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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