Archive for the ‘Budget’ Category

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Bread and butter

October 9, 2018

The hopelessness, it gets to you.

You look at the world, at politics, economics, climate change, and you think, it’s all so big and so hopeless and so utterly, utterly fucked that there’s just no point in anything…

Nevertheless. Insert platitudinous inspirational meme here. We can’t go on. We go on.

Anyway. Did you know we have a Minister for Small Business? Well, actually a Parliamentary Under Secretary of State, Minister for Small Business, Consumers and Corporate Responsibility? It’s Kelly Tolhurst MP and she’s only been in post since July of this year, so I suppose we must let her off.

Because small businesses are being screwed. Again. Well, not small businesses, as such, but micro businesses. You know, the ones who aren’t represented by the CBI or the FSB, the ones which barely have a need for an accountant let alone someone to read policy documents for them and represent them at HMRC “Stakeholder” groups.

In the beginning there was administrative burden, which is the cost of dealing with the government – not the money the government takes from you in taxes etc, but the money it costs you to comply with the regulations they make like filling in the necessary forms to tell them how much tax you’re going to have to pay. And the UK had the highest VAT threshold in the EU because that took bazillions of micro businesses out of VAT and cut the administrative burden by gazillions.

Then there was Amazon, who hoovered up the business of selling ebooks and they did it from a low-VAT-on-ebooks jurisdiction. So the EU introduced rules to make the VAT chargeable where the buyer was located, not the seller, and in solving one problem they created another, because there were a load of authors who sold their ebooks directly from their own websites rather than paying a substantial proportion of the turnover to Amazon or another platform.

Because those authors (and the knitters selling patterns and the musicians selling sheet music and the trainers selling online courses…) weren’t represented by any “stakeholder” group and because neither HMRC not the EU did due diligence on the impact on micro businesses, no-one realised they were literally unable to comply with the legislation as originally envisaged, well, they were fucked.

Fair play to the micro businesses of Great Britain, though, because they got together and lobbied their little hearts out and crowdfunded to go to Ecofin in Dublin and lobbied the EU and… won. There’s a €10,000 Euro turnover threshold below which the new rules won’t apply, so Amazon and the like are hit but the one-woman kitchen-table business isn’t. Result?

So you might think.

The legislation comes into force on 1 January 2019. Unless something happens, the UK leaves the EU on 29th March 2019. The micro businesses of Britain have a whole 87 days to trade legally and friction free.

After that? Not only do they not get the concessionary treatment for micro businesses and the simplified system for small businesses, they don’t even get the “benefit” of being able to transact via the VATMOSS system with the protection of HMRC between them and the other EU fiscs. They become “non-union” traders and are expected to work out the rate of VAT applying in the location of their customer at the exchange rate on the day of the transaction…

It’s rubbish, and (according to the campaign group) the British government haven’t even asked for relief, or for a continuation of the de minimis threshold, after Brexit.

Oh, and there’s talk of lowering the VAT registration threshold. Because the one thing we need from Brexit is more red tape and administrative burden, right?  I mean, right?

Dear Kelly Tolhurst MP, can you please remember the very smallest businesses and look at the VATMOSS mess?

I can’t even. It’s worse than the music hall. The circus. The music hall.

 

Posted in Budget, VAT, VATMOSS | Leave a Comment »

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The day after the Budget…

March 9, 2017

Was it a good Budget?  A significant Budget?  Steady as we go, or radical change?

I’m not sure it was any of those things.  The overall pattern seemed to me to be one of self-imposed constraint – the austerity narrative, as evidenced for example in the soundbite about each family owing £60k+.  As I said on twitter:

In the context of this self-imposed constraint, then there was some tinkering around the edges.  A few million to set up GPs triage units in A&E.  Well yes, but where are the GPs going to come from?  A more radical Budget might have looked to recruit hundreds more GPs by offering to waive their student loans if they worked for a couple of years in these triage units after qualifying, for example.

A few million foregone by postponing the mandation of MTD for businesses below the VAT threshold for a year?  Well yes, but that still doesn’t answer the arguments against mandation in the first place, and makes it even more urgent that the government releases the calculations underlying their ridiculous claims for the tax they think small businesses are having it away with.

Another few million to set up T-levels, to give parity of esteem between technical qualifications and A-levels?  Hmmm… education policy really does need some work on the “parity of esteem” issue, particularly the devaluing of apprenticeships from the genuine qualification for a skilled trade to, well, a different way of describing entry-level call-centre workers.  A bit of virtue-signalling in the Budget isn’t a bad idea per se, but it’s again in the “tinkering” end of the problem-solving spectrum.

