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Whose job is it anyway?

August 29, 2012

A while ago Taxation magazine wondered why they bothered to include the articles summarising the Finance Bill debates: articles that (I have to say) are some of my favourites.

I do begin to wonder why we bother to cover the Finance Bill at all, when MPs say so little of relevance.

The original reason for covering it was to find points which might be relevant for a Pepper v Hart argument in the future. Best of luck with that.

Perhaps readers could let us know how (if at all) they would like us to cover the Finance Bill next year?

For me the interesting thing about their coverage of the Finance Bill debates is how little actual debate there is. There’s point scoring, headline chasing and some party political posturing. But no actual substantive debate, not in the sense anyone outside of parliament would understand it.

Perhaps that’s a good thing, though? After all, the changes following on from Tax Policy Making: A New Approach mean that the Finance Bill shouldn’t come as a surprise to anyone any more.  The changes will have been subject to consultation: will have been refined and improved, the legislation itself exposed for technical review so that the Finance Bill itself is as near perfect as it can be, right?

Well, up to a point, Lord Copper.

After all, who responds to consultations?

“Stakeholders”, that’s who. Professional associations, interest groups, lobbyists. But where is the public interest in this? In the not-a-mansion-tax consultation, one of the questions was (I paraphrase) do you think we need the annual charge as well as stamp duty  or have the poor dears suffered enough! Who is representing the non-expert ordinary decent taxpayer?

Um… That’s the MP’s job, isn’t it, and have we accidentally shut them out of the process?

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Secrets of the universe?

August 28, 2012

To anyone struggling with the results of their GCSE and A levels this month, you have my sympathies.  You’re at the most stressful time of your life (trust me, it DOES get better!) and, yes, you’re being screwed by the political interference with exam results and exam grades.  So here’s one of the Secrets of the Universe that your parents won’t have told you: ready?

It doesn’t matter.

No, seriously.  I know that at the moment it feels as if exam results are the be-all and end-all of existence, that passing your exams is the best thing in the universe and failing them is the end of life as we know it.

It isn’t.

I know anecdotes from the middle aged aren’t going to convince you of anything but I can only try.  Look at me: I passed my exams, went to university, did a degree in something I loved, and came out of my course at the same time and in the same place and with the same degree as Danny Boyle and Fran Barber.

And then I bummed around as a book seller, a secretary, a drama teacher, a secretary again, and finally became a tax inspector.

My point is, there is no way for you to know at seventeen what you’ll be doing at 27 or 37 or 47.  All you need to do at 17 is survive to be 18, and the rest of it will sort itself out as you go.  As John Lennon (google him) said, “Life is what happens to you when you’re busy making other plans”

But I think there IS something we could do about exams.

Because every year we go through the same rubbish: more people/fewer people have got A grades or pass marks or done wacky subjects that the Daily Mail doesn’t agree with, and it’s frankly insulting to the people who’ve worked so hard to get those results.

And there’s a reason the grades fluctuate.  What the politicians don’t seem to understand is the difference between marking to an absolute standard (like the driving test, where everybody knows and understands what you have to do to pass – be able to control the car and remember enough of the highway code) and marking on a distribution curve.  In other words, you’d mark the papers and then fiddle the results so that the same proportion of each year’s intake get an A, a B or a C etc.  The mark on a distribution curve tells you  your position in that year’s intake – but isn’t an absolute score.  Imagine passing the driving test if they graded on a curve – you’d know you were a better driver than the people who failed that day.  But what if it was a day when only the fumble-fingered people with no clutch control entered?  You would be better than them – but would you be good enough to pass the test EVERY day?

And that’s the reason we get all those headlines each year about “grade inflation”.  Because a few years ago we moved from a system which marked on a curve to marking to a standard – which is what we, supposedly, do now.  And which is, of course, why more and more people get higher grades.  Because the marking system says they can, and because we push teachers and schools with targets and league tables to GET more people into the higher grades.

Imagine if we complained that more people were passing their driving test every year.  You’d look at the highway code first, and at the instructions we give to examiners.  And then conclude that, actually, that’s a good thing, right?

