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Language, Timothy!

March 4, 2013

Back to the Mail Online again today for the story about the top dozen UK companies that pay no tax.  Serendipitously, there’s some thoughtful material on the same subject from Robert Maas in the last issue of Taxation (behind a paywall, sorry) where he asks “Are organisations really dodging tax, or are they just following the rules?”

This brings me back to the language of tax; Maas makes some reasonable points

  • Amazon makes its UK sales through a Luxembourg subsidiary.  It has warehousing in the UK, but under the 1968 Double Taxation agreement with Luxembourg a warehouse doesn’t constitute a “permanent establishment” that would make the sales from that warehouse taxable in the UK.
  • Starbucks has its intellectual property in a Netherlands company (in other words the know-how of how to run a branch of Starbucks) and it franchises UK shops.  So the profits made by an individual franchise would be payable by the franchisee in the UK, but would be decreased by the amount it pays to Holland for the know-how.

but his conclusion – “Most of the so-called avoidance schemes that are being publicly criticised are not avoidance at all” is a bit more difficult if you’re not a tax expert.

The fact is that the person on the Clapham omnibus – the tax muggle, if you will – doesn’t care about the complexity of tax legislation but applies the “it’s not fair” test.  It doesn’t feel fair that I have spent £100 on books without leaving my chair and that a British postman has brought them right to my door, but because I bought them from Amazon instead of [insert name of non-Amazon book seller here.  There must still be one somewhere, right?] then the profits the seller made aren’t taxed here but in Luxembourg.

Similarly it feels wrong if I’m sitting in Sheffield drinking a caramel macchiatto and eating my red velvet cake but somehow the profits from selling them to me get taxed in Holland.

But if we talk about tax avoidance in these terms it seems to me we’re generating heat without light.  “It’s not the firms, it’s the system” yes, maybe – but where does that get us?  The interesting thing to me is the government’s ambition to make the UK a “competitive” tax system, to show that it’s “open for business”.  That’s where I can shrug and agree with Maas that it’s not necessarily a “fault” for a company to arrange its trade in a way that takes advantage of the “competitiveness” of the different tax regimes in different countries: the issue isn’t with the actions of the company but with the people who designed the system in which they operate.

Perhaps, though, the issue takes us back to the one which didn’t really get bottomed out in the PAC hearings – if the fault is in the way the government makes its tax legislation, then the whiff of something smelly comes from the involvement of the same big businesses that profit from “tax competitiveness” in designing the competing systems.  That’s why we shouldn’t have a revolving door between industry and civil service, and why we should have records of meetings between Ministers and civil servants and industry representatives.

And, while we’re at it, why we ought to have the Small Firms Impact Test back in the list of things that must be included in the work of policy development, rather than archived at the back of the bus and replaced by some meaningless warm words.

Posted in Bit of politics, Consultation, SFIT | Tagged , , , | 1 Comment »

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Seriously?

February 28, 2013

I mean, seriously, Daily Mail?

HMRC recruits well-paid investigators and inspectors — often from universities or accountancy firms.
It has also launched a so-called tax academy to train inspectors.

Yes, a sinister cadre of… whisper it… people who might know what they’re talking about!  Why, I bet some of them even wear glasses… closet intellectuals, the lot of them.

Then the dark forces at work in HMRC even – prepare to gasp in horror – train them to do their jobs!  In a tax academy, no less.  (As opposed, presumably, to a plumbing apprenticeship?  Or a PhD in rocket sciences?)

I’m tempted to make a sarcastic comment about, oh, I don’t know, a “so called” newspaper.  But that would be petty.

Posted in Bit of politics | 1 Comment »

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Tax prat or muggle?

