Archive for the ‘Bit of politics’ Category

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Tax simplification and better regulation.

January 18, 2017

My PhD-in-progress asks the question whether using better regulation techniques produces tax simplification, a question to which the glib answer is, of course, “it would, if they did”. So in keeping with the Making Tax Policy Better report and the suggestion that this is just the start of a conversation, I have been wondering what progress we might make towards a simpler tax system by making better use of the tools we already have.

Look, for example, at the 51 TIINs published on 5 December to support the draft 2017 Finance Bill.  If you take these and put them into a spreadsheet, listing the three quantifiable fields (exchequer impact, administrative burden and HMRC costs) what do you find?

The measures fall into three crude categories.  Firstly, there are those measures whose overall impact will be greater than £100 million.  Insurance Premium Tax: increase of standard rate, for example, or Abolition of Class 2 National Insurance contributions.  The Chancellor must be allowed to determine how and where he raises the money he needs to fund the expenditure he incurs: decisions about these large measures is political, and we can leave them alone for these purposes.

Secondly there are the measures which have smaller impacts. Personal Tax: changes to bands for ultra-low emission vehicles in company car tax for example will raise some tax, save some admin burden and cost HMRC some money.  Personally if I were an MP debating the Finance Bill I would want these relatively trivial measures to balance out: I would only allow as many measures which increase tax by amounts less than £100m as there were measures which decreased tax or administrative burden by similar amounts.  I suspect if this balance were demanded, the number of such measures might significantly decrease.

Finally there is the category to which I would wish to draw your attention today.  There are fully twenty measures where, so far as I can see, the exchequer effect (the actual tax raised or foregone) is zero, and both the administrative burden on taxpayers and the cost increases or savings for HMRC are either nil or negligible.

The question then is – why the hell are we doing them?  Here is a random selection:

Tobacco Duty: Illicit Trade Protocol – licensing of tobacco manufacturing machinery is a provision to licence tobacco manufacturing machinery.

Co-ownership authorised contractual schemes: reducing tax complexity seems to be a tidying-up of capital allowance rules for operators of co-ownership authorised contractual schemes (CoACS) and their investors, and yet will have a “negligible” impact on the tax they pay or on their administrative costs.

Landfill Tax: definition of taxable disposal will affect approximately 150 specialist disposal firms in England (the tax is or will be devolved in Scotland and Wales) and they will “incur negligible on-going savings through the removal of the requirement to inform HMRC about certain non-taxable activities.”  (HMRC couldn’t have just written them a letter??)

The Treasury and HMRC have an easier ride than other Departments in getting legislation before Parliament: they do not have to bid for space in the legislative programme, and Finance Bills are counted as “money bills” and subject to an easier passage through Parliament as the Lords can only delay rather than amend them.  There is a broad definition of “money bills”  which includes one “which in the opinion of the Speaker of the House of Commons contains only provisions dealing with … the imposition, repeal, alteration, or regulation of taxation…”  Perhaps someone should have a word with John Bercow?  It seems to me that, were he to declare that in his opinion no measure which produces neither tax, administrative burden saving nor government cost saving was a provision regulating taxation… and therefore no Finance Bill containing such measures could be certified as a money bill…

…well, perhaps he might, at a stroke, become tax personality of the year for his services to simplification of the tax system?

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Equality again

January 16, 2017

Well this is interesting. Cat Smith, Shadow Minister for Women and Equalities,  asked in a written parliamentary question on 13th January

when the Government plans to publish the equality impact analysis of the Autumn Statement 2016 to comply with the Public Sector Equality Duty.

David Gauke’s reply said amongst other things that

 There is no statutory requirement to prepare this information in a particular form or to publish Equality Impact Assessments.

Now, there is no requirement to assess and publish the impact of the Budget or the Autumn Statement as a whole, a giant loophole in equality legislation that was opened up or at least exposed by the Fawcett case (when the Fawcett society brought a judicial review of the 2010 “emergency” Budget).  Nor is there a requirement to prepare a separate document called an Equality Impact Assessment.

