December 7, 2016

The Parliamentary Question is an arcane art: for the person asking, the art is to phrase the question as widely as possible so as to “fish” for at least some of the facts you might want to know.  For the person answering, it is to give the minimum amount of information compatible with not actually lying in the person’s face.

Why?  Why not just ask what you want to know and then answer the bloody question?

Here’s an illuminating exchange from the 5th December Small Business debate in the Lords, from Hansard, via the indispensable “they work for you” site:

Lord Vinson (Conservative)
To ask Her Majesty’s Government, in the light of the fact that most small businesses assess their profits annually in arrears, whether it is the intention of HM Revenue and Customs to make small businesses report their income and expenditure quarterly; and what assessment they have made of the feasibility of this requirement. (HL Deb, 5 December 2016, cW)

In other words, MTD, can it be done?

Lord Young of Cookham Lord in Waiting (HM Household) (Whip)
HM Revenue and Customs published a consultation document setting out the Government’s proposals on 15 August 2015 entitled “Making Tax Digital: Bringing business tax into the digital age”. The consultation included an initial assessment of the impacts on businesses. The consultation closed on 7 November. The government is currently considering the responses to the Making Tax Digital consultations and will publish its response and draft legislation in January, together with an updated Tax Impact Assessment.

In other words, we’ve done an initial impact assessment and we’ll refine it in January.

Let’s turn to that impact assessment, shall we?

Look at para 8.6 on page 60, for example:

…We recognise that many businesses will incur costs, including time costs in making the transition to a digital way of transacting with HMRC.  However we do not yet have a granular understanding of what those costs will be to provide an estimate at this time.

An impact assessment is about costs, not about feasibility.  The tax impact assessment process is about three costs: the cost or gain to the exchequer (i.e. the increase or reduction in tax due as a result of a change to the system), the cost or savings to the taxpayer (the administrative burden, in terms of the standard cost model – a very precise measurement of the average cost to the averagely competent business, but not a particularly robust or realistic assessment of the actual costs to an actual business) and, thirdly, the costs or savings to HMRC.  The question Lord Vinson asked was, I think, whether businesses would be ABLE to operate MTD.  The question Lord Young answered appears to have been an entirely different one.

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