February 26, 2013 
http://www.parliamentlive.tv/Embed/js.ashx?12458 460x322"
For me, it all started with the Public Accounts Committee under Margaret Hodge.  Their questioning of representatives of the Big Four accountancy firms was an object lesson in failure to communicate (the video, all two hours of it, is linked at the top of this post, if you have the patience and if the technology works)  As a result of this hearing Taxation magazine labelled Hodge “Tax Prat of the Year”.
Now to me this sounds like the Harry Potter wizards labelling all non-wizards as “muggles” – a separate and lesser breed.  Do we really want the discourse on tax to be based on the idea that there are only Some People – people who can quote Cape Brandy Syndicate and know why Delaware isn’t really a tax haven – who have any stake in the discussion?  Are you a Tax Prat?  Are you a Tax Muggle?  Tax muggles of the world unite!  
However Taxation were also sporting enough to publish my satirical article, “How to handle a tax prat” in response to their piece. It’s behind a paywall on Taxation magazine’s website, but, with permission, here it is in full for anyone who’s interested and who doesn’t subscribe:

How to handle a tax prat

Are we trying to raise awareness about tax avoidance or suppress discussions?

KEY POINTS

  • Tax avoidance in the public eye.
  • Dealing with criticism.
  • Complexity of the tax law.
  • Customise responses.

We are all tax professionals here, right? We get it. We understand. There is a continuum that goes from tax planning via tax avoidance to tax evasion, and we are always on the right side of it.

There is something very soothing about being in a civilised discussion with people who speak the same language.

I am sure we all appreciated the identification of Margaret Hodge as a “tax prat” [1] for her chairmanship of the public accounts committee, particularly the session where they tried to pull a Paxman on the Big Four.

Even the people in HMRC were annoyed: that comment about the size of their brains is going to rankle for a few years.

Margaret Hodge is not the only one. I am sure we have all had that uncomfortable feeling of trying to talk to someone who doesn’t speak our language.

Perhaps you have come up against one of those people who thinks that country-by-country reporting is a good idea? What about someone who wants company tax computations or personal tax returns to be published?

There are people who do not know that “there is no equity in tax” and think that there ought to be some kind of principle of fairness involved in taxation – imagine that!

So if you come across someone like that, someone who is, in fact, a “tax prat”, you will need this handy guide.

Countering your opponents

Tired of discussions of tax in the newspapers and on television? Worn out from unwarranted criticism of your chosen profession? Frustrated with having to respond to each new argument carefully and conscientiously?

We can help! If you come across an argumentative civilian, a tax prat if you will, all you need to do is to follow the structured steps set out below.

1. Control what your audience sees

Do not allow people who think there is something wrong with tax avoidance to set the terms of the debate.

Say the “drama unfolded live on Parliament TV” and generated a Twitter storm from “those tax professionals who were watching”.

Do not (especially not in your online edition) link to the text of what was said [2], or embed the video stream, or Storify the tweets [3].

Many of your readers will not even realise they have not heard what was said. If you make sure you never quote anything in context, they never will. If anyone asks you for a link, obfuscate.

Remember, you are the editor of a tax magazine: it is not your responsibility to educate anyone about how tax “really” works.

If people lose their heads and start to Google on their own, don’t worry, not all is lost – go to step two.

2. Attack the person, not the argument

If you can make it clear your opponent is on a “personal crusade”, “idiosyncratic and ill informed”, engaged in a “vendetta” and, this is always a good one with a female opponent, “aggressive”, you don’t need to bother addressing any of the concerns.

Those two steps will get you through almost any argument with a tax prat but there will come a time when you need to engage in an actual discussion about tax avoidance itself.  If that happens, take a deep breath, smile, and go on to step three.

3. Argue against straw men

Remember: responding to what your opponent says should always be a last resort. Never underestimate the power of simply arguing against what you would like her to have said.

Suppose she says something like:

“I think you are a bunch of really clever people. You are clever, well remunerated and very experienced, I have no doubt of that. What depresses me is that you could contribute so much to society and the public good and you all choose to focus on an area that reduces the resources available for us to build schools, hospitals and transport infrastructure…”

In that event, focus carefully on the tone of the discussion instead. Say something about how the committee “forget that they are neither in a criminal court nor at prime minister’s questions, and … adopt a point-scoring and aggressive tone which generates heat without ever casting light”.

After all, it’s entirely accurate (they are politicians, after all) and why should a bunch of politicians get away with treating the tax profession like Jeremy Paxman treats them?

But even if you have to face direct criticism, there are ways. The next step?

4. Deflect attention away from the specific criticism

Remember, people outside the tax profession often think we are a bunch of parasites. So here is a list of helpful phrases to start deflecting attention away from specific discussions of tax avoidance. They can be used in almost any context.