The main focus of the press this morning seems to be on the “tax hike on the self-employed”, the 1% increase in National Insurance.  There’s a big issue with employment status, self-employment, incorporation, and limited and unlimited partnerships.  The same thing done by the same people via different legal vehicles can have absurdly different tax results.  But they can also have absurdly different consequences in other ways: rights to sick pay, health and safety requirements, responsibility for National Minimum Wage, holiday pay.  To put it crudely, the argument is that self employed people take more risks and have the chance to make more money, setting the risk of triumph or disaster against the boring security of a weekly wage.  But life is more complicated now: does working as an Uber driver really give the possibility of sufficient reward to outweigh the foregoing of holiday pay and the NMW?  So it’s right that the government should do something to remove perverse incentives from the system: it shouldn’t cost so much to employ someone that you have to strong-arm them into claiming self-employment.  There should, in my view, be a clear choice between security and risk: why shouldn’t a firm have two contracts available, where you can work fixed hours for a fixed salary or take the risks and rewards of delivering a fixed outcome and make your own way towards delivering it?

I gather there will be a consultation.  Let’s hope it covers all the issues, across all the affected departments.  But fiddling about with the NI levels?  Tinkering at the edges.

Finally (and leaving aside all the annoyances in the way the budget documents were actually delivered, a major irritation to anyone trying to work on them but of zero interest to the general public) have a look at this, the “scorecard” of policy decisions  from the budget announcements.  Now, I could be mistaken of course, but I interpret this as the amount the government thinks the things it has announced in this budget will bring in by way of tax etc (the +ve numbers) and the amounts it thinks it will pay out in spending or else in tax foregone or rebated (the -ve numbers).  And doesn’t that mean that this budget will result in a net figure of one thousand seven hundred and ten million extra expenditure in 2017-18?  That’s some tinkering, and some edge.

 

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2017 Spring Budget – here we go!

March 8, 2017

At present I’m poised at my computer, watching Guto Bebb in the Commons (and why is that man not an internet meme yet?) respond (as Wales Minister) to Wales questions.  Then it’ll be PMQs, followed by the Budget.  I shall keep this post open and add anything that occurs to me as we go along, so if you follow this blog and get notified when a post is updated, you might want to turn off the updates temporarily for the afternoon.

Also, I shall have twitter open in another window.  Shouting at the tv, but when the tv shouts back!  Onwards and upwards!

Update: 12:40 Chancellor has been going ten minutes.  You may not know this, but the “interesting” stuff in a Budget often isn’t in the speech itself but in the documents published “alongside” it, which by convention aren’t published till the speech itself is over.  Theoretically they should hit the “send” button on their internet publishing as soon as the Chancellor sits down, but you will find anyone commentating on the budget obsessively hitting “refresh” on these two pages for some time afterwards, I predict.  Watch this space.

Update 12:50 There’s the MTD announcement and it’s disappointing.  It will still be compulsory for businesses to keep their records digitally, but the smallest businesses (between £10k and the VAT limit of £80+k turnover) can have an extra year before it’s compulsory.  Not cool, sorry – and costed at £200m (I think) so there clearly is some granularity to the government’s data on this theoretical £945m gain from digital recording.  I wonder if we’ll get to see it???

Update 1:00 Here’s the IR35 announcement and it’s a bit feeble.  Instead of grasping the nettle of equalising NICs for different ways of working he’s confirmed the abolition of class 2 NICS but put the class 4 NICs up by 1% next year and another the year after.  It’s a start, but really the distinction between employees and the self employed is a nettle that could do with being grasped more firmly.

Update 1:10 The interest rate on the new NSI Bonds available from April will be 2.2%, available on savings up to £3,000.  It’s not much, but it’ll cover a lot of small savers.  But of course the “competitive” banking system means it won’t remain the highest rate available for long, will it, right?  I mean, right???

Update 1:35 Well that’s it for the actual speech.  Now I’m going offline for a while to look at the documents (when they turn up) on the website.  You can turn automatic notification back on if you like: I’ll put up a new entry if I have anything notable to say.

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’twas the night before Budget…

March 7, 2017

It’s the night before the Budget. Why does HMRC have four open consultations on the gov.uk website?

Let’s look at them, shall we?

Withdrawal of extra statutory concessions 2017 is a call for evidence that was issued in January and closes at quarter to midnight tonight.  Unless you’re really interested in the withdrawal of extra-statutory concessions, I suggest we leave that one well alone.

Hybrid and other mismatches – draft guidance is some technical guidance for HMRC staff and for businesses on how the legislation on, er, hybrid and other mismatches will work.  It’s complicated stuff coming out of the OECD BEPS project and I really feel as if I ought to buckle down and make an effort to understand it…

However in the real world…

Simplifying the administration of Alcohol Duty published 16 February, closes 26 April.  This seems like a private conversation between the alcohol industry and HMRC but is being conducted in public for the sake of transparency.  Again, I feel as if I ought to care enough to read it through, but again…

Finally we have:

Sanctions to tackle tobacco duty evasion and other excise duty evasion launched on 17 February and closing on 10 May (according to the website) or 12 May (according to the document). Sigh.

