September 16, 2014

Property again.  Was it the duck houses that irrevocably tainted the relationship between our government and the governed in the area of property policy?  Anyway, duck houses are the first things that come to my mind in connection with the idea we should reduce the administrative burden of the ATED – the annual tax on enveloped dwellings.

Because ATED is a rich buggers’ tax: it’s the “not-quite-a-Mansion-Tax” tax on houses that are owned by some kind of corporate entity to avoid Stamp Duty Land Tax.  The idea is that if you and I live in a house we own and then sell it we don’t pay capital gains tax but, if the house is worth enough, we have to pay stamp duty.  If we own two houses and sell one of them, well, we only get the CGT exemption (broadly) for one house at a time.  So if we had to sell the estate in Scotland to finance the country house in Berkshire we’d have to pay capital gains tax on the estate (pause for hollow laughter, because capital gains tax is a notoriously voluntary tax) and Stamp Duty Land Tax.  So we’d put the estate into a company, preferably offshore, and just sell the shares in the company instead, right?  Hence ATED, an annual tax on “enveloped dwellings” – houses that are put into some kind of corporate ownership rather than being owned by a natural person.

In that light, the fact that the tax only started in April last year and already the buggers are wanting the “burden” of administering the tax to be eased seems preposterous to me: the condoc says upfront that the entire aim of ATED in the first place is

to discourage enveloping, to encourage the de-enveloping of property and to ensure that those who continue to hold property in this way pay a fair share of tax

The consultation also says it should be read “by those currently within the charge to ATED… those who are likely to fall within the regime in the future, ATED practitioners and representative bodies” (Pause to boggle at the thought that there are already “ATED practitioners”)  Yes, I know that there are inoffensive businesses which have to claim exemption from ATED and it is, presumably, reducing the administrative burden on these which is the aim of the consultation.  They are listed as:

1) property rental businesses (including preparation for sale, demolition and conversion);

2) dwellings opened to the public;

3) property developers (including exchange of dwellings interests);

4) property traders carrying on a property trading business;

5) financial institutions acquiring dwellings in the course of lending;

6) dwellings used for trade purposes (occupation by qualifying employees and partners);

7) farmhouses (occupation for the purposes of carrying on a trade of farming) and

8) providers of social housing. (2.6)

You know, I might have been persuaded that there was some legitimate policy aim in here, if I hadn’t read on, past the list of inoffensive businesses to the list of those who have already been engaged in “informal discussions” with HMRC.

They’re helpfully listed in Annex A: let’s play “spot the one whose interests most closely align with your own.”

Barratts PLC

British Land Company

British Property Federation

Burges Salmon


Chartered Institute of Taxation (CIOT)

Clifford Chance

Council for Licensed conveyancers


Ernst & Young

FTI Consulting


Hunters Solicitors


Law Society

National Landlords Association

Rawlinson & Hunter

Smith & Williamson

Stephenson Harwood

Taylor Wimpey PLC

All worthy enterprises, of course, but what about the rest of us?  Isn’t this all really a bit like… asking MPs to decide their own expenses claims???




September 15, 2014

Oh no!  I hope I don’t get delayed finishing this piece until after the consultation into Legislating Extra Statutory Concession D33 closes!  It closes at 3.30 today (because, reasons) so hurry along!

Actually that’s about the only comment I have on this consultation, sorry.  It’s a sensible idea – in the general tidying up of extra-statutory concessions that followed on from the  2005 Wilkinson case they have reached D33.  D33 was a sensible way around the possibility of a capital gains tax charge arising when someone received a compensation payment. Basically you’d get an imaginary “cost” or “value” of the right to take action equal to the actual amount you received, so you wouldn’t pay CGT.  There was a limit of half a million, after which you had to write to HMRC and ask nicely.

Now the limit is to be a million, and after that you pay CGT, but as the consultation points out, the courts will know that and, presumably, adjust the compensation accordingly.

Simplification that’s actually effective?  Well done!



September 12, 2014

I’m fascinated by the rationale behind the sixth and final tax consultation closing this week, into the Stamp Duty Land Tax rules for property investment funds.

As the foreword says:

The UK Investment Management industry is an important and successful part of the economy.  It accounts for 1% of GDP and a similar proportion of UK tax revenues, is a significant employer and is a key part of our wider financial services sector.