  • The tax law is very complex in the UK and internationally.
  • The Finance Bill that was just passed is 50 pages longer than any other Finance Bill.
  • Countries are competing for tax revenue more than they ever have done.
  • We are giving the best that we can to businesses that are competing internationally.
  • It is not an offence at all to have a difference of interpretation about what the law means.
  • It is a supply chain management issue.

5. Tax avoidance, if we have to use that term, is better than the alternative

Sometimes, with the best will in the world, you will find yourself up against an opponent who is so persistent that you find yourself in the middle of an actual conversation about tax avoidance.

Well, worse things happen at sea, and in most cases you can get by with a few handy responses. Try one of these:

  • I think, with respect, you are underestimating the skills and quality of HMRC.
  • If you collected VAT from a customer and did not hand it on, it would be a criminal offence.
  • Evasion is illegal and tax avoidance is not.
  • Delaware is not a tax haven.
  • It is a supply chain management issue.

6. Prove your opponent has mistaken some other quality for tax avoidance

In a worst-case scenario, you may need to respond to specific points in your opponent’s argument. In these cases, familiarity with the piece of tax law in question will help you customise your response to best effect.

Warning: not all of the responses below will be applicable to all situations. Make sure that you only use responses appropriate for the current argument.

  • The Netherlands has some privileged tax regimes, but essentially it is offering facilities to businesses to base employment, jobs and development there.
  • US multinationals directly employ some 5% of the Irish workforce and indirectly probably another 15%. Without that contribution, Ireland would probably be in even more trouble than it is.
  • Insurance companies operate out of the Isle of Man and Guernsey because the UK’s regulatory regime is too onerous.
  • Country-by-country reporting would have huge costs, enormous complexity and, in some cases, commercial confidentiality, but I am in favour of greater transparency.
  • The problem with that proposal is that it is data, not information.
  • Delaware is not a tax haven.
  • It is a supply chain management issue.
  • Our main purpose is to help our clients calculate and pay their tax.

Here to help

So there you have it. There is no need to feel downhearted by all the negative press about tax avoidance. It’s just that tax outsiders simply don’t understand.

Wendy Bradley is a PhD student researching the relationship between tax simplification and better regulation. She is a former member of HMRC’s Better Regulation team and writes a tax blog.  She can be contacted by email.

Happy to carry on the discussion, in comments here or on Taxation’s site, or on twitter (@wendybradley).  If you’re interested, I was also contacted by Tax Journal and there are quotes from me in the second half of this article, here.  That’s BOTH taxation magazines crossed off the bucket list, in the same week!

Posted in About me, Bit of politics | 1 Comment »

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Moving on

February 21, 2013

Seventy days and counting since the Treasury updated the tax consultations page, but the HMRC consultations page has had a couple of new ones added – look down at the bottom of the page – with extremely short deadlines.

So if you’re interested in the taxation of non-doms you need to check out the third iteration of consultation on legislating the extra statutory concession 1/09, a consultation on some revised legislation that was issued on 11 February where the consultation closes on February 25th.  I don’t intend to respond, as it’s a small and very techy change to do with non-domiciled people employed in work that takes place both inside and outside the UK and what to do about bank accounts where employment earnings from both UK and non-UK work is received.  Frankly, I don’t care: but I DO care that it’s stupidly complex legislation that would have been better tackled by a proper review of (and, preferably, abolition of) the entire concept of non-doms.  But there you are.  A two week consultation.  How’s that working out for you?

The second one is the procurement guidance: the much vaunted plan to prevent tax avoiders from benefiting from government contracts.  Given that this was announced in September it’s hard to see why it needs to be open for public consultation for a mere fourteen days (it was issued on 14th February and closes on 28th) but I rather suspect the answer is that there’s not going to be any alterations to it, whatever the feedback.  The government seems to have found a reasonably workable plan to use relatively objective criteria to decide what sort of avoidance is objectionable enough to allow them to disbar a firm from government contracts without falling foul of EU procurement rules.  So if a firm has used a DOTAS scheme that doesn’t work, or if it uses a scheme that falls foul of the GAAR or a TAAR, or it has a civil or criminal penalty, well, it won’t get a government contract.