So my suggestion is this.  We need the exam system to do two things.  First of all to tell us that people are getting the basic education they’re entitled to.  Everyone is entitled to come out of school able to read and write and add up and work out how much a 20% offer means they’d have to pay and know where America is and when mankind landed on the moon and… stuff.  We need a sort of Highway Code of Education, an agreed package of Stuff that we think everyone ought to have – skills they ought to have have, and facts they ought to know.  So let’s put that into one exam and have it instead of GCSEs – and have it as a clear “reach an agreed standard” exam like the driving test.

And then let’s have the other exams, in everything under the sun that you might reasonably (or unreasonably) want to know, instead of A levels.  And grade those on a curve, so you can use them to pick out talent, and point the people in the top percent of the music exams towards the orchestras and the plasterers towards plastering…

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Unit trusts and the citizen stakeholder

August 22, 2012

I posted yesterday my response to the consultation on the tax treatment of unauthorised unit trusts.  These aren’t the kind that are sold to the likes of you and me: they’re not regulated by the Financial Services Authority.  They’re investment envelopes used by institutional investors.

HMRC didn’t seem to be clear why people would use unauthorised unit trusts in the first place and sought to understand the legitimate uses of them as an investment vehicle to distinguish that from their uses in avoidance, and whether the introduction of a new kind of investment,  Tax Transparent Funds, would make the whole process moot.

The respondents to the first consultation – 14 of them – are listed in the Annex to the latest consultation.  Basically they are a list of the “usual suspects” with only perhaps the Law Society  having any wider community stakeholder interest and that’s only because I’m not a legal specialist so I’m a bit numb and vague about what, precisely, the Law Society’s function in this kind of transaction is.

That’s beside the point.  My point is, nobody not already a tax specialist was asked, involved, or expected to have an opinion.

That’s not necessarily a bad thing at this stage of the process; this was a second consultation, to settle the technical details of a piece of legislative change, when the principles of whether there was any need for a change at all and, if so, how it ought to be framed, was supposed to have been covered in the first stage.

One fundamental change the coalition was supposed to have made was to the making of tax legislation.  In the landmark Tax Policy Making: A New Approach we were supposed to have moved to a more considered, strategic method of making changes.  Policy ideas would be tested, options explored, and only then would the preferred option be looked at from a technical viewpoint by the experts in the field, so that the final legislation that went before Parliament was as good as could be achieved.

You know, there’s a missing section in there.  It’s all very well having an Office of Tax Simplification but look at their biographies.  I have written before about the failure to carry out the Small Firms Impact Test to look at the possible impact of legislation on micro businesses.  So even though the government is committed to talking to small businesses, it doesn’t exactly cover itself in glory in putting that into practice.  But look at the process from the point of view of its owner, the ordinary taxpayer.  There isn’t even a commitment to ask Joe and Josephine Public what we think are the priorities for tax and tax simplification.

Citizen stakeholder, to the barricades!  Well, all right, to twitter at least…

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

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Regulated justice

August 14, 2012

You might be remember that I blogged a while ago about the changes to legal aid and suggested the new regulations might be vulnerable to judicial review because the MoJ hadn’t dotted the “i”s and crossed the “t”s in passing the regulations, in both the impact assessment (of the enabling legislation) and SFIT (the conclusion that the specific reg wouldn’t impact on small firms, when the IA to the enabling legislation clearly says that it does).

I mentioned I was trying to track down the Regulatory Policy Committee’s independent assessment of quality of the IA for the enabling legislation (The Legal Aid, Sentencing and Punishment of Offenders Act 2012).  The RPC secretariat told me I would have to ask the MoJ.  The MoJ sent me this letter in response to an FoI request for sight of the Opinion.

Freedom of Information Request 

Dear Ms Bradley

Thank you for your email of 20 July 2012, in which you asked for the following information from the Ministry of Justice (MoJ):

  • I am seeking the Regulatory Policy Committee’s opinion on the Impact Assessment no MoJ088 entitled “Central Funds”. 

