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On Hiatus

July 21, 2014

The internet can make you crazy.  I’m house-sitting and taking a writing retreat for the next couple of weeks, and taking the opportunity to have a simultaneous digital detox.  In other words, it’s radio silence from me until August.  Play nicely while I’m gone!

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DOTAS

July 17, 2014

If you go here, you will see that HMRC have published a list of the DOTAS schemes which are to be subject to accelerated payment, provided the government passes the legislation.

This is what the list looks like:

2014-07-16 19.55.57

What’s the line again?  Oh yes: “The problem with that proposal is that it is data, not information.”

Transparency, anyone?

 

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My union, ladies and gentlemen!

July 16, 2014
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Two Cultures

July 9, 2014

No, not C P Snow’s “two cultures” (science and humanities) but the two cultures in tax of which I have written before, the tax wizards and the tax muggles.

Yesterday I was at Committee Room 14 of the House of Commons, where Mazars and ARC were hosting a debate, chaired by Margaret Hodge, on tax transparency and the role of the trusted advisor.  It was a fascinating debate; put all the tax wizards in one room and ask them to talk to each other and you’ll get a fascinating debate – if you’re a tax wizard yourself.  I think I have to stop calling myself a squib and embrace my membership of the wizarding world, because I genuinely found it fascinating.

The muggles?  Google “tax” in “news” this morning, and there’s no mention of the wizenagemot but there IS a huge front page story about various celebrities allegedly involved in the Liberty tax scheme.

My point?  Mazars are flogging a dead horse: no-one outside the wizarding world is interested in their proposed scheme for a kitemarked “trusted tax adviser” status, sorry and all that.  ARC are flogging a different dead horse: no-one outside the wizarding world is interested in their ideas of transparency and pleas for their professional status to be better recognised and rewarded.  They are dead horses.  They have joined the choir invisible (repeat lines from the Dead Parrot sketch till you get it out of your system.)

Why?

Because there weren’t any tax muggles in the room.  Because “tax transparency” isn’t something that tax muggles are interested in, unless it comes with a preliminary explanation of what it means and how it will help them.  Because wizard can speak to wizard until Nicholas Flamel dies of old age (Harry Potter joke.  I think I backed my metaphor into a corner and beat it to death.  I’ll try to stop.)

The interesting bit about the debate was that we kept skirting around the issue: how to involve the muggles.  The reason that Margaret Hodge can be, simultaneously, “Tax Prat of the Year” and “Tax Personality of the Year” is precisely that, that she bridges the gap: that she is muggle who has authority over wizards.  She infuriates tax professionals by asking questions that don’t make sense in the language of tax, but which resonate deeply with the general public who ALSO don’t speak tax but think there’s something with a fishy aroma somewhere in the tax conversation between professionals.

I don’t have a solution.  If we rely on politicians to bridge the gap between tax professionals and the general public, then we need to do more, much more, to brief politicians in what the issues are.  There were plenty of offers during the day and on twitter afterwards to set up some kind of seminar, briefing, task force, educational effort for politicians, committees, around finance bills and at other times.  They only have to ask.  And if they don’t, they might be assertively offered anyway.  (Puts up hand to add to the offers)

There were a few quick wins suggested that might usefully be actioned (argh! management-speak is worse than Potterspeak!)

There was, for example, a discussion about comparability.  It wouldn’t help “transparency” if companies were simply compelled to publish their tax computations if they were then full of incomprehensible gobbledegook that couldn’t be compared company to company.  However the amount of tax paid by a UK company in a given year is – theoretically – available from their published accounts, although Richard Murphy has done some work on extracting it and says it isn’t, if I understood him correctly – I haven’t looked.  But HMRC could easily publish a database that would show, say, the tax paid by the top 100 – 1000? -10,000? firms for a given year and also whether they had disclosed use of any DOTAS (avoidance) schemes.  They *could* – but they aren’t *allowed* (by taxpayer confidentiality rules, even though the same information is theoretically available elsewhere with sufficient knowledge and expertise to root it out)  Quick win?  Quick statutory instrument to give them the necessary information gateway?  Or a voluntary scheme while that goes through parliament?  Some enterprising NGO writes to the top 100 and asks them?

Second, there was an interesting discussion about the kind of tax barrister who gives an opinion on tax schemes, so that a barrister’s opinion that the scheme is viable allows it to be marketed.  If it’s then found NOT to work, should there be some kind of sanction for the barrister?  Something like the situation which – I thought I heard at the meeting but haven’t looked at – applies in the US where the financial risk is then passed to the barrister?  Or should they be sanctioned by the bar council, in the way that a mis-prescribing doctor might face sanction by the medical authorities?  I don’t know, but it sounds like an interesting idea: cut off the flow of abusive schemes at source.  I look forward to seeing where that goes.

But step back a bit and look at it from the point of view of the Times reader this morning, tutting over the celebs “getting away with” something via a scheme they don’t understand.  Would a seminar for politicians, a database of tax paid and schemes entered and a stiff rebuke from the Bar Council make one scintilla of difference to their view of the tax world?

We need to find a way of bringing the tax conversation into the public discourse.  As someone said on twitter, we need a Professor Brian Cox of tax avoidance.

