Labour has given a guarded welcome to the government's plans to simplify Britain's tax system.

Shadow Treasury chief secretary Liam Byrne told the Commons: "Simplification is a good thing."

But he warned that the creation of a new Office for Tax Simplification (OTS) sounded "more like an attempt to grab headlines than real evidence of a push to improve legislation".

Answering an urgent question on 20 July 2010, Treasury Exchequer Secretary David Gauke said a complex tax system created "uncertainty and instability", sending the wrong signal to businesses wanting to invest in Britain.

"A complex tax system also means that businesses end up spending more time dealing with their tax affairs and less time on their core business," he added.

The OTS will be asked first to study around 400 tax reliefs to see how many can be removed.

Michael Jack, who served as financial secretary to the Treasury in John Major's government, and John Whiting, a former tax partner at PricewaterhouseCoopers, have been appointed as an unpaid two-man board, based in the Treasury, for the next 12 months.

Mr Byrne said: "You will see this afternoon across the House wide endorsement for the principles of a simpler tax system which allows people to focus on their business affairs and profitability."

But he questioned how the appointment of Mr Jack had been made.

He also contrasted the establishment of the new body with "the chancellor's push for a bonfire of the quangos", demanding to know how much the OTS would cost to run.

Mr Gauke said the appointment of both Mr Jack and Mr Whiting were "interim" for 12 months before permanent appointments were made.

The cost of the OTS would be borne by the existing budgets of the Treasury and HM Revenue and Customs, while private sector secondees would be paid for by their parent firms, he added.