March 25, 2015

I was on the tv show The Apprentice once.  Only in the background, when the apprentices did an “advertising” challenge and my then-branch of the WI were invited to provide some background Members Of The Public, but still, I was there.

Originally of course the tv show was about finding someone who would work in, and be trained up in, a business.  Now that it’s all about Alan Sugar finding someone in whose business he wants to invest, surely “The Apprentice” is a misnomer?  Surely it should be called something else?  (I rather like “Enter the Dragons”!)

What does the word “apprentice” mean to you?  I always thought it was a sort of official status – part of a continuum which went apprentice -> journeyman -> master.  Someone who is just starting out but learning on the job, who will later become a skilled worker paid a daily rate (“journeyman” from the French “jour” for day).  And who might ultimately produce a “masterpiece” – the equivalent of passing a final exam by producing a piece of work demonstrating sufficient skill to enrol a journeyman as a full member into a guild and allow them to take on apprentices of their own.

Well yes, I realise we don’t actually live in the middle ages any more, and the guild system is about as relevant to trade as Friendly Societies are to insurance, but I did, in the not TOO distant past, teach apprentices at a further eduction college.  There were building and hairdressing and motor trade apprentices who worked at their trades most of the time but were sent to the college on “day release” for one or two days a week for the formal part of their training.  No, I didn’t teach a trade: I was employed as a lecturer in drama and communication skills so I taught “communications”.  And, trust me, teaching a 6pm class of motor mechanics who can go to the pub once they’ve finished their communications skills lesson is an, er, interesting experience.  Rumour has it the person who drew the short straw in a previous year was tied to a chair and put in a cupboard so I consider I did reasonably well to have survived an entire term without a nervous breakdown.


To get back to my point, I do not think apprentice means what the government thinks it means.  Look at this, an important piece of research by Lorna Unwin and Alison Fuller at UCL, a fact check of Vince Cable’s claim that the government has created 2.1m apprenticeships.  There is a sense in which it’s true: 2.1 million people have been registered as starting apprenticeships, but there’s no way of telling if that represents 2.1 million people starting new positions or whether some (many?  How many?) are existing jobs being converted into “apprenticeships” by the addition of external training.

Their apprenticeship will have involved having their existing skills accredited plus tuition to pass the “Functional Skills” tests in maths, English and information and communications technology. Some will have developed new skills, but government doesn’t check this.

Survey data suggests that the “conversion rate” in some sectors such as health and social care, where older apprentices dominate, is as high as 90%.

Older apprentices?  Yes, if you read the article in full, you’ll learn the – to me, at any rate – staggering fact that “we have around 3,000 apprentices aged 60 and over.” (The statistical sources for the article can be found here).

Coincidentally, the same day that I saw this article I followed some links on an entirely different topic and, in that tangential way that you proceed on the internet, found myself boggled again.  I tweeted this:

Yes, HMRC are recruiting 200 extra customer service operatives (presumably to staff their telephone helplines) and – because they will be trained to an externally recognised standard – are, entirely legitimately it seems, calling the jobs apprenticeships.



Guidance is not advice.

March 23, 2015

This is what George Osborne said in the 2014 Budget Speech, archived here.

And we’re going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution pensions will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have.

Now, “advice” and “guidance” are two different things.  Guidance is someone telling you there are ISAs and this is how much interest they pay.  Advice is someone sitting down with you and asking you relevant questions and then recommending which ISA fits your personal circumstances.  Guidance can be a leaflet or a website: advice is personal and can be relied on.  As a general rule, you can’t sue someone who gives you accurate guidance if you make the wrong decision after reading it, whereas you might be able to claim you’d been missold a financial product if you followed advice that later turned out to be wrong.

Got that?

And this is the new Pension Wise website which offers government guidance but

Pension Wise won’t recommend any products or tell you what to do with your money.

