Archive for September, 2012

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Catching up

September 27, 2012

I’m not sure whether to be cheered or depressed at the fact that my reader stats have remained about the same, in a week when I haven’t been posting (on account of it being the first week of my PhD studies, of which more later).  Anyway…

I see that there was a consultation which closed last week on the HMRC ambition to “clarify” their extra-statutory concession A19.  Now this gives me problems on several levels.  First of all, the completist in me goes “hang on, I thought the aim of this blog was to reply to ALL of HMRC’s consultations this year?”  I know there have been a couple lately where my response has been along the lines of ‘I’m not going to respond to this one because it’s too stupid…’, but the A19 one I didn’t see.  At all.  I mean, I can see it now, on the page for lapsed consultations but where was it on the tax tracker???  Did I miss it, or was it never there?  I mean, if (as it says on the “lapsed consultations” page) it opened on 3 July, why isn’t it on the tracker page under July?  Oh, and while we’re on the subject, the DirectGov page for “all” government consultation websites lists an HMRC site and an HMT site, but NOT the tax tracker site!  No wonder people – well all right, no wonder I, at least – get confused!

Don’t worry, though – next month the DirectGov page will be overtaken by the Gov.uk site… which is in beta testing now.  Here’s what I sent them by way of feedback today…

I seem to remember that at one point there was an aspiration to have all government consultations available from one webpage. At least direct.gov has a link to all government *consultation* pages on one page – well, except the tax tracker! – but the beta version of gov.uk doesn’t return any hits for consultation that seem relevant. Is the aspiration still in existence, and will it be met by gov.uk?

The automated response says they’ll, er, contact me if something changes!

So let’s have a look at A19.  Well, to start with, why on earth are we having a consultation about “clarifying” the wording of an extra-statutory concession?  An extra-statutory concession is where HMRC uses its powers to administer tax to achieve a sensible answer where the strict application of the law throws up something hard-edged and unpalatable – so for example there are rules that say if companies are controlled by the same people they only get one small companies rate.  You can’t split up your billion pound business into a thousand little companies and say they’re all entitled to small companies rate.  And for a married couple you add together all of their companies.  But there’s an extra statutory concession that lets you off the strict application of this, so that if a plumber marries a hairdresser their companies don’t necessarily get aggregated (but if a plumber marries the owner of her biggest supplier, a plumbing supplies company owner, well, tough)

Now I admit I thought that all of the extra statutory concessions were being reviewed with a view to either legislating or abolishing them, but I see that the latest technical note I can find on this (2010) says:

The House of Lords’ decision in the Wilkinson {note} case clarified the scope of HM Revenue & Customs’ (HMRC) administrative discretion to make concessions that depart from the strict statutory position. HMRC is therefore reviewing its concessions. Although it is likely that the majority can remain as they are, some are thought to be beyond the scope of HMRC’s discretion. Of these, some can be legislated to preserve their effect; others will need to be withdrawn. {Note :R v HM Commissioners of Inland Revenue ex p Wilkinson [2005] UKHL 30}

Nevertheless, the point remains – if we’re talking about an extra-statutory concession, shouldn’t our first thought be whether we need to have the concession at all?  But no:

The consultation is designed to explore the option for a revised version of Extra-statutory Concession (ESC) A19. It is not intended to cover whether ESC A19 should exist or the scope of concessions, but rather how HMRC may be able to improve the clarity of this particular concession ensuring it continues to be applied appropriately.

Ok… define “clarity” and “appropriately” in that last sentence, please!

Essentially the concession says that, where HMRC has messed up by not making use of information that taxpayers or their employers have sent to them, then HMRC won’t pursue them for tax they didn’t know they owed.  Which is pretty clear, no?

Well, no.  Apparently HMRC need to define “information”… because they aren’t going to guarantee that they can be bothered to look at correspondence from employers, perhaps?  Anyway, if the concession is changed, they will only accept “information” from employers and from the DWP on specified forms or the RTI equivalent.

But from the taxpayer… the proposed definition is

1. Direct communication from a taxpayer (or someone authorised to act on their behalf) informing HMRC about a change in income, allowances, benefits or personal circumstances.

