Archive for August, 2012

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Hang on, lads; I’ve got a great idea

August 31, 2012

Yesterday I suggested that a land tax might be a good idea and tweeted and facebooked a link to the blog entry.  Here’s the subsequent thread of facebook comments (names redacted, but number 3 was me)

  1. Give me the wealth and I’ll give you the tax.
  2. Nah: beard, hearth and window.  A return to the old values.
  3. Beard tax! Oh yes, let’s do that one!
  4. Can I now be a member of an irrationally oppressed minority?
  5. If we didn’t have to pay tax the country would become a lot wealthier.  Of course no schools and hospitals or police or NHS.  I agree with you, Wendy; a Beard tax will do.

And, you know, it being Friday and all, I got to thinking.  What ABOUT a beard tax?  So here’s the draft TIIN.

                                                                                                                                                                                           

Tax Information and Impact Note for the introduction of the Beard Tax

Who is likely to be affected?

This measure applies to all natural persons resident or ordinarily resident in the UK, and to all natural persons visiting the UK for more than 20 consecutive days.

General description of the measure

This measure requires any natural person present in the UK to pay a levy if they wear a beard.

Policy objective

This measure supports the Government’s objective of a more competitive corporate and personal tax system to provide the right conditions for business investment and growth, by putting the onus on the taxpayer to decide whether the ambition to demonstrate facial hair growth outweighs the requirement to pay the tax.

Detailed proposal

This measure defines “beard” as a facial hair density (“fhd”) (not including vellus hair) of more than 13 hairs per square inch (“psi”) over the “chinbeard” area.  This area is defined as the area surrounding a natural person’s mouth measured from

  • below the eyes
  • between the ears
  • to the topmost point of the Adam’s apple

Any person with a chinbeard fhd of 13 psi and above is subject to the tax, which will be calculated on a daily basis.  Beards, sideburns, moustaches and other facial extrusions will, should their root be within the chinbeard area and their length be greater than 0.005 inches, be included in the calculation of the chinbeard fhd.  In other words, a particularly stupid moustache may also qualify as a “beard” for these purposes.

Any person with a 13 psi fhd at 8.30 am will be liable to the tax for that day and must, if challenged by a properly accredited officer of HMRC, be able to produce a Beard Tax Token for the day in question (these will be available either as a token or as an electronic card obtainable from HMRC which may be “topped up” at any cash machine) or be subject to the Beard Tax Token Penalty (initially £50, rising to £100 a day.  And, for repeat offenders, waxing.)

Summary of impacts

Exchequer impact (£m)

This will be calculated by taking the expected deficit, dividing by the number of beard-wearers estimated to be affected, divided by the number of days in the year, and then charged on a daily basis.  The final figures will be subject to scrutiny by the Office for Budget Responsibility, and will be set out at Budget 2014.

Economic impact

The measure is not expected to have any economic impacts.  Clearly razors and shaving cream will be banned under the associated anti-avoidance provisions which may impact on the steel and pharmaceutical industries but any impact is expected to be negligible.

Impact on individuals and households

Individuals subject to the tax will make a daily choice between shaving before 8.30 or self-certifying for the tax and acquiring the necessary token.  It won’t take but a minute, honest.

Equalities impacts

No different impact on any equality group has been identified. (Ed: that’s what we usually put, I think.  We aren’t going to get any comeback from the bloody feminists this time are we?)

Impact on business including civil society organisations

This measure is not expected to have an impact on businesses or civil society organisations.

Operational impact (£m) (HMRC or other)

This measure will not have any impact on HMRC’s operating costs.  Yes, I know they’ll have to chase around checking whether the beardies have bought their tokens but they’re not getting any more money out of us for it.  Hell, I don’t know.  They can close down another contact centre or something, can’t they?

Other impacts

No other impacts have been identified. (Ed. That’s what we usually say, isn’t it?  The tree-huggers aren’t going to kick up a fuss and say we’re, I don’t know, putting up heating bills by losing facial insulation or something?)

