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Rejoice! Only a fifth of government legislation is nonsense! (last year it was a quarter)

August 27, 2014

Great news today from the Regulatory Policy Committee, the independent scrutineers of Impact Assessments.  There has been an improvement in the number of Impact Assessments marked as “fit for purpose”, from 75-77% to 80%.

Yes, that’s right.  Instead of a quarter of the government’s legislation having an evidence base which is not fit for purpose, it’s now only one in five – rejoice!

Let’s take a step back and look at what this means, shall we?  First of all, what is an Impact Assessment?  It’s a document that sets out the reasoning behind the government making a piece of legislation, particularly what the costs and benefits will be, and whether there are any other impacts on, for example, equality, small businesses, carbon emissions and, coming soon (if we are to believe David Cameron)  impacts on families.  They are supposedly a key part of policy development, making sure that the only legislation which sees the light of day is based on robust evidence.  I say “supposedly” because in my experience they are also on occasions produced at the last minute, between the policy being finalised and the announcement seeing the light of day, solely to justify the actions being taken rather than as part of a judicious consideration of alternatives.  At their heart, though, Impact Assessments should show you that there’s a good reason for the government to take the action that it’s taking.

So why would a panel of independent experts find that the ones you were publishing were “not fit for purpose”?  Well, let’s look at a few examples, shall we?  How about the BIS attempt to change the Trades Unions’ register of members regulations, where they managed not to know what they were requiring unions to do, not to give a long enough consultation for the unions to talk to them about it, and not to work out how much it would all cost to implement.  No?

Well then, how about the Cabinet Office trying to consult on the proposal to introduce a register of lobbyists, where they managed to forget to explain why they were proposing the change in the first place, what options were available, whether there were any benefits from what they were proposing, oh, and to base their costs on a register of dental professionals that the RPC thought was “unclear how relevant”!

I’m sorry, but as a former Impact Assessment professional you have to allow me my moment of schadenfreude here.  There is a serious point, however, which is that by the time an Impact Assessment goes to the RPC for its opinion, the responsible Minister will have physically signed the form (Jo Swinson in the case of the TU register) if it’s a final IA, or will have approved the documents for issue if it’s a consultation (Oliver Letwin and Mark Harper for the Lobbyists consultation) so the IA is the place where “the rubber meets the road” – the place where the responsible Minister has to rely on his Civil Service to give him the facts.  You don’t expect him or her personally to investigate whether the numbers should be 42 or 43, but you do expect them to be able to be confident that when they sign a piece of paper saying it’s 42 they’re damned certain there’s an infrastructure in place that gives them assurance they’ve got the right figures in their hands.

It’s embarrassing to the Minister, then, to be found wanting by the RPC.  It’s embarrassing to the government to have its expertise found wanting by a panel it appointed to give it independent scrutiny.

And then sometimes they go ahead and just plain do it anyway.

 a red-rated ‘not-fit-for-purpose’ opinion does not mean the policy is flawed, but that the evidence as presented in the impact assessment is lacking. Decisions on whether to proceed with regulatory proposals following the publication of an RPC opinion are for ministers to take. 

So that’s all right, then.  The impact assessment shows you the rationale and evidence for a piece of regulatory legislation.  Around a fifth of them aren’t fit for purpose.  But then the government can go ahead and do what it likes anyway, regardless of whether there’s any evidence underpinning what it wants to do.

But what of tax changes, I hear you ask?

Hmmm… well, for tax changes the impact assessment is contained in the TIIN, the Tax Information and Impact Note.  How do I know?  Because David Gauke told Parliament it was, so by definition it must be true. But, oddly enough, the New Approach to Tax Policy Making somehow forgot to include external scrutiny of the evidence base for tax changes, so the TIINs don’t go to the RPC.  I’m a lot keener on the idea that they should now that I no longer work on them, of course.  Practical experience tells me it’s enough of a nightmare to get the book of TIINs out of the door in time for the Budget and the autumn statement, let alone having to wrangle them past an external scrutiny panel first.