You know, I think a tweet directed at @HMRCgovuk would count as information for those purposes.  Test case, anyone?  “@HMRCgovuk I just gift-aided £1k to @somecharity, love @FBlogs”

The plain fact is the ESC exists to protect unsophisticated taxpayers from HMRC errors, and for HMRC to seek to change it by introducing the weaselly concept of “taxpayer responsibilities” is monstrous.  Look, particularly, at the last paragraph of this:

Taxpayer responsibilities

As set out in the HMRC Charter HMRC expects individuals to take responsibility for getting things right even if they have authorised someone to act on their behalf.

HMRC expects individuals to:

 Tell it about any changes in their circumstances that will affect their payments or claims.

 Check their tax code to ensure the information included is correct and up to date.

Sometimes where there has been a change in personal circumstances, it might not be clear whether it has an effect on the amount of income tax an individual has to pay. If an individual is unsure as to whether a change of circumstance affects their tax code they should contact HMRC.

Now I’m an ex-tax Inspector and I spent much of this afternoon on the phone with HMRC trying to sort out my mum’s P800 which turned her overpayment into an underpayment by means of a mystery “adjustment” which we eventually deduced was on account of her making too many gift-aided charitable donations – yes, when pensioners helpfully tick the box to help the charity get gift aid, HMRC are happy to pursue them for the last penny.  But there are always, as Donald Rumsfeld famously remarked, the “unknown unknowns”.  How would someone like my mum know that she didn’t know that she had to pay more tax before she could tick the box?

Maybe the consultation will produce a sensible outcome and the concession will remain as it is.

But if it doesn’t, maybe we should all check with HMRC before we do *anything*.  Because it seems to be our responsibility, if we’re unsure whether a change of circumstance affects their tax code, to contact HMRC…

“Hello?  HMRC?  I’ve just started a PhD.  Does that affect my tax code?”

Posted in Consultation, HMRC | Leave a Comment »

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Simples

September 21, 2012

I give up.

I mean, wouldn’t you expect an office called The Office of Tax Simplification to do just that?  To simplify tax, the tax system?

Right.  Well have a read of their framework document, which sets out what they are actually allowed to do and how they do it.  Basically it’s an independent office (but it’s set up by and in the Treasury and the Chancellor is responsible for it and for taking or not taking its advice) and it got right down to business:

An immediate task of the Office will be to decide, in conjunction with an informal group of potential Committee members, whether there should be a single Consultative Committee to steer the work of the Office or whether an individual Committee for each of the Office’s inquiries is preferable. Any Committee(s) constituted will meet regularly throughout the year or inquiry and minutes of Committee meetings will be published on the Office’s website.

Yes, Minister.

My reading of it is that the politicians thought it would be a good idea to do some work on simplifying the tax system – and they were right, for once – but they got Sir Humphreyed to death in the setting up of it.

Because it’s very clear that the Office can’t do any strategic thinking, about the whole tax system – how it works, how the bits fit together, how it might work better – and instead is bogged down in looking at little “projects” fed to it by, presumably, the Treasury.

Which is how it comes to produce something like its Review of Tax Advantaged Share Schemes and thus the consultation document  for the consultation which closed last week (18th).

I’m going to quote some bits of the consultation document.  Here’s the background.

The four schemes are:

Share Incentive Plan (SIP) – an ‘all employee’ scheme under which employees may purchase ‘partnership’ shares out of their pre-tax (gross) salary, be awarded ‘matching’ or ‘free’ shares by their employer, or reinvest dividends earned on SIP shares into ‘dividend’ shares.

Save As You Earn (SAYE) – an ‘all employee’ savings and share option scheme under which employees can save out of taxed earnings and use their savings to purchase shares at a discounted price.

Company Share Option Plan (CSOP) – a scheme under which selected employees may be awarded options to purchase shares.

Enterprise Management Incentives (EMI) – a scheme targeted on small and medium sized businesses carrying out certain trades, under which selected employees may be awarded share options.

Separate rules and requirements, limits, and qualifying conditions apply for each scheme. (my emphasis)

Four schemes, each with their own rules, got that?  Right.