Monitoring and evaluation

This measure will be kept under review through communication with affected taxpayer groups. No, really.

(Note: economic impact edited, as I had neglected to avoidance-proof the first draft!)

Posted in Bit of politics | 4 Comments »

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Bit of politics

August 30, 2012

I had two immediate reactions to Nick Clegg’s “wealth tax” proposals. First of all, the obvious “politics of envy” jibes from the Tory benches were really annoying in the current climate: yes, let’s freeze salaries, raid pensions, screw the disabled and sell off the playing fields, but heaven forbid we should be “envious” of our betters!

“But we also have to be careful as a country we don’t drive away the wealth creators and the businesses that are going to lead our economic recovery.”

says George Osborne. Funny how the “wealth creators” need to be motivated by giving them money and the ordinary person by taking it away. And how is that “trickle down economics” working out for the States, hmmm?

But I’m afraid as a former tax professional my first thought was “that won’t work”. A wealth tax? Define “wealth”. Are the Queen’s diamonds “wealth”? What if they were in a safety deposit box in a Swiss bank?

The costs of calculating, collecting and enforcing a “wealth” tax are likely to outweigh the benefits, particularly if it’s only to be a one-off levy.

But I’ll tell you what would work. A one off levy on land. You know where it is, you know (or can calculate) what it’s worth, and, with a firm deadline that says someone – and we’re not going to argue with you about who, so you can set up as many offshore trusts as you like – has to pay the tax by Land Tax Day or else the land itself is forfeit – simple to administer.

I’d like to see the cost benefit analysis for it. Anyone want to have a go at drafting the impact assessment???

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Whose job is it anyway?

August 29, 2012

A while ago Taxation magazine wondered why they bothered to include the articles summarising the Finance Bill debates: articles that (I have to say) are some of my favourites.

I do begin to wonder why we bother to cover the Finance Bill at all, when MPs say so little of relevance.

The original reason for covering it was to find points which might be relevant for a Pepper v Hart argument in the future. Best of luck with that.

Perhaps readers could let us know how (if at all) they would like us to cover the Finance Bill next year?

For me the interesting thing about their coverage of the Finance Bill debates is how little actual debate there is. There’s point scoring, headline chasing and some party political posturing. But no actual substantive debate, not in the sense anyone outside of parliament would understand it.

Perhaps that’s a good thing, though? After all, the changes following on from Tax Policy Making: A New Approach mean that the Finance Bill shouldn’t come as a surprise to anyone any more.  The changes will have been subject to consultation: will have been refined and improved, the legislation itself exposed for technical review so that the Finance Bill itself is as near perfect as it can be, right?

Well, up to a point, Lord Copper.

After all, who responds to consultations?

“Stakeholders”, that’s who. Professional associations, interest groups, lobbyists. But where is the public interest in this? In the not-a-mansion-tax consultation, one of the questions was (I paraphrase) do you think we need the annual charge as well as stamp duty  or have the poor dears suffered enough! Who is representing the non-expert ordinary decent taxpayer?

Um… That’s the MP’s job, isn’t it, and have we accidentally shut them out of the process?

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Secrets of the universe?

August 28, 2012

To anyone struggling with the results of their GCSE and A levels this month, you have my sympathies.  You’re at the most stressful time of your life (trust me, it DOES get better!) and, yes, you’re being screwed by the political interference with exam results and exam grades.  So here’s one of the Secrets of the Universe that your parents won’t have told you: ready?

It doesn’t matter.

No, seriously.  I know that at the moment it feels as if exam results are the be-all and end-all of existence, that passing your exams is the best thing in the universe and failing them is the end of life as we know it.

It isn’t.

I know anecdotes from the middle aged aren’t going to convince you of anything but I can only try.  Look at me: I passed my exams, went to university, did a degree in something I loved, and came out of my course at the same time and in the same place and with the same degree as Danny Boyle and Fran Barber.

And then I bummed around as a book seller, a secretary, a drama teacher, a secretary again, and finally became a tax inspector.