Now, I haven’t gone back and watched the video of the 2014 Budget speech (I’m not THAT sad) nor checked the wording of the quotation above with the verbatim Hansard report.  But someone ought to.  Because, you know, if I’m right, George Osborne told Parliament something which was not true.  And isn’t that a resignation matter?




That was a Budget, apparently.

March 18, 2015

I always had trouble with “For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath.”  Which is a shame, as George Osborne seems to have taken it as his inspiration for his final Budget as coalition chancellor.

If you have savings, well, you won’t have to declare the fourpence interest you get on them.  If you have an ISA, you’ll be able to take money out of it when you’re broke and bung it back afterwards (take THAT, payday lenders!)   If you have a mortgage, well, your house is going to carry on going up in value because, if you’re saving up for a house, the government is going to start bunging you a few quid towards the deposit.  And if the entry level houses get harder to find and more expensive, then the others go up in value too, because, capitalism.

So if you’re a “hard-working family” (and dear god but I hate that phrase) who has managed to get ahead, even a little: if you’re a “hath”, then you’re going to feel a bit better for this Budget.

(We will draw a veil over the fact that most people with “savings” got them from inheritance or redundancy or early retirement.  What used to be called, back in the sixties when they were taxed more heavily than earnings, “unearned income”)

If you can’t get ahead?  If you live in a rented house because the you can’t afford the deposit, and the cost of your commute means you’ll never have any spare cash even to begin to save towards a deposit?  If you’re struggling with your credit card bill and juggling a payday loan to pay for the groceries and the kids new shoes?  Well you can just jolly well be grateful that

The government’s long-term economic plan is securing a sustained recovery and a more resilient economy. From April 2015, Corporation Tax will be cut to 20%, the joint lowest in the G20

Forty-nine days and counting.


Before we start…

March 18, 2015

… can I just ask a small question.


No, seriously, I mean, why are we doing this again?  What is the point of running the policy teams in Treasury and HMRC ragged, spending all that money on producing and promulgating a Budget, when there’s going to be an election and a change of government in forty nine days anyway?

The new government will no doubt want to do the same thing all over again later in the year.  (Next time, please don’t call it an “emergency budget” though.)  And, pedantry corner, yes, there will be a change of government whatever the result of the election.  The current coalition isn’t up for re-election: the status quo is not an option.  The individual parties that make up the current coalition might conceivably, if the maths came out just so, decide to reconvene but would nevertheless have to hammer out a different coalition agreement.


Why not quietly do a competent Finance Bill based on the material that’s already out there: the things announced in the last Budget and in the autumn, that have been subject to consultation and had their unintended consequences examined?  Why faff about announcing a load of stuff that’s just designed for the manifesto, that won’t be enacted if controversial or will be overturned if expedient?

Because, politics.

Yes, all right.  I’ll be watching (and live tweeting) this afternoon anyway.  I have pizza.  See you on the other side.




February 19, 2015

You know what?  There’s too much legislation.  Not just tax legislation, all legislation.  No-one has time to read it all, yet we are all presumed to know and understand it, because ignorance of the law is no defence.  And if you have been watching the programme about what goes on Inside the Commons you will have seen why.  Who has the time, in amongst the running down corridors to be shepherded into the right lobby to vote and camping out in empty offices to get to the front of the queue for a Private Member’s Bill slot (have these people never heard of computers?)

Parliamentary scrutiny is supposed to be the way that Bills are turned into Acts of Parliament – a series of formal debates take place with select committee scrutiny in between and so anything that comes out of the process has been scrutinised by our elected representatives and that’s democracy, right?

Yeah, right.

Parliament isn’t fit for purpose, or at least not for THAT purpose.  The House of Commons is a generator of heat, not light.  Even the way the building is designed confirms it, with two sides sitting opposite each other at a distance calculated to prevent them *sticking each other with swords*.