It would be difficult to do, and inconvenient for the civil servants who have to do it, and expensive for the government (because they’d need shed-loads more people on the RPC and so they’d need to resource them better, not to mention they’d need a big spike in analyst resource to get the TIINs produced in time to get them to the RPC in time to get the Budget out of the door on time so they’d probably have to buy in some resource there, too…)  But those are project management problems, not issues of principle.

It would be difficult in terms of Budget secrecy, too – increase the number of people who know about a package of measures by the number of people needed to give them independent scrutiny and you of course increase the number of opportunities for things to go astray.  Again, though, a practical rather than a principle issue.

Is there a principle behind the lofty insistence that tax is different and special?

No, I don’t have an answer: it’s a genuine question.  Is there?

 

Posted in Bit of politics, Budget, HMRC, HMT, TIINs | Tagged , , | 1 Comment »

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Interesting…

August 21, 2014

Just back from Loncon3, the World Science Fiction Convention held in London’s Excel centre over the weekend (the Excel centre is big…I mean vastly, hugely, mind-bogglingly big… and as a result I’m too exhausted to write much just yet) and I have all sorts of blog posts sitting in my head begging to be written.

But all I’m going to say today is this.

If I were Ed Milliband, what I’d do today is announce that, under a Labour government, it would be illegal for banks to raise the interest rate on an existing mortgage.  They have already lent the money, they must abide by the interest rate they agreed when they did so.  And that, were a Labour government to be elected, the legislation that introduced this change would be backdated to today’s date.

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

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My union, ladies and gentlemen!

July 16, 2014

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Two Cultures

July 9, 2014

No, not C P Snow’s “two cultures” (science and humanities) but the two cultures in tax of which I have written before, the tax wizards and the tax muggles.

Yesterday I was at Committee Room 14 of the House of Commons, where Mazars and ARC were hosting a debate, chaired by Margaret Hodge, on tax transparency and the role of the trusted advisor.  It was a fascinating debate; put all the tax wizards in one room and ask them to talk to each other and you’ll get a fascinating debate – if you’re a tax wizard yourself.  I think I have to stop calling myself a squib and embrace my membership of the wizarding world, because I genuinely found it fascinating.

The muggles?  Google “tax” in “news” this morning, and there’s no mention of the wizenagemot but there IS a huge front page story about various celebrities allegedly involved in the Liberty tax scheme.

My point?  Mazars are flogging a dead horse: no-one outside the wizarding world is interested in their proposed scheme for a kitemarked “trusted tax adviser” status, sorry and all that.  ARC are flogging a different dead horse: no-one outside the wizarding world is interested in their ideas of transparency and pleas for their professional status to be better recognised and rewarded.  They are dead horses.  They have joined the choir invisible (repeat lines from the Dead Parrot sketch till you get it out of your system.)

Why?

Because there weren’t any tax muggles in the room.  Because “tax transparency” isn’t something that tax muggles are interested in, unless it comes with a preliminary explanation of what it means and how it will help them.  Because wizard can speak to wizard until Nicholas Flamel dies of old age (Harry Potter joke.  I think I backed my metaphor into a corner and beat it to death.  I’ll try to stop.)

The interesting bit about the debate was that we kept skirting around the issue: how to involve the muggles.  The reason that Margaret Hodge can be, simultaneously, “Tax Prat of the Year” and “Tax Personality of the Year” is precisely that, that she bridges the gap: that she is muggle who has authority over wizards.  She infuriates tax professionals by asking questions that don’t make sense in the language of tax, but which resonate deeply with the general public who ALSO don’t speak tax but think there’s something with a fishy aroma somewhere in the tax conversation between professionals.

I don’t have a solution.  If we rely on politicians to bridge the gap between tax professionals and the general public, then we need to do more, much more, to brief politicians in what the issues are.  There were plenty of offers during the day and on twitter afterwards to set up some kind of seminar, briefing, task force, educational effort for politicians, committees, around finance bills and at other times.  They only have to ask.  And if they don’t, they might be assertively offered anyway.  (Puts up hand to add to the offers)

There were a few quick wins suggested that might usefully be actioned (argh! management-speak is worse than Potterspeak!)