Here’s the real test.  Would it have stopped the Mapeley contract, where the old Inland Revenue accidentally sold its property portfolio to a firm based in a tax haven?

No.

In which case, frankly, who cares?

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

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Budget suggestions

February 18, 2013

The Treasury website asking for Budget representations is open until 20th February.  This is, in effect, a giant electronic suggestions box where any “stakeholder” is invited to put forward ideas for changes that they would like to see as part of the Budget process.

Now, you might think that, as I have already suggested a wish list of ten changes to the tax and benefits system I’d like to see in 2013, I would simply be sticking a link to that post through the letterbox and walking away.  But you’d be wrong.  Because as I see it, there’s a difference between the kind of small incremental changes that an external stakeholder can ask for as part of the Budget process, and the kind of large-scale politically-contentious change I asked for in my New Year’s Wish List.

I do, however, have a modest proposal which I think might be actionable as a minor Budget tweak, and it’s this.  Stop collection of unpaid Gift Aid from basic rate taxpayers.

Let me explain.  I know a couple of pensioners who have fallen foul of the rule that means, if you tick the gift aid box when you’re donating to charity, you have to have paid more tax than the amount the charity reclaims, or else you have to pay the tax yourself.

Think about that for a moment.  A pensioner on say £12k – basic state pension and a few quid from a works pension scheme – gets just under a grand a month net and pays £300 a year in tax  (personal allowance of 10500 so 1500pa is taxable at 20%).

They put a tenner a week in the collection box at church, but because the church is well organised it actually goes into a little envelope with an identifying number on it that matches up to the gift aid declaration they signed, so their £10×52= £520 is actually worth £624 to the church, because they claim back 20% of the amount – 104 – from the Treasury.

But then when you’re doing their tax return you find out that they also put another tenner in the collection when they go to the Wednesday service, so there’s another £520 on which a further £104 gift aid is claimed.  And that’s without the £100 that went to the Lifeboats, the £100 to the local hospice, £100 on Red Nose day and of course the £25 a month direct debit to the homeless…  So suddenly you’re looking at a total of £1640 in charitable donations over the course of the year on which £328 has been claimed back from Treasury and they’re £28 over.

Now in a sane world you’d ignore it, wouldn’t you?

Well that’s not what happens.  In both cases I know of, the return was amended and they were made to pay up the £28, and their previous three returns were looked at and they were made to pay any trivial amounts they’d over-donated in those years, and now one is scared stiff of “getting into trouble” and won’t tick the Gift Aid box on anything she donates to anyone.

Now, there are problems with Gift Aid.  Apparently there are around £10m of fraudulent Gift Aid claims each year (remember the Omnishambles Budget attempts to stop it?) But those problems are organised fraud which ought (at least in my view) to be treated via criminal rather than civil procedures – and they certainly aren’t caused by pensioners over-donating twenty-eight quid.

And the Treasury has itself introduced a new quasi-gift-aid relief for charities that doesn’t rely on a link between the tax payer and the tax paid, the Gift Aid Small Donations Scheme, which, I notice, was introduced to reduce the administrative burden on charities of Gift Aid… but which assesses them as “negligible” in its Impact Assessment.

So here’s my Budget suggestion.  Make any overpayment of charitable donations by a basic rate taxpayer non-collectable.  If a basic rate taxpayer chooses to tithe or otherwise give more money away than the tax they have paid, well, it’s going to be peanuts in the great scheme of things, and entirely likely to cost more to collect than the tax itself.

Here’s what I sent.  Now, I usually say you’re welcome to adopt or adapt this kind of response and of course you are.  And I also usually say I’m not campaigning for my point, because usually officialdom doesn’t respond well to campaigns.

Budget suggestions are different.  If I send this in on my own, my guess is it’ll be ignored.  If it turns out other people agree with me, well… who knows.

Make Gift Aid overpayments non-collectable from basic rate taxpayers

1. Background/Introduction

At least two pensioners of my acquaintance have at different times fallen foul of the rule that collects back taxes from people who donate slightly more in gift-aided charitable donations than the tax they pay. In each case the process was bureaucratic, frightening and appeared punitive to the pensioner concerned, and indeed one is now so frightened of “getting into trouble again” with her tax that she will not tick the gift aid box on any charitable donation. This is not, I contend, the aim of the legislation, nor of the administration of the tax system.

