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The kitchen table micro

October 10, 2017

I don’t get it.

I’m a micro business, so this tweet from HMRC is directed at me, right?

What definition of “micro” business are HMRC using these days? I mean, it used to be that a “small” business was one with 50 employees or fewer and a “micro” was one with fewer than 10 employees. This seems to be the definition used in this Parliamentary briefing from last year, which tells us that, of the five and a half million businesses in the UK, fully four million are micro businesses like mine, which have no employees at all

 

Why, then, is the HMRC twitter feed telling those four million people that they need to check whether FRS105 applies to them? What the hell IS FRS105?

As far as I can tell from following the links, it’s a change to the generally accepted accounting practice (GAAP) used to prepare accounts. If you look here, you’ll see HMRC helpfully tell you

Because of the changes to the UK Financial Reporting Standards (FRS), over the next few years UK businesses will see changes to the accounting practice used to prepare financial statements. In particular, many UK businesses will be required to apply one of the EU-endorsed IFRS, FRS 101, FRS 102 or FRS 105.

The purpose of these 3 papers is to assist businesses that will be applying FRS 101, FRS 102 or FRS 105. In particular, it provides an overview of the key accounting changes and the key tax considerations that arise for those businesses that transition from old UK GAAP to the new standards.

Clear? Well maybe, if you’re an accountant, but to this retired tax inspector it conveys almost no meaning, and to the couple who run my local coffee shop and the woman who runs the local chiropodist? Nothing except another thing to ask their accountant about, if they remember.

Why are HMRC pointing “micro” businesses to changes in accounting standard? It has taken me the best part of an afternoon to work out that, no, I don’t need to worry about it personally. Isn’t there a principle of “think small first” that is supposed to exclude the very smallest businesses from tax changes altogether where possible? Surely this ought to apply to communications too? This is not a change that a business with no employees and uncomplicated affairs needs to be concerned with at all, in my view. A business with an accountant? Well, their accountant ought to be up to date, but saying “If you use an accountant to prepare your accounts, make sure they are up to date with the changes to accounting standards here” would be an insult to the accountancy profession and its maintenance of its own professional standards.

Has HMRC learned nothing from the VATMOSS fiasco at all, where a group of micro businesses – kitchen table businesses – were all but wiped out by changes that weren’t intended to apply to them and which weren’t mitigated because HMRC had no idea these micro – nano? – kitchen table? – businesses even existed. Wouldn’t it be nice in this instance if HMRC had written an introduction to the changes which made it clear most unagented businesses don’t need to be worried, and then tested it out on a group of genuinely micro businesses? And then stopped mithering people on its twitter feed about something they will, with luck, never need to be concerned with at all?

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Pensions again

September 28, 2017

Goodness me but people feel strongly about pensions! I’m one of the WASPI women (by which I mean I’m one of the women to have my pension age raised – twice – and not that I’m anything to do with the actual WASPI campaign) and I’m professionally interested in the intersection between tax, benefits and pensions. In my other life I’m also a science fiction fan, interested in how the world will be organised in the future, and as a result I’m interested in the campaign for a Basic Income

So let’s unpack this a little.

First of all, I’m in favour of pension equality: men and women should be eligible for their pensions at the same age. I’ve believed that all my life but – as a feminist all my life – it’s been one of those rare things where men and not women were disadvantaged, and frankly it wasn’t high on my list of issues. But I had always expected that one day the pension age would be equalised – but great flying spaghetti monster, I’d always expected the result would be that men retired at 60, not that women retired at 65! So, although the WASPI campaign isn’t asking for the retirement age to be restored to 60, I bloody well am.

Sixty? Well of course! Over the next twenty years don’t you think your job is going to disappear? Whether or not you believe in the singularity, the machines are coming, coming for your job, whether it’s manual, clerical, professional, technical. We are just plain going to need fewer people.

So unless you want some kind of Kingsman-style solution, where we kill off nine-tenths of the population, what are the rest of us to do?

Everything! As Philip Larkin commented, “Why should I let the toad work squat on my life?” Do we live to work, or work to live? What happens if you free up the human population from the requirement to spend thirty-seven hours a week doing something they almost certainly hate?

I see two categories of possibility. In one, we have a few millionaires and billionaires in gated enclosures and private islands, serviced by a few paid bodyguards and other servants, and a mass of the populace reduced to eating the rats or each other, or to some sort of feudal serfdom. The dystopian future.

In the other, we go, no, actually I’m not willing to sit next to someone who’s starving to death while I’m getting fat. We give everyone some kind of basic income that’s sufficient to stop them starving to death and the rest is up to them. The utopian future.