Now we have a report from the OTS making some recommendations for simplifying them.  Ok… There are three categories of change discussed in the consultation document: those which the government has accepted, where the consultation is aimed at checking how to carry them out, those where the government isn’t sure, where they want further details before they make a decision, and those where they want to do “further investigation”, the outcome of which they’ll announce in the “autumn”, with further consultation to follow if appropriate.

Got that?

Well there’s more.

There’s also “other work”…

1.11 The focus of this consultation is the recommendations made by the OTS in its report on tax advantaged employee share schemes. However, there are a number of other consultations, reviews or further work planned or currently taking place in relation to employee share schemes, or employee ownership more generally. These are:

 The second stage of the OTS’s review of employee share schemes, focusing on non tax advantaged employee share schemes and share based incentives.

 EMI measures announced at Budget 2012. These include an increase in individual EMI limits to £250,000; an extension of capital gains tax entrepreneurs’ relief to gains made on shares acquired by exercising EMI options; and development of the guidance available for start-up companies wishing to use EMI.

 An HMRC consultation on extending access to EMI for academic employees, which will run alongside this consultation on the OTS’s recommendations.

 A review by the Department for Business Innovation and Skills on promoting employee ownership in the private sector.

 An internal review by HM Treasury to examine the role of employee ownership in supporting growth and options to remove barriers, including tax barriers, to its wider take-up, which will conclude ahead of the Chancellor’s 2012 Autumn Statement.

And, you know what, that was the point at which I lost the will to live. So, no, sorry, for the third time I’m not going to respond to a consultation. In fact, for the first time, I don’t think I’m going to even finish reading the consultation.

Because, know what?  If this is simplification, then I’m a meerkat.

Posted in Consultation | 2 Comments »

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Tax is not regulation. Discuss.

September 19, 2012

All right, I admit it, I’m baffled.  Well, more than usually baffled.  I mean, I know I haven’t been in HMRC for three whole months now, but when I was last there the rules were that tax changes were excluded from the Impact Assessment process because they had their own, the Tax Information and Impact Note.

So, er, why have we published an Impact Assessment for the proposed changes to the Gift Aid scheme?  Have we decided it doesn’t count as a tax?  If it’s not a tax, is it a regulation?  Or what?

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It’s academic

September 18, 2012

Next week I’ll be starting a PhD at the Law Department of the University of Sheffield.  My current topic title is Tax Simplification and Better Regulation, and so the question of what is an academic and how we recognise and reward academics is one which I expect will be increasingly close to my heart.

So, full disclosure made, let’s now turn to the consultation on Enterprise Management Incentives: Extending Access for Academic Employees.  Woo hoo!

OK, well the government is quite clear it doesn’t want any of your faffy-abouty dissertations around the subject.

1.15 The Government is not seeking views during this consultation on broader issues, such as:

 whether there are employees other than academics for whom the present EMI working time requirement should be relaxed;

 the limits that apply to the value of EMI options that may be held by an employee or granted by a company;

 the requirement that EMI options may only be issued to employees of a qualifying company or group; or

 the features or requirements of any tax advantaged employee share scheme other than EMI.

So there! “This consultation is only concerned with the limited issue of allowing access to EMI for certain academic employees who do not currently meet the working time requirement.”

Basically what it seems to be about is a scheme to let small companies attract and retain talent by awarding shares to their employees without having to pay tax and national insurance on them.

EMI is a popular and successful scheme which each year enables around 20,000 employees to obtain options over shares with a total value of around £250 million, and provides tax advantages on exercise of these options of around £200 million.

But – to prevent the scheme being used as an avoidance device – there are rules to ensure your employee is an actual employee (and not a potential tax avoiding investor who “works” for you for half an hour a month at the minimum wage).  And these rules seem to mean that academics who do work for this kind of company sometimes come up against problems because of course their contract with their academic institution will usually mean most of their time is already spoken for.

You can see the point.  What we want is for scientists to take their brilliant ideas and turn them into brilliant businesses as well.  So let’s not faff about: give them the relief.  Agreed?  Good.

All right then.

So why are we doing it by way of a formal written consultation?  Why aren’t we doing it under the HMRC “care and management” powers – simply tell HMRC staff to stop faffing about trying to find ways that an academic working for an EMI scheme might NOT qualify.

