SCOTLAND should be used for a “flat tax” pilot scheme, according to a top accountancy firm, writes Robert Ballantyne.

David Clarkson, head of tax at Price Waterhouse Coopers in Scotland, said even accountants acknowledged that the taxation system was too complex and that a radical and simplified solution was required.

A flat tax — a single rate across all sectors, including Vat, income tax and capital gains tax — would, if set at the right rate, allow the chancellor to increase the total tax take. If accompanied by an increase in the allowance of untaxed income, say to £10,000, it would also be socially inclusive by taking large numbers of low-paid workers out of the income tax system altogether.

Clarkson said the system could be piloted in Scotland, which had a higher number of low-paid workers and the largest centralised Inland Revenue computer system.

A flat tax has worked in many of the smaller countries that have acceded to the European Union, such as Estonia, which was comparable to Scotland, and has a flat tax of 26%, which is due to be cut to 20% in three years’ time.