My point is, there is no way for you to know at seventeen what you’ll be doing at 27 or 37 or 47.  All you need to do at 17 is survive to be 18, and the rest of it will sort itself out as you go.  As John Lennon (google him) said, “Life is what happens to you when you’re busy making other plans”

But I think there IS something we could do about exams.

Because every year we go through the same rubbish: more people/fewer people have got A grades or pass marks or done wacky subjects that the Daily Mail doesn’t agree with, and it’s frankly insulting to the people who’ve worked so hard to get those results.

And there’s a reason the grades fluctuate.  What the politicians don’t seem to understand is the difference between marking to an absolute standard (like the driving test, where everybody knows and understands what you have to do to pass – be able to control the car and remember enough of the highway code) and marking on a distribution curve.  In other words, you’d mark the papers and then fiddle the results so that the same proportion of each year’s intake get an A, a B or a C etc.  The mark on a distribution curve tells you  your position in that year’s intake – but isn’t an absolute score.  Imagine passing the driving test if they graded on a curve – you’d know you were a better driver than the people who failed that day.  But what if it was a day when only the fumble-fingered people with no clutch control entered?  You would be better than them – but would you be good enough to pass the test EVERY day?

And that’s the reason we get all those headlines each year about “grade inflation”.  Because a few years ago we moved from a system which marked on a curve to marking to a standard – which is what we, supposedly, do now.  And which is, of course, why more and more people get higher grades.  Because the marking system says they can, and because we push teachers and schools with targets and league tables to GET more people into the higher grades.

Imagine if we complained that more people were passing their driving test every year.  You’d look at the highway code first, and at the instructions we give to examiners.  And then conclude that, actually, that’s a good thing, right?

So my suggestion is this.  We need the exam system to do two things.  First of all to tell us that people are getting the basic education they’re entitled to.  Everyone is entitled to come out of school able to read and write and add up and work out how much a 20% offer means they’d have to pay and know where America is and when mankind landed on the moon and… stuff.  We need a sort of Highway Code of Education, an agreed package of Stuff that we think everyone ought to have – skills they ought to have have, and facts they ought to know.  So let’s put that into one exam and have it instead of GCSEs – and have it as a clear “reach an agreed standard” exam like the driving test.

And then let’s have the other exams, in everything under the sun that you might reasonably (or unreasonably) want to know, instead of A levels.  And grade those on a curve, so you can use them to pick out talent, and point the people in the top percent of the music exams towards the orchestras and the plasterers towards plastering…

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Not A Mansion Tax

August 24, 2012

Yesterday was the closing date for the consultation on “Ensuring the fair taxation of residential property transactions” or the Not-A-Mansion-Tax.  Because, as we all remember, the Lib Dems came into the coalition with a commitment to a “Mansion Tax”  (“Introducing a Mansion Tax at a rate of 1 per cent on properties worth over £2 million, paid on the value of the property above that level” P14).  This is not that policy.

What this is, is a proposal that people who own properties worth more than £2 million via an “envelope” – for example by owning an offshore company that owns the property in question – should have to pay stamp duty when the property gets transferred to someone else, and should have to pay capital gains tax when they sell the property even though the legal owner might be a non-resident company (non-residents don’t normally pay UK capital gains tax) AND there should be a bit of an annual levy on the value of the property over £2 million.  Not quite the promised mansion tax, then, but enough to get the lib dems off the cons’  backs perhaps?

Anyway, here’s what I said:

This is an individual’s response and will also be published, with commentary, on my blog, http://tiintax.com. I have addressed your consultation questions in turn.

Annual charge

Question 2.1 Do you think that the current criteria for the 15 per cent SDLT rate should also apply to the annual charge? If not, what exclusions or additions would you make to the coverage of the annual charge? Why would you recommend such changes?

Yes, I agree it’s sensible that the criteria should be aligned. As a natural person, a citizen and a taxpayer, I would be in favour of the criteria being aligned in as broad a scope as possible – personally I would include ALL non-natural persons and not just “certain” ones, for example.

