, or environmental goals. Transparent, purposeful reforms build confidence and move the system toward greater coherence and long-term stability.
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7. Subject to proper consultation
Other than in exceptional circumstances, tax changes should be subject to open and meaningful consultation. Adequate time for stakeholder input improves policy quality, practicality, and public trust.
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8. Regularly reviewed
Tax rules, reliefs, and policy-driven interventions should be subject to regular, transparent review to assess whether they remain relevant, effective and aligned with current policy goals. Outdated or unjustified provisions should be reformed or repealed to maintain coherence.
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9. Fair and accessible
The tax system should be fair and accessible in design and in operation, ensuring equitable treatment of taxpayers. Revenue authorities must exercise their powers proportionately, and all taxpayers should have timely access to HMRC assistance, independent appeal and redress.
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10. Efficient
The tax system should raise revenue in a way that minimises unnecessary distortions, compliance burdens, and resource misallocation. While all taxes affect behaviour to some degree, tax design should avoid cliff edges, unintended incentives, or inefficiencies that reduce economic wellbeing unless these serve a clearly defined policy aim.
The specific changes made to each tenet can be found in Appendix 1.
By adhering to the Ten Tenets for a Better Tax System, the UK can ensure that its tax system is competitive. It is important to note that the best places to do business are not necessarily those with the lowest taxes. For example, Denmark is often cited as one of the best places to do business due to its stable and transparent tax system, despite having relatively high tax rates. This demonstrates that a well-designed tax system can foster a competitive business environment by providing certainty, fairness, and efficiency.
Fixing the foundations
In reviewing the Ten Tenets, it became clear that although many of the original tenets from 1999 remained valuable and relevant tests against which tax policy should be judged, it was not clear that they had achieved their objectives. The UK tax system is arguably more complex than ever, and it is often poorly administered. Although the Ten Tenets tell us what the tax system should look like, they do not cover the structural elements of the tax system – the institutional pillars needed to ensure the proper functioning of that system.
We believe that there are five pillars that hold up a functioning tax system:
- Policy-makers: the legislative and executive bodies that design, enact, and review tax policy to align with public objectives. [HM Treasury and Parliament]
- Administration: the operational arm of the tax system, responsible for collecting revenue, enforcing compliance, and supporting taxpayers. [HMRC]
- Digital infrastructure: the systems and technology that enable effective, secure, and user-friendly tax administration and data management. [For example, HMRC ETMP based systems, HMRC legacy systems, One Login for Government, Companies House systems]
- Judiciary: the independent dispute resolution system that interprets tax law, resolves conflicts and upholds taxpayer rights. [Tax tribunals and higher courts]
- 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.
These institutional pillars are not working, whether considered individually or taken as a whole. The UK’s tax policy landscape is increasingly incoherent. Measures intended to attract skilled individuals, such as the new Foreign Income and Gains (FIG) regime, are undermined by immigration restrictions and tax treatments that disincentivise employers, such as treating visa sponsorship as a taxable benefit-in-kind. Complexity is layered on complexity: marginal income tax rates can quietly spike to 60% or higher, and inheritance tax reliefs like the Residence Nil Rate Band taper without clear visibility. Policy is rarely developed with implementation in mind, and there is little evidence of serious post-implementation review. Effective tax policy-making requires not just vision, but coordination, coherence, and long-term planning.
HMRC’s operational capacity has deteriorated significantly. Customer service has declined to levels that damage public confidence, and many taxpayers struggle to receive timely, accurate responses. Back-office systems are outdated, internal processes lack integration, and routine errors are increasingly common. The commitments in HMRC’s own Charter are often ignored in practice, eroding trust and undermining voluntary compliance. A modern, effective tax system cannot function without a well-resourced and responsive administrative engine.
In many cases linked to poor administration, the technology that underpins tax delivery is often not fit for purpose. While the private sector has embraced seamless, user-friendly, data-driven platforms, the tax system remains fragmented, clunky, and difficult to navigate. Many processes that could and should be automated remain manual. Crucially, policy development often fails to account for how rules will be implemented digitally, leading to friction, inconsistency, and cost. Digital infrastructure is not an add-on; it is a core pillar of modern tax delivery, and it needs sustained investment and strategic oversight.
Finally, independence and accessibility of the tax dispute system are vital for upholding taxpayer rights and legal certainty, yet this pillar is under severe strain. The tribunals are overloaded, causing lengthy delays that frustrate both taxpayers and advisers. Justice in tax must be timely to be meaningful. A functioning judiciary ensures that power is exercised lawfully and proportionately; when this pillar weakens, confidence in the whole system begins to erode.