Or why aren’t we setting up an expert working party with some actual academics who are or have been involved in EMI schemes to thrash out the definitions, like we’re doing with the creative industries consultation I wrote about yesterday?

Why haven’t we got any idea of the scale of the problem being addressed  – the impact assessment says helpfully that:

This measure is expected to have a cost, the magnitude of which will depend on the outcome of this consultation.

Why haven’t we got anyone in HMRC or HMT who looks at these documents before they go out and says “look, Fred, Freda, I see what you’re getting at, but have you seen what they’re doing in the Creative Industries team?  Couldn’t you try something like that?”

So this is another consultation I don’t propose to respond to.  Because when your first question is

Can you provide details and evidence on the typical working patterns and arrangements of academic employees engaged by EMI qualifying companies – for example, whether this involves a regular and permanent weekly commitment of time, or whether working time is concentrated at particular times of the academic year?

wouldn’t it occur to you that there are people who would know?  And wouldn’t it be a good idea to ask them?

How much does it cost to do a formal consultation, do you think?

Posted in Consultation | Tagged , , | 1 Comment »

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Bread AND roses

September 17, 2012

I’ve always thought the suffragists and the wobblies had it right about bread and roses:

Our lives shall not be sweated from birth until life closes;
Hearts starve as well as bodies; give us bread, but give us roses.

In other words, it’s not just the “bread and butter” financial issues that campaigning organisations need to think about but the “roses”, the things that could otherwise be put aside with the derisory label “pink and fluffy” – like equality issues, support for the arts, anything outside of the narrow horizon of simply keeping body and soul together.

So when we have a government that thinks we need to cap benefits to reduce taxes and frames its agenda in terms of an unprecedented financial crisis it’s good to see any consideration being given to the roses of, say, the television industry.

But I can’t get excited about the consultation into creative sector tax reliefs.    The consultation is into applying something like the tax scheme that works for film production to three other areas: animation, “high end” television drama, and video games.

In contrast, the government will give Arts Council England £360m this year,  around thirty per cent less than the £400m+ it has had for the last five or six years.  Against that, the amounts shown in the tax impact assessment (in millions) for the three categories of business covered by the consultation are relatively small:

Animation Television Video Games
2012-13 0 – 0
2013-14 -5 – -10
2014-15 -10 – -25
2015-16 -15 – -25
2016-17 -15 – -25

Considerably less, in fact,  (max of £15+£25m in one year) than the government has already taken from the Arts Council.

So why did I not respond to the consultation?  Not because the numbers are small – lots of the consultations we’ve looked at so far have been in the why the heck are you spending time and money asking about it if it makes no difference category.  Not because I don’t care about the subject – it would be hard for more than the three people involved to get truly passionate about, say, the taxation of unauthorised unit trusts or time apportionment reductions on life insurance policies.  I didn’t respond to this one because… well, because it’s OK.

I mean, the general principle of giving tax breaks to creative endeavour seems OK to me – whether or not you agree we have money to give to the arts, it seems sensible not to take too much from them, like not eating your seed corn.  Bread AND roses, right?

And I think they’re asking the right people – even though the amounts involved are ludicrously small in context, there are three working parties of industry representatives working with the Treasury and HMRC.  And they seem to be asking them the right questions: working on things like coming up with a workable definition of a distinctively British television programme, or how to avoid giving tax breaks for video games which are pornographic, or how do you define “animation”.

So, just this once, I’ll pass, thanks.  Keep calm and carry on!

Posted in Bit of politics, Consultation | 1 Comment »

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Wouldn’t it be nice…

September 14, 2012

…if we treated our paralympians and other fellow citizens with disabilities or terminal illnesses the way we treat our tax avoiders?  I’ve just written a long post, below, in response to a consultation about the General Anti-Avoidance Rule Notion.  I just wanted to pick out one small aspect of that suggestion, the proposed definition of abuse.

Tax arrangements are “abusive” if they are arrangements the entering into or carrying out of which cannot reasonably be regarded as a reasonable course of action, having regard to all the circumstances…

This is called the double reasonableness concept: it’s not enough that the action is reasonable, it also has to be reasonable to regard it as reasonable.