While the UK is Europe’s leading centre for fund management, often the funds themselves are located elsewhere.  About 36% of all assets under management in Europe are managed in the UK but only 11% are domiciled here…

The aim of this strategy is to improve the UK’s leading global role in fund management and increase our market share of fund domicile…

Reading between the lines (and not very far between them, to be honest) the consultation seems to have resulted from pressure from the investment management industry to relieve two types of investment from stamp duty land tax.  The first, CoACS, is a type of “authorised contractual scheme” introduced last year, a “co-ownership scheme” (the “co” from CoACS).  Investors own the underlying assets, but there’s a collective investment scheme doing the buying and selling.  Theoretically, they could be charged to SDLT every time someone joins or leaves the scheme, because the remaining investors’ shares of the property would go up or down.

The second type is PAIFs, property authorised investment funds, which were invented to enable people to invest in a mix of residential and non-residential property as well as real estate investment trusts.  Here the problem seems to be that when properties are moved into a PAIF even when the beneficial ownership doesn’t change there is a charge to SDLT and the consultation wonders whether these “seeding” transactions should be relieved from tax and, if so, how.

My issue with all this, of course, is that I genuinely don’t care if rich speculators have to pay some tax when they move their investments around from one kind of investment vehicle to another.  Looked at in that light, this isn’t a consultation that ought to be answered only by “the asset management and property sectors” but by the rest of us as well.

For example, in 2.6 we are asked to believe that the main impact of making the changes would be that property investment portfolios would be transferred into CoACSs and PAIFs which would “create larger pools of assets and benefit from economies of scale”.  But in 2.7 we learn that “more property funds would also mean greater competition within the sector”.  Would it, though?  Or would it just mean that the companies that blight the landscape with shopping malls and cookie cutter student accommodation would be enabled to do so without enduring some of the tax consequences?

Basically, what are we wanting from the property market?  Do we want to encourage “investors” to buy up (particularly residential) property in giant megacorps, or do we want the property market to be driven by something other than profits – like, say, the need actually to house people?  “Collective investment schemes are increasingly investing in residential property and [the government] does not want to limit growth in this area” (3.9)  You know what?  Fuck that.  If we were talking about assisting organisations that were planning to BUILD residential property then yes, I’d say let’s make life easy for them.  But we’re not.  We’re talking about the organisations that bundle and securitise assets, squeeze all the profits they can out of them, and then walk away.  Let them at least pay taxes on doing so.  One per cent of the economy?  The housing market is somewhere between five and 18% of GDP.  Let’s concentrate on the bit that actually provides houses for people to live in, rather than profits for investment portfolios.


I circumvent, you avoid, he -?

September 11, 2014

“…The previous rules applied only where the worker’s contract was one where he was obliged to provide services personally. It was therefore possible to circumvent the legislation by placing a right of substitution into the contract.” (from Taxation 20 August £)

And this is why we’ll never have tax simplification.


“throughout the development…”

September 10, 2014

Traditionally an Impact Assessment is published with a consultation document.  But Impact Assessment for tax changes is conducted via the “tailored tax impact assessment process” and published in a TIIN “at the point at which the policy design is final or near final”.

Does this explain why there were four separate consultation documents published by HMRC without any consideration in them of the impact the proposals might have, or at least of any coherent statement of the possible impacts?

The four consultations which closed yesterday (at 11.45pm.  Because, reasons) were on four separate aspects of the PAYE regime which the Office of Tax Simplification had identified as ripe for simplification.  There were 27 pages on exemption for paid or reimbursed expenses, 21 pages on abolition of the £8500 “higher paid” threshold, 29 pages on voluntary payrolling and another 17 pages on trivial benefits exemption. They each have different officials named as lead and, aside from identical forewords from David Gauke, appear to have been written by different hands.  But although they all talk about the administrative burden saving that will flow from any change, none of them has the usual table of impacts quantifying these impacts, nor any statement of what the impact might be on equality groups or on small businesses.

I wonder what would happen if someone were to make a Freedom of Information Act request for sight of the current state of the “tailored tax impact assessment process” for each?  I’m just saying…



September 9, 2014

Let’s have a quick gallop through the consultations closing today.  I haven’t actually sent in a response to any of them: I’m becoming sufficiently cynical to think there is no point in an individual responding to a consultation at all, particularly when your feedback could be summed up as “you aren’t telling me enough to let me formulate a sensible answer”.

First, let’s look at the one that closes first (5pm, as opposed to 11.45pm.  Because, reasons.)  It’s on VAT Prompt Payment Discounts: there’s a change to the way businesses have to invoice if they give prompt payment discounts.  According to the impact assessment, it’ll affect a quarter of a million businesses and add around £8 million of one-off costs and around £3.5 million of annual recurring costs to their administrative burden.  Yet all HMRC can say by way of small firms impact is “the measure will impact on all businesses that offer or receive prompt payment discounts, including small firms.”  So will it cost them more or less than large businesses?  How many of them are affected?  Have you spoken to them?  Will they be able to cope with the change?  Who knows?  I’m tempted to add – from HMRC’s point of view, it seems – who cares?

