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MTD: it means “making tax digital”. (Why oh why would we want to?)

August 17, 2016

There’s a big hole in the heart of the seven consultation documents the government published on Monday about MTD, the plan to “make tax digital”, and it is this: why the hell are they doing it in the first place?

Seriously.  The overview document begins

The way you interact with the tax system is changing. From 2018 it will become increasingly digital and most businesses, the self-employed and landlords will need to use software or apps to keep their business records, and to update HMRC quarterly. The underlying tax rules will be simplified to support these changes.

Note the passive “is changing”.  Not the active “we are changing it…”

The main business document tells us baldly that it is consulting on how and not whether to MTD (make tax digital).

At Autumn Statement 2015, the government announced that, by 2020, it would require most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HM Revenue and Customs (HMRC) at least quarterly via their digital tax account. This consultation considers in more detail how these new processes should operate.

The Ministerial introduction tries to allay any fears we may have:

Freeing businesses from red tape and allowing them to flourish is a central part of our long-term economic plan for Britain. Businesses want a simpler tax system.

This is why at the 2015 Spending Review the government announced it would invest £1.3bn to transform HMRC into one of the most digitally advanced tax administrations in the world. We want to create something that is more effective, more efficient and easier for taxpayers.

OK then, but why (in the impact assessment chapter, on page 60) do we identify administrative burden savings for business of somewhere between £85m and £250m globally as against a saving to the exchequer (page 67) of £945 million – plus an uncosted benefit to HMRC from “significant operational changes”, including the orwellian “enhanced risk rules which will build in upstream compliance through nudges, prompts and personalised messaging for businesses” (page 71)

My problem is I think there’s probably a good idea in there somewhere, but HMRC have lost their mojo as far as communications are concerned.  They can talk to “stakeholder groups” all they like but they aren’t reaching the rest of us – and it’s human nature that commentators *cough* who aren’t on the “stakeholder” lists are going to be a bit pissed off that they had to find out about the condocs from twitter or from the Daily Telegraph.  My sole (thus far) academic paper is entitled “Tax Prats and Citizen Stakeholders” and “argues that othering non-professionals as ‘tax prats’ should cease in favour of inclusion of ‘citizen stakeholders’.”  In other words, we are all stakeholders in our country’s tax system and the conversation about a change as sweeping as this one shouldn’t take place only between professionals, whether they be professional tax practitioners or professional commentators.

What would I have done differently?

Well look at online tax returns.  In 2015 85% of us, over ten million people, filed tax returns online.  In 2002 it was seventy five thousand.  Why the change?  Because it’s easier, there’s no compulsion, and because there are benefits for both sides (you can do it later, and it works out how much you need to pay).

I’d have built an app and put it out onto the app stores and let people see for themselves whether it was better.  I’d have had a Hector the Inspector avatar walk you through what to click to get it to work and hired Ewan McGregor to do his Alec Guiness lite voice over.

I’d have made it simple as a game and made it work with all the most common accounting packages.  I’d have made it like a fitness app or a calorie counting app, where you can get the data from elsewhere (a fitbit or a barcode on your shopping, or in this case a bookkeeping app) or you can enter the data yourself… and then press a button to close it off/agree it’s correct.  I wouldn’t have linked it to the HMRC systems but I’d have had it tell users that “if your results for this quarter were repeated for the rest of the year you would need to pay [x amount] of tax and NIC”… and then I’d have worked out a way to make final result (“if you’re happy with the figures, click here…”) flow to the HMRC system, even if that bit had to wait a year or two.  I’d have spent half a million developing a clever, cute little app that did at least some of what the MTD project is supposed to do and put it out there free of charge for people to try if they felt like it, use if they wanted to.  And THEN we could have had a meaningful conversation about how to get people to use it, without arguing about whether we’re talking about four tax returns a year, compulsory photographing of receipts and using the system as a “cash cow”.  If you build it, they will come.

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Holiday reading?

July 20, 2016

If I’m reading the Parliament website correctly (and always assuming nothing has changed with the change of Prime Minister), then Parliament “rises” – goes on holiday – tomorrow, 21st July.  They will be off for the summer, coming back briefly for ten days in September before the party conferences, until term starts properly again on 10th October.   (And even then the poor dears will need a break for a week in November – what DO they do all day! – to see them through to Christmas.)