Question 2.2 Is the exclusion for property development businesses sufficient both to address the risk of avoidance and to ensure bona-fide businesses are excluded from the charge? If not, what changes to the exclusion for property development businesses would you recommend and why? How could such changes be policed?

I think the exclusion for property development businesses is unnecessary and would be adamantly imposed to any relaxation of the current proposals. Personally I’d go for the simplest option here and have no exclusion at all – the charge is, frankly, minimal for a company which is genuinely developing property and would (a) be factored in to their costs and (b) prove an incentive, if only a marginal one, for them to get on with the development and bring the property back into use.

Question 2.3 How might it be possible to develop an exclusion from the annual charge for collective investment vehicles which distinguishes between widely-held funds and quite narrowly held ones (that might potentially be used for avoidance)?

As you will have deduced, I have little or no sympathy for exclusions or limitations to this charge, so I would be against any such potential loophole.

Question 2.4 Should the definition of ‘residential property’ be the same as that used for stamp duty land tax? (See Annex B). If not, what amendments or exclusions (in addition to those set out above) need to be made and why?

Yes. Simplicity is very much to be favoured in developing a policy where the sense of entitlement and privilege of the potential payers is such that they will be actively looking for arbitrage and avoidance opportunities.

Question 2.5 What, if any, policy issues do you see with the proposed application of the annual charge to properties which either move into or out of liability or to multiple property ownership interests? What rules for valuation and submission of returns of annual charges in these circumstances do you think will be most appropriate?

The simplest possible. Base the charge on the valuation at the five year point and simply keep it that way for the next five years. This has the advantages of simplicity and certainty, and the tax charge could simply then be factored in to any price on any change of interest in the interim.

Question 2.6 Do you think a prior agreement service along the lines described will be helpful to property owners? If so, what would be the best way for it to operate from a stakeholder point of view?

Of course it would. But whether this would be beneficial for the remainder of the taxpayer base is moot: in my view the costs of achieving certainty in this area should be borne by the potential taxpaying entities. However a “determined once and then remaining stable for five years” solution (proposed in 2.5, above) would minimise the need for such a service.

Question 2.7 Are there any other aspects of the valuation proposals that will cause difficulties or require further clarification?

Not that I am aware of.

Question 2.8 What length of time do you think is reasonable for submitting the annual charge return and why? Would monthly payment instalments be a more preferable option?

Normal rules, I would have thought? Monthly *payment* options, fine, but annual *returns* on the same schedule as everyone else.

Question 2.9 What will the impact of the annual charge be on (i) the high value residential property as a whole, and (ii) landlords and tenants? What evidence do you have to support your view?

If the charge were to discourage non-resident entities from buying up the top end of the residential property market I think this would be a positive outcome as the drag caused by the increasing prices at the top end of the market has a negative effect on affordability for actual UK residents.

Question 2.10 To what extent do you think the impact of the 15 per cent SDLT charge will differ from that of the annual charge? Should the Government continue with both measures once the annual charge is in place? If not, why not?

If the country is in a fiscal crisis which requires removing cost of living pay rises from public servants, charging civil servants more for their pensions, exerting downward pressure on disability payments, selling off playing fields and rationing cancer treatments, then I think it is completely fair that owners of multi-million pound properties should be required to make a substantial contribution to deficit reduction as well. I am wholly in favour of both charges and absolutely against any relaxation.

Question 2.11 Do you think there are any equality issues that arise for people with protected characteristics as a result of the proposed annual charge?

There is a strong possibility that the charge will weigh more heavily on non-UK citizens than on UK citizens. I think that is wholly proportionate to the level of fiscal crisis described by the government and to the nature of the entities to be taxed.

Capital Gains Tax

Question 3.1 Are there entities or forms of ownership whose status as an individual or non- natural person requires clarification?

Interesting question (to which I have no answer). But I look forward to reading the responses document!

Question 3.2 Are there entities or other forms of ownership, other than charities, which should either be relieved from or included within the charge?

Absolutely not. And I’m not at all sure about charities in this context!

