Judicial Review, anyone?

April 30, 2012

Anyone fancy a bit of light Judicial Review?  I’m not seriously suggesting anyone will want to apply for a judicial review of the Gift Aid Small Donations Scheme consultation (not least because the interested parties – charities – are likely to receive more money than otherwise from its introduction) but I think they could if they wanted to.  Why, do I hear you ask? Because I don’t think it fulfils the legitimate expectation of including what the government has said will be contained in a consultation.

I retired from HMRC at the end of March and my last job title was Impact Assessment Coordinator, so what leaps out to me from this consultation is, well, the impact assessment.  Let me explain.

If the government

  • does something regulatory
  • which affects businesses or charities
  • then they are committed to doing an impact assessment
  • which contains the costs and benefits of the change.
  • Unless it’s a tax measure, in which case the impact assessment is in the Tax Impact Assessment


Let’s have a look at the Gift Aid Small Donations Scheme consultation.

First: is it regulatory? The definition of regulation (no, seriously) is on page 19 here and includes:

 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

Since this is about the rules under which charities would be eligible for this gift aid funding then, yes, it falls within the “regulatory” definition.

Second: does it affect charities – er, yes.

Third: is there an impact assessment….

well that’s where it starts to get interesting.  There’s a chapter in the consultation document which is headed “impact assessment” (Chapter 6 on page 27) but when you turn to it, it’s obviously not an Impact Assessment.  Normal Impact Assessments (“IAs”) are set out on a form (you can find it here if you really want).  No, this looks a lot like a TIIN, a Tax Information and Impact Note, like these ones here.

Except, well, there are lots and lots of rules about what has to go in an IA and what it will look like.  And the government hasn’t published any of the standards it will apply to the Tax Impact Assessment process… except that when he introduced the process, David Gauke said “This new tailored tax impact assessment process will be used throughout the development of tax and NICs policy and will be summarised in tax information and impact notes”

So, yes, in my view there’s a legitimate expectation that there will be a tax impact assessment with a formal tax consultation document like this, and this one doesn’t qualify because it doesn’t give the basic data you need in any kind of IA – what are the costs, benefits and other impacts and unintended consequences of the proposal.

I’ll be responding to the consultation itself over the next few days, but in the meantime here’s what I sent the HMRC consultation coordinator about the format of the consultation.  Again, feel free to adapt and use if you want to respond yourselves.

Dear Amy

I am writing to you about the Gift Aid Small Donations Scheme consultation to say that I think this consultation may be defective in that it doesn’t include an adequate impact assessment.  This is an individual’s response and is also posted online (with commentary) at http://tiintax.com/.

You will know that the government’s Code of Practice on consultations says that “Estimates of the costs and benefits of the policy options under consideration should normally form an integral part of consultation exercises, setting out the Government’s current understanding of these costs and benefits.” and that the Tax Consultation Framework additionally promises that, at each stage of the consultation, government will set out “its current assessment of the impacts of the proposed change and seek to engage with interested parties on this analysis.”

I see that the consultation document has a chapter headed “Impact Assessment” but it merely sets out the description of the proposal, using the headings

  • Who is likely to be affected?
  • General description of the measure
  • What are the policy objectives and the intended effects?
  • Background to the measure
  • Detailed proposal
  • Operative date

These are, of course, the scene-setting elements of a TIIN, explaining what the proposal that is being considered IS – but the impact assessment chapter omits the elements of a TIIN which are designed to show what the IMPACTS of the action will be:

  • Exchequer impact
  • Economic impact
  • Impact on individuals and households
  • Equalities impacts
  • Impact on businesses and the third sector
  • Impact on the public sector
  • Other impacts
  • Monitoring and evaluation

I cannot see that a proper consideration of the proposal can be undertaken without some understanding of how much money is being talked about, what will be the likely administrative cost to charities of claiming it, what will be the cost to HMRC of administering the scheme and, of course, a consideration of the statutory equalities impacts and of any unintended consequences.  It seems to me that the consultation is defective because it does not contain these necessary estimates – surely these are exactly the issues on which the department should be engaging with the charities sector to understand the possible impacts?

You will see that I suggest in my blog that the consultation would be vulnerable to judicial review and I would suggest that, as consultation coordinator, you might want to bring this to the attention of your policy colleagues and ask them to extend the consultation deadline and publish a supplementary chapter containing the information that the government has promised to include with its consultations, ie its best estimates of the costs, benefits and other impacts.

Kind regards

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