There was, for example, a discussion about comparability.  It wouldn’t help “transparency” if companies were simply compelled to publish their tax computations if they were then full of incomprehensible gobbledegook that couldn’t be compared company to company.  However the amount of tax paid by a UK company in a given year is – theoretically – available from their published accounts, although Richard Murphy has done some work on extracting it and says it isn’t, if I understood him correctly – I haven’t looked.  But HMRC could easily publish a database that would show, say, the tax paid by the top 100 – 1000? -10,000? firms for a given year and also whether they had disclosed use of any DOTAS (avoidance) schemes.  They *could* – but they aren’t *allowed* (by taxpayer confidentiality rules, even though the same information is theoretically available elsewhere with sufficient knowledge and expertise to root it out)  Quick win?  Quick statutory instrument to give them the necessary information gateway?  Or a voluntary scheme while that goes through parliament?  Some enterprising NGO writes to the top 100 and asks them?

Second, there was an interesting discussion about the kind of tax barrister who gives an opinion on tax schemes, so that a barrister’s opinion that the scheme is viable allows it to be marketed.  If it’s then found NOT to work, should there be some kind of sanction for the barrister?  Something like the situation which – I thought I heard at the meeting but haven’t looked at – applies in the US where the financial risk is then passed to the barrister?  Or should they be sanctioned by the bar council, in the way that a mis-prescribing doctor might face sanction by the medical authorities?  I don’t know, but it sounds like an interesting idea: cut off the flow of abusive schemes at source.  I look forward to seeing where that goes.

But step back a bit and look at it from the point of view of the Times reader this morning, tutting over the celebs “getting away with” something via a scheme they don’t understand.  Would a seminar for politicians, a database of tax paid and schemes entered and a stiff rebuke from the Bar Council make one scintilla of difference to their view of the tax world?

We need to find a way of bringing the tax conversation into the public discourse.  As someone said on twitter, we need a Professor Brian Cox of tax avoidance.

Posted in Bit of politics | Tagged , | 2 Comments »

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Scrutiny

June 19, 2014

I was a bit boggled by this, from the Law Society Gazette, when the link made the rounds on twitter last week.  I mean,

The City of London Law Society revenue law committee has called for the creation of an independent body with the power to veto tax legislation.

Seriously?  I can deal with THAT in 140 characters:

 

I saw the same thing floating around again this morning, so this time I went and looked at what the City of London Law Society revenue law committee actually said.  You can download their report here, and the relevant paragraphs would seem to be

8.3 We believe it would be useful to create an independent body which would have the power to veto the promulgation of tax legislation where either the legislation itself or the policy behind it are insufficiently developed having regard to its proposed effective date. … Whilst to some extent inevitable in a democracy, these phenomena are hugely damaging to the UK tax regime’s reputation for stability, and the creation of a constitutional check to limit the scope for them to occur would in our view be of real benefit.

8.4 Whether or not an independent body is feasible, we would urge a more realistic and open dialogue between ministers and officials about whether proposals are ready to be implemented than would appear to occur at present…

Which is slightly less worrying: the government already allows regulatory proposals to be reviewed by an independent body, the Regulatory Policy Committee, who issue an opinion on whether the evidence base for the impact assessment is of sufficient quality to support the policy proposal.  When the RPC was invented HMRC and HMT waged a successful campaign to have tax measures and their TIINs excluded from this external scrutiny but now that I’m outside looking in, I can see that there might be some merit in the idea, particularly as I wouldn’t have to be involved in doing any of it (!)

But actually I think the City lawyers may have been looking in the wrong direction.  Although there isn’t a mechanism in place for external scrutiny of tax proposals other than Parliamentary debate (and improving the quality of Parliamentary “debate” requires an entire constitution of reform) there IS, of course, a mechanism in place for improving the quality of tax legislation.

It’s called Tax Policy Making: A New Approach and it was invented by the coalition, announced and implemented to some degree of approval from both politicians and the tax profession, and then swiftly allowed to fall into disuse.

In other words, City of London Law Society, I think with the greatest respect that you’re focusing on the wrong issue.  It isn’t the relationship between Ministers and officials that you should be trying to improve (how do you know what it is?  How would you be able to tell if it was better?) but the relationship between Ministers and officials on one side, and the rest of us – tax muggles and tax wizards alike – on the other.  If consultation actually happened when it was supposed to, involved the right people (including some serious effort at involving small firms and individuals affected, spending some money on conducting small firms impact tests and consulting citizen juries, for example), and the New Approach was actually implemented…

…well, it just might work.