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Scrutiny

June 19, 2014

I was a bit boggled by this, from the Law Society Gazette, when the link made the rounds on twitter last week.  I mean,

The City of London Law Society revenue law committee has called for the creation of an independent body with the power to veto tax legislation.

Seriously?  I can deal with THAT in 140 characters:

 

I saw the same thing floating around again this morning, so this time I went and looked at what the City of London Law Society revenue law committee actually said.  You can download their report here, and the relevant paragraphs would seem to be

8.3 We believe it would be useful to create an independent body which would have the power to veto the promulgation of tax legislation where either the legislation itself or the policy behind it are insufficiently developed having regard to its proposed effective date. … Whilst to some extent inevitable in a democracy, these phenomena are hugely damaging to the UK tax regime’s reputation for stability, and the creation of a constitutional check to limit the scope for them to occur would in our view be of real benefit.

8.4 Whether or not an independent body is feasible, we would urge a more realistic and open dialogue between ministers and officials about whether proposals are ready to be implemented than would appear to occur at present…

Which is slightly less worrying: the government already allows regulatory proposals to be reviewed by an independent body, the Regulatory Policy Committee, who issue an opinion on whether the evidence base for the impact assessment is of sufficient quality to support the policy proposal.  When the RPC was invented HMRC and HMT waged a successful campaign to have tax measures and their TIINs excluded from this external scrutiny but now that I’m outside looking in, I can see that there might be some merit in the idea, particularly as I wouldn’t have to be involved in doing any of it (!)

But actually I think the City lawyers may have been looking in the wrong direction.  Although there isn’t a mechanism in place for external scrutiny of tax proposals other than Parliamentary debate (and improving the quality of Parliamentary “debate” requires an entire constitution of reform) there IS, of course, a mechanism in place for improving the quality of tax legislation.

It’s called Tax Policy Making: A New Approach and it was invented by the coalition, announced and implemented to some degree of approval from both politicians and the tax profession, and then swiftly allowed to fall into disuse.

In other words, City of London Law Society, I think with the greatest respect that you’re focusing on the wrong issue.  It isn’t the relationship between Ministers and officials that you should be trying to improve (how do you know what it is?  How would you be able to tell if it was better?) but the relationship between Ministers and officials on one side, and the rest of us – tax muggles and tax wizards alike – on the other.  If consultation actually happened when it was supposed to, involved the right people (including some serious effort at involving small firms and individuals affected, spending some money on conducting small firms impact tests and consulting citizen juries, for example), and the New Approach was actually implemented…

…well, it just might work.

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Checking in

June 11, 2014

So this rumour about the coalition running out of ideas and running out of steam, are they actually true, do we think?  I mean, there are “only” 68 open consultations across government listed on the Gov.uk website today.  68 sounds like a lot, but in comparison with other times I’ve checked it seems, well, peanuts.

The open consultations from HMRC (in order of closure date) are:

21 Jun 2014    Implementing a capital gains tax charge on non-residents
27 Jun 2014    Tax-Free Childcare: consultation on childcare account provision
29 Jul 2014     Direct recovery of debts
29 Aug 2014   Inheritance tax: A fairer way of calculating trust charges

and again, I go, where are the consultations linked to Budget announcements?

Wait a minute.  Let’s have a quick look at what was announced in the Budget (taking the ones that are costed in chapter 2 here and reproduced below the cut): how many of these are new?  How many of them are planned to be in next year’s Finance Bill?  How many of them would, therefore, we expect to find the subject of consultation over the summer?  As I said in an earlier post, are we just not bothering to consult any more?

Interesting times…

Read the rest of this entry »

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Hot off the press

June 9, 2014

One of the things I often wonder about, in my post-civil-service, proto-academic career, is why on earth hadn’t I heard any of this stuff before?

In other words, why do more civil servants not know about the academic study of, well, civil servants?

I had an inkling, when I was working on the introduction of CIS, the Construction Industry Scheme, and was invited to an academic conference where I discovered to my amazement that there was a whole field of study devoted to understanding the construction industry, and that I could network with more construction industry stakeholders in that one afternoon than in months of going to HMRC-organised “stakeholder” events.  But as for HMRC understanding that there are people who study how tax, how public administration, how government works? Well, let’s just say my email offering to share my conference paper from last year with them didn’t even merit the courtesy of a response.

 

Christopher Hood is the guru of academic writing about government, so far as I’m concerned (or, to be more precisely accurate, so far as I’ve read to date) and if you follow the link in his tweet you’ll find a blog entry which is well worth reading and which gives some of the flavour of what to expect in his forthcoming book (and, if anyone would like to send me a review copy…?!)

Look at this extract from the blog entry:

As for cost-cutting, far from falling, the administration or running costs of UK civil departments actually rose by about two-fifths in constant-price terms over the three decades from 1980 to 2010

So for my entire civil service career – which I experienced as a constant erosion of professional standards, working conditions and ancillary resources – running costs were rising as standards were falling.

And where was the money going?

when we look at the pattern more closely, that increase in administration costs turns out to have come from non-payroll items such as consultancy and IT, while paybill – what it cost to hire civil servants – stayed roughly the same in constant-price terms over the period as a whole.

I was looking for a witty or at least a pithy way to end this blog entry, but all that’s coming to mind is “so there!”

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