I understand that you did not receive an acknowledgement letter to your request, please accept my apologies this was due to an administrative error within the department.

Your request has been handled under the Freedom of Information Act 2000 (FOIA).

I have searched the MoJ’s correspondence system and I can confirm that the Ministry of Justice (MoJ) does not hold the information that you have requested.

However, I can confirm that the Regulatory Policy Committee’s (RPC) opinion was not required on the Impact Assessment in your request as the policy did not amount to regulation.

You can find out more about information held for the purposes of the Act by reading some guidance points we consider when processing a request for information, attached at the end of this letter.

You can also find more information by reading the full text of the Act, available at http://www.legislation.gov.uk/ukpga/2000/36/contents and further guidance http://www.justice.gov.uk/guidance/foi-step-by-step.htm

You have the right to appeal our decision if you think it is incorrect. Details can be found in the ‘How to Appeal’ section attached at the end of this letter.

Yours sincerely

So the response is – there isn’t one, because it *isn’t a regulation*!!!

Um…

The coalition actually defined regulation when they started regulating the way regulations are made: the definition is at annex A (bottom of page 19) in the impact assessment guidance:

Definition of Regulation
A rule with which failure to comply would result in coming into conflict with the law or being ineligible for funding and other applied for schemes. This includes: EU regulations; Acts of Parliament; Statutory Instruments; rules, orders, schemes, regulations etc. made under statutory powers by Ministers or agencies; licences and permits issued under Government authority; codes of practice with statutory force; guidance with statutory force; codes of practice, guidance, self-regulation, partnership agreements with Government backing; approved codes of practice; bye-laws made by Government.

so… legislation that requires that the Lord Chancellor “must secure that legal aid is made available” doesn’t put him into conflict with the law if he fails to comply?

See, this is why I was a Civil Servant and not a barrister!

The only get out clause I can think of is that the Act isn’t published with an impact assessment, and the impact assessment isn’t connected specifically with the Act – the connection comes from the Explanatory Memorandum to the Statutory Instrument (The Costs in Criminal Cases (General)(Amendment) Regulations 2012) which says

10. Impact

10.1 The impact on business, charities or voluntary bodies was set out in the final Impact Assessment that was published with the Legal Aid, Sentencing and Punishment of Offenders Act 2012 which can be found at http://www.justice.gov.uk/downloads/legislation/bills-acts/legal-aid-sentencing/ia-central- funds.pdf

Maybe the MoJ have deluded themselves that publishing an impact assesssment at round about the same time as a piece of legislation covers them in case someone says “where’s the impact assessment” but doesn’t oblige them to take into account any of the rules around what an impact assessment is supposed to contain or how the legislative process is supposed to be governed?  I don’t know.  But if some stroppy legal aid lawyers would care to arrange a judicial review of the regulations I’d love to be in the public gallery.  With popcorn!

Seriously, when the coalition took over with its brave new world of deregulation and cost cutting and asked serving civil servants for their suggestions I made a serious suggestion that they should abolish my job (at the time) and the jobs of all the people working in Better Regulation teams across Whitehall and simply let the legislative process take its course.  The requirement to publish an impact assessment and to conduct a small firms impact test, where appropriate, is enshrined in Statutory Instrument Practice, the bible of how to make regulations (well, it wasn’t in the actual SIP last time I had access to a copy, because it hadn’t been updated for… well, that’s a whole other story, but it was there in one of the supplements).

So MPs ought to know, when they debate a bill (or at least when they let a Statutory Instrument go by on the nod) that it should have an impact assessment and it should tell you what its impact will be on small firms in the EM.

Let them ask questions in Parliament if they aren’t happy with the quality of the legislation they’re getting put in front of them.  Because so far as I can see, all the mechanisms they’ve put in place to raise legislative quality have become mechanisms for explaining why – although it’s a jolly good idea, Minister – it doesn’t actually, you know, apply in this case…

Posted in Bit of politics, Regulation, SFIT | Leave a Comment »

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Actually, Boris…

August 10, 2012

On Monday the Mayor of London, Boris Johnson, was on the Today programme (listen around 2 minutes in) and said:

“Kids around this country are seeing that there’s a direct correlation between effort and achievement and the more you put in the more you get out.  That’s a wonderful Conservative lesson about life.”