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

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Minimum wage

June 5, 2014

Could you live on the minimum wage?  Do you even know what the minimum wage is?

It’s £6.31 an hour, if you’re over 21.  That’s £227.16 a week if you’re on a 36 hour week.  Just under twelve grand a  year.  (And a couple of grand of that is still taxed, too)

Now imagine you’re in a crappy job that doesn’t quite pay you twelve grand a year, and you have to drive around to old people’s houses and make their dinners or get them in and out of bed, and you’re not paid except for the time you’re actually in the room with the client, because the rest of the time you’re on a “rest break” (because driving from one side of the city to another in the middle of the day is so restful) and you’re vaguely aware there’s something wrong with your wage packet because you seem to have been working like a dog for forty seven hours, counting from when you left the house till when you got home, but you’ve still got barely two hundred quid in your wage packet.

What are you going to do?

Because if you complain, if you stick your head over the parapet, why, you aren’t going to work again next week, are you?  And when you go to sign on, you’re as like as not to be told you’ve made yourself voluntarily unemployed so go away and starve quietly…

There’s an asymmetry, in other words, between the employer and the employee.  In the twentieth century you might have said, well, they ought to join a union, but Thatcher did for unions, didn’t she, so these days you’d say, well, there’s minimum wage legislation.  Ring the HMRC hotline…

Which is good, but HMRC have issued a “look how brilliant we are” press release today which has really got my goat.

First thing: is is legal to refuse to pay travelling time under those circumstances?  I don’t know, but the practice is so widely reported that I had assumed it must be.  But look at the middle of page 14 of this HMRC report which says that “time work” includes

travelling in connection with their work. This includes time spent:

o travelling between appointments (but not rest breaks)

o travelling from work to a training venue

Well, if travelling time IS included in minimum wage calculations, why not clearly say so?  Instead of issuing a press release bragging that you have

recovered average arrears of around £205 per worker.

Two hundred quid???  I mean, if it’s money they’re entitled to then, yes, they should have it – but I’d be a lot more impressed if there had been some prosecutions or that the

issued 652 financial penalties, worth £815,269

had been 652 penalties averaging £800 grand instead of totalling £815k – and so averaging £1250.  I mean, scary, right?  Plenty to keep some bastard employer from screwing his poorly-paid staff out of the money they’re entitled to in order to bump up his massive profits.  Oops – sorry, I’m being normative again…

Let’s look at the worked examples in that HMRC paper for a moment again, shall we?  Turn back to page 14 and look at example 1.

Example 1 Domiciliary care worker A is paid £6.35 per hour and is paid weekly. The employer has paid the worker £190.50 for 30 hours worked. Time records show the worker spent a total of 45 minutes that week travelling between clients that had not been recorded as working time.

How to check compliance with NMW legislation

The minimum amount paid to the worker should be £6.31 x 30.75 hours = £194.03

The worker was paid £190.50 so therefore has been underpaid the NMW by £3.53 that week (£194.03 minus £190.50).

Now, just hold on a minute there – the worker is paid £6.35 per hour.  They have been paid for 30 hours when they should have been paid for 30 hours and 45 minutes.  So they have been underpaid by .75x £4.76, but HMRC will only pursue for the difference between the NMWxhours worked and pay, and not for the difference between ACTUAL pay rate x hours worked and amount paid?  In this instance (and the 45 minutes is a pretty unbelievable travel time but let that go) it only amounts to a few pence but how is the worker to collect it?

Look at example two:

Example 2 Domiciliary worker B is paid £7.50 per hour and is paid weekly. The employer has paid the worker £225 for 30 hours worked (30 x £7.50) Time records show the worker spent 2 hours that week travelling between clients that had not been recorded as working time.

How to check compliance with NMW legislation

The minimum amount paid to the worker should be £6.31 x 32 hours = £201.92 As the worker was paid above £201.92 (i.e. above the NMW amount) no arrears are due even after taking account of the additional 2 hours working time spent travelling.