Question 3.3 Would the introduction of a £2 million threshold create any particular difficulties or adverse behavioural effects? If so, what are these likely to be?

No doubt there would be the usual rash of sales agreed at £1,999,999 and attempts to value fixtures and fittings sufficient to put the property below the threshold but no more than for other property taxes.

Question 3.4 Would a limit to properties valued at over £2 million create any particular complexities? If so, what are these likely to be?

As for 3.3

Question 3.5 Would this cause any compliance difficulties for collective investment arrangements or where share ownership is heavily diluted? If so, please explain what these would be.

No opinion.

Question 3.6 Does the adoption of the SDLT definition of ‘residential property’ (in Annex B) create any problems? If so, what amendments or exclusions (in addition to those set out above) need to be made and why?

Again, I think this is a policy area where simplicity is very much to be preferred in the design of legislation, if only in order to eliminate future avoidance activity.

Question 3.7 Are there any other issues concerning the design or delivery of the policy that need to be considered?

Yes: how are you going to collect tax from a non-resident entity if it doesn’t make a return in the first place and doesn’t come to the UK? I would strongly urge a simplified procedure where any unpaid tax creates a charge on the property and leads, ultimately, to confiscation.

Question 3.8 Do you think there are any equality issues that arise for people with protected characteristics as a result of the proposed extension of the CGT regime?

No.

Kind regards

Wendy Bradley
http://tiintax.com

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Equal to what?

August 23, 2012

“The measure is not anticipated to impact on groups with protected characteristics any more than on those without such characteristics.” (Tax Impact Assessment, bottom section of page 29)

Uhuh.

Let’s unpack that a little, shall we?

The Treasury and HMRC are covered by the Public Sector duty of the 2010 Equality Act.  So they’re required to give due regard to equality issues while they’re making policy, for example (as the Government Equalities Office guidance says)

Having due regard means consciously thinking about the three aims of the Equality Duty as part of the process of decision-making.

So here we are, thinking consciously about the equality duty as part of our decision making, and we’ve decided what we’re proposing doesn’t impact on groups with protected characteristics any more than it does on people without such characteristics, right?

Um…

What protected characteristics are we talking about, then?

Well the Equalities Office has helpfully listed them for us here:

The protected characteristics covered by the Equality Duty are:

• age

• disability

• gender reassignment

• marriage and civil partnership (but only in respect of eliminating unlawful discrimination)

• pregnancy and maternity

• race – this includes ethnic or national origins, colour or nationality

• religion or belief – this includes lack of belief

• sex

• sexual orientation

So “being a man” would be a protected characteristic, for example, and you would, if you had that protected characteristic, be protected from being treated less favourably than someone with a different protected characteristic such as, oh, say, “being a woman.”

Similarly “being aged 26” is a protected characteristic and you are protected at 26 from being treated less favourably than someone with a different protected characteristic such as, say, “being aged 96”.

Similarly, “being from Yorkshire” is as protected a characteristic as “being from New York”.

So tell me, please, how we have given due regard to equality by deciding that this measure won’t affect people with protected characteristics any more than it will affect people without protected characteristics?  Show me a person without a protected characteristic.  Who has no age, sex or national origin?

It’s logical rubbish, and shows contempt for the whole process.  Shame on you!

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Unit trusts and the citizen stakeholder

August 22, 2012

I posted yesterday my response to the consultation on the tax treatment of unauthorised unit trusts.  These aren’t the kind that are sold to the likes of you and me: they’re not regulated by the Financial Services Authority.  They’re investment envelopes used by institutional investors.

HMRC didn’t seem to be clear why people would use unauthorised unit trusts in the first place and sought to understand the legitimate uses of them as an investment vehicle to distinguish that from their uses in avoidance, and whether the introduction of a new kind of investment,  Tax Transparent Funds, would make the whole process moot.

The respondents to the first consultation – 14 of them – are listed in the Annex to the latest consultation.  Basically they are a list of the “usual suspects” with only perhaps the Law Society  having any wider community stakeholder interest and that’s only because I’m not a legal specialist so I’m a bit numb and vague about what, precisely, the Law Society’s function in this kind of transaction is.