Actually, I would argue, it’s not.  The direct correlation isn’t between effort and success; it’s between funding and success.

In 1996 at the Atlanta olympics the British team had its worst results ever.  Then Lottery funding kicked in and enabled our amateur athletes to give up the day job and become full time athletes with world class training facilities and sport science input.  Even the Telegraph agrees it was the money wot won it.  It may take a village to raise a child; it takes a country to raise an athletics team.  It’s the same correlation between the individual effort and achievement of the children who study at Eton and those who study at the top performing comprehensive… which happens to be the Thomas Telford school in Shropshire – which has now become a CTC and is sponsored by Tarmac.  Who says it’s all about individual effort – you need to work, but you need the resources behind you too.

Which is, in my view, the Conservative lesson about life – those that have, get.

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August 8, 2012

I’m a firm believer in the Oliver Wendell Holmes theory that “taxes are the price we pay for civilisation”.  As a retired Tax Inspector, you’d expect that.  I have no patience with tax arbitrage, tax avoidance schemes and tax evasion, and even less patience with any attempt to persuade the tax authorities to be less than even handed in collecting the right amount of tax – neither too much nor too little – from everyone, no matter how big or small their business.

Nor do I have any patience with big business whining about how much tax they pay, particularly when they include the PAYE they collect for the government but which is actually paid by their employees, or the VAT they also collect for the government but which is paid by the end user of the products they sell.

So I’m not really an impartial reader of the Taxation of Controlling Persons consultation document, which is full of soothing words about how we don’t doubt that people use personal service companies for all sorts of legitimate reasons (to which I say: name one!) but we’d rather like them to stop doing it if they’re, you know, the head of the BBC or the head of the Student Loans company or someone else who might come back to embarrass us.

Quite.

Personal service companies are, essentially, one man companies.  So if I want to be head of Company Ltd but don’t want to pay tax on my gazillion pound salary, I arrange for Company Ltd to buy in management services from a little company called “Worker Ltd”.  And the fact that Worker Ltd happens to belong to me, and the services that Company Ltd buys from Worker Ltd are the managements services of, er, me…

The reason that might be good for me is that Company Ltd pays Worker Ltd the gazillion pounds it is happy to pay for my services but without deducting tax – it’s a company-to-company payment for services, rather than an employer-to-employee payment of wages.  And then, because Worker Ltd belongs to me, I can decide whether it pays me a minimum wage salary and sticks the other gazillion in the bank for later, or pays me my gazillion and pays the tax on it.  And the reason this might be good for Company Ltd is that they can pay my company for my services without having to worry about such trivialities as employer’s National Insurance, employment legislation (so there’s no sick pay or holiday pay due to me from Company Ltd, it all comes out of my Worker Ltd company) and there’s no unnecessary fuss about, say, equal opportunities or redundancy legislation if Company Ltd wants to get rid of me, they just tell Worker Ltd they don’t want any services this week, thanks.

There’s legislation to stop the Worker Co from sticking its money in the bank and saying nya nya nya to the tax authorities: it’s called IR35 (after the leaflet that introduced it) but basically it says, imagine Worker Co didn’t exist: would Company Ltd have to pay deduct PAYE before it paid me?  If so, then you ignore Worker Co and Company Ltd has to pay the PAYE.  It’s not popular and, frankly, it doesn’t always work, but at least it’s there.

Essentially this consultation is a result of the government giving up on the idea it can ever come up with a way of defining employment that will do away with this kind of disguised employment and saying simply that, if the person with the service company is in a position to control Company Ltd, then let’s apply IR35-ish rules.