2. Concerns

A basic rate taxpayer is normally unlikely to give more in charitable donations than they pay in tax. The exceptions are likely to be pensioners, for whom a tithe of an income around 10-15k can easily take them into the “danger” area. It is also hard to understand and apply the legislation at that age, and it is particularly distressing for someone in those circumstances to find they are treated as a wrongdoer by HMRC. The cost of collecting an excess payment of £20 or £30 must far outweigh the benefit of collecting the money – as indeed the Treasury has acknowledged by introducing the GADS where NO connection between the taxpayer and the gift aided amount is required.

3. Aims/Proposals

My proposal does not require legislation but simple administrative action. HMRC should be instructed not to seek to collect any gift aid overpayments from basic rate taxpayers; they should issue guidance which says this is what they will do, and then they should do it. They would retain the ability to collect any tax due from anyone undertaking some kind of avoidance scheme (channelling funds from another source to a dubious charity via a pensioner, for example) because the law would remain as it is. They would simply, under their “care and management of the tax system” powers, not do it for the odd fifty quid from a too-generous pensioner.

  • likely effectiveness and value for money; this would save money – the resource HMRC spends on such cases is, in my view, sadly misplaced and could easily be more productively spent.
  • revenue implications for the Exchequer; negligible – the GADS scheme IA says that the costs to the Exchequer, the administrative burden and HMRC costs of the GADS scheme are “negligible” and I contend that this change would be less expensive than GADS and include at least the same administrative saving
  • wider macroeconomic implications (for economic stability and growth); none
  • sectoral impacts; the impact on the charitable sector is likely to be nil – the intention is not to change behaviour but simply not to punish existing over-generous donation
  • distributional impacts; the principal impact would be on pensioners, who are the most likely group to be in the marginal income band where a tithe of income would be more than the amount of tax paid. It is wholly within the government’s ambition for a simpler tax system that they should not be mithered about the odd twenty quid over-donation
  • administrative and compliance costs and issues; compliance costs for HMRC should be reduced
  • legislative and operational requirements; I consider this could be done under HMRC’s “care and management” powers.
  • environmental impact. None

4.   Conclusion

Gift Aid is a good idea. Punishing pensioners because they have given a few quid too much, isn’t. Ceasing to pursue such cases is a simple change which would free up HMRC resource, free a number of pensioners from unnecessary stress and worry, and is wholly in line with the government’s stated aims for a simpler tax system.

Wendy Bradley February 2012

Posted in Bit of politics | 2 Comments »

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Factcheck please?

February 1, 2013

Does anyone know how the announcement of 100 recruits into the HMRC affluence unit turns into a job advert for, um, a grand total of 9 vacancies?  Apparently it’ll be fully operational by April.  What year???

Posted in Bit of politics | 2 Comments »

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One point one billion

January 9, 2013

The coalition government doesn’t like the additional income tax rate of 50% on people with incomes of more than £150,000 a year. It says that the previous government’s estimates of the yield were wrong and published a detailed paper reviewing the actual amounts raised, to support its argument that the rate should be reduced from April.

The detailed report is here and if you will be kind enough to turn to page 39 and look at table 5.3 you will see that the adjusted figure for yield in 2010/11 is £1.1 billion.

In other words, if I’m reading it right, the government says that the additional rate didn’t bring in the five or so billion that Labour had suggested, but it did bring in £1.1 billion.  The conclusion (paragraph 5.64 on page 45) agrees:

Although the estimates are subject to a wide range of uncertainty, they suggest that the underlying yield is much lower than originally forecast, possibly only raising £1 billion at most.

Now, there was some comment yesterday during the debate on the Welfare Uprating Bill, because the Impact Assessment hadn’t been published till a couple of hours before the debate, so the information in it couldn’t really be used to inform the discussion.