Wouldn’t that be a great way of re-testing disabled people to make sure they’re still entitled to disability benefits?  Say something like

Disability assessments are “abusive” if they lead to an action such as the removal of benefits which cannot reasonably regarded as a reasonable course of action, having regard to all the circumstances…

Just a thought.  (but the consultation on the tax GARN closes today.  You’ve still got time to drop them a line at study.gaar@hmrc.gsi.gov.uk suggesting they pass on their double reasonableness test to the DWP…)

Posted in Bit of politics, Equality | Tagged , , | 1 Comment »

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Garn!

September 14, 2012

I’m having trouble finding the work of literature in which I first encountered the word “Garn!” but I’m reassured by Wiktionary listing it as a cockney word that “expresses disbelief or mockery” (and hinting it was probably Pygmalion).   Having established its existence – garn, you didn’t believe I was making it up, did you? – I propose forthwith that we stop calling for a General Anti Avoidance Rule (GAAR) and instead talk about the General Anti-avoidance Rule Notion – GARN.

Because I don’t believe we’ll ever have one.  Not a rule that actually works, anyway, where “works” is defined as “making a difference”.  Look, for example, at page 33 of the consultation on A General Anti-Abuse Rule, the Tax Impact Assessment, where the Exchequer impact is given as follows:

The GAAR will support the Government’s aim of reducing tax avoidance and will both raise and protect revenue. The revenue impact will reflect the targeting on artificial and abusive avoidance schemes, but will depend on the final design of the proposal. Any final Exchequer impact will be assured by the Office for Budget Responsibility.

Uhuh.  Now, you may recall that I obtained the internal instructions on how to prepare a tax impact assessment under the Freedom of Information Act (go here to see the full instructions) but let me just quote the bit about what to say in a formal consultation document about the Exchequer Impact:

If the measure is not yet scored so a 5-year scorecard costing has not been published, don’t enter one. Instead enter a statement giving an indication of the order of magnitude of the costing, and stating that the final costing will be subject to OBR scrutiny.  (my emphasis)

Well, I see a reference to the Office for Budget Responsibility (“OBR scrutiny”) but what indication is there of the order of magnitude of the problem and the amount of any tax to be raised or saved as a result of introducing these proposals?

Anyway, this is what I sent to the policy team: the consultation closes today so you’ve still got time to send an email to study.gaar@hmrc.gsi.gov.uk if you’d like to add your two-pennorth.

This is an individual’s response and is also being published, with commentary, on my blog at http://tiintax.com

First of all, Graham Aaronson’s report says that “tax planning is an entirely appropriate response to the complexities of a tax system such as the UK’s” and section 2 of the condoc says “The GAAR should not affect what the Report describes as “the centre ground of tax planning”.” I wonder therefore why you are tinkering at the edges rather than trying to simplify the tax system so that avoidance and the “centre ground of tax planning” is engineered out of the system altogether?

However I appreciate that isn’t within the scope of this consultation so I will address the specific questions you have asked.

1. Do you agree that the GAAR should be limited to the taxes and duties set out in clause 1(3) of the Draft GAAR initially?

No: but then I feel the best options, in order of preference, are a radical simplification of the tax system to engineer out avoidance, or if that cannot be effected, a broad-spectrum GAAR. In this case the GAAR itself is so narrowly drawn it will make little or no difference that its scope is also limited. It’s a fly-whisk, when you need an elephant gun.

2. Do you agree that the GAAR should be capable of counteracting UK tax advantages obtained under double tax agreements?

Yes

3. Do you agree that (1) the proposed “main purpose” rule serves as a useful filter, when coupled with the concept that arrangements must also be “abusive” and (2) a specific exclusion for arrangements without tax intent is not required? If you think a specific exclusion is required, please explain why.

I disagree: “purpose” is irrelevant. If an arrangement produces an abusive tax consequence I personally don’t care if the abuse was accidental! (And, in case it’s not obvious I’m being sarcastic here, let me be plain and say I think you’re tying yourselves in knots unnecessarily. The concept of “abuse” should be decisive enough a test.)

4. Do you agree that the proposed “double reasonableness” test operates as intended to counteract only artificial and abusive schemes (such as those described in Annex B)?