Which is why the process is vital.  By the time the Bill gets to the floor of the House, all the democratic scrutiny should already have been facilitated.  If it is a regulation, then there should be an impact assessment to show what the proposed change will cost and why the particular option has been chosen.  There should have been a public consultation where all the unintended consequences were bottomed out.  There should be an explanatory memorandum showing what the regulation is intended to achieve and assuring Parliament that all the necessary processes have been followed (there’s a good explanation of what ought to be in the EM at paragraphs 18 onwards here, in the House of Lords Secondary Legislation Scrutiny Committee’s guidance:

The purpose of the EM is to provide members of Parliament with a plain English, free-standing, explanation of the effects of the instrument and why it is necessary)

So consultation is important.  Oliver Letwin told the Legislation Scrutiny Committee that debates in parliament were the bedrock of democracy (so it didn’t really matter if he cut the time allowed for consultation, because consultation wasn’t the place to gather public “views”)  But I disagree.  I think democracy is, perhaps not quite broken, but a bit battered and bent round the edges, and that a consultation process before changes get as far as the Commons is a good sticking plaster.

Which is why it pisses me off that, three years after I suggested it to the Legislation Scrutiny Committee and they made it one of their recommendations, you still can’t get a list of consultations ordered in the date they will close.

I mean, it’s not rocket science, is it?


Small firms impact: not waving but drowning [Part 3 of 4]

February 18, 2015

We have finally reached page A113 of the TIIN, the second half of the table of impacts.  In terms of the seven questions, we are now past “what does it cost/raise” to the final three questions which are:

  • What will it cost the customer?
  • What will it cost the department?
  • Are there any other impacts?

“What will it cost the customer” can be a bit hard to fathom if you aren’t used to dealing with TIINs, but start with the section on “impact on individuals and households”.  In this case, you could summarise it as:

  1. Individuals who buy ebooks from abroad will have to pay UK VAT on them
  2. There won’t be any compliance costs

Now, if you are an individual with a kitchen table business affected by this change you might object to this, but  “individuals and households” in this context means “customers” rather than suppliers.  The impact on one-woman businesses is covered in the business impact section, further down.

So all of us who buy ebooks – or music downloads, or pdf knitting patterns or any of the other things covered by VATMOSS – will feel the impact because the things we buy will have VAT charged on them at the 20% UK rate and not at, for example, the Luxembourg rate of 3%.  But the total amount of that VAT is captured in the “exchequer effect” field I looked at in part 2: the “impact on individuals” field is for any extra compliance costs the individual might incur.  And of course when you buy an ebook you don’t, as a customer, have to DO anything to pay the VAT at the right rate.  It’s up to the seller to work out the correct rate, charge it, collect it, and hand it over to the tax authorities.

(One of the interesting things about this whole mess has been the lack of any particular interest from small vendors in other European countries.  The rates of VAT are here, on page 3 of this EU document.  The interesting bit isn’t the main rate.  It’s the table of reduced rates on page 4.  Books are zero rated in the UK, and so it feels annoying to us that ebooks aren’t zero rated but charged VAT at 20%.  But look at other countries.  There are very few zero rated items, but many countries charge a reduced rate of VAT on books… so if you’re charging 3, 4 or 5% VAT on books already, why not charge 3, 4 or 5% on ebooks too, to harmonise your rates?  Maybe they should just cut the VAT rate on ebooks all round???  As I understand it, you can keep your zero rates but you can’t increase their scope or number.  So we haven’t asked for a lower VAT rate on ebooks in the UK because we have a zero rate on hard copy books and we’re afraid that the EU would insist on changing that if we changed the rate on ebooks.  Would it be worth paying say 5% VAT on all books to harmonise the rate between hard copy and ebooks?  I genuinely don’t know.)

The main thing to note in this section of the TIIN, though, is the “impact on business including civil society organisations” (in other words, the impact on businesses and charities)

Here we have the lovely suggestion that there are only five thousand businesses who will really lose out by the changes.