Let’s look at it now, shall we?  Here it is: and, oh look!  Here’s what it says about the yield (the amount of money the government will “save” by not uprating benefits to keep pace with inflation)

Overall, it is estimated that savings to the Government from up-rating certain benefits by 1 per cent rather than by the CPI inflation rate, will be around £1.1 bn in 2014/15 and £1.9bn in 2015/16 in cash terms.  The savings will continue into the future and gradually increase in cash terms.

Of course it’s not a straightforward comparison – if it were, would even this coalition think that spending £1.1 bn on tax breaks for those earning over £150k was so important they’d take £1.1bn off of people working in low paid jobs and earning tax credits to pay for it… would they?  The £1.1bn from the top rate tax is the adjusted estimated total yield from the tax and not the total estimated reduction in tax take due from reducing the rate.  But if you look here at the tax information and impact note for the rate change you’ll see that the government aren’t really sure what the effect of reducing the rate will be, which is of course entirely in tune with their argument that we aren’t really sure what the tax brings in in the first place.

The impact assessment, of course, is a tool of evidence-based policy-making, and on these documents the evidence looks a bit uncertain to me.  Is the argument made?  Time will tell.

But in cash terms, what we seem to be talking about is whether incentivising the 300,000 people who pay additional rate income tax by giving them a tax cut of five p in the pound for their income over 150k is more important – more useful to  society?  More likely to get the economy moving?  More just?  More fair?  More… civilised?  Than taking it from people on job seekers allowance because there are no jobs, or on working tax credit because the jobs that exist are low paid?  It seems to be a question of priorities rather than evidence.

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Post 101

January 2, 2013

I see that I made 100 posts to this blog in 2012 – a profound thank you to anyone who made it through all hundred with me, and welcome to the next 100!

So now, in the spirit of the season, here is my New Year’s Wish List for the tax changes I’d like to see in 2013 – does anyone know when the window for Budget Representations opens this year?  The Budget will be on March 20th and there’s usually a few weeks beforehand when you can send in your ideas.  Anyone with more or better ideas, please add them in comments.

1. Abolish tax relief for private schools 

Because, seriously, how can we possibly justify giving tax relief to Eton College with its hundred million of investments  when the state school of which I’m governor can’t afford to get the windows fixed in the classroom with the damp problem?

2. Employ 150 lawyers to litigate the HMRC backlog

As ARC proposes:

Additional legal resources, 150 trained lawyers and 50 legal assistants, to accelerate litigation of the Tribunal backlog and accelerate yield. Cost £35m. Projected yield £2000m.

which seems to me a no-brainer.

3. Abolish the concept of domicile and move to worldwide taxation on the US model

The US system starts by taxing all its citizens on the basis of their worldwide income.  But then it goes on to tax all the people who are resident in the US on their income generated within the US.  This seems to me to be eminently sensible and if you agree with me, please add it to your own Budget representation.

4. Stop messing with AIA (annual investment allowance) and set it at 100,000 permanently

Or, really, just pick a number and stick with it.  

5. Shift tax thresholds up

Because, come on, no-one on minimum wage should pay tax, and no-one on less than 60k is “higher paid”.  Seriously.

6. Remove the difference between revenue and capital tax rates

Or, in other words, cut out areas of manipulation and avoidance by making the tax rates for income tax, capital gains tax and corporation tax the same – with the same thresholds.

7. Show some backbone over employment and self-employment

This probably needs a longer post, but honestly you’re never going to get agreement on what constitutes a contract OF employment or a contract FOR employment.  So get together a Royal Commission to devise two standard contracts that cover tax, NI, H&S… and make it a simple binary.  Are you on a version of contract A (employment) or contract B (self employment).

8. Show some backbone on the mansion tax

The main argument against charging an annual tax on people with homes worth over £2m seems to be that it would need an expensive new revaluation of the entire domestic property market.  Erm… why?  Charge the tax on anything valued over £2m the last time they were valued, and on anything that changed hands for more than £2m since then.  There.  Job done.  You’re welcome.

9. Make your mind up whether people are individuals or family members

And hurry up about it, because having a tax system that works on an individual basis (unless you get tax credits or child benefit) and a credit that works on a family basis (because Universal Credit is coming) is a recipe for disaster.  And, hint, people are individuals.  The child benefit is for the child – the clue is in the name – so they should get it whether their parents earn fourpence or four million.  But it should, of course, be a criminal offence not to spend it ON the child.