It really makes you wonder about the 65 open consultations listed on the gov.uk website today, doesn’t it?  Are people really going to give up some of their time to give their views on, say, the future of the inter-city West Coast rail franchise (closes 8th August) or the Personal Independence Payment (PIP) assessment: second independent review call for evidence (closes 16th September) when the Minister who signed off on the actual consultation may not be in place when the results are in, and in any event policy priorities are likely to have changed?

HMRC has six open consultations: each of them opened on 26th May and each has a closing date in August (and, great flying spaghetti monster, after all this time and a positive recommendation from the House of Lords Merits Committee why can gov.uk STILL not manage to let you list consultations in order of closure date???)

HMRC also has a new minister: Jane Ellison MP, the new FST.   Maybe the most useful thing she could do on her last day before the recess might be to have a quick look at the six consultations, check whether they still align with the new priorities she’s (presumably) going to be setting for the department, and decide whether they need to go ahead.  It’s my guess that a notice on the website (plus an email to “stakeholders” and other “usual suspects” who might be working on responses to the consultations) to the effect that they’ve been put on hold: take the summer off and come back in September… might be quite welcome.  What do we think?

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Industrial strategy

July 18, 2016

The new mission statement for the Department of Business, Energy and Industrial Strategy is interesting (read it here).  I’m particularly thinking about the first article:

developing and delivering a comprehensive industrial strategy and leading the government’s relationship with business

which is really two different things but they’re closely related enough that I can see why they put them together.

The new Minister, Greg Clark, has a statement on the website which basically could be translated as “squee!” which is all you would expect in your first day on the job.  However there are a couple of ways that a newly-energised BIS (oh all right, BEIS) could usefully interact with the tax and benefit system.

“Leading the government’s relationship with business”?  Maybe some bilateral talks with HMRC about their relationship with businesses, perhaps aiming to rebalance the energy which goes into large and small businesses.  What do I mean?  Large businesses get a customer relationship manager, they get to have “non-statutory business clearance” discussions (but never “sweetheart deals“): small businesses get self-service on a website.  What could they do in practice?  Are there any “quick wins”?

Well, maybe it’s time for an external look at the Administrative Burdens Advisory Board which is supposed to give HMRC an objective stakeholder view of the burdens they place on small business.  While they did sterling work back in the days of the Labour government, when HMRC had a series of “new relationship” papers at successive Budgets, setting out the work they were doing to cut the measurable admin burden by 10%… now?  Maybe the membership needs a refresh, the remit needs a wash and brush up… The telling thing for me was that ABAB – the small business champions – and the EU VAT Action Group – the quintessential small and micro business group – had never heard of each other when I posted the ABAB survey on the EU group Facebook page.

Secondly, as you will know if you have been a regular reader of this blog, my major bugbear with the HMRC relationship with taxpayers is the “stakeholder” model, which seems to me to resemble the pre-revolutionary France “estates” model.  It’s possible to make your voice heard in HMRC and the Treasury, but your voice will be listened to a lot harder if you’re a member of a big city legal firm, a major accountancy firm or body, or a trade association.  It doesn’t have to be that way: it would be perfectly possible for HMRC to get views and opinions from small businesses, but it takes time and money and effort: it takes going outside of London and outside of business hours and outside of the civil service comfort zone.  It takes explaining the issues in plain English to people who aren’t going to fall over themselves with delight at the thought of talking about tax but who are going to be interested when you let them know how it connects with them and their lives – and who are going to be bloody furious if they only get to read half-informed journalism instead.

So those are my suggestions for the new Department’s “we lead on relationships with businesses” chat with HMRC: have a look at the allocation of resource between small and large business, and at the “stakeholder” concept.  But by the rule of three, this sort of article ought to h ave three ideas, right?  Well here’s a Modest Proposal for the “industrial strategy” part of the remit.

Why don’t unemployed British people take jobs fruit picking?  Why do farmers complain that they only take on foreign fruit pickers because British people won’t take the work?