Before you heap scorn on the utopian future, just think about it for a moment. Pensioners are already there, and what do they do? They have enough money to live, but does that mean they just sit drooling in front of Bargain Hunt and Countdown all day? Some do, sure: but some look after their grandkids and their own aged parents, some volunteer in hospitals and schools, some have jobs, run businesses, write books, paint pictures, learn a musical instrument, take tai chi classes…

What if we gave everybody a pension? You don’t have to sign on if you’re unemployed, because you won’t starve. You don’t have to work in order to eat and have a roof over your head, but you do if you want to go on holiday or buy a new coat. Let’s give everyone ten grand a year, and pay for it by abolishing the tax free allowance and taxing everything everyone earns.

Slight detour here on the subject of “paying for it“. When the post-war Attlee government introduced the welfare state, when the NHS was introduced in 1948, when we have a war to fight or a bunch of banks to save before the cash machines get switched off… how do we “pay for it” then? A government’s budget isn’t like a household budget. The National Debt isn’t like a credit card debt. Maybe we can’t give everyone a million quid and a pony without ending up with hyper-inflation that makes the million quid worth less than the price of a cuppa. But there are respectable economists who know a lot more about this stuff than I do who think it would be perfectly reasonable for governments to print a bit more money, and that public spending doesn’t drive out private spending but … fertilise it. If we should do it then we should do it, and the paying for it bit we’ll worry about later.

Apparently the people who study Basic Income as a serious policy option worry about the cadasterability of the proposal – how do you identify the people who are entitled to the income, how do you make sure they are citizens of, or residents in, the state paying the income, how do you make sure they aren’t claiming it twice?

Here’s an idea. Start with the pensions. Year one, reduce the pension age to 60 for everyone, and pay it to those people whose NI contribution record supports it. Year two, reduce the pension age to 58. Keep doing that till you get to zero (of course you’d pay it to children, although you’d also make it a criminal offence not to spend it on the children, and the children or a lawyer acting on their behalf could sue parents or guardians)

But let’s leave aside the utopian future and think about the WASPI campaign right now, and about the objection that there’s no point in paying pensions or compensation to everyone affected and any transitional payments should be means tested.

Just, no. Means testing is inefficient, expensive, and produces a second class, second rate outcome. It misses people who can’t deal with applying for it, and it puts stress on everyone who has to go cap in metaphorical hand for something that ought to be a right.  It’s a lady bountiful solution – “I don’t need it, but here, fill this form in, little person, and I’ll see if you qualify.”

Just give it everyone. And then get it back from the people who don’t need it, via the tax system.

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Back to school

September 27, 2017

…and then suddenly you look around and see that you haven’t posted for a month, because – overwhelmed by the futility of it all – you realised that there wasn’t anything to say.  And yet, and yet…

There was a point where there were no open consultations from HMRC at all.  For perfectly sensible reasons (change of Budget date, the enormous administrative changes going on in HMRC and, of course, the reduction in flow of legislation from clearing the decks for Brexit) but still a bit concerning.  Maybe no public consultations, but were there still those cozy chats with “stakeholders”? (Was there an “annual stakeholder conference” at all this year?  Or has it happened and been kept wery, wery quiet?)

But normal service has resumed.  We are back to consultations: four of them, in fact, if we are to believe the gov.uk consultations page, sorted for “open consultations” from HMRC…

 

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So gov.uk’s “consultation” page manages to list consultations like, oh, the Forestry Commission’s plans to change public access to open access land at Harwood Village in Northumberland, (See here) but not “eight policy papers” from HMRC?

Sigh.  What was I saying about the futility of existence?

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Summertime blues

August 23, 2017

It’s August, Parliament is not in session, Big Ben’s bongs are silent: yet there are still 62 open consultations listed on gov.uk.  Less is more, guys, please!  (At least, in the sense that we want less legislative activity and more administrative competence from our government, not that we want fewer consultations on what legislation they DO introduce, of course.)

However there are currently zero, count them, zero consultations listed from HMRC. Hurrah!  and, is this unprecedented?  Enquiring minds want to know!  The sole HMT consultation is on developing the supply of capital for “innovative firms” (Bank of Dave, anyone???)

However – should you still be sitting in an office somewhere idly reading blog entries and pretending it’s work – there is another way you can contribute to the government’s developing policy and administrative agenda: yes, you too can Help Make Gov.uk Better by joining the panel of service users contributing to their research.

Yes, I’ve joined.

No, they still haven’t found a way of listing consultations in the order in which they close.  Sigh.

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The Navy Lark

July 20, 2017

All quiet on the consultation front. Which is as you would expect, really, because this is not a government embarking on a frenzy of domestic legislation on which it needs to consult, but holding its fire ready for the transposition and/or abolition of EU law after Brexit.