10. Look up “insurance”

And, particularly, “National Insurance” – and then read this article about care for the elderly.  And then extract digit and get on with it.

Posted in Bit of politics | 3 Comments »

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Tax simplification and better regulation

December 11, 2012

Does the use of “better regulation” tools like consultation and impact assessment promote a simpler tax system? (And, yes, I know it all depends what you mean by “simpler”, thanks)

Well, the coalition has four objectives for the tax system – they’re written into the Coalition Programme for Government, no less.  They  say (at item 29, page 30)

The Government believes that the tax system needs to be reformed to make it more competitive, simpler, greener and fairer

So I did a “quick and dirty” analysis of OLD (the “overview of legislation in draft”) published today on the Treasury site – yes, I know it’s on HMRC’s too, but a helpful twitter correspondent pointed out that HMT had it earlier. (Oh, and while I’m here: hint to the Treasury.  When you compile the TIINs into one document, you could add numbers instead of bullet points, so that we didn’t have to manually count them to realise there are tax information and impact notes for eighty-four measures in it.  And a decent editor could have cut out quite a few extraneous blank pages.  And added page numbers that were actual consecutive numbers instead of “A267”.  Ahem.  Yes, well.)

I had a quick look at the “policy objective” field for each of the 84 TIINs and tabulated which ones say they are aimed towards making the tax system

  • more competitive
  • simpler
  • greener
  • fairer

and the results are:

 More Competitive   2
 Simpler  10
 Greener    1
 Fairer  20
 Other  53
and, yes, I’m well aware that this adds up to 86 rather than 84, but there were two measures which plainly said that their policy objectives were to be fairer AND more competitive, and simpler AND fairer.
Like I say, it’s only a “quick and dirty” analysis and if you go through and do it for yourself you might come up with a slightly different answer, depending on how much inference you’re willing to put in.  I resisted inferring policy objectives this time around and stuck to straightforward statements.
Why does this matter?
Well there are some obvious questions – the “greenest government ever” ™ can only manage to come up with ONE tax change aimed at being green?  (It’s page A115 by the way: capital allowances for business cars, and it’s fair to say that it’s one where I actually did have to infer that the “environmental objective of reducing overall CO2 emissions” was a green objective.  It makes a difference of a fair few millions in tax and thousands in administrative burden, but produces an unquantified “indirect impact” of reduced carbon emissions.)
A remarkable number of measures are in the “other” category because the policy makers don’t seem to have answered the basic question of “why are we doing this?” which, yes, I recall from being involved in designing the TIIN process, is actually one of the considerations they’re supposedly taking into account.
Look at page A267, for example. Why are we cancelling the fuel duty increases?  Because “This measure will ease the burden on motorists and businesses”.  OK then.  That isn’t one of the objectives the coalition set itself, but you could, I suppose, say it’s a legitimate policy objective (even if it is startlingly anti-green in context!)
But what about this, from page A171:
This measure will encourage UK bingo promoters to grow their business and expand their customer base by amending bingo duty legislation to modify the restrictions and allow UK bingo promoters to link with overseas operators to offer ‘combined’ games of bingo
Are you seriously telling me that encouraging UK bingo promoters to “grow their business” is a legitimate objective of tax policy?  Or, if it is, is it not part of the overall narrative of making the UK a more “competitive” tax system?
But look at page A75 and tell me where there is an actual policy objective and what it might be:

Policy objective

The measure ensures that the switching of assets in a trust settled by a non-UK domiciled individual to investments in OEICs and AUTs is exempt from IHT charges. It also ensures that no tax will have arisen on those trusts which held OEICs or AUTs when the changes introduced in 2003 came into force.

I’ll have a closer look over the next few days at the ten measures aimed at making the system “simpler” – again, watch this space.

 

Posted in Bit of politics, HMRC, HMT, Reference | Tagged | Leave a Comment »

h1

Next year’s finance bill

December 11, 2012

So. “Full details of the draft legislation and supporting documents will be available here on 11 December”

*Refreshes HMRC webpage*

*drums fingers*

Posted in Bit of politics | Leave a Comment »

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