tiintax

So I had another look at the 29th June iteration of the tax tracker and noticed this:

Heritage maintenance funds

Consultation on easing a restriction for trusts that are heritage maintenance funds and which have deferred, or may defer, capital gains tax charges arising from the resettlement of assets from one to another.

Informal

May

So it’s an informal consultation… which means there’s no formal consultation document for us to read.

What’s it all about, then?

In the 2012 Budget document it was announced that

2.76 Heritage Maintenance Funds (HMFs) – Applying with effect from April 2012, the Government will legislate to ease a restriction for trusts that are HMFs and which have deferred CGT charges arising from the re-settlement of assets from one HMF to another. (Finance Bill 2013)

OK let’s break that down.  Whatever it is will apply from April 2012 – ie it’s already in effect, whatever it is.  But it won’t be in the Finance Bill till 2013.  So far so good: a technical change can be done like that – announce it now, and legislate it later – because the few people to whom it will apply will know about it from the technical press and there’s maybe a long lead-in time for a transaction.

But what *is* the change, and who are they consulting about it?

Well I strongly suspect we can get the answer from Google: if you put in “Heritage Maintenance Fund” as your search term, the first entry you get is a link to the HMRC Instruction Manual at TSEM5800 telling you that a heritage maintenance fund is a fund set up to maintain a historic building, and that if HMRC staff come across them they shouldn’t worry their pretty little heads about them but pass them on to a specialist unit in Nottingham. (I paraphrase).

The second entry, however, is a link to the Historic Houses Association page where the HHA helpfully explain that they want these funds (which are intended to build up the money to maintain historic houses and which are therefore exempt from Inheritance Tax) to have special treatment for income tax and capital gains tax as well.  They have a lobbying paper which sets out their stall, and where they argue amongst other things “the public benefits of privately owned heritage” – to which the only answer is, surely, “well they would, wouldn’t they?”

I have no beef with historic houses or the HHA but I read between the lines that the Historic Houses Association have lobbied for changes and have succeeded in getting, not all that they wanted, but at least one small concession.

Which begs the question, with whom is HMRC and/or HMT currently informally consulting?

It’s not just a point for the policy wonks amongst us.  Essentially the government is telling all of us not to worry our pretty little heads about it.  The point of an informal consultation is to talk to the people who will be affected by a decision to make sure the legislation works in the way it was intended to work.  In effect, the government says “I’ve decided to give the Widget Industry a tax break on oak widgets but not on mahogany ones” and then talks to widget industry representatives about whether this will distort the market or have any unintended consequences for the beech-, tin- and plastic-widget makers.

What an informal consultation doesn’t do, however, is let in any light on the wider question for the citizen.

There’s no Impact Assessment with an informal consultation.  So there’s no indication of how much it will cost to give the Heritage Maintenance Funds some but not all of what the Historic Houses Association might want, and no indication of the benefits that might accrue.  A TIIN will no doubt be published in due course with the actual legislation – but, isn’t that a bit late, for legislation that won’t even be published till next year, but which is already in force?

But let’s not worry our pretty little heads about it.  I’m sure Nottingham Trusts Office and the Historic Houses Association between them have it covered.  So that’s all right, then.

There’s an easy way to satisfy the citizen that the lobbyists haven’t taken over making tax legislation.   In the written ministerial statement that introduced the TIIN for tax changes, David Gauke said:

From Budget 2011 onwards, the Government will publish a tax information and impact note for tax policy changes at the point at which the policy design is final or near final.

So, er, if legislation is going to be backdated to last April, doesn’t that mean the “policy design” is already final?

How about it, Minister?