Incidentally I notice that the list of “who should read this” starts with “The general public”.  Seriously?  Then how are they communicating that they would welcome views from the general public?

More to the point, what is it doing sitting on the website today, the day before Budget, when you’d expect there to be a clean sheet of proposals ready for the Chancellor to start overwriting the tax rules again?

Could the answer lie in the paragraph on “getting to this stage” where it says that “at Budget 2016 the government announced that they would consult on sanctions to tackle the illicit trade in tobacco and duty evasion.” And, lo, before the next Budget… so they have.

 

 

 

 

 

Posted in Budget, Call for evidence, Consultation, Gov.uk | Leave a Comment »

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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?

Posted in Bit of politics, Budget, HMRC, HMT, TIINs | 2 Comments »

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Better

January 17, 2017

Yesterday I was in London for the launch of the joint Chartered Institute of Taxation, Institute for Fiscal Studies, and Institute for Government report on improving tax policymaking.

The report, Better Budgets: Making tax policy better, is here. There are ten suggested steps towards making tax policy better, the first of which – moving from two to one fiscal event each year – has already been adopted.

There was an interesting discussion at the launch including a response from the FST and contributions from Andrew Tyrie from the Treasury Select Committee and Edward Troup from HMRC.  There is even video – fortunately I was sitting out of sight of the cameras so it’s safe to watch!

The report is described as being the start of a conversation and I have some thoughts about that which I’ll put together later this week if I can.  However the interesting part of the discussion yesterday was, for me, the comments Edward Troup made about widening the conversation.  Because there was a feeling of familiarity about the collection of people in the room yesterday: I found I recognised a fair number of people and there was talk about “partnership” – between politicians and tax professionals – in making the Budget in future.  And, yes, I was tweeting that this horrified me, because tax policy is too important to be left to the wizards.  We need to bring the tax muggles on board too.  I was charmed – and immensely pleased and relieved – to find Edward Troup arguing for the inclusion of the muggles too.  Kudos!

Posted in Budget, HMRC, HMT | Leave a Comment »

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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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Tax credits, grandfathering, and Budget speeches

October 19, 2015

I have very little knowledge of the tax credit system but, like many other people, I was disturbed by the suggestion that the government was taking money from the working poor and claiming it would be replaced by the increase in the national minimum wage.  For one thing, the NMW is only £6.70 an hour, applies at even lower rates to apprentices and under 20s, doesn’t apply at all to the self employed, and is poorly enforced and… creatively interpreted, shall I say? – by rapacious employers.

The rebranding of the NMW as a National Living Wage (from April next year) seems to see the age limit rise again to 25 and the amount rise to £7.20 an hour, with the promise it will reach £9 an hour by 2020.  But how can a pay rise in 2020 compensate for a tax credit cut in 2015?

— Wendy Bradley (@wendybradley) October 8, 2015

However as the row about tax credits has been in the news I have been trying to clarify my own thinking about the subject.  Because I think that tax credits should – ultimately – wither on the vine, because I think that they can be a form of corporate welfare, allowing bad employers to pay poverty wages and let the taxpayer pick up the bill.  So I believe that increasing the minimum wage and decreasing tax credits is the right thing to do, and have said so before.

I was all set, in fact, to write a blog entry suggesting that grandfathering might be the “tweak” that politicians were looking for to get themselves out of the political row.  “Grandfathering” being the term used in tax and elsewhere for changing the law but allowing the old law to continue to apply in certain circumstances – for example, reducing the maximum amount you can put into a pension, but allowing people who have already put in more than that to “grandfather” the amount already there.

So – I thought, innocently – if you changed amount of tax credit but grandfathered those already in receipt of tax credits…

Say someone had 100 of wages and 50 of tax credits, you’d grandfather that total figure, so if tax credits went down to 25 you would pay a new claimant 25 but grandfather those already on 50.  But if their wages went up to 125 you would reduce the tax credits to 25, so they would still be on the grandfathered amount – they wouldn’t be a cash loser – but the state’s contribution to the amount would reduce.  And you would hope, of course, that by the end of the parliament they would be getting wages of 200+ and tax credits of zero so the benefits of the supposed economic improvements washed out the need for tax credits and people actually were better off.

Except…

Well, except when I started looking at what George Osborne had actually said in the Budget speech, I found he said this:

This approach means no family sees a cash loss.

Either he was being disingenuous in the Budget speech (it’s written in that dreadful, flat, verb-free politician-speak, so it’s entirely possible that the clear statement I picked out refers only to one, or some, or a few of the multiple changes he’s listing), or he’s changed his mind, or he’s lied to Parliament.

I’m sure there’s a simple explanation, but I’d like to hear someone ask him the question, please.

 

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

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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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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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