Archive for November, 2015

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Two fingers of tax

November 28, 2015

My theory is that you should do your tax return in bite sized pieces, none of them taking more than the time it takes to drink two fingers of scotch.

I would also like, just once in my life, to get my tax return in before January 31st!

So walk with me as I complete my tax return, and think about getting on with yours. The first thing* – the absolute first thing – to do is to check you can still get into the HMRC website.  Because you’re too late, now, to do a paper return, and it’s not December yet so there’s still time to get yourself registered with HMRC or get new passwords or whatever if you don’t have access.

I went to gov.uk and followed the links to self assessment.  And, lo!  My computer automatically filled in my HMRC registration codes and I was online!  Yay me!

The system also has a built in security feature which tells you when you last logged on to it (presumably so that if it tells you that you logged on at four am you can investigate who has been impersonating you).  When did I last log in?

31st January, of course!  But I filled in the first page, and my tax return is 1% complete already and it isn’t even December yet.  Two fingers of tax, two fingers of scotch.

 

 

*unless you use an accountant, in which case the very first thing to do is speak to your accountant.  Imagine all their clients pass them a carrier bag full of receipts on January 31st… If you haven’t given them all the necessary records yet, I suggest you have a conversation with them about what they’ll need from you if you want them to do your return this year.  They may need more than two fingers of scotch from you – I recommend a bottle of Talisker at least!

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The sheep thing

November 27, 2015

Have a look in Hansard at the debate about the HMRC closures:

Chris Stephens

Many MPs and tax experts support the view that a visible and local HMRC presence is essential to maintaining ​confidence in the tax system. Does he not believe that the measures that have been announced by HMRC will open the way for more tax avoidance?

Mr Gauke
No, I do not. As I have made clear, the number of HMRC officers has been falling since its creation in 2005, including over the past five years, and we have seen the closure of inquiry centres, as has been touched on, but HMRC’s success in dealing with tax avoidance and evasion over that period has been marked and has improved. The truth is that HMRC deals with tax avoidance and evasion principally through sophisticated data analysis and by bringing together highly skilled people. The more that we can do of that, the bigger the difference we will make.

There are several issues raised by the prospective closure of HMRC’s network of offices, and it does no-one any favours if we braid them together and pretend they’re all one and the same.

First of all there’s the argument that “tax avoidance and evasion” are fought “principally through sophisticated data analysis”.  I have no recent practical experience of whether or not that’s true – the last time I looked at a set of accounts in anger, the dispute was over whether an inspector’s judgement was more effective than a “package” of data sent from a remote analysis unit.  At the time it wasn’t, but I strongly suspect the balance has swung the other way and this is the way most cases will be broken in the future, particularly the larger ones.

But that isn’t the same argument as this one: “Many MPs and tax experts support the view that a visible and local HMRC presence is essential to maintaining ​confidence in the tax system.”  A remote analysis unit can’t do that job.

It’s an oversimplification, but think of it this way.  HMRC exists to serve us, the taxpaying public, by bringing in the money which funds public services.  They do that to a large extend by administering the tax system so that we, the taxpaying public, can pay our taxes.  That sounds like tautology but in fact it’s a profound truth.  I want to pay my taxes.  I want to pay the right amount at the right time.  I want to do it with the least amount of contact with HMRC possible, but if I *do* need to speak to them, I want them to be there, where I can get at them, to be contactable, and to be courteous, authoritative and knowledgeable when I speak to them.  And – as a taxpayer – I want them to come down in righteous wrath on the people who don’t do that.

There are two constituencies to be served, in other words.  The avoiders and evaders might well best be tackled by specialist accounts factories in remote locations: the first time an evader needs to contact HMRC is when they knock on their door with a warrant.  The rest of us, however, need an entirely different kind of service: local, accessible, friendly, helpful.  Treat avoiders and evaders like regular taxpayers and you may “nudge” some of them into normalising their relationship with taxes and behaving like the regular taxpayers they’re being taken for.  Treat regular taxpayers like avoiders and evaders, however, and you risk them saying to themselves, well, may as well be hanged for a sheep as a lamb…

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Spending review

November 25, 2015

It fascinates me that there are people and organisations that don’t take twitter seriously.  Although often it’s just a bit of fun (and occasionally a screaming pit of insanity), it’s also the place where you can see the first draft of politics – which is itself the first draft of history – being hashed out.

