I am pleased to report that, at 4.20 on Monday afternoon, I received at least an acknowledgement of my response to the Direct Recovery of Debts consultation. It was accompanied by a note that my “query” about the consultation process “should receive a response shortly.”
Breath duly bated. Onwards!
The Direct Recovery of Debts consultation closed on 29th July, while I was still on holiday. Here’s what I sent: I won’t reprint the correspondence I sent to the consultation coordinator until I hear back. I’m assuming there’s some reason why no-one has answered me on the technical consultation issues so I’ll give them a chance to go “eek! we printed the wrong address!” or “we promoted her and forgot to appoint a new coordinator” or whatever it is, and get it sorted first…
Anyway, this is what I sent:
- I am writing in response to the Direct Recovery of Debts consultation document. I see that, although on the face of the document is says “closing date for comments: 29 July 2014”, nevertheless the landing page on gov.uk now suggests that the consultation is closed because it ran from ” 6 May 2014 12:00am to 29 July 2014 12:00am”. I am assuming that, since the consultation document itself is signed off by the responsible Minister, it takes precedence over the (mis)information on the webpage and that I am therefore in time to have my response considered.
- I have written about this consultation before, at https://tiintax.com/2014/05/09/here-we-go-again/, and the content of that blog entry forms part of my response.
- Please note that I wrote to the HMRC consultation coordinator on 9th May, and again on 12th May, with a number of technical issues about the consultation process. I am surprised to find that, to date, I have received neither acknowledgement nor response. I also wrote to you personally about this failure, at this email address, on 19th June (in case there was some technical problem with the consultation coordinator email address) but again received neither acknowledgement nor response. Please note therefore that the government do not appear to have met the legitimate expectation that they will abide by their own consultation rules and consider whether the consultation should in fact be re-run in full compliance with the published processes.
- Assuming you go ahead with policy development, the two suggestions I have for improving the proposed process are as follows:
(1) Cap the total number of cases for which direct recovery can be used at the 17,000 p.a. suggested at 2.12 of the condoc. This will ensure that the process does not suffer from “mission creep” and become normalised without further democratic discussion and agreement.
(2) For an initial three year trial period, restrict the power to non-natural persons i.e. to companies and LLPs etc but not to individuals.
It seems to me that these two simple limitations to your proposed power, perhaps in conjunction with a sunset clause so the power can be reviewed after a three year period, would reassure the public that you were being proportionate as well as relentless, and nevertheless allow you to achieve your stated aims of recovering money due from the worst offenders.
I look forward to hearing from you that this email, at least, has actually been received!
The internet can make you crazy. I’m house-sitting and taking a writing retreat for the next couple of weeks, and taking the opportunity to have a simultaneous digital detox. In other words, it’s radio silence from me until August. Play nicely while I’m gone!
If you go here, you will see that HMRC have published a list of the DOTAS schemes which are to be subject to accelerated payment, provided the government passes the legislation.
This is what the list looks like:
What’s the line again? Oh yes: “The problem with that proposal is that it is data, not information.”
Transparency, anyone?
@wendybradley @ARC_Union HMRC has no significant retention problems
— ARC (@ARC_Union) July 16, 2014
No, not C P Snow’s “two cultures” (science and humanities) but the two cultures in tax of which I have written before, the tax wizards and the tax muggles.
Yesterday I was at Committee Room 14 of the House of Commons, where Mazars and ARC were hosting a debate, chaired by Margaret Hodge, on tax transparency and the role of the trusted advisor. It was a fascinating debate; put all the tax wizards in one room and ask them to talk to each other and you’ll get a fascinating debate – if you’re a tax wizard yourself. I think I have to stop calling myself a squib and embrace my membership of the wizarding world, because I genuinely found it fascinating.
The muggles? Google “tax” in “news” this morning, and there’s no mention of the wizenagemot but there IS a huge front page story about various celebrities allegedly involved in the Liberty tax scheme.
My point? Mazars are flogging a dead horse: no-one outside the wizarding world is interested in their proposed scheme for a kitemarked “trusted tax adviser” status, sorry and all that. ARC are flogging a different dead horse: no-one outside the wizarding world is interested in their ideas of transparency and pleas for their professional status to be better recognised and rewarded. They are dead horses. They have joined the choir invisible (repeat lines from the Dead Parrot sketch till you get it out of your system.)
Why?
Because there weren’t any tax muggles in the room. Because “tax transparency” isn’t something that tax muggles are interested in, unless it comes with a preliminary explanation of what it means and how it will help them. Because wizard can speak to wizard until Nicholas Flamel dies of old age (Harry Potter joke. I think I backed my metaphor into a corner and beat it to death. I’ll try to stop.)