However the outcome of the Fawcett case was – I always understood – an undertaking from the Treasury that they and HMRC would assess the impact of individual measures in a better, more systematic way.  And – I always understood – this was reflected in the design of the TIIN, which includes a specific field for the result of the work done on assessing the impact on equalities.  If you refer back to May 2012 where I published the TIIN instructions you will see they included this passage:

Equalities Impacts

This test concerns people with protected characteristics. All policies must be signed off as compliant with this statutory test. At each stage of policy development you must comment on what work you have done to see whether you have given due regard to any impact on people with these characteristics and say so explicitly if you think it has none. You must keep an audit trail of your consideration, and retain this written record in the policy area so that the Department can show it is fully compliant with the law, now and in the future.

The policy is likely to impact on Equality and therefore required to complete a separate equality assessment if you answer yes to any of the following five questions:

Will the policy or its implementation have a particular impact onindividuals with one or more of the equality groups below?

Are particular communities or groups likely to have different needs,experiences and/or attitudes in relation to the policy or itsimplementation?

Are there any aspects of the policy or the way that it is implemented that could contribute to inequality?

Could this policy or its implementation have a positive impact on equality groups?

Could the aims of the policy be in conflict with equal opportunity,elimination of discrimination, promotion of good relations?

There are 10 protected characteristics that you need to consider:

Racial Group, Gender, Transsexual/ Transgender, Disability, Carers, Age, Sexual Orientation, Religion or Belief, Marital Status/ Civil Partnership, Political Opinion (NI only).

It is important that you look at the Departmental guidance and liaise with [Personal data redacted under Section 40 of the FOI Act 2000] in ICD when considering Equalities impacts as they now ‘own’ this part of the process.

And this is what it says in the current TIIN instructions, which I published last week:

Equalities impacts

This box needs to show we have had “due regard” for equality to comply with section 149 Equality Act 2010 (and similar Northern Ireland legislation). So it is not enough to say that the measure does not discriminate. A mistake that is often made is to say that there is no equality impact when there is: just about any change to personal tax for example will have an equality impact, because it will tend to affect some groups differently to others. A lot of business tax changes do too.

If the measure affects people this box should be used to say what we know about who those people are (men/women, young/old etc). The Customer Equality team in Central Customer Directorate (CCD) can advise.

Has there been a substantive change?  The Minister asserts there is no statutory requirement to publish the equality impact in ‘any particular form’.  Well, no: there isn’t a statutory requirement.  But there is a reasonable expectation, surely? Equalities impact was and remains a fundamental part of the TIIN process, and a TIIN is published with all tax changes.  Amusing as it may be for politicians to play the great game of answering parliamentary questions with as little information as possible, might it not have been more helpful to have said that?

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Worst of all possible worlds

December 6, 2016

You will no doubt remember the six (seven, if you include the summary) consultations on the ambitious “Making Tax Digital” proposals, which closed on 7 November.  At the Autumn Statement there was nothing in the actual speech, but, buried deep in the documentation, there was a statement that the government would be issuing a consultation response in January.

This sounded hopeful, because – if MTD is to be mandatory from 2017 or 18 – then the legislation needs to go into the 2017 Finance Bill and the draft clauses for that were published today, 5th December.

But look what it says here, in OLD (The Overview of Legislation in Draft) at the end of paragraph 6.1:

To ensure that the views of respondents to the consultations are fully considered, the government will publish its response to all 6 consultations, together with draft Finance Bill 2017 legislation in January 2017.  [my emphasis]

So not only is there an absurdly short timescale for the government to consider the multiple responses it is “pleased” to have received on MTD, but it plans to bring forward the legislation, or at least some legislation, anyway, except it will be out a month later than all the rest, shortening the time available for that to be scrutinised.

Poor show all round, I say.