This is on the assumption that most small businesses will sell their electronic wares via Amazon or another big platform.  I already have an outstanding Freedom of Information Act review request asking whether HMRC really can get away with not telling us who they consulted in arriving at their decisions on this issue.  But I was always taught that the data used in calculating an impact assessment were subject to disclosure under FoI and I wonder whether it would be interesting to look at just how, exactly, the figures of “up to 34,000 businesses, of which about 5000 are not currently registered for VAT”  were arrived at, because from the face of the TIIN it looks as if they have been plucked from the air.

The estimated compliance cost for these businesses is £40 per business per year for the businesses already registered for VAT and £220 per business per year for the estimated 5000 unregistered businesses which HMRC thought would have to join MOSS.  Again, that’s not the cost of the VAT itself, just the cost of administering the tax – the time cost of filling in the VAT returns.  Even on these figures, 29,000 x £40 plus 5000 x £220 (£1,160,000 + £1,100,000) you get an increase in admin burden just on the very small businesses of around two and a half million a year.  The question the TIIN raises in my mind is, does the £300m putative tax raised from the large businesses like Amazon warrant imposing the £1.5m putative admin burden on micro businesses?


Prosecuting tax evasion is hard. Because, evidence.

February 14, 2015

Prosecuting tax evasion is hard.  Or at least, I imagine it is.  Because in all my time in the Inland Revenue and HMRC, I was never involved in a prosecution case.

Prosecutions are dealt with by a separate bit of the department.  Because, evidence.

Say I looked at a set of accounts and asked for some backing documents and then someone sent me a document that was a forgery.  Should they have been prosecuted?

Say it was an appeal: say they told me they’d appealed.  Say the thing they sent me was backdated to make it look like they’d appealed in time, and I spotted it was a forgery – could prove it was a forgery, in fact, because it referred to a thing that hadn’t happened at the purported date of the document.  Should they have been prosecuted?

What would their defence have been?  We actually did send in the appeal on time, but we couldn’t put our hands on it when you asked us?  A junior member of staff made a copy from our computer files but obviously they shouldn’t have done it and we’re very sorry, but that doesn’t alter the fact that we made the appeal in time and the dog ate our copy and why can’t you find YOUR copy, HMRC?  Is your filing system SO chaotic?

Say failing to make the appeal on time would have cost them £100.  Should they have been prosecuted for a measly hundred quid?  Would that have been worth the cost of prosecution in the first place?

Would the forged document even have been admissible as evidence?  We hadn’t had any conversations under PACE, they hadn’t had legal advice when they spoke to me, I hadn’t had any training in PACE except for the basic “this thing exists, you have to get it right, so refer to prosecutions if you think you’ve found something that needs this kind of handling” training.

It’s not as easy as it first sounds… except….

Well, except that obviously an overworked prosecution section has to prioritise.  Say they are so under resourced they can only take cases where there’s a million quid of tax at stake: would you even waste their time asking them about a forged document that £100 hangs on?

What should have happened, in an ideal world?

Well, shouldn’t there have been a prosecution unit attached to every team?  Resourced to investigate the smaller cases, under PACE, with a view to prosecution?  To prosecuting the tax cheats (and I mean the direct tax cheats, not the fag smugglers and VAT dodgers on the “most wanted” list) with the same kind of limits as the benefit cheats?

Instead of me arguing with them about their accounts and a district inspector shouting at them about the attempted forgery, maybe their accounts should have been examined with a view to prosecution and they should have been hauled in and interviewed under PACE.  It still might not have been a serious enough case to be worth prosecuting, but there’s a space between a hundred quid and a million where, surely, there ought to be some equivalence between the limits we set on benefit fraud and the ones we set on tax fraud?

Wouldn’t that bring in 25 times more than it would cost to run?  Why aren’t we doing that?

[Edited 14/2/15 because the headline should have read “evasion”, not “avoidance”.  Thank you, twitter! *beats head on desk*]


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