Except…

…well, there are still more than 40 open consultations listed on gov.uk. There are equality and other impact assessments around the HS2 proposals, open access restrictions proposed on different Nature England sites, odds and ends of changes to the way statistics are compiled and…

This. Proposed cessation of the Ministry of Defence’s military aid to civil authorities I wondered what it might be about.  Surely the MoD weren’t going to stop helping out in times of disaster; fear, fire, foe, flood?

No. It’s an odd thing. It seems to be a proposal to stop telling us about something we’re not much interested in, but not to stop doing the thing itself.

This is an annual publication that provides information on the number of vessels boarded by the Royal Navy Fishery Protection Squadron (RN FPS) within British fishery limits, and the number of court convictions and financial administration penalties (FAPs) issued as a result of the boardings.

We are proposing to cease production of this publication

The consultation closes on 14th August and it’s only a one page document and I honestly recommend you read it in full, because, well, I just don’t get it. Under “reasons for the proposed change” it says

The number of vessels boarded by the RN FPS has fallen from 1335 in 2006/07 to 460 in 2015/16, a decrease of 66% over the decade. The number of convictions and administrative penalties has fallen from 53 in 2006/07 to 4 in 2015/16, a decrease of 92% over the decade.

The number of web-hits for the publication page has fallen from 535 in 2015/16 to 343 in 2016/17, a decrease of 36%.

Something that is happening less and less, and being enquired about less and less, so we can stop publishing stats about it? Well OK then but I still have questions. First of all, presumably people will still be able to make a request for the figures under the Freedom of Information Act (or by asking their MP to ask a Parliamentary Question). Does’t it cost more to respond on request than it would cost to carry on chucking the figures routinely onto a website?  Seriously?
Secondly, does it cost money to collect the figures in the first place? Is there some process (“Damn it Caruthers, we may have caught the blighters but there’s still a thirty-six page form to fill in explaining how we did it”?) involved in compiling the figures in the first place that’s going to be stopped?
And finally… well, Brexit, I suppose. Isn’t policing the UK’s fisheries going to be a higher priority for the RN after Brexit, and wouldn’t you therefore expect these stats themselves, as well as interest in them, to go up substantially in the next few years? Remember the Cod Wars? The timing of this seems weird to me.
But, hey, what do I know? I’m neither a fisheries nor a naval expert and maybe this all makes sense to the people who know about it. Wouldn’t you think, though, that before you issued a consultation document you might have read it and maybe wondered whether you’d included sufficient detail for other people to understand where you’re coming from? Particularly if you’re going to say “As long as there is no objection during the consultation period, the cessation of the report will proceed as planned and the June 2017 bulletin will be the final annual report produced.” No objection? None? Anyone?
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Good news, bad news?

July 14, 2017

Great news yesterday, with the announcement that Making Tax Digital has been postponed and that only businesses with a turnover over the VAT threshold will have to keep digital records until, well, this government has either gone or has consolidated itself enough to be able to get the legislation through.

This is the best of all possible worlds – or at least it is at first sight.  Because of course HMRC needs to have a modern computer system that isn’t held together with string, prayer and for all I know a couple of  floppy disks.  Of course we should be able to log on and see our tax returns already pre-populated with the information HMRC already knows about us, the stuff from our P60s and bank interest and what have you.  MTD is a customer service imperative.

The problem is that the Treasury won’t pay for that kind of thing: it had to be pitched as a project that would pay for itself, and that’s when you get into the ridiculousness of trying to make teeny tiny businesses that keep perfectly adequate paper records move online or perish, in the absurd belief they’ve all got seventeen grand or so stuffed down the back of the sofa.

So keep the good stuff, the modernisation of the online interface, and ditch the bad, the mandation/penalty routine?

I wish.  The HMRC annual report and accounts for 2016/17 came out yesterday.  I know it’s a couple of hundred pages so I can’t pretend to have done more than skimmed it so far, but for me the key question is this:

do they still get the money?

Does HMRC still get the funding to upgrade its computers to MTD and to do the necessary work on pre-population without the spurious promise of resultant tax gap closure?  I can’t tell from the accounts.  Did they get MTD funds in 16/17 and will they get the rest in 17/18 and beyond.  I can’t tell.

Anyone?

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The magic money tree!

June 13, 2017

I’ve found it!  You know, the famous Magic Money Tree that Theresa May was saying didn’t exist?  Well hurrah, the Times is reporting this morning that apparently she has found it; there’s to be no more austerity because £2.2 billion from #MTD (along with £4 billion on “corporation tax relief” and £1.4 billion from “scrapping permanent non-domicile status”) will sort it.  Hurrah!

Except…

…as I wrote in this article for accounting web, I’m not sure there’s really £2.2 billion down the back of small businesses’ sofas.

…and as I wrote in this blog post, I’m not at all convinced there’s a correlation between “austerity” and tax receipts in the first place.