Yes. (And, incidentally, wouldn’t it be a good idea to have a similar test introduced into – say – matters like removing disability benefits from people. So the government would only stop paying mobility allowances to someone with a missing limb if they could show it was reasonable to believe that it was reasonable for the person to do without it!)

5. Do you agree that the counteraction provision in the draft GAAR is appropriate?

Yes. I assume if HMRC had sufficient grounds to penalise avoiders they would take action under that appropriate provision and the GAAR would not come into effect at all – that it’s “belt and braces” – the GAAR will be the braces, but the belt will be tried first.

6. The Government is continuing to develop its analysis regarding the appeals processes in relation to counteraction and consequential adjustments under the GAAR, and welcomes views which may inform detailed proposals to be published later in the year.

No comment

7. The Government would welcome views on the options set out regarding commencement, how transitional arrangements should be dealt with, and whether there should be different rules for different taxes where appropriate.

Good grief, we’re talking about ABUSIVE arrangements here! It should apply from the date it’s announced – preferably 1 October 2012 – and to any transaction completed after that date, just as it would if you were introducing retrospective legislation to close an obvious tax loophole. No, there’s no need for transitional arrangements – send the message, tax abuse stops today.

8. The Government welcomes views on clause 5(1) of the Draft GAAR.

No comment

9. Do you agree that it is appropriate for particular weight to be given in the legislation to the GAAR guidance and the opinion(s) of the Advisory Panel on the arrangements?

Not unless the makeup of the Advisory Panel is radically changed! At the moment it reminds me of that line in 1066 and all that, about the barons wanting to be tried by “a jury of their peers, who would understand”! At present the panel seems to consist purely of legal tax professionals. It needs to have some members who are there to represent the law-abiding taxpayer such as union or other civil society group representatives; there to represent the interests of the non-avoiding taxpayer base.

10.The Government welcomes comments on whether particular issues arise in relation to Self Assessment (where the relevant taxes operate within a Self Assessment regime) or within the existing administrative rules for those taxes that do not operate within a Self Assessment regime.

11.The Government invites comments on the general proposal that the GAAR should as far as possible operate within existing administration rules for the taxes involved; and on what adaptations may be necessary to existing administrative rules to ensure that the GAAR operates with as little as possible additional administration cost and burden for taxpayers, advisers and HMRC. Is there a case for having a new type of assessment given the cross-regime range of the GAAR?

No comment

12.The Government invites comments on whether time limits should be set for each of stages two, three and four and if so what those time limits should be.

Yes: probably one to three months. The work needs to be resourced to risk, so HMRC will need to allocate appropriate resource to push these cases forward. And the tax avoider will have little or no incentive to cooperate if there isn’t also a time limit for them to respond or lose the case by default.

13.The Government welcomes comments on the proposals relating to the Advisory Panel.

See answer 9. The Advisory Panel needs to have lay members.

14.The Government would welcome views on the proposals for producing and updating the guidance.

The government already has rules in place around guidance – that it should be ready when legislation is published, that it should be compiled in collaboration with the affected taxpayers, that it should be in plain English – if it follows its own rules it won’t need to make more!

15.HMRC would welcome comments or evidence that can improve the TIA assessment of impacts, costs and yield of the GAAR proposals.

The Exchequer Impact does not follow the internal guidance to give the order of magnitude of the problem. What amounts are expected to be raised and/or saved as a result of the introduction of the GAAR? Without that information, it’s hard to see whether the GAAR will amount to a hill of beans.

Posted in Avoidance, Consultation | Tagged , | Leave a Comment »

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Nothing to look at, move along please

September 13, 2012

No bloggery today, although instead I urge you to go over to the Guardian’s Public Service pages.  There you will find an interesting piece on why civil servants leave, and an “expert panel” live two hour discussion in the comments thread.  Warning: includes me.  Apparently I’m an expert now.  Well, at least an expert in Not Being A Civil Servant, anyway!

 

[Update Friday 14th: there’s a roundup of the event here.  Warning: contains me!]

Posted in About me | Leave a Comment »

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Residence

September 12, 2012

I really wish I could care about the consultation on a statutory definition of tax residence, honestly I do.  I mean, I’m sure it’s a good thing to give simplicity and certainty to people whose residence status might be in doubt, and I’m sure all the work that has gone into the initial consultation, the responses document and the current consultation has been carried out diligently and intelligently and will produce the right result in the end.