Personally I think they ought to grasp the nettle and be about a million per cent more bullish about what we mean by employment/self-employment and kill off these service companies altogether.  But that’s not going to happen – the people who use service companies are too well organised an interest group, and anyway it’s a useful tax dodge for lots of rich people, and only the little people pay taxes anyway…

Ahem.  I hadn’t realised I felt quite so strongly about this one!

Anyway, here’s what I sent in response to the consultation.  As ever, feel free to adopt, adapt or otherwise recycle if you wish.

This is an individual’s response and is also online (with commentary) at my blog, http://tiintax.com. I have answered your specific questions: where I have not included a question below it is because I have nothing to add. However I would additionally add that the impact assessment at page 14 of the document is so thin as to be virtually useless and as a result it does not provide the necessary information to allow the costs/benefits of this proposal to be assessed. The exemption for micro businesses is ambiguously worded and as a result the small firms impact test is incomplete. No sectoral impacts have been explored, when in fact there must be existing data on where and how this measure will impact – presumably on the civil service and on broadcasters? This should be explained in the economic impact field and would enable a more constructive engagement with the relevant sectors.

Q1 Is creating a provision which would require the engaging organisation to deduct income tax and National Insurance at source a correct and proportionate solution to this problem?

Yes, under certain circumstances. For government and quasi-government organisations (eg the head of the Student Loans organisation) I would argue that legislation is unecessary: all that is required is for the government to declare that it will not acquire services via service companies and that anyone working in a government department or quango is an employee and will be paid via PAYE. Where it is, for example, buying in IT or other services (such as the HMRC Aspire contract) then there should be clear blue water between the people providing services under that contract and government employees. Contractors would not, for example, have desk space in or security card access to government buildings. If they do, then they are employees and should be treated as such.

Q3 Are there alternative approaches that would better deliver the transparency the Government is seeking in the taxation of controlling persons than requiring them to have income tax and National Insurance deducted at source by the engaging organisation?

Yes: although a “control” provision is useful, a timing provision would also be useful. Anyone who works for the same organisation for more than (say) three months should be a deemed employee. If a genuine contract for services is in place then different staff would be able to provide the service.

Q6 Is someone who has managerial control over a significant proportion of the workforce and/or control over a significant proportion of the organisations budget the correct delineation for a ‘controlling person’?

No: what about (say) the head of a policy team in HMRC? They might control only a few staff and a small budget, but “own” a significant slice of the tax code. Similarly someone like the head of a minority channel or a commissioning editor at a broadcasting organisation might not direct a significant number of staff and the contractual arrangements might mean they did not directly control a large proportion of the budget, but by setting the policy or direction in which commissions are awarded might control a significant part of the organisation.

Q7 Should we extend controlling person to bring a larger group within the remit of this provision? If so who and why?

As above: people who control the ethos, policy or practice of the organisation should be included.

Q8 Should controlling person be narrowed so that fewer people are within its remit? If so who should be additionally excluded and why?

No.

Q10 Is there any reason we should not exclude micro businesses, who are not part of a group structure from this provision?

In case it doesn’t quite “go without saying”, clearly it is right to exclude micro businesses who are not part of a group structure when they are the payers/engagers. Equally, it is not right to exclude micro businesses who are the payees/engagees!

Kind regards

Wendy Bradley
http://tiintax.com

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

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Trackless wastes

August 1, 2012

Yes, I know I wrote on Monday about the Tax Tracker and yes, I know they published another iteration of the tracker ON Monday, sigh.

Turns out I missed one, anyway – there’s a formal consultation due “in the summer” on “Life insurance policies: time apportionment reductions”.

I had another look at the list of consultation closing dates over the summer and the only alteration I could find was the addition of:

Closes 22 October: The attribution of gains to members of closely controlled non-resident companies

I note in passing that there’s a remarkable number of “informal” and/or “technical” consultations, which I take to be officialese for “yes, I know we said we’d consult on tax changes, but we don’t want your opinions, peasants; we just want to talk to knowledgeable tax specialists who will Understand.”

You think I’m exaggerating?

