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Austerity porn

June 23, 2015

I have been in hospital.  Five days, as it happened, instead of the scheduled one or two.  (Yes, thanks; it seems, fingers crossed, that I’m clear of the cancer now and just have to get over the op itself and go back for monitoring every few months)

So there was this moment early on when I was being held up by, I think, four nurses (I was on the really good drugs at that point, so I’m a bit hazy about the detail) and someone was doing unmentionably personal things for me, and I recall feeling it was very very important that the nurses should know where I was coming from.  I explained in a drug-induced haze that I wanted it to be very clearly understood that I thought it was an obscenity for MPs to award themselves a ten per cent pay rise when nurses such as themselves had been on the frozen-or-one-per-cent rule for so long.

I thought about that this morning, when the news story was all about foreign nurses perhaps having to return to their country of origin after six years if they weren’t earning more than £35k.

There’s a simple way round that.  Surely anyone who has been in nursing for six years ought to have progressed up the scale to £35k?  Reinstate increments.  Pay experienced nurses £35k minimum.  There.  Problem solved.

And another thing.  The idea that there need to be cuts in Working Tax Credits of £12bn or so out of a £30bn whole.  You know, that one I support.  It’s absurd that anyone in work should need to be supported by the taxpayer.  Work should pay.  Which means that employers should pay.  Which, surely, means the best way of cutting the welfare bill is to increase the minimum wage substantially, and then keep it topped up by inflation.  Which would transfer the burden of those WTC payments from the taxpayer to the employer, which is where they belong.  Isn’t anything else just, well, corporate welfare?

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Saving £80million

June 9, 2015

The in-year budget review announcement that a further £80million is to be cut from HMRC’s budget may have passed you by. After all, the argument has been made that spending £1 on HMRC staffing brings in £25 or more of unpaid tax  so you would think that the overriding priority of deficit reduction would imply more rather than less spending on tax collection. However if all we are thinking about is costs, well, perhaps all it takes is a little thinking outside of the box.

5 ways to save £80m from HMRC

1. Reinstate 174 paper

When I started my career, tax inspectors did their calculations with pen and paper, not computer. It would cost a few thousand pounds to give every tax inspector a pad of lined “174 paper” – ruled for double entry bookkeeping – and a pencil. And, if you look at the items on this file of April’s spending  it looks as if turning off the “desktop managed serv” – which I take to be the routine desktop “managed services” available on all HMRC computers – could start us off with a few million of savings.

2. Turn off the phones

No-one answers them anyway. Or at least they aren’t meeting (table 3.1) their own “unambitious and inadequate target“. So stop doing something expensive that you’re doing badly. Turn off the phonelines altogether. And while we’re on the subject…

3. Stop answering mail

HMRC is rubbish at acknowledging, tracking, filing and above all answering pieces of post from the public.  They can’t even produce the correspondence in court. So again they should stop doing something expensive when they’re doing it badly. People can just email…

Oh. Well, they can use Googlemail on their…

Oh. Well everyone has an iPad somewhere. The staff can use googlemail on their own computers. Just THINK how much money the department would save!

4. Stop employing staff

No, hear me out. Not all of them, obviously. Just the ones that do customer service work. With no computers to work on, no phones to answer and no post to deal with, why not? Make all the customer service staff redundant and they can set up small businesses that do emailing and online tax returns for pensioners and other computerisation refuseniks for a small fee – to be paid by the customer, obviously. So HMRC won’t need customer service staff AND we’ll gain hundreds of new small businesses, thus boosting the economy!

5. You know, really, with all this self assessment, the system practically runs itself. Give all the remaining staff a year’s unpaid leave & sort out any errors the following year. Savings? £2,267.7 million (“Total net costs” table 3 page 135 here)

Easy! £80 million? Pah! If the government don’t mind how much revenue they collect and only care how much they save, well, as you can see, it’s easy peasy, and £80 million is another unambitious and inadequate target…

 

 

 

 

 

 

[Personal note: I’m off for a spot of surgery tomorrow so I won’t be around for a while.  See you on the flip side!]

[And another update on June 15th: I’m now out of hospital after rather more extensive surgery than originally indicated.  A five day stay rather than two.  Ow!  But progressing in leaps and bounds… well, incremental steps anyway.  God bless the NHS!]