That’s beside the point.  My point is, nobody not already a tax specialist was asked, involved, or expected to have an opinion.

That’s not necessarily a bad thing at this stage of the process; this was a second consultation, to settle the technical details of a piece of legislative change, when the principles of whether there was any need for a change at all and, if so, how it ought to be framed, was supposed to have been covered in the first stage.

One fundamental change the coalition was supposed to have made was to the making of tax legislation.  In the landmark Tax Policy Making: A New Approach we were supposed to have moved to a more considered, strategic method of making changes.  Policy ideas would be tested, options explored, and only then would the preferred option be looked at from a technical viewpoint by the experts in the field, so that the final legislation that went before Parliament was as good as could be achieved.

You know, there’s a missing section in there.  It’s all very well having an Office of Tax Simplification but look at their biographies.  I have written before about the failure to carry out the Small Firms Impact Test to look at the possible impact of legislation on micro businesses.  So even though the government is committed to talking to small businesses, it doesn’t exactly cover itself in glory in putting that into practice.  But look at the process from the point of view of its owner, the ordinary taxpayer.  There isn’t even a commitment to ask Joe and Josephine Public what we think are the priorities for tax and tax simplification.

Citizen stakeholder, to the barricades!  Well, all right, to twitter at least…

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Unit trusts

August 21, 2012

So there”s a lot of reading to do before HMRC are interested in your views on the taxation of unauthorised unit trusts. The consultation document tells you to go and read the first consultation, published in June 2011 and which closed in   September of that year first – because summarising  it would be too much like hard work?  The twin aims are to reduce tax avoidance and to achieve administrative simplicity but it is, in my view, another of those reviews which makes the fundamental error of considering only “commercial users of UUTs, administrators and industry professionals” as stakeholders, rather than seeking the opinions of the wider citizen stakeholder.

Well, for what it’s worth, this is the response which this citizen stakeholder sent before the consultation closed yesterday.

This is an individual’s response and will in due course also be published, with commentary, on my blog, http://tiintax.com
I am not commenting on the technicalities of the legislative proposals, but the impact assessment is curious for this stage of the consultation. It does not quantify any costs or benefits from the proposed changes.  While I can see that you might not have precise figures for either the amount of the tax gap you think will be closed by the anti-avoidance element of this proposal or for the administrative burden saving for affected firms, I would have expected to see some indication at least of the order of magnitude involved.  Will you be saving billions of tax and millions of admin burden?  Or thousands and hundreds?  Or is it the other way round – protecting fourpence but saving the industry forty million?  It is hard to say the case for change is made without this information.
I can’t help but notice that you have reverted to talking about “third sector” organisations rather than “civil society organisations” and wonder whether this has any significance in context – I would be interested to know whether there are any third sector or civil society organisations which are also UUTs or TTFs or otherwise could be considered first order stakeholders in this change?
I am particularly curious about the request for specific information on admin burdens – surely the method of quantifying admin burdens is in the control of HMRC as owners of the original database of legislative admin burdens and how each is scored – so are you not able to tell from the proposed legislative changes which burdens will be removed or replaced?  Or are you talking about a wider set of costs to business than the specific list measured in the admin burden database?
Finally you say that “it is not expected that affected customers would include small firms”.  I find that extremely hard to imagine, as the test of “small” for the purposes of the small firms impact test is, surely, the number of employees?  I can see that an UUT might have extremely large sums of money at its disposal: but would it have a payroll of more than 20 employees?  If not, then it is a small firm according to the small firms impact test, isn’t?

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To regulate or…

August 20, 2012

How much does it  cost to pass a piece of legislation?  Any idea?  No, I don’t know either.  I suppose it must vary according to whether the legislation is debated in both Houses of Parliament, the length of the debate, the numbers involved…?  How much of the costs of the upkeep of the Lords and Commons would you apportion to the legislative process?  What about statutory instruments?  They can either require a positive or negative process – in some circumstances they have to be positively passed, but in some they go through on the nod unless someone actively objects.

