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Unit trusts and the citizen stakeholder

August 22, 2012

I posted yesterday my response to the consultation on the tax treatment of unauthorised unit trusts.  These aren’t the kind that are sold to the likes of you and me: they’re not regulated by the Financial Services Authority.  They’re investment envelopes used by institutional investors.

HMRC didn’t seem to be clear why people would use unauthorised unit trusts in the first place and sought to understand the legitimate uses of them as an investment vehicle to distinguish that from their uses in avoidance, and whether the introduction of a new kind of investment,  Tax Transparent Funds, would make the whole process moot.

The respondents to the first consultation – 14 of them – are listed in the Annex to the latest consultation.  Basically they are a list of the “usual suspects” with only perhaps the Law Society  having any wider community stakeholder interest and that’s only because I’m not a legal specialist so I’m a bit numb and vague about what, precisely, the Law Society’s function in this kind of transaction is.

That’s beside the point.  My point is, nobody not already a tax specialist was asked, involved, or expected to have an opinion.

That’s not necessarily a bad thing at this stage of the process; this was a second consultation, to settle the technical details of a piece of legislative change, when the principles of whether there was any need for a change at all and, if so, how it ought to be framed, was supposed to have been covered in the first stage.

One fundamental change the coalition was supposed to have made was to the making of tax legislation.  In the landmark Tax Policy Making: A New Approach we were supposed to have moved to a more considered, strategic method of making changes.  Policy ideas would be tested, options explored, and only then would the preferred option be looked at from a technical viewpoint by the experts in the field, so that the final legislation that went before Parliament was as good as could be achieved.

You know, there’s a missing section in there.  It’s all very well having an Office of Tax Simplification but look at their biographies.  I have written before about the failure to carry out the Small Firms Impact Test to look at the possible impact of legislation on micro businesses.  So even though the government is committed to talking to small businesses, it doesn’t exactly cover itself in glory in putting that into practice.  But look at the process from the point of view of its owner, the ordinary taxpayer.  There isn’t even a commitment to ask Joe and Josephine Public what we think are the priorities for tax and tax simplification.

Citizen stakeholder, to the barricades!  Well, all right, to twitter at least…

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