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Aha! (an update)

May 11, 2015

OK then; it’s 8pm on May 11th and the consultation on HMRC Penalties still shows up on the list of five open consultations from HMRC… but the consultation itself is shown as closed.  Conclusive proof, I think you’ll agree, that by “12.00pm” the gov.uk website means “12 noon”.

I know, I know: I really will try and get out more.

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One small change…

May 11, 2015

Look at one small point from the list of open HMRC consultations: the closure date.  Here’s a reminder of the current five:

  • HMRC penalties (Closes 11 May 2015 12:00pm)
  • Commissioners’ Directions for customs (Closes 15th May 12.:00am)
  • Tax-advantaged venture capital schemes (Closes 15th May 12:00am)
  • Removal of manual customs declarations (Closes 5 June 2015 11:45pm)
  • Reform of the Landfill Communities Fund (Closes 10 June 2015 11:45pm)

So does the first one close at lunchtime or do we have till midnight?  Do the next two close at midnight on May 14th, midday on 15th, or midnight at the end of 15th?  The last two at least make it clear that they close at the end of the day on 5th and 10th, but, seriously, is representing midnight such a difficult concept in the twenty-first century?  It’s a nice notes and queries question, but the Royal Observatory and Greenwich, the owners of GMT so to speak, tell us helpfully that there is no such thing as 12.00am.  Noon is when the sun is at the meridian line, so it’s neither “ante meridian” nor “post meridian” – neither before nor after that point in time.  The “correct” designation is either 12 noon or 12 midnight.  Alternatively you should use the 24 hour clock, in which case it’s 00.00 for midnight and 12.00 for noon.

Please, gov.uk, can you just pick one?

 

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The day after

May 8, 2015

There are 61 open consultations today, still the same 5 from HMRC and 8 from HMT.  So nothing new from either department being snuck out on election day.  There must have been a couple which passed their closing date and fell off the “open” list (and dear god in heaven is gov.uk ever going to work out how to let us filter them in the order in which they close????) because there is also a new one today from the Airports Commission (we have an airports commission???) on air quality.

I’m assuming the Airports Commission is some kind of quango with continuity that means the election passed it by.  Because otherwise it’s an extraordinary time to be pushing condocs out there, surely?

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A new day

May 7, 2015

Well, election day, actually.  I’ve been and voted, and now I’m ready for a marathon night watching the results.  I know, I know, I’m sad like that; and, of course, I’m semi-retired so I don’t have to be anywhere tomorrow so I can sleep in as long as I like.

You would think, in the hiatus between governments, that all would be quiet on the consultation front.  I logged on to gov.uk out of sheer curiosity, thinking it would be interesting to see the consultation page with the counter set to zero.

But no!  There are, in fact, some 62 open consultations listed.  I don’t know about you, but I feel that 62 new laws and regulations would be a reasonable score for an entire parliamentary term, not the number of residual bits of leftover legislation not important enough to wait for the end of purdah.  Can we just STOP making new law and try administering the ones we’ve got for a bit?

Sigh.

Of the 62 open consultations I have no objection to odds and ends of measures like Natural England consulting on restricting access to, for example, Widdybank Fell (which looks very nice, by the way).  The world would still continue turning even if we didn’t have a government, (Belgium managed OK for 541 and then 135 days, after all) and so I suppose there’s no reason to stop the process of consulting.  But I could have lived without seeing a serious consultation into reform of the Government Ombudsman service, a paper on what I suspect is the first salvo in the war of the next BBC licence fee and a call for evidence on creating a secondary market in our bloody pensions sliding quietly out while all our backs are turned to the polling station.

Anyway.

HMRC has five open consultations:

and the Treasury has eight, two of them also on the HMRC list, five which (from a quick look, anyway) aren’t connected with tax, and one which may be of interest: Travel and subsistence review.  But which closes on 1 May 2016 at 11:45pm.

2016? Seriously?  I suspect it should read 2015 and it’s an already closed consultation.

It’s the twenty first century.  Keeping and maintaining an up to date list like this shouldn’t be this hard, surely?

Dear New Government: please get someone to make gov.uk work.  Thanks.

 

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Consultation: simplification at last

April 1, 2015

Considering that the provisional title of my PhD is “tax simplification and better regulation”, and that the original purpose of this blog was to monitor and respond to all tax consultations, I’m a little embarrassed to have missed this one.  It’s big.