For example are you on the #spendingreview or #SR15 hashtag?  The BBC and most of the people I follow on twitter seem to be using #spendingreview which is comprehensible but longer and takes a chunk out of your 140 characters, whereas the Treasury and the George Osborne twitter feeds are using #SR15 which is short but muggle-exclusionary.  If that’s a thing.  (Well it is now).  More follows.  Probably.

(By the way I’m live blogging this, and it’s the first time I’ve done so.  If you’ve subscribed to the feed and find it’s sending you multiple emails, you might want to unsubscribe for a bit or at least ignore anything that comes to you from tiintax before the end of the spending review speech)

12.30  Here we go.

All I’m getting from the first few minutes is security, security, security – sounds a bit…. no, Godwin’s law.  And a notable lack of verbs.  I wish governments would start employing speech writers who would write actual speeches and not bullet point lists.

12.46 a giant sneer at Labour over borrowing £8bn less than forecast so “mending the roof while the sun shines”.  Where did this idiotic roof metaphor come from?  What metaphorical sun is shining on the country at present?

Next the tax credits.  I can’t pretend to understand the detail from the speech alone, but what I think I heard was, we’re not going ahead with the changes to tax credits because they’ll all be washed out by the introduction of the universal credit.

“HMRC is making efficiencies of 18% of its own budget”  Good grief, are we taking the putative savings from closing down the network offices *before* the putative improvements in digital service that will allow the savings to be made???

Fighting tax evasion… seems to mean some kind of action on disguised employment.  Which will be interesting. And there was some kind of commitment to make CGT payable within 30 days of the disposal of residential property.  The detail of that will be interesting – main residence relief means most residential property doesn’t incur CGT surely?  And if we’re talking about property development, why only residential and not offices etc?

13.00 Social care: two billion more, but it comes from Local Authorities sticking a hypothecated 2% onto council tax.  So the government won’t be unpopular about it, just the local authorities, so that’s all right, yes??

13.05ish Osborne sneers at Scotland, or more specifically at what a Scottish spending review would have looked like (given the fall in oil prices) if there had been a different result in the referendum.  Have weird deja vu, till I realise he’s saying exactly what Cameron said towards the end of PMQs.  they’re plagiarising each other’s speeches now?  Or do they learn the insults and sneers in the same bullet-pointed list they take their talking points from?

All right, why is hypothecating the tampon tax a problem?  Because tampons are not “luxury items” and the EU needs to get its act together to recategorise them into the nil rate band for VAT.  But Osborne crowing that he’s going to donate the VAT raised to women’s charities is – as I said on twitter – patronising bollocks (and, yes, I use the gendered language deliberately).  Because why do women have to pay the bill for violence against women?  Why is violence against women only a cause of concern for women?  He’s conflating different issues and trying to make himself look good.  Must check later to see if the Macho Fund (for guide dogs for servicemen and something to do with Winston Churchill?  My womb was wandering too much to take in the detail) is bigger than the Gurlydosh.

Extra stamp duty on buy to lets.  Interesting.  “We will consult on the details” is code for “we haven’t worked out how to do it yet” you understand.

Now some infantile gamesmanship on the police.  Suggest you’ll be making huge cuts to the police.  When Labour suggest cuts should be no more than 10%, recast it as “we have had representations” from the other side to cut the police by 10% – we’re cutting to zero.  Childish and insulting.  And followed by hideous baying sounds from the government benches.  Sometimes I’m ashamed we let these people represent us.

I’m going to take a walk and cool off a bit.  See you soon.

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Autumn statement and spending review day

November 25, 2015

I can’t make it to London to watch the Autumn Statement/Spending Review with the Women’s Budget Group today, but I’ll be watching it on tv and on twitter and may come back with some thoughts later on, particularly if there are any TIINs published.  Although I’m not sure why anyone should care, as the Autumn Statement doesn’t seem to require the same amount of secrecy as the Budget, and Budget secrecy has been thoroughly exploded by selective leaking over the last few years.  So we already know there is money down the back of the national sofa for defence, there may be some stuff about housing benefit, and there’s some secret squirrel stuff about the tax credits fiasco.