This is a question only asked by people who have never been unemployed (or at least not in the modern “austerity” age of unemployment).  If you are on JSA  or Universal Credit you’re in a binary system: either you have a job or you don’t.  Who would take the risk of taking on two weeks’ work picking fruit at minimum wage if they are then going to have to re-start their application for benefits from scratch, including waiting six weeks to get anything at all…

If you had a basic income (give everyone ten grand a year instead of a tax allowance or benefits, and tax them at a moderate rate on anything over that) then your fruit picker would be two weeks better off from their two weeks work.  And you could go back to having useful offices called Labour Exchanges, whose job was actually to find you a job…

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Theatre of cruelty

July 6, 2016

I apologise for the hiatus on this blog, but honestly the world has become too bizarre to be encompassed by bloggery.  I shall return when reality reasserts itself, or when I get used to the new paradigm of chaos.  If there are any upcoming consultations you’d like me to eviscerate, feel free to ping me in comments and I’ll take a look.

In the meantime, in the immortal words of Bill and Ted, be excellent to each other.

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Quick update

June 1, 2016

Just a quick update to say that I have now received an acknowledgement of my response to the Land Registry consultation.  Nothing so far from the BIS consultation coordinator about why there were two different consultation email addresses on the website and what assurance there is that all our responses were received.

If you responded, I strongly suggest you check: did you get an acknowledgement?  Even if you didn’t explicitly ask for one, re-send your email to lr.consultation@ukgi.gov.uk with a copy to the BIS consultation coordinator angela.rabess@bis.gsi.gov.uk and make sure.

If you responded and did get an acknowledgement, please let me know in the comments below – and which address did you send it to?

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Land registry: and another thing

May 27, 2016

The Land Registry privatisation consultation closed last night at quarter to midnight.  So I had a quick look yesterday evening to see if I’d had the acknowledgement which I’d asked for by ticking the relevant box on the response form and explicitly in the covering email.  I hadn’t.

On the principle of “it’s probably me”, I had a quick look to make sure I’d sent it to the right email address…

…and I found a curious thing.

If you look at the covering page for the consultation on gov.uk you will see you were directed to send your responses to lr.consultation@ukgi.gov.uk

(The page has now been changed to show the consultation as closed, and, dammit, I didn’t think to take a screenprint.)

But the consultation document itself gives the response address as lr.consultation@ukgi.gsi.gov.uk.  Party, brewery anyone?  I tweeted about it before the deadline (just!)  I also wrote to the consultation coordinator at BIS (named in the condoc) last night and asked for assurance that both email addresses are live and that everyone who responded will have their responses considered – watch this space.

The addresses are interesting, though.  I did wonder about the “ukgi” element, thinking perhaps that the civil service had moved to a new provider and that instead of “gsi” the format would now be “ukgi” – but that didn’t make sense when you had an address which had both “ukgi” AND “gsi” in it.  The usual format of civil service email addresses is firstname.surname@dept.gsi.gov.uk

…and so I looked again at the condoc.  Which says it is produced by BIS, the Department for Business Innovation and Skills, on the face of the document.  But on the consultation website, it’s listed as a production

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Digitalis

May 25, 2016

I don’t want to say much about the NAO report on HMRC’s customer service, out today, except to note this:

As a consequence, though HMRC continued to live within its agreed budget, the quality of its service to taxpayers collapsed in 2014-15 and the first half of 2015-16. In hindsight, this was a mistake, and not value for money.
In other words, it prioritised “saving” money over customer service.  Because “taxpayers” are citizens with rights, but “customers” are economic units who can be ignored if they’re not profitable.

When compared to HMRC’s data on the annual cost of answering calls, the NAO estimates that the increased cost to customers was £4 for every £1 saved by HMRC over this period. (NAO)

In other words, there was – the NAO found – a direct correlation between HMRC’s “savings” and the administrative burden placed on taxpayers.

HMRC came back gamely this morning with the usual line about this all being in the past and everything today is rosy and bright…

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The problem is, that as we go forward into the Brave New Digital World, we don’t really believe them.  There is evidence that they prioritised cuts over service in the past.  There are firm plans to cut staff further and relocate them where pesky customers can’t get to them for the future.  Why should we believe that the “best customer service performance in years” won’t dive back down to rubbish in the next few months and years?  As Richard Murphy suggests:

Stop the office closures.

Stop the redundancies.

Make digital services optional.

Provide the support people need.

Make paying tax possible.

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