I obtained some internal HMRC correspondence under an FoI request which contained amongst other things the interesting news that my response to the consultation on the proposals to add a top up to Gift Aid “is of rather poor quality”.  While the ex-Civil Servant in me finds this extremely funny, the Angry Citizen in me finds this… less so.

Because what are we consulting for, please?  I mean, if all that is wanted is to crowd-source the bread and butter work of policy making – to save the government money by getting rid of civil servants so that instead the government can rely on the tax and legal professions and interested industry bodies to do the tedious work of updating and checking legislation for them, well then, yes: my response on the Gift Aid consultation was, indeed of “rather poor quality”.

Because I didn’t do that.  I didn’t try to do the job of the policy team for them and work out any kinks in their proposals.  Because, you know, I used to do that kind of thing for a living and I’d be a scab if I now started doing it for free!

What I did try to do, was to give my response as a citizen to a proposal which will affect me, as a citizen, a taxpayer and as a person who gives to charity.  The fact that I thought it was a misconceived proposal should have been a useful datum.  I’m not saying it should in any way be decisive; but it should be part of the picture.

And any other citizen who chooses to comment on the workings of government and the development of policy ought also to be able to feel that their contribution is taken on board as part of the picture.  It’s government of the people, by the people, for the people; not GCSE civics.

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

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Use the mike

July 31, 2012

Yesterday I went to Sheffield station to buy some railway tickets.  My mother is deaf, so she doesn’t like to transact on the phone, and she’s in her eighties, so she’s not comfortable transacting on the internet.  So we jumped in a cab and went down to the station so she could renew her senior railcard and buy the tickets for us both to go down to London next month to see the Queen’s Diamonds.

There’s a sound system in place, so when we finally made it to the counter she set her hearing aid to the T setting and was able to hear the clerk (although she couldn’t, then, hear me, standing next to her, and had to switch back and forth).  But after she’d done the railcard transaction and we’d selected the dates and times we wanted to travel, the clerk told us the price.

“Sorry, I’m not hearing you,” I said.  The clerk gave me That Look – you know the one.  The “are you stupid or something” look.  And repeated what she’d said, at exactly the same volume.  Just move the mike, I thought – I could hear the guy at the next counter, perfectly loud and clear, because he had the mike an inch from his mouth and the volume turned up.  But this lady obviously didn’t think using the mike was necessary.  “Sorry, I still can’t hear you,” I said, and again got The Look and another repetition, this time with an eyeroll.  My mother, being of the “don’t make a fuss” generation, simply put her credit card into the machine, paid the amount we couldn’t decipher, and we checked it all later.  No big deal, right?

Well, have you ever tried to get your employer to make a reasonable adjustment to your working conditions on account of a disability covered by the Equality Act?  If the simple action of getting someone to use correctly the equipment that’s already there is a problem, imagine what it would be like trying to educate your employer on what their duties are and your reasonable requirements might be, while you were feeling ill in the first place.  I’m exaggerating?  I’ve just written and then deleted (because they aren’t my stories) a paragraph detailing three different examples I know of from my personal acquaintance of people who have had grotesque difficulties getting different employers to abide by the law in the last year; partly because, when you’re ill, you’re not really in a good place to provide a teachable moment to your employer in the first place, let alone the assertiveness to insist they comply with the law that’s in place for your protection.  It’s easier to be quiet, don’t make a fuss, make do.

Living with a disability must be hard.  Working with a disability is hard enough when you acquire the disability after you acquire the job, are a valuable source of knowledge and ability for your employer, and know and exercise your rights.

Well, what about Remploy, the business that employs workers with disabilities in an inclusive environment?  Oh, yea, being shut down.  Because, apparently, there are better ways of supporting people with disabilities in mainstream employment.