I note in passing that David Cameron believes that adding a specific question about family impact to impact assessments will mean that “Policies that fail to support family life will not be allowed to proceed.”  Just like adding a small firms impact test to impact assessments prevented policies with a disproportionate impact on small businesses from proceeding, right?  Bless!



Midnight at 100PS

September 8, 2014

Imagine the scene: it’s eleven thirty pm and the clock is ticking down towards midnight at 100 Parliament Street.  A crack team of HMRC and HMT civil servants are clustered around a single computer terminal, the sickly light the only source of illumination in the vast emptiness of their cavernous shared workspace (where, in daylight, a hundred drones compete for every 65 chairs).  Someone seated at the terminal constantly hits the “refresh” button, while another holds a stopwatch, and their colleagues’ gazes flick nervously between the two.  At 11.42 they start to make eye contact with each other, the light of hope dawning in their eyes.  At 11.43 there are some fingers crossed.  At 11.44 someone begins a lugubrious countdown and gradually the rest of them join in: ten… nine… eight… seven… six… Five!  Four!   THREE!   TWO!!  ONE!!!  11.45 pm everyone!  The Consultation into the New Employee shareholding vehicle is now CLOSED!

Champagne is opened.  Someone hits refresh for one last time and the whole crowd erupts: LOOK AT THAT! THIS LOSER SENT IN HIS RESPONSE AT 11.47 BWA HA HA HA HA…

Well of course it’s nonsense!  What happens in real life is you set the date for your consultation to close, you hear nothing much till the actual day, and then they all tumble in at once, some before midnight, some after, and you pick them up when you come in the next morning.  And, yes, including the ones sent hopefully at 4.30am and, if you’re feeling generous, the ones that came in half an hour after you did but before you’d finished reading the rest of them.

Nothing hangs on a consultation deadline, not to the degree of precision that requires a countdown anyway.  You need the responses to be sent so that you have time to read them and consider what’s said before you have to commit to any further action.  You might have Parliamentary and other deadlines to meet, but you know your consultation guidelines and you allow as much time as you can to give the participants giving you valuable feedback some reasonable chance of considering your proposals at leisure.  What you don’t – ever, in my experience – do, is to cut off people whose response is signed off five minutes late.

So why the devil has gov.uk started giving deadlines with actual time limits – 5pm, 11.45 pm, 12.00am – on the open consultations?  What will actually happen if I send in my response to the consultation into legislating ESC D33 at 3.31pm rather than at 3.29?  As our younger netizens say, WTF, gov.uk?

Here’s the list:

9 September 2014 5.00pm VAT: Prompt Payment Discounts

9 September 2014 11.45pm Employee benefits and expenses: exemption for paid or reimbursed expenses

9 September 2014 11.45pm Employee benefits and expenses: abolition of the £8,500 threshold for lower paid employment and form P9D

9 September 2014 11.45pm Employee benefits and expenses: real time collection of tax on benefits in kind and expenses through voluntary payrolling

9 September 2014 11.45pm Employee benefits and expenses: trivial benefits exemption

12 September 2014 11.45pm Stamp Duty Land Tax rules for property investment funds

15 September 2014 3.30pm Legislating Extra Statutory Concession D33

16 September 2014 5.00pm Annual Tax on Enveloped Dwellings: reducing the administrative burden for business

19 September 2014 5.00pm Landfill tax – liability of waste ‘fines’

19 September 2014 5.00pm VAT relief on substantially and permanently adapted motor vehicles for disabled wheelchair users

19 September 2014 5.00pm Sharing and publishing export data for public benefit

22 September 2014 5.00pm Improving the operation of the Construction Industry Scheme (CIS)

10 October 2014 5.00pm Office of Tax Simplification review of unapproved share schemes: marketable security

10 October 2014 11.45pm New Employee shareholding vehicle

15 October 2014 12.00am Inheritance Tax: exemption for emergency service personnel

16 October 2014 5.00pm Internationally mobile employees and earnings related securities

22 October 2014 9.30am implementing agreements under the global standard on automatic exchange of information

23 October 9.30am Strengthening the Tax Avoidance Disclosure Regimes

31 October 2014 5pm Tackling offshore tax evasion: Strengthening civil deterrents

31 October 2014 5pm Tackling offshore tax evasion: A new criminal offence

Hmmm… looks like a busy day tomorrow.


[Note: edited 9th September to reflect the fact there are four consultations closing at 11.45pm tonight and not 3: I had misread the Trivial Benefits closure date as 19th and not 9th.  Sorry!]


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