So what now?
ICAEW believes that rebuilding the UK’s tax system requires more than better principles - it requires stronger institutions. The revised Ten Tenets provide a vision of what good tax policy looks like, but that vision can only be realised if the institutional pillars are capable of supporting that system.
To that end, ICAEW is proposing to set out recommendations to improve each of the four pillars, which will allow us to make focused and evidence-based recommendations to government. Where possible, our recommendations will build on the success of previous work. For example, our joint 2024 report with the Chartered Institute of Taxation on HMRC’s customer service challenges generated meaningful engagement not only within HMRC but also from ministers, including the Exchequer Secretary to the Treasury. This kind of focused, constructive intervention shows the value of bringing the profession’s insight and experience to bear on system-wide issues.
Each pillar - policy-making, administration, the tax profession, digital infrastructure, and the judiciary - plays a critical role in making the tax system work. We will examine the strengths and weaknesses of each, engaging with government, business, and the wider profession to identify what needs to change.
This work will form the backbone of ICAEW’s tax policy activity over the coming years. We will not only judge future tax reform against the Ten Tenets but also assess whether the conditions exist to deliver it - and we will press for reform where those foundations are lacking.
Just as with roads, energy, or broadband, a functioning tax system is essential infrastructure. It must be designed with care, maintained with discipline, and invested in for the long term. ICAEW is committed to ensuring the UK has a tax system worthy of that role.
The enabling environment
A functioning tax system does not operate in isolation. It depends on a broader enabling environment that supports compliance, fosters trust, and sustains legitimacy.
Three elements are particularly important:
- Public trust and tax morale: voluntary compliance is underpinned by a shared belief that the system is fair, effective, and proportionate. When taxpayers trust that others are paying their fair share and that revenue is used responsibly, they are more likely to comply.
- Civil society and media: independent scrutiny and informed public debate help hold institutions accountable and ensure that tax policy reflects societal values. Transparency and open dialogue are key to legitimacy, which is why education of society and the media regarding tax is crucial.
- International cooperation: in an interconnected world, tax systems must work across borders. Cooperation on standards, enforcement, and information exchange is critical to tackling avoidance, evasion, and harmful competition.
These enabling factors are not institutional pillars in themselves, but they are essential to the success of any reform effort. Future workstreams should consider how to strengthen these elements alongside institutional reform.
Next steps
This paper sets out ICAEW’s proposed revisions to the Ten Tenets for a Better Tax System and introduces a framework for strengthening the institutional foundations that support them. These proposals are intended to provoke discussion, shape priorities, and guide the next phase of ICAEW’s tax policy activity.
We will begin by seeking input from ICAEW’s Tax Faculty Board and all of ICAEW’s tax committees. Their insight will be essential to ensuring the revised tenets and proposed workstreams are robust, relevant, and widely supported.
In parallel, we invite engagement from across the wider Institute. This work aligns directly with ICAEW’s Direction 2030 strategy - particularly its goals of enhancing relevance, resilience, and trust - and presents a timely opportunity to shape the future of tax policy and administration in the lead-up to ICAEW’s 150th anniversary in 2030.
Following this period of internal consultation and refinement, we will then publish a series of chapters for each of the five institutional pillars.
ICAEW will lead this work in collaboration with government, business, and the wider profession. Our aim is to ensure that the UK’s tax system is not only well-designed, but also well-supported, well-administered, and fit for the future.
Specifically, the changes to each tenet are respectively:
- Statutory: no substantive change, just an extra sentence.
- Certain: no substantive change, just improved wording.
- Simple: now focuses more on taxpayer understanding and talks about the tax system, not just rules.
- Easy to administer (name changed from ‘to collect and to calculate’): now focuses more on administration and reflects that taxes need to be designed with digital simplicity in mind while remaining accessible.
- Properly targeted: broadened as it was very focused on anti-avoidance, whereas anti-avoidance should be less of an issue in a well-designed tax system. Focused more on proportionality as well.
- Stable (name changed from Constant): we do not want the tax system to be constant if it is consistently bad. ‘Stable’ allows for a purposeful transition to a better tax system, whereas ‘Constant’ does not. We have also introduced social and environmental goals, so this tenet covers sustainability in both these respects.
- Subject to proper consultation: no substantive change.
- Regularly reviewed: now explicitly calls for ongoing review of all aspects of the tax system.
- Fair and reasonable: extended beyond HMRC’s powers to equitable treatment of taxpayers generally.
- Efficient: broadened to mention economic growth and UK attractiveness while incorporating more good tax design principles (eg, efficiency, neutrality, etc).