OK.  But what IS that support?  Well, if you were watching anything except the Olympics last night, you’d have seen either the Dispatches programme: Britain on the Sick or the Panorama programme, Disabled or Faking It?  Both programmes showed DWP film of people who had been prosecuted for faking disabilities but reminded us that this amounts to less than half a per cent of the people actually claiming disability allowances.  The real problem identified by both programmes was the mechanism the government has put in place to assess whether people needed to be “on the sick” or were “fit for work”.  Dispatches concentrated on ATOS and secretly filmed a GP taking the ATOS assessors’ training.  Panorama concentrated on the claimants – including the gentleman found fit for work while he was sectioned under the Mental Health Act!  Lucy Mangan spoke for me and, I believe, for millions watching, when she wrote in the Guardian:

‘Why don’t you just stop it,” you wanted to say. “Just stop doing this cruel, pointless, terrible thing to people. Stop adding to the sum of human misery in the world and start working for our betterment instead.”

Because it was all about finding people were capable of work – if they had one finger they could push a button, if they could sit or stand they could work a checkout, if they could theoretically propel themselves in a wheelchair they were mobile, even if they didn’t actually have a wheelchair.  And while I see the government’s argument that it’s better to think about what people can do rather than what they can’t do, none of this amounts to a hill of beans if there isn’t a job for them to move into, an employer willing to take on a one-fingered, invisible-wheelchair-using person.
One final thought.  Chris Grayling said that “there are no targets anywhere in the system“.  In other words, ATOS don’t have a fixed target of people to find fit for work (or, unfit for financial support).  This is a pusillanimous equivocation.  There may not be a “target” – find 12% of them fit for work or we sack you.  But there is an “average“: the average number of people found fit for work is 12% and if you’re outside of the average you’ll be audited.  And then look at table 1 on page 36 of the 2010 Budget Costings document which shows the expected exchequer impact of “reforming (sic) disability living allowance”.   Next year we’re taking £360 million from sick people and, the year after, £1,075 million.
Well, not in my name.  If this makes you, too, into an #angrycitizen, take a few moments to sign the epetition here.  And write to your MP.

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

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Red RAG

July 27, 2012

So there’s this thing called a “capability review”.  You get someone external, neutral and dispassionate to review a government department – and, in particular, its management – and assess its capability.  Could it cope with a crisis?  Could it react appropriately to change?  Does it have the confidence of its staff?  Does it have the confidence of its Ministers and of the general public who pay its wages?

It happened three times.  Once in 2006-7, once again in 2008-9… and now the third and final round, covering 2011-12.  (No, I don’t know what happened to 2010 either.) But the Institute for Government have crunched the numbers and raised some interesting questions about the answers.

Because, oh look, this is going to be the last time we do capability reviews (because Gus O’Donnell, who invented them, has retired now?)   And, oh look again, we had someone external doing the first two but the last one was based wholly on self-assessment.  And, knock me down with a feather, it turns out that not one department awards itself a “red” rating on the red/amber/green “RAG” rating system – where green is “strong”, amber is either “well placed” (amber/green), “development” needed (plain amber) or “urgent development” needed (amber/red), and red is “serious concerns”.

Yes, not one department has serious concerns about its own capability. Excellent news?  Or more a case of, altogether now, “well, they would say that, wouldn’t they?”  (Note in passing the first comment on this report of the results, suggesting that DECC’s apparently poor performance might correlate to their being the only department to use an external assessor this time around)

So what of HMRC?

After the MoJ they showed the most improved score in the third round.  They reported a clear green for “build capacity/develop people” and “collaborate and build common purpose” while achieving the lowest score across Whitehall in the separate staff survey.  In other words… the senior management thinks it’s doing marvellously, and its staff and customers beg to differ.  Its action plan, though, tells us that the external assurance was provided by the non-execs on the Board:

The Board has been very involved in this Capability Review, with all non-executive directors playing an assurance role throughout the process. We provided challenge during the review and support the final report and scores.

Oh, these guys??? Well that’s all right then! {sarcasm mode off}

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

h1

Have I got news for you? (Well, have I?)

July 23, 2012

There’s been some very poor reporting of the speech David Gauke made this morning at the Policy Exchange – “cowboy” tax advisers will be forced to “name and shame” their clients, for example.  No they won’t, and, don’t be daft.  Some journalists need to do some research that doesn’t involve google once in a while.