I’d be fascinated to know if anyone has any figures on the bare costs of  making legislation, any legislation, as opposed to any costs and benefits imposed or accruing from the legislation.  But whatever the cost IS, common sense tells us that there is one.

So there has to be a benefit from making legislation, or else why would we (as a country) incur the cost in the first place?

This is the question that seems to be have been entirely overlooked in the consultation on withdrawing the requirement to make a self assessment  return, which closed last week.

Essentially, if you are sent a Self Assessment Return, you have fallen into the HMRC sausage-machine and will need to fill the return in and send it back or you’ll be ground up by the machinery and spat out at the other end after penalties and determinations and pursuit of imaginary (estimated) debts.  So it’s a good thing that there’s an “out”.

But there already IS an out – HMRC has the power, under its “care and management” of the tax system, to say, actually we sent you this one by mistake, don’t bother.

The question that OUGHT to have been addressed by the consultation was whether this was enough or whether there was a need to replace the HMRC discretionary power with a legislated, mandatory provision.  Unfortunately what the document seems to me to address is whether it’s better to have legislation or – nothing.  Ask the question that way round, and you get an entirely different answer.

Asking whether we can rely on HMRC to exercise its discretion with common sense, even-handedness and some human compassion would have been a revealing question.  How disappointing, then, that the Department chickened out of asking it.

Here’s the response I sent:

This is an individual’s response and will also be published, with commentary, on my blog, http://tiintax.com.

1. If HMRC already has the power under its “care and management” provisions as stated in the consultation document, then I cannot understand what advantage is there to legislation?  The government is committed not to regulate unnecessarily and on the evidence of this consultation document I cannot see that a case has been made that legislation is either necessary or desirable.
2. Should there be a deadline?  No.  People don’t know what they don’t know.  If people don’t understand the requirement to file and don’t comply, they won’t know there’s a deadline they have to meet to explain that they don’t think they need to comply until they’ve passed it!
3.  Is a sanction needed if people lie to get the notice rescinded?  Well probably, but is legislation required to introduce a NEW one?  Wouldn’t the circumstance be covered by the existing power to make a discovery assessment, ie HMRC would discover an amount hadn’t been assessed by reason of the taxpayer’s negligence or fraud.  This looks like regulatory creep to me.
4. The impact assessment is wrong: the state that currently applies is that HMRC *can* rescind the requirement under their care and management powers.  The impact assessment tests the proposal against the concept of HMRC being UNABLE to remove a requirement to file once a self assessment return is issued.  What it should, of course, be testing against is the status quo, the current flexibility being in HMRC’s hands.
5. The question to be addressed – both in the IA and in the consultation – surely is whether there is any need for LEGISLATION, rather than whether there is any need for FLEXIBILITY.  The consultation document says there is already flexibility, and does not make a case for there being legislation to codify how the flexibility might be exercised

Sorry and all that!

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Regulated justice

August 14, 2012

You might be remember that I blogged a while ago about the changes to legal aid and suggested the new regulations might be vulnerable to judicial review because the MoJ hadn’t dotted the “i”s and crossed the “t”s in passing the regulations, in both the impact assessment (of the enabling legislation) and SFIT (the conclusion that the specific reg wouldn’t impact on small firms, when the IA to the enabling legislation clearly says that it does).

I mentioned I was trying to track down the Regulatory Policy Committee’s independent assessment of quality of the IA for the enabling legislation (The Legal Aid, Sentencing and Punishment of Offenders Act 2012).  The RPC secretariat told me I would have to ask the MoJ.  The MoJ sent me this letter in response to an FoI request for sight of the Opinion.

Freedom of Information Request 

Dear Ms Bradley

Thank you for your email of 20 July 2012, in which you asked for the following information from the Ministry of Justice (MoJ):

  • I am seeking the Regulatory Policy Committee’s opinion on the Impact Assessment no MoJ088 entitled “Central Funds”. 