The interesting bit about the debate was that we kept skirting around the issue: how to involve the muggles. The reason that Margaret Hodge can be, simultaneously, “Tax Prat of the Year” and “Tax Personality of the Year” is precisely that, that she bridges the gap: that she is muggle who has authority over wizards. She infuriates tax professionals by asking questions that don’t make sense in the language of tax, but which resonate deeply with the general public who ALSO don’t speak tax but think there’s something with a fishy aroma somewhere in the tax conversation between professionals.
I don’t have a solution. If we rely on politicians to bridge the gap between tax professionals and the general public, then we need to do more, much more, to brief politicians in what the issues are. There were plenty of offers during the day and on twitter afterwards to set up some kind of seminar, briefing, task force, educational effort for politicians, committees, around finance bills and at other times. They only have to ask. And if they don’t, they might be assertively offered anyway. (Puts up hand to add to the offers)
There were a few quick wins suggested that might usefully be actioned (argh! management-speak is worse than Potterspeak!)
There was, for example, a discussion about comparability. It wouldn’t help “transparency” if companies were simply compelled to publish their tax computations if they were then full of incomprehensible gobbledegook that couldn’t be compared company to company. However the amount of tax paid by a UK company in a given year is – theoretically – available from their published accounts, although Richard Murphy has done some work on extracting it and says it isn’t, if I understood him correctly – I haven’t looked. But HMRC could easily publish a database that would show, say, the tax paid by the top 100 – 1000? -10,000? firms for a given year and also whether they had disclosed use of any DOTAS (avoidance) schemes. They *could* – but they aren’t *allowed* (by taxpayer confidentiality rules, even though the same information is theoretically available elsewhere with sufficient knowledge and expertise to root it out) Quick win? Quick statutory instrument to give them the necessary information gateway? Or a voluntary scheme while that goes through parliament? Some enterprising NGO writes to the top 100 and asks them?
Second, there was an interesting discussion about the kind of tax barrister who gives an opinion on tax schemes, so that a barrister’s opinion that the scheme is viable allows it to be marketed. If it’s then found NOT to work, should there be some kind of sanction for the barrister? Something like the situation which – I thought I heard at the meeting but haven’t looked at – applies in the US where the financial risk is then passed to the barrister? Or should they be sanctioned by the bar council, in the way that a mis-prescribing doctor might face sanction by the medical authorities? I don’t know, but it sounds like an interesting idea: cut off the flow of abusive schemes at source. I look forward to seeing where that goes.
But step back a bit and look at it from the point of view of the Times reader this morning, tutting over the celebs “getting away with” something via a scheme they don’t understand. Would a seminar for politicians, a database of tax paid and schemes entered and a stiff rebuke from the Bar Council make one scintilla of difference to their view of the tax world?
We need to find a way of bringing the tax conversation into the public discourse. As someone said on twitter, we need a Professor Brian Cox of tax avoidance.
I was a bit boggled by this, from the Law Society Gazette, when the link made the rounds on twitter last week. I mean,
The City of London Law Society revenue law committee has called for the creation of an independent body with the power to veto tax legislation.
Seriously? I can deal with THAT in 140 characters:
An independent body with power to veto tax legislation? Isn’t that called, er, a Parliament? http://t.co/r0LSSKct7n
— Wendy Bradley (@wendybradley) June 10, 2014
I saw the same thing floating around again this morning, so this time I went and looked at what the City of London Law Society revenue law committee actually said. You can download their report here, and the relevant paragraphs would seem to be
8.3 We believe it would be useful to create an independent body which would have the power to veto the promulgation of tax legislation where either the legislation itself or the policy behind it are insufficiently developed having regard to its proposed effective date. … Whilst to some extent inevitable in a democracy, these phenomena are hugely damaging to the UK tax regime’s reputation for stability, and the creation of a constitutional check to limit the scope for them to occur would in our view be of real benefit.
8.4 Whether or not an independent body is feasible, we would urge a more realistic and open dialogue between ministers and officials about whether proposals are ready to be implemented than would appear to occur at present…
Which is slightly less worrying: the government already allows regulatory proposals to be reviewed by an independent body, the Regulatory Policy Committee, who issue an opinion on whether the evidence base for the impact assessment is of sufficient quality to support the policy proposal. When the RPC was invented HMRC and HMT waged a successful campaign to have tax measures and their TIINs excluded from this external scrutiny but now that I’m outside looking in, I can see that there might be some merit in the idea, particularly as I wouldn’t have to be involved in doing any of it (!)