They have, however, been stiffed out of £15 – two hours’ pay – they should have been paid £240 (32 x £7.50) rather than £225 (30 x £7.50).  But because the amount they have been paid is more than the legal minimum, the HMRC NMW enforcement team is going to be no use to them.

That’s like saying everyone’s entitled to £57.35 a week, so if I come along and mug you and nick fifty quid out of your purse, the police won’t do anything about it if I leave you with £57.35, isn’t it?

Ah yes, but the administration of the benefits system and the justice system are different, and so are the administration of the NMW and employment law, right?  So the HMRC team that enforces National Minimum Wage can’t get involved if your employer is ripping you off in some way that doesn’t involve breaking the NMW legislation, right?

Sod that.  There’s an easy fix.  First, make it crystal clear that travelling time – except home to the first visit, and last visit to home – is working time.  Publicise THAT and the press release might be worth having.  Second, issue the workers and the employers with an official HMRC document at the end of any investigation which says clearly the rate of pay and the number of hours worked.  This then would be prima facie evidence that the worker could use to sue the employer for the rest of it, the amount they’ve ripped off that isn’t covered by minimum wage legislation – the five pence not enforced by HMRC in the first example, and the fifteen quid HMRC weren’t interested in, in the second example.

How would the worker make use of that?  Well, an individual worker could sue separately, but it’s likely to be too small an amount for an individual to take the risk.  But maybe for a collection of workers you might get, god help us, the claims management companies stepping in and suing the employer on behalf of a number of workers.  Or – and here’s a thought – how about some kind of collective worker organisation picking up the slack and advertising their services?  Anyone know any trades unions???

Posted in Bit of politics, Employment, Equality, HMRC | Tagged , | 3 Comments »

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Bit of politics

May 22, 2014

What’s the most subversive thing you can do today?

Vote.

No vote is a wasted vote. Even writing “none of the above” on a ballot paper is better than staying at home. Vote!

If you despise them all, pick someone who won’t get in and vote for them – let’s see some constituencies where the Monster Raving Loonies outnumber the lot of them. Vote!

Did you know the government is taking longer holidays because the coalition has run out of ideas? Vote! Show them we want something different, show them they can’t assume a low turnout and appeal only to the tiny number of swing voters – show them their numbers don’t add up and this isn’t a game of Moneyball, it’s a functioning democracy with a lot of pissed off people. Who vote.

Vote for someone. Vote for anyone. Subvert the system. Vote!

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Peanuts?

May 15, 2014

 

99.81% of HMRC’s staff are paid above the living wage.  (David Gauke told Parliament, so it must be true)

So that means that 0.19% of them are paid LESS than the living wage?

How many is that?

According to the 2013 Pocket Data guide they had 64,476 full time equivalents (in other words, there might be more people, but that’s the number of units of 36 hours a week you’d get if you added up the hours of the part time people: two part timers on 18 hours a week each = one “full time equivalent”)

0.19% x 62,276 = 122.

A couple of hundred part timers being paid less than £7.65 a week by the department that polices the minimum wage.  Paying above the minimum wage of £6.31 an hour but below the living wage isn’t illegal.  But it’s a pretty bloody poor show from a government department.

It would cost the nation £1.34 per hour (7.65-6.31) x 36 hours a week x 122 people x 52 weeks to put right.  In other words, about £300k.

HMRC’s total staff costs are £2,267.3 million (table 7 page 113)

It’s peanuts, comparatively speaking.  Make it right, for goodness sake.

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

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Here we go again…

May 9, 2014

“Do you want HMRC to be able to take money directly from your bank account?”  Well that’s not exactly rocket science, is it?  If you put it that way, the answer is always going to be no, right?

So how about this?

“Do you want HMRC to be able to take money directly from the bank accounts of tax avoiders who are refusing to pay up?”  That’s a bit harder but I’m guessing most of us would be on the side of the angels and would answer yes?  Because tax is the price we pay for civilisation and it’s a bit much to take advantage of the stuff that’s paid for out of taxes – hospitals, schools, roads, the fire brigade, pensions… – and then rat out on paying your share.

Hmmm… so here we go again with a consultation that produces instant headlines: shock horror!  the taxman is coming for your bank account!  Even if it’s a joint account! but with enough “no, but seriously” issues that the actual debate gets lost in a welter of petitions and op ed pieces.  (Like, yes, this one, all right.)