I understand that you did not receive an acknowledgement letter to your request, please accept my apologies this was due to an administrative error within the department.

Your request has been handled under the Freedom of Information Act 2000 (FOIA).

I have searched the MoJ’s correspondence system and I can confirm that the Ministry of Justice (MoJ) does not hold the information that you have requested.

However, I can confirm that the Regulatory Policy Committee’s (RPC) opinion was not required on the Impact Assessment in your request as the policy did not amount to regulation.

You can find out more about information held for the purposes of the Act by reading some guidance points we consider when processing a request for information, attached at the end of this letter.

You can also find more information by reading the full text of the Act, available at http://www.legislation.gov.uk/ukpga/2000/36/contents and further guidance http://www.justice.gov.uk/guidance/foi-step-by-step.htm

You have the right to appeal our decision if you think it is incorrect. Details can be found in the ‘How to Appeal’ section attached at the end of this letter.

Yours sincerely

So the response is – there isn’t one, because it *isn’t a regulation*!!!

Um…

The coalition actually defined regulation when they started regulating the way regulations are made: the definition is at annex A (bottom of page 19) in the impact assessment guidance:

Definition of Regulation
A rule with which failure to comply would result in coming into conflict with the law or being ineligible for funding and other applied for schemes. This includes: EU regulations; Acts of Parliament; Statutory Instruments; rules, orders, schemes, regulations etc. made under statutory powers by Ministers or agencies; licences and permits issued under Government authority; codes of practice with statutory force; guidance with statutory force; codes of practice, guidance, self-regulation, partnership agreements with Government backing; approved codes of practice; bye-laws made by Government.

so… legislation that requires that the Lord Chancellor “must secure that legal aid is made available” doesn’t put him into conflict with the law if he fails to comply?

See, this is why I was a Civil Servant and not a barrister!

The only get out clause I can think of is that the Act isn’t published with an impact assessment, and the impact assessment isn’t connected specifically with the Act – the connection comes from the Explanatory Memorandum to the Statutory Instrument (The Costs in Criminal Cases (General)(Amendment) Regulations 2012) which says

10. Impact

10.1 The impact on business, charities or voluntary bodies was set out in the final Impact Assessment that was published with the Legal Aid, Sentencing and Punishment of Offenders Act 2012 which can be found at http://www.justice.gov.uk/downloads/legislation/bills-acts/legal-aid-sentencing/ia-central- funds.pdf

Maybe the MoJ have deluded themselves that publishing an impact assesssment at round about the same time as a piece of legislation covers them in case someone says “where’s the impact assessment” but doesn’t oblige them to take into account any of the rules around what an impact assessment is supposed to contain or how the legislative process is supposed to be governed?  I don’t know.  But if some stroppy legal aid lawyers would care to arrange a judicial review of the regulations I’d love to be in the public gallery.  With popcorn!

Seriously, when the coalition took over with its brave new world of deregulation and cost cutting and asked serving civil servants for their suggestions I made a serious suggestion that they should abolish my job (at the time) and the jobs of all the people working in Better Regulation teams across Whitehall and simply let the legislative process take its course.  The requirement to publish an impact assessment and to conduct a small firms impact test, where appropriate, is enshrined in Statutory Instrument Practice, the bible of how to make regulations (well, it wasn’t in the actual SIP last time I had access to a copy, because it hadn’t been updated for… well, that’s a whole other story, but it was there in one of the supplements).

So MPs ought to know, when they debate a bill (or at least when they let a Statutory Instrument go by on the nod) that it should have an impact assessment and it should tell you what its impact will be on small firms in the EM.

Let them ask questions in Parliament if they aren’t happy with the quality of the legislation they’re getting put in front of them.  Because so far as I can see, all the mechanisms they’ve put in place to raise legislative quality have become mechanisms for explaining why – although it’s a jolly good idea, Minister – it doesn’t actually, you know, apply in this case…

Posted in Bit of politics, Regulation, SFIT | Leave a Comment »

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