The interesting bit, for me, will be this blather about a “Northern Powerhouse”.  It doesn’t look very powerful from where I sit in the putative middle of it.  It looks, in fact, like an attempt to roll back the state to something like the competing tribal nations we see in The Last Kingdom.  Let’s give the northerners a few quid if they’ll get together and agree someone to give it to.  (Didn’t we vote against the idea when we were asked?) But, hey, let’s ignore that and go with whatever we can cobble together.  Let’s ignore the views of local people and see if we can get some kind of oligarchy together that will take our money and then go away and manage them quietly.  Thanks George.  Or should that be Uhtred?

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Why closing down HMRC’s network won’t save money either

November 22, 2015

A correspondent draws my attention to another reason why closing down HMRC’s network offices to concentrate in 13 regional centres is a bad bad bad idea.  It may not save the money anyway.

As I already suggested, it seems unlikely that HMRC can achieve spectacular savings in rent by announcing its preferred locations and only *then* negotiating for new premises.  I know office space isn’t exactly at a premium outside of London but are there really modern buildings which can house thousands of staff to be had for the asking?  There are unlikely to be so many suitable premises in each location that HMRC can sit back and expect a reverse premium for their willingness to move in: is it not much more likely that landlords will have seen them coming and hold out for substantial rents, as high or higher than the sum of the small office spaces being given up?

My correspondent, however, also suggests it is worth a look at the costs and patterns of employment.  In Wales, Scotland and for much of England it seems there are jobs being moved from areas of high unemployment to areas of low unemployment.  The current prediction is that 90% of the affected staff can move with their jobs to the new locations.  However around 70% of HMRC’s staff are in junior grades and – my correspondent suggests – 70% of those junior grades are part-timers on fewer than 20 hours a week.  Junior staff who are in part time work tend to be mainly women, mainly because they have other responsibilities.  This is a demographic unlikely to be able to commute for an extra hour each way every day. It’s a plan put together by people in London, for whom and hour and a half commute each way is a regrettable fact of life if you want to live somewhere bigger than a rabbit hutch.  Outside of London, however, the work/life balance is different.

So how will that work out? If someone is offered a post in one of the new HMRC Regional Centres an accepts it, will HMRC have to pay the excess travel costs, at least for the first year or so, as is usual in the Civil Service?

If the office space is expensive and employment costs increase, then how will there be savings?

The only savings I can see come from, well, shafting the employees.  If someone refuses a transfer to an office an hour and a half away, will they then  be considered to have made themselves voluntarily unemployed?  With the civil service pay cap and the abolition of pay progression, any new employee taken on to replace them would be on the lowest point on the scale and likely to stay there.  So you exchange one employee on a decent salary and one person on jobseekers allowance for one new employee on a lower salary and one former employee on… nothing at all.  Ka ching?

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Why closing all* the HMRC offices is a bad, bad, bad idea

November 18, 2015

*all but 13

HMRC announced last Thursday that their “modernisation” programme now requires them to close all their “expensive, isolated and outdated offices” and bring their remaining staff together in 13 “regional centres”.

This is a bad idea for so many, many reasons.  Here are a few of them.

  • HMRC as a national network used to have a mix of people who worked locally (who would notice a new business starting up or a conspicuous show of unexplained wealth) and people who were moved around the country for promotion (so the standards of service were national).  In the new plan, whole swathes of the country will have no physical HMRC presence.
  • Regional centres where someone spends their whole career have the potential to develop into fiefdoms with their own customs and practices – a national system becomes a postcode lottery.
  • A national system with regular staff mobility has an in-built anti-corruption apparatus**. A static regional team will need another bureaucracy of inspection and quality standard-setting.
  • As the PCS points out, there was no public consultation or parliamentary discussion of the plans. HMRC is a non-ministerial department but that doesn’t mean it can behave like a private company and arrange its affairs to suit itself rather than the public it services.  Obviously we need a tax administration fit for a twenty first century tax system… but who decided this was it?

There are also a couple of missed opportunities in the announcement

  • “The new regional centres will bring our staff together in more modern and cost-effective buildings in areas with lower rents”  I spent the last two or three years of my HMRC career living in Sheffield and working in London.  Because 90% of what almost any HMRC employee does can be done on a computer, and the computer could be located anywhere.  If HMRC invested in a decent network of secure laptops they could let large numbers of their staff work from home: do staff need to be concentrated in accounts factories to do their jobs?
  • The locations have been announced.  The buildings to be used in each location … haven’t.  Good luck with negotiating those “lower rents”, then!