So let’s look at the actual consultation and what’s really being proposed (rather than the tabloid shock horror version of what people imagine it might say) and then compare that with a couple of real life situations that we might actually know something about, then, shall we?

Here’s the consultation: published on 6th May, closes on 29 July, so there’s plenty of time for people actually to read it and reply to it.  And it’s not proposed to bring any changes into force until at least late next year, if I’m reading it correctly (there’s this consultation on the design, then there will be draft legislation for comment over the autumn/winter, and then the legislation would be in the 2015 Finance Bill so it’s unlikely to come into force till some time after that).  And what else have we noticed is happening in 2015?  That’s right, an election on 7th May 2015.  So it’s possible that the coalition could pass a Finance Act and then a Putative New Government could produce an Emergency Budget in, say, June (it’s not unprecedented) and repeal the lot anyway.

Let’s start by writing D O N ‘ T   P A N I C  in large, friendly letters on the front of our notebooks, then, shall we?

Right.

First of all, I see on the first page there’s a reminder that HMRC consulted on a very similar vein, about direct “attachment of assets”, in 2007.  I hope we all have our buzzword bingo cards ready for when the politicians are interviewed about this and it all turns out to have been Labour’s fault.  Oh, and I wouldn’t have drawn attention to a consultation where the responses included, at A6.2: (my emphases)

The most commonly raised concern was that HMRC would have insufficient safeguards for this to be implemented appropriately and that it could create hardship. The level of HMRC error was a major point that would need to be addressed before any such scheme could be implemented. There was doubt over current customer service levels and that HMRC would be unable to support the system if it were introduced. A6.3. A small number suggested that this would be a draconian measure and that HMRC should not be given these powers under any circumstances.

Has anything changed in the meantime?  I simply offer it up as a money-saving suggestion to organisations which replied to the first consultation – dust off your responses and send them again!

There is a foreword from David Gaulk simply studded with “nudge unit” language designed to normalise the idea – it will “modernise” the system, other countries already do it, it’ll level the playing field, it is “targeted” at a “core” of non-compliant people.  We are being nudged to answer the second of the questions I posed at the start of this article, rather than the first.  We are good people who will never be affected by this change.  They are bad people who are deliberately ripping the rest of us off.  If you are innocent you have nothing to fear…?

Well all right.  If HMRC is serious, here’s an idea:

2.12 HMRC estimates that:  DRD [“Direct Recovery of Debts”] will apply to around 17,000 cases a year;  the debtors affected by this policy have an average of £5,800 in tax and tax credit debts; and  around half of the debtors affected by this policy have more than £20,000 in their bank and building society accounts and ISAs.

Let’s limit the power, so that HMRC can apply DRD to no more than 17,000 cases a year.  I would suggest also limiting it to people with debts greater than £5,000 and assets greater than £20,000 but it would be too easy for evaders to game the system that way (by never paying the last £4000 of tax debt and always keeping less than £19,999 in the bank)  But the “no more than 17,000 cases” rule is a good one, I think.  Firstly, it would stop mission creep, where this year it’s just the people with large and deliberate debts and next year it’s anyone with a debt older than six months and the year after that, it’s routine for everyone.  A cap on the number of times HMRC could use the power would force them to prioritise where the power was to be used and make them concentrate on the cases they asked for the power to deal with, rather than using it to settle cases that start to feel vexatious to them.

Here’s an example.  Last year HMRC wrote to me out of the blue asking me to repay an allegedly overpaid tax credit debt.  I argued with them over the phone on several occasions that first of all they were time-barred from collecting a ten year old alleged debt when they hadn’t mentioned it to me in the meantime (including years when I had actually been working for them!) and secondly I didn’t accept there had ever been an overpaid tax credit.   They kept telling me I had to ring the tax credits people and sort it out with them, and I kept saying I didn’t accept there was any collectable debt so the onus was on them to prove there was something for the debt management people to collect.

In the end they tried to collect the alleged debt via a PAYE coding amendment (rather than via some method that I could appeal against or defend in court) so I went the formal complaint route.  They grudgingly backed off and agreed the amount wouldn’t be collected, and then tried to amend the PAYE code to collect it anyway, and had to pay me £25 compensation after I had to make a second formal complaint.