In what will presumably be the last consultation document published by the Coalition, “A simpler tax system: the fast track to delivery” there are some far-reaching proposals put forward for simplification of the tax system.  This is a surprisingly radical attempt to achieve, at a stroke, the first of the Coalition’s priorities for its tax policy making (which, I’m sure we all recall, were that tax should be simpler, fairer, greener and more competitive).

As anyone involved in taxation knows, there have long been calls for the tax system to be simplified, and as anyone involved in tax policy making knows, it isn’t as easy as it looks. Anyone who gains by tax simplification is unlikely to show any gratitude to the government responsible, whereas anyone who loses under simplification is likely to be vocal in their opposition. However in a gratifyingly statesmanlike-display of cross-party agreement, the new proposals are being put forward in a multi-lateral document endorsed by all the major parties and are widely expected, if enacted by the next administration, to bring about a major simplification of business and personal taxes across the UK.

Building on the proposals in the Budget document “Making Tax Easier: the End of the Tax Return” where there is the aspiration that “it will feel like paying a single tax“, the change – in a project provisionally named unitary taxes – will retain all existing taxes and national insurance, but move to a per person, rather than a per tax, administration. Everyone will have a basic allowance of £12,000 below which they will not pay any tax on any income, gains or transactions. Between £12,001 and the current VAT threshold of £81,000 they will pay 20%, whether on income from employment or self employment, gains from capital transactions or interest on investments. Between £81,001 and £120,000 the rate will be 40% and from £120,001 it will be 60%. There will be no mansion tax, but neither will there be any exemption from capital gains for only or main residential property with the gains from any house sales folded into the unitary tax.  There will be no exemptions, allowances nor deductions – a change likely to have serious repercussions in the savings industry but which was perhaps foreshadowed in the Budget announcement of abolition of tax on the first £1000 of interest payments. The section on ISAs in the consultation document is particularly radical, consisting of three words: “ISAs are out”.  There will be some interesting recalculations to be done with the dramatic adjustment to the inheritance tax thresholds as inheritance tax, too, becomes subject to a one-off unitary tax charge on the estate of the deceased, bringing virtually all estates into its remit.  And of course capital gains tax planning is likely to prove challenging with the abolition of all possible reliefs, whether farming, entrepreneurs or even the minor chattels exemptions and merger of its thresholds with the single unitary threshold.

VAT will remain largely unchanged with its threshold remaining static and the current rules and rates remaining untouched.  However the total exemption for small and micro businesses from the revisions to place of supply rules is a surprising concession and it seems that there will be a further document after the election, on a similarly multi-lateral basis, proposing further radical simplifications including the abolition of all reduced and zero rates and the removal of all alternative calculation methods.

It is perhaps the changes to National Insurance (NI) which are the most radical.  In future NI will be charged at a single rate on all earnings, gains and transactions.  There will be no upper or lower thresholds, and the rate will change annually.  It will be calculated by taking the previous year’s total expenditure on pensions, disability and unemployment benefits (but not in work payments like housing benefit or working tax credits) plus the total cost of the NHS and of personal care provision, and then dividing this by the previous year’s unitary income.  Although National Insurance receipts will always lag behind National Insurance Payments (as pensions and benefits will in future be known) there will be a clear link between them.  If at any point the rise in GDP is such that unitary NI receipts are greater than the previous year’s NI expenditure the excess will not be used to reduce the following year’s rate but to start a sovereign wealth fund, with the intention of, ultimately, building up a capital sum sufficient to make abolition of NI payments altogether feasible, although the timescale is, it has to be said, ambitious.

Preliminary costings in the accompanying TIIN for this radical package seem rather optimistic, in that they suggest an administrative burden saving of more than a billion pounds and an exchequer impact of zero. Furthermore the economic impact appears to assume that the entire tax avoidance industry will close its doors at once and its employees and partners be immediately re-tasked to economically useful activity, thus creating a 5.8% spike in GDP.

Root and branch tax simplification has been the subject of much hopeful persiflage in the past but there have been few concrete proposals. Although these proposals are radical and the numbers are, to say the least, sketchy, it is to be hoped that the tax industry will respond to the consultation in the spirit in which it is put forward. In future, who knows, we may thumb through our slim pamphlets of tax legislation and look back on today as the end of an era.

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