 

**see for example Christopher Hood The Art of the State (p162) on the “gaming machine model of organisational design in traditional tax bureaucracy”

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Oh no you didn’t!

November 12, 2015

I find the Sheffield Theatres website appallingly difficult to use: one of those annoying merchants who won’t sell you anything unless you have an “account” but won’t open you an account because it tells you there’s already one connected to your email address but won’t for love nor money let you log into it.  I wanted to buy some panto tickets and wound up sending a complaining email instead…

… and they responded by emailing back, then telephoning me and walking me through the transaction,  and explaining that their website will be completely revamped in January.

And that’s what customer service looks like!

HMRC’s customer service, on the other hand…

HMRC’s customer service, and particularly their call handling, is criticised in the latest PAC report.  As Meg Hillier, the chair, said:

“It beggars belief that, having made disappointing progress on tax evasion and avoidance, the taxman also seems incapable of running a satisfactory service for people trying to pay their fair share.”

I’m interested in how the call handling figures are put together: according to the latest quarterly figures I can find, HMRC answered 67.1% of calls although the Guardian reports there’s a March 2015 figure of 68.3%.

But look at the response.  There are 3000 more staff handling calls, or, more precisely:

In the summer, HM Revenue and Customs (HMRC) recruited 3,000 additional staff into customer facing teams. The recruitment process included bringing people in on contracts to work in the evenings and at weekends, thus building capacity to handle calls outside of normal working hours. (David Gauke, PQ)

So is that 3000 new people recruited into HMRC?  3000 full time jobs?  3000 FTEs (“full time equivalent”) posts i.e. it might be more bodies working fewer hours but adding up to 3000 x 37 hours a week?  Or was there some internal “recruitment” of staff from existing jobs within HMRC into “customer-facing teams”?  I can find some anecdotal mention of there having been “1600” jobs advertised, but that is from a website of students complaining about the slow pace of the recruitment process (reply 19 here).  It seems from a twitter conversation that it was likely new bodies – 2000 full time and 1000 fixed term appointments – but it’s a sad indictment of the current state of public discourse that the text of David Gauke’s answer sounds like weasel words rather than an actual attempt to answer the question asked.

Why do I think that?  And why should you care?

Well, Jolyon Maugham starts from the same PAC report (in his Waiting for Godot tax blog) and lays out a compelling case leading to the  startling conclusion that

HMRC set out to mislead you as to its success in tackling offshore tax evasion. Not lying – because the document does not explicitly state that those are charging decisions in relation to offshore evasion – but an attempt to mislead.

When something goes wrong – like the Sheffield Theatres website – or looks as if it might have gone wrong  (because in the end it turned out that it was just my having logged into the site with Facebook instead of with my email address that was causing the problem) the way to deal with it is to deal with it.  If HMRC have recruited 3000 new customer service staff but found their resource insufficient to prosecute offshore evasion then they should say so.  And we should be able to trust what they say means what it sounds like, without the need for careful parsing and double checking.  No-one expects them to be able to do everything.

But if they imply they have prosecuted numbers of tax evaders in the hundreds we should be able to resist the urge to say “oh no you didn’t” (it was eleven, and the hundreds of prosecutions included all kinds of other offences).  If we stop trusting the integrity of the tax authorities, we’re in a whole new space.

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Equal pay day

November 9, 2015

Today, Monday 9th November, is “equal pay day”.  The argument is that effectively women are now working for nothing for the remainder of the year, as women’s salaries are on average 14.2% lower than men’s.

You can read more about this in The Independent, and there is a handy guide to negotiating your pay rise in The Guardian and on taking the legal route in The Telegraph.  And don’t forget I’ve banged on about it before here and here and here.

But WHY, forty five years after the passage of the first Equal Pay Act, have we not achieved equal pay?  Well, in public services things are getting worse, largely because of the 1% cap on public sector pay rises and the obsession with wiping out increments – which would be fine, if it weren’t for the awkward fact that it means everyone is stuck on the point on the pay scale they were at when the music stopped, so people are doing identical jobs for widely different salaries (because they no longer progress over time to “the rate for the job”)

No, I don’t have a wrap-it-up positive ending for you.  But sometimes there are men who stand up and say “it’s not fair” and thank goodness for them.  If you’re a man, try being that guy.  If you’re a woman – take the rest of the day off.

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