tiintax

A search on “open consultations” in the category “HMRC” on gov.uk today tells me there are three open consultations.  I’m not sure I believe them after the shenanigans I reported on in my 7th January post (customer service tip: if someone tells you a site isn’t working, the least helpful response is “I don’t currently see any technical problems…”) but let’s roll with it.

The three are:

Real time information: legislative changes.  Opened 29th November (so why didn’t it show up when I searched on the same terms on 7th January?) and it closes on 24 January.  Incidentally, wouldn’t it be really, really helpful if you could search on closing date on gov.uk?  Or at least that you could tell from the search results when the consultation closes and didn’t have to click through to find out?

Onshore employment intermediaries: false self-employment.  Opened 10 December, closes 4 February.

Assistance with electronic filing of VAT returns.  Opened 20 December, closes 14 February.

So let’s start with the Real Time Information (RTI) one.  RTI, in case you didn’t already know, is the PAYE equivalent of Universal Credit – it’s the New! Improved!  All-singing!  All-dancing! method of making sure that Universal Credit will work because the government will know, from timely information from employers, who has worked where and when, so people will – perhaps, if it all works, fingers crossed – finally be able to dip in and out of paid work without screwing up their benefits for six months.

But from an employer’s viewpoint, it’s a royal pain.  You have to report payments to employees when you make them, not at the end of the month or quarter or year or whenever you can stop to draw breath.

There’s little point looking at the actual consultation, because this is one of the Finance Bill consultations – in other words, the policy has already been decided and we’re not being asked for our opinions on whether it’s a good idea or not, just for technical comments on whether or not the regulations that have been written will actually work as described.  And I don’t really feel like doing the government’s unpaid copy-editing for them this morning so we’ll skip that.

There are a few interesting things we might want to think about, though.

First of all, the TIIN (surprise!)  They aren’t publishing a TIIN with this because they’ve already published one.  In fact they’ve published two, one for the penalty regime here and one for the actual policy change.

The one for the penalty regime says that there will be no actual exchequer impact.  In fact the government says it doesn’t expect to get any money in from these penalties at all, or at least an amount which shows up as “nil” on a TIIN.  If memory serves, that’s something like a quarter of a million threshold (grateful if anyone can confirm or amend this figure please?)

That’s a good thing, of course.  The point of penalties is to change behaviour, not to collect money.  The idea is that people should make the change to RTI and get used to sending the same information they would always have sent, just a bit earlier and in a different way.  I can see two problems with that.

First of all the level of the penalty.  It needs to be a “smacked wrist” amount – enough that you know not to put your hand into the fire but not so great that your parents get done for child abuse.  So if you’re a small business with up to nine employees, it’s a hundred quid.  Enough to make you want not to incur it, but not enough (one hopes!) to bankrupt you.

But look at paragraph 16 of the condoc:

16. Regulation 67I sets the size of the late filing penalties as follows:

 £100 for schemes with 1 – 9 employees;

 £200 for schemes with 10 – 49 employees;

 £300 for schemes with 50 – 249 employees; and

 £400 for schemes with 250 or more employees.

If I have 300 employees on the average wage of £26,500 then I’m paying out over half a million in wages every month (£26,500 x 300 / 12 = 662,500).  Now, in comparison to £662,500, is £400 a “smacked wrist” or is it, well, peanuts?  An amount which it might very well be worthwhile my incurring so I can sort out my RTI submission at my own pace?

In other words, I think they got the gearing of the penalties a bit wonky.  But it’s too late now, we’re not being asked to comment on that.

Secondly, as I have commented before, there’s not a great deal of point charging “smacked wrist” penalties if you don’t actually go out and collect them, and is HMRC now committed to sending someone round to knock on the employer’s door if they incur a £100 or £400 penalty and explain to them how it arose and, more to the point, what they can do to avoid incurring another?  Otherwise I think that “exchequer effect – nil” may turn out to be, shall we say, optimistic?  Or should that be pessimistic?

And finally, what about the equalities impact?  I said in my response to the consultation on the actual policy that I was worried about the impact on “care and support” employers, which is HMRC jargon for people who have employees but who aren’t businesses.  People who employ nannies, for example, or, more worryingly, people who are given a “care budget” instead of a home help and have to get on and organise their own support package including paying their carers and working out the tax due on their pay.

In the TIIN for the actual policy it says under equalities impacts that

Care and support employers will also have the option to file RTI on paper, and those wishing to use this option will report RTI from April 2014. This date has been deferred from April 2013 in line with customer feedback, to allow more time for HMRC to thoroughly test the new paper forms and guidance with customers who will use them.

So.  We’re not publishing another TIIN.  We’re not updating the equalities impact, then?  Has there actually BEEN any testing of the impact on care and support employers?  Are they happy, or at least confident they’ll be able to comply?  Does anyone know?

Sigh.  I’d write to my MP again, but it’s Nick Clegg and I think he’s probably getting sick of hearing from me about inadequate government equality impact assessments by now.  Over to you.