But actually I think the City lawyers may have been looking in the wrong direction. Although there isn’t a mechanism in place for external scrutiny of tax proposals other than Parliamentary debate (and improving the quality of Parliamentary “debate” requires an entire constitution of reform) there IS, of course, a mechanism in place for improving the quality of tax legislation.
It’s called Tax Policy Making: A New Approach and it was invented by the coalition, announced and implemented to some degree of approval from both politicians and the tax profession, and then swiftly allowed to fall into disuse.
In other words, City of London Law Society, I think with the greatest respect that you’re focusing on the wrong issue. It isn’t the relationship between Ministers and officials that you should be trying to improve (how do you know what it is? How would you be able to tell if it was better?) but the relationship between Ministers and officials on one side, and the rest of us – tax muggles and tax wizards alike – on the other. If consultation actually happened when it was supposed to, involved the right people (including some serious effort at involving small firms and individuals affected, spending some money on conducting small firms impact tests and consulting citizen juries, for example), and the New Approach was actually implemented…
…well, it just might work.
So this rumour about the coalition running out of ideas and running out of steam, are they actually true, do we think? I mean, there are “only” 68 open consultations across government listed on the Gov.uk website today. 68 sounds like a lot, but in comparison with other times I’ve checked it seems, well, peanuts.
The open consultations from HMRC (in order of closure date) are:
21 Jun 2014 Implementing a capital gains tax charge on non-residents
27 Jun 2014 Tax-Free Childcare: consultation on childcare account provision
29 Jul 2014 Direct recovery of debts
29 Aug 2014 Inheritance tax: A fairer way of calculating trust charges
and again, I go, where are the consultations linked to Budget announcements?
Wait a minute. Let’s have a quick look at what was announced in the Budget (taking the ones that are costed in chapter 2 here and reproduced below the cut): how many of these are new? How many of them are planned to be in next year’s Finance Bill? How many of them would, therefore, we expect to find the subject of consultation over the summer? As I said in an earlier post, are we just not bothering to consult any more?
Interesting times…
One of the things I often wonder about, in my post-civil-service, proto-academic career, is why on earth hadn’t I heard any of this stuff before?
In other words, why do more civil servants not know about the academic study of, well, civil servants?
I had an inkling, when I was working on the introduction of CIS, the Construction Industry Scheme, and was invited to an academic conference where I discovered to my amazement that there was a whole field of study devoted to understanding the construction industry, and that I could network with more construction industry stakeholders in that one afternoon than in months of going to HMRC-organised “stakeholder” events. But as for HMRC understanding that there are people who study how tax, how public administration, how government works? Well, let’s just say my email offering to share my conference paper from last year with them didn’t even merit the courtesy of a response.
Thank you to everyone for coming to my valedictory lecture. You can read my and @ruth_dixon ‘s blog here. http://t.co/5oAEvp7gwt
— Christopher Hood (@C_C_Hood) June 9, 2014
Christopher Hood is the guru of academic writing about government, so far as I’m concerned (or, to be more precisely accurate, so far as I’ve read to date) and if you follow the link in his tweet you’ll find a blog entry which is well worth reading and which gives some of the flavour of what to expect in his forthcoming book (and, if anyone would like to send me a review copy…?!)
Look at this extract from the blog entry:
As for cost-cutting, far from falling, the administration or running costs of UK civil departments actually rose by about two-fifths in constant-price terms over the three decades from 1980 to 2010
So for my entire civil service career – which I experienced as a constant erosion of professional standards, working conditions and ancillary resources – running costs were rising as standards were falling.
And where was the money going?
when we look at the pattern more closely, that increase in administration costs turns out to have come from non-payroll items such as consultancy and IT, while paybill – what it cost to hire civil servants – stayed roughly the same in constant-price terms over the period as a whole.
I was looking for a witty or at least a pithy way to end this blog entry, but all that’s coming to mind is “so there!”
Could you live on the minimum wage? Do you even know what the minimum wage is?
It’s £6.31 an hour, if you’re over 21. That’s £227.16 a week if you’re on a 36 hour week. Just under twelve grand a year. (And a couple of grand of that is still taxed, too)
Now imagine you’re in a crappy job that doesn’t quite pay you twelve grand a year, and you have to drive around to old people’s houses and make their dinners or get them in and out of bed, and you’re not paid except for the time you’re actually in the room with the client, because the rest of the time you’re on a “rest break” (because driving from one side of the city to another in the middle of the day is so restful) and you’re vaguely aware there’s something wrong with your wage packet because you seem to have been working like a dog for forty seven hours, counting from when you left the house till when you got home, but you’ve still got barely two hundred quid in your wage packet.
What are you going to do?