Only why couldn’t we just copy out the same rules the Americans use?  The ones that fit onto one sheet of A4?

Oh, that’s right, because Americans have sensible rules “If you are a resident alien, you must follow the same tax laws as U.S. citizens. You are taxed on income from all sources, both within and outside the United States.”

In the States, the first determinant is citizenship – if you’re a US citizen, you pay US taxes, and you don’t have to faff about with residence and ordinary residence unless you’re in a non-citizen-but-still-living-there category.

Here, we still retain the imperial concept of “domicile” – if you were going out to rule the Empire, you were still an Englishman even if you never set foot in blighty till your corpse was shipped home for burial. Which might have made some sense when we HAD an Empire, but, you know, That Sun Has Set.  Now we are only a tax haven, inviting anyone filthy rich enough to settle here and pay us £50k in blood money and we won’t bother them about taxes because that’s only for the little people.  Oh, and if you’re starting to make serious money, check out your family tree – if your grandfather was born somewhere interestingly foreign or if you suddenly develop a passion for Belize then you too could become a non-dom

So you’ll forgive me if I can’t get too fussed about the detail of how to legislate the residence conditions.  The tax impact assessment shows that it’s “expected to have a negligible Exchequer impact”.  Well, what about tackling the other side of the coin and doing something which would have some impact?  Let’s stop being a tax haven, make citizenship and taxation go together, and stop faffing about.

Posted in Bit of politics, Consultation | Leave a Comment »

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Forty two

September 11, 2012

How many employers are there in the UK?

Well, the Federation of Small Businesses says there are about four and a half million small businesses in the UK and about a quarter of them are employers. So let’s suppose there’s one and a half million, plus another few thousand of the very largest businesses not covered by the FSB.

HMRC makes it rather more: 2,351,620 to be precise, if you add up the figures for employers on the timetable for rolling out RTI (figure 6 on page R25 of their latest annual report.)   This seems more plausible: there are nearly thirty million people in work, after all.  And HMRC ought to know: they’re the ones who are implementing radical changes to the way that all employers have to operate the PAYE system, moving them over to RTI.  So they have planned for the numbers in their table:

  1. Control group and first stage pilot.  Around 320 employers.
  2. Pilot: around 1300 employers
  3. Extended pilot: around 250,000 employers
  4. Main migration: around 2.1 million employers.

Please check my adding up, but I make that around 2,351,620 employers altogether, right?

I’m a bit worried about that.  Principally, that it’s all a bit quiet, and those two million three hundred and fifty one thousand, six hundred and twenty employers aren’t going to know about, let alone be ready for, RTI coming at them like a steam train.  After all, the government has abolished its own advertising agency and radically cut down the amount it spends on getting information to us.  And, serendipitously, it seems I’m not the only one, because Steven Timms asked David Gauke how much money HMRC had set aside to publicise the changes. 

The answer seems to be, well er… none, actually.

Or rather, communication is part of the overall cost of RTI, which the Minister helpfully tells us may amount to £108 million.

Do the math with me here. Counting just the small businesses covered by the FSB (and not the large ones where, so far, most of the education and support has been targeted) and not including the people who have employees but who aren’t businesses, like people with nannies and people given budgets and told to go off and employ their own careers…

The smallest number of businesses likely to be affected by RTI is, well, for the sake of the mental arithmetic let’s say that a quarter of the FSB’s four and something million amounts to ONE million employers.

On whom HMRC can spend 108 million quid?  Ok then – lets say changing HMRC’s computer, building the free software for micro business employers and doing all the other techie stuff only came to 8 million. It won’t, is my guess, but you see where I’m going with the numbers.

That gives HMRC 100 million to spend on education and communications for 1 million businesses.

A hundred quid each?

That won’t get you one person from each business going on a course, or even having a couple of phone calls with HMRC’s helpline. Its… It’s peanuts.

Divide that theoretical hundred million by the HMRC number of 2,351,620 and you get … £42.

(Well, OK, £42.52, but still.  You really couldn’t make it up.)

Posted in Bit of politics, Employment, HMRC, RTI | 5 Comments »

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