However, the body has recognised that changing the period to end either on 31 December or 31 March would incur “significant” transitional costs and impacts.
The comments were made as part of an OTS analysis report, which aimed to analyse the potential benefits, costs, and implications of a change to the tax year.
While the OTS’ review did not make specific recommendations on the exact date, it stated that a change to 31 December would be the “natural, simplest, and easiest approach” for all to understand.
However, it was added that moving to 31 March would be “much more understandable” while also assisting “taxpayers who prepare business accounts or report income from investments”.
The body did suggest that a 31 March cut off be used in place of the regular 5 or 6 April deadline before the implementation of Making Tax Digital for Income Tax.
Bill Dodwell, tax director at the OTS, said: “There would be clear advantages from having a different tax year end date, but as the transitional costs and impacts are significant, it would require detailed advance planning.
“If government were to make a change, it would also be important to ensure the timing did not derail existing change programmes such as work on the single customer account.”
He added: “So, while we do not consider such a change should take place in the immediate future, it is not too early to start some long-term planning if the government were to consider taking this forward.”