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Good news

December 2, 2016

You couldn’t make it up.  A small band of angry women, about to lose their small businesses because of a piece of legislation that they knew nothing about till it was right in their face, angry that the legislation had been made by people who knew nothing about them and hadn’t done the due diligence to find out they even existed, take on the might of HMRC and the EU tax authorities…

… and win!  Yes, the VATMOSS campaign has won its objective of having a sensible threshold to protect small businesses and allow them to grow.  Here’s the press release from the EU yesterday:

To simplify VAT rules for startups and micro-businesses selling online, VAT on cross-border sales under €10,000 will be handled domestically. SMEs will benefit from simpler procedures for cross-border sales of up to €100,000 to make life easier;

The full proposal is here, and there’s a rather good impact assessment here.  Let’s just take a moment to sit back, pop a bottle of our favourite beverage and, well, rejoice!

Now… it’s only a proposal at present, not settled legislation.  So the usual advice is to lobby your MP, your MEP and anyone else you can think of, in order to get it through ECOFIN and into practice.

Question: will the Brexit brouhaha make a lobbying effort from the UK more, or less, likely to succeed???

 

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Serendipity

September 16, 2016

The House of Lords are looking into the process of law making.  I imagine a submission consisting of my previous post and the suggestion they just stop doing it for a while might not be entirely welcome?  But I can’t say I’m not tempted…

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Tax Simplification: A Modest Proposal

September 12, 2016

There’s to be another Autumn Statement at the end of November.  Oh joy.

Here’s an idea.  Stop having an annual Finance Bill, an annual Budget, and an annual Autumn Statement.  Replace them with some kind of “state of the union” style speech telling us how we’re doing (and there goes the Autumn Statement), a Financial Statement – a set of annual accounts and details of routine uprating of allowances etc (and there goes the Budget), and, best of all, a Tax Bill that the Chancellor has to bid for space for alongside all the other bids for Parliamentary time that are out there, so the temptation to mess with the edges is abolished along with the Finance Bill.

Seriously.  Just stop letting Treasury and HMRC policy wonks float their favourite ideas as “budget starters” and do away with the thousand page Finance Bills.  Maybe you’d end up with a Tax Bill about every year anyway… and maybe you wouldn’t.  A moratorium on tax changes till after Brexit?  How about it?

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A quick note on citizen stakeholders. And, tents.

September 5, 2016

I bloody hate the term “stakeholder”.  It started off as a reasonable sort of idea, that a business doesn’t just have to answer to its shareholders but has a wider responsibility to its customers, employees, suppliers and to society in general.  The current usage of stakeholder, so far as I can see, is to mean ‘anyone who might affect or be affected by an organisation’, in other words it’s a word in danger of becoming almost meaningless.  Unless you’re HMRC.

Yes, HMRC had its annual “stakeholder conference” today.  Yes, yes, I know it’s going to look like I’m having a massive attack of Lyndon B Johnson’s tent syndrome because I wasn’t invited, but bear with me.  Whoever they invite (here’s the list from the first one, in 2013) they can’t hope to include everyone.

But they bloody should include everyone, because we are all stakeholders in – affected by the actions of – our national tax authority.  At the very least, you’d think a twenty-first century government department with ambitions to make itself one of the most digitally advanced tax authorities in the world could manage to live stream the conference so we didn’t have to follow it second hand on twitter.

Nobody cares, I think I hear you say?  Well, people don’t know what they don’t know.  I have been conducting a little experiment lately where every time I have a conversation with a small business owner (and I mean a really small business – the hairdressers and taxi drivers of this world, the coffee shop owners and pub landlords) I have asked them about Making Tax Digital, the ambitious plan to make HMRC digital by making us all keep records electronically and none of your excel spreadsheets and carrier bags of records either.  None of my small businesses had heard of MTD, unless I have prompted them with the “four tax returns a year” horror stories from the budget before last, and then it’s been a vague, might have come across it.  And then I have (to the best of my knowledge and ability) explained it, and then I have spent the rest of my visit scraping them off the ceiling and advising them to write to their MP and to answer the consultation rather than shouting at me.

In other words, no-one is interested in HMRC until it does something that affects them.  And MTD will affect us all: we are all stakeholders.  Talk to us all, HMRC: not just to the Usual Suspects but to the people who won’t know they’re interested till you interest them.  Because interested is better than furious, honest.