Under DRD, wouldn’t they simply have taken the money out of my bank account?  My point is that HMRC’s view of who is “refusing to pay what they owe” may not match up to the views of the rest of us.

Here’s another thought:

3.3 Examples of the types of debt that will be covered by DRD include, but are not limited to:  tax debt owed by individuals (for examples, income tax or VAT owed by taxpayers in self-assessment);  tax credit debt owed by individuals who have received overpayments of tax credits (for example, Child Tax Credit or Working Tax Credit) and need to repay them to the Government; and  taxes owed by businesses and partnerships (for example, unpaid corporation tax and Pay As You Earn (PAYE) tax).

Why not have a three year trial of the policy, where you concentrate solely on the third of these categories?  In other words, apply the policy only to companies and LLPs and basically anyone except “natural persons”, individuals.  If it works on the big boys, then come back and ask how we feel about extending it to individuals?

At the risk of making this post severely “tl:dr” I was a bit gobsmacked when I got to the first consultation question, on page 13 of the document, which was:

Question 1: Is 12 months’ worth of account information appropriate for HMRC to establish how much the debtor needs to pay upcoming regular expenses?

In other words, we aren’t going to ask you about the criteria to be applied to the policy design or to the possible solutions to the policy issue we have identified, but, please, tell us whether we can ask your bank for twelve months of your bank statements or we should have more?  Seriously???  Question 2 is, can the banks provide this information to HMRC within five days, and question three, can you live on the £5,000 we’re proposing we should have to leave in your account!  This is a consultation supposedly run in accordance with the government’s consultation principles which still include (I checked) a commitment that

Engagement should begin early in policy development when the policy is still under consideration and views can genuinely be taken into account.

Why, then, are we getting a fully developed policy “solution” foisted on us and a consultation document which tinkers around at the edges and margins, and not a robust consultation on the actual policy issue which is, how can HMRC get more money in from debtors without oppressing inoffensive taxpayers.

Here’s another example.  I wrote an article for Taxation magazine in April of last year about some problems that were occurring in construction industry penalties.  Because there are £100 penalties applied to contractors in the construction industry who don’t put their monthly subcontractor returns in on time.  And a problem was arising because HMRC no longer considers a taxpayer wholistically but has an industrialised system where you deal with different departments for different matters.  So there was no “help the bewildered” service that could turn up on a contractor’s doorstep in month 2 and say “you owe us £100 for not sending your forms in last month.  Do you need me to show you how to do them?”  Instead, the £100 debt was too small to bother with, the taxpayers affected were the kind of people so petrified of brown envelopes they weren’t opening them, and it wasn’t until the debt was in the tens of thousands – and wholly disproportionate in terms of the person’s trade – before anyone from debt management was turning up on their doorstep, at which point they were, well, screwed.  As Liz Bridge of the Federation of Master Builders said:

How can it be just to seek penalties in thousands of pounds from firms that do not make much more than a living wage for their owners? Penalties should make informed people cautious and compliant, not make ordinary men with limited resources bankrupt.

Would it assist people in those circumstances to find their working capital vanishes from their bank account and they have five grand left to see them through to the bankruptcy court?

And finally, the usual question.  What does it say in the equalities impact assessment?

HMRC does not hold data which indicates impacts on any protected group.

How many times?  That isn’t the question! 

(Oh, and one last thought:)

Posted in Bit of politics, Consultation, HMRC | 6 Comments »

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Women’s Budget Group reports

April 15, 2014

I had the unusual experience this year of watching the Budget at the LSE alongside a group of other feminist academics from around the country.  After we had watched the speech and discussed our first reactions, we split up the Budget according to our various specialisms and went off to do some rather fuller analysis than the insta-punditry that was going on in the papers.

You may have your own views on whether it’s better to hit the reporting cycle while the Budget itself is still news, or to think about it for a bit longer and come up with a reasoned response.  Personally I think you have to do both, but anyway, here’s the advert: the Women’s Budget Group analysis of this year’s Budget can be found here.

(Which bits, if any, were written by me, I leave as an exercise for the class!)

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

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