The speech itself is interesting, though, in part because the Minister has a go at what’s acceptable and what isn’t in terms of tax planning:

Legitimate use of reliefs is not tax avoidance:

Claiming capital reliefs on investment is not tax avoidance – when those reliefs were introduced precisely to encourage the investment in question.

Claiming reliefs against double taxation is not tax avoidance – when the alternative would be taxpayers paying tax twice on the same income.

Claiming back tax on legitimate charitable donations is not tax avoidance – any more than ticking the ‘gift aid’ box is.

Not paying tax on your pension contributions is not tax avoidance.

Taking out a tax free ISA is not tax avoidance.

Quite.  (Although you then ask yourself why we then had the ill-conceived consultation on capping charitable tax reliefs…???)  

Buying a house for personal use through a corporate entity to avoid SDLT is avoidance.

Channelling money backwards and forwards through complex networks for no commercial reason but to minimise tax is avoidance.

Paying loans in lieu of salaries through shell companies is avoidance.

And using artificial ‘losses’ deliberately accrued to claim back tax is avoidance.

To which we say “yes!!!!” (And, when are you going to give HMRC the resources to do something about it??)

Where, though, do we find the announcement that leads to the “name and shame” the “cowboys” headlines?  Well, a consultation IS announced:

Today we consult on ways to improve the information available to the public on avoidance.  Publishing warnings for all to see, and making it easier for taxpayers to see if their adviser has promoted failed avoidance schemes in the past.

(which, you will note, suggests that it’s information about advisers that might be made public, not about their clients)

Let us turn, then, to the Tax Updates and Consultation Tracker helpfully provided by HM Treasury, which lists as To Be Published in July a consultation on “Disclosure of tax avoidance schemes (DOTAS)” Hmmm…. the accompanying PDF helpfully elucidates that this will be

Consultation on extending the DOTAS hallmarks so as to capture avoidance schemes that do not currently have to be notified.

Because, as anyone who works in tax would already know, there is already a regime which says that, if you’re going to market an avoidance scheme, you have to tell HMRC about it.  You have to give it a reference number, and you have to tell the people who buy the scheme from you what the reference number is, and they have to include the reference number on their returns.  Avoidance, not evasion, remember?  These are people who are trying to outsmart the taxman, not hide from him.

So have I got news for you?  Or, to put it another way, is this consultation “news” at all?

Well we don’t know what it’s going to say yet, do we.*

But…

Well…

Look at the briefing note which the Law Society produces for its members, telling them what their responsibilities are if they are the promoters of a scheme and reassuring them that they aren’t going to be asked to violate their professional ethics by disclosing privileged information and they aren’t going to be caught by the legislation if they simply give advice to their clients on a scheme that someone else is promoting.

And turn to section 9, “more information”, and the list of legislation on disclosure of tax schemes.  There are thirty two of them.  So far. Including

I seem to recall that David Gauke said, in the foreword to Tax Policy Making: A New Approach that

Business and tax professionals have previously criticised the tax policy making process as piecemeal and reactive, pointing to the wide range of policy announcements in recent years that have been unexpected and insufficiently thought through.

We could discuss whether this vast train of DOTAS legislation is the result of “piecemeal” policy development that hasn’t been sufficiently “thought through”, or is a sensible use of an iterative approach.  Or we could just say that it’s the tax authorities and the tax avoiders playing whack-a-mole.

As the Minister himself said in his speech today:

There are some who might say that consultation documents on tax administration are often an effective cure for insomnia, but this is one consultation that will keep the promoters of aggressive tax avoidance schemes awake at night.

Um… are you sure, Minister?

 

[*Update: not twenty minutes after I’d posted this, I saw in my twitter feed a tweet from Tax Journal which had a link to the consultation itself.  So we DO know what it says.  But – having read through it – I’m afraid the rest of this still stands.  Sorry and all that.  Oh, and could someone from the Treasury please explain why they bother having a tax consultations tracker at all if it isn’t up to date, please?  Thanks!]

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

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