Because if you complain, if you stick your head over the parapet, why, you aren’t going to work again next week, are you? And when you go to sign on, you’re as like as not to be told you’ve made yourself voluntarily unemployed so go away and starve quietly…
There’s an asymmetry, in other words, between the employer and the employee. In the twentieth century you might have said, well, they ought to join a union, but Thatcher did for unions, didn’t she, so these days you’d say, well, there’s minimum wage legislation. Ring the HMRC hotline…
Which is good, but HMRC have issued a “look how brilliant we are” press release today which has really got my goat.
First thing: is is legal to refuse to pay travelling time under those circumstances? I don’t know, but the practice is so widely reported that I had assumed it must be. But look at the middle of page 14 of this HMRC report which says that “time work” includes
travelling in connection with their work. This includes time spent:
o travelling between appointments (but not rest breaks)
o travelling from work to a training venue
Well, if travelling time IS included in minimum wage calculations, why not clearly say so? Instead of issuing a press release bragging that you have
recovered average arrears of around £205 per worker.
Two hundred quid??? I mean, if it’s money they’re entitled to then, yes, they should have it – but I’d be a lot more impressed if there had been some prosecutions or that the
issued 652 financial penalties, worth £815,269
had been 652 penalties averaging £800 grand instead of totalling £815k – and so averaging £1250. I mean, scary, right? Plenty to keep some bastard employer from screwing his poorly-paid staff out of the money they’re entitled to in order to bump up his massive profits. Oops – sorry, I’m being normative again…
Let’s look at the worked examples in that HMRC paper for a moment again, shall we? Turn back to page 14 and look at example 1.
Example 1 Domiciliary care worker A is paid £6.35 per hour and is paid weekly. The employer has paid the worker £190.50 for 30 hours worked. Time records show the worker spent a total of 45 minutes that week travelling between clients that had not been recorded as working time.
How to check compliance with NMW legislation
The minimum amount paid to the worker should be £6.31 x 30.75 hours = £194.03
The worker was paid £190.50 so therefore has been underpaid the NMW by £3.53 that week (£194.03 minus £190.50).
Now, just hold on a minute there – the worker is paid £6.35 per hour. They have been paid for 30 hours when they should have been paid for 30 hours and 45 minutes. So they have been underpaid by .75x £4.76, but HMRC will only pursue for the difference between the NMWxhours worked and pay, and not for the difference between ACTUAL pay rate x hours worked and amount paid? In this instance (and the 45 minutes is a pretty unbelievable travel time but let that go) it only amounts to a few pence but how is the worker to collect it?
Look at example two:
Example 2 Domiciliary worker B is paid £7.50 per hour and is paid weekly. The employer has paid the worker £225 for 30 hours worked (30 x £7.50) Time records show the worker spent 2 hours that week travelling between clients that had not been recorded as working time.
How to check compliance with NMW legislation
The minimum amount paid to the worker should be £6.31 x 32 hours = £201.92 As the worker was paid above £201.92 (i.e. above the NMW amount) no arrears are due even after taking account of the additional 2 hours working time spent travelling.
They have, however, been stiffed out of £15 – two hours’ pay – they should have been paid £240 (32 x £7.50) rather than £225 (30 x £7.50). But because the amount they have been paid is more than the legal minimum, the HMRC NMW enforcement team is going to be no use to them.
That’s like saying everyone’s entitled to £57.35 a week, so if I come along and mug you and nick fifty quid out of your purse, the police won’t do anything about it if I leave you with £57.35, isn’t it?
Ah yes, but the administration of the benefits system and the justice system are different, and so are the administration of the NMW and employment law, right? So the HMRC team that enforces National Minimum Wage can’t get involved if your employer is ripping you off in some way that doesn’t involve breaking the NMW legislation, right?
Sod that. There’s an easy fix. First, make it crystal clear that travelling time – except home to the first visit, and last visit to home – is working time. Publicise THAT and the press release might be worth having. Second, issue the workers and the employers with an official HMRC document at the end of any investigation which says clearly the rate of pay and the number of hours worked. This then would be prima facie evidence that the worker could use to sue the employer for the rest of it, the amount they’ve ripped off that isn’t covered by minimum wage legislation – the five pence not enforced by HMRC in the first example, and the fifteen quid HMRC weren’t interested in, in the second example.
How would the worker make use of that? Well, an individual worker could sue separately, but it’s likely to be too small an amount for an individual to take the risk. But maybe for a collection of workers you might get, god help us, the claims management companies stepping in and suing the employer on behalf of a number of workers. Or – and here’s a thought – how about some kind of collective worker organisation picking up the slack and advertising their services? Anyone know any trades unions???
tiintax 