Archive for the ‘Consultation’ Category

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Glass of almond milk, anyone?

December 6, 2017

There are 100 open consultations listed on the gov.uk website this morning, and 13 of them are from HMRC… do we not think HMRC are legislating too much???

Having a quick flick through to see if there are any which expire soon I came upon this: the draft legislation for the soft drinks industry levy (the tax on sugary drinks).  It is, in my humble opinion, wretched stuff, trying to define in legislation when is a fruit drink different from a vegetable juice different from a milk drink and what constitutes a milk substitute drink.  Treble almond milks and years of anti avoidance legislation after amusing tribunal cases sampling kale, mango and almond smoothies all round?

However my eye was, of course, instantly drawn to the TIIN, or at least to where the TIIN ought to be.  Because, look, here is what it says at the end of the draft SI for the levy itself:

A Tax Information and Impact Note has not been prepared for this Instrument as it contains no substantive changes to tax policy.

What?

No, the other piece of draft legislation (the enforcement provisions, here) has the identical final paragraph.

No.  Just, no.  The TIIN is there to inform parliament about the legislation they are being asked to rubber stamp.  There is little enough genuine scrutiny of this kind of legislative gunk as it is, and at least attaching a TIIN gives readers the chance to see what the likely impact is of letting this go through on the nod.

I was getting ready to write a righteous screed in the manner of Angry of Tunbridge Wells about how it really is appalling that no TIIN has been prepared for this entirely new tax…

…and then I used google.  And of course there WAS a TIIN, and it’s here, from when the primary legislation was published last year.

In order to inform Parliament, surely the last sentence of the draft instruments should read something like “The TIIN for this measure was published in 2016 and may be found at https://www.gov.uk/government/publications/soft-drinks-industry-levy/soft-drinks-industry-levy”

And then I thought, oh, they’re asking for feedback on the draft legislation, and that IS feedback…  So there you go.

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Dreary me

November 2, 2017

Dreary, dreary me. Well, not intrinsically me, you understand, but how I feel after the soul-sucking experience of looking at the Making Tax Digital (MTD) regulations.

Yes, we’re at that stage now. HMRC has given up trying to make us swallow the whole elephant of MTD and instead is pushing it at us one bite at a time. The primary legislation is in Finance Bill (No 2) 2017 (where the MTD section essentially says HMRC can make MTD regulations) and now the secondary and tertiary regulations are out for consultation here and in four attachments. Honestly, I wasn’t going to look, because it’s dreary. You know it is. Dreary, joyless, pettifogging and unnecessary. Look at this, from the Income Tax (Digital Requirements) Regulations

6.—(1) Subject to paragraph (3), “digital records” for a business means records of each of the transactions made in the course of the business, including—

  1. (a)  the amounts of the transactions;
  2. (b)  the dates of the transactions, according to the basis used by the relevant entity for recording transactions for the purposes of income tax; and
  3. (c)  the categories of transactions into which the transactions fall, to the extent those categories are specified.

Please. Get a life.

If this regulation is passed, businesses affected will have to keep records of the amounts, dates and categories of their transactions in “functional compatible software”. Lost the will to live yet?

Functional compatible software is defined in the regulations too:

“functional compatible software” means a software program or set of compatible software programs the functions of which include—

  1. (a)  recording and preserving digital records in a digital form;
  2. (b)  providing to HMRC quarterly updates and as applicable, end of period statements or Schedule A1 partnership returns in a digital form and by using the API platform; and
  3. (c)  receiving information from HMRC using the API platform in relation to a relevant entity’s compliance with obligations under these Regulations;

“The API platform” is nonsense: one might as well say “the language” or “the alphabet” without specifying which language (Greek? Mandarin?) or which alphabet (Cyrillic? Or Japanese – kanji or kana?)

So the Statutory Instrument will also have to define “the API”? Well, it defines “API platform”:

“API platform” means the application programming interface that enables electronic communication with HMRC, as specified by notice made by the Commissioners;

which I take to be drafters language for “HMRC haven’t written it yet but they’ll tell you when they have”?

Dreary, pettifogging stuff.

But I’m an impact assessment specialist, so of course I turned to the impact assessment, or at least I tried to. Where is the TIIN?

The Income Tax (Digital Requirement) regulations end with the words:

EXPLANATORY NOTE

(This note is not part of the Regulations)

The Regulations [ ].

but there IS no explanatory note attached, so there is no indication of whether a TIIN was completed or where it might be found, and there is no actual TIIN attached.

The Income and Corporation Taxes (Electronic Communications) (Amendment) Regulations  end with the words

Consent by the recipient is not required.

[TIIN]

Here’s what ought to happen. Governments say that they will not regulate unnecessarily, only where there is some “market failure” which means the government has to step in.

Does the government need to step in to force businesses to keep their records electronically in a way which will enable them to be sent to HMRC and for HMRC to read them? No Socrates, it does not: all that is required is for HMRC to build an electronic system which is demonstrably better than the current method of making returns of business profits and businesses will use it. Only then would it be reasonable to compel the last few recidivists to join in.

So, in a democracy, these regulations should be scrutinised by MPs before they are passed, and only passed into law if they are a reasonable way of achieving the policy objective.

MPs should do this by looking at the cost/benefit analysis in the TIINs and forming a view on whether the costs are justified by the benefits. They are hamstrung from doing this by the failure to publish a TIIN with the regulations. They should decline to rubber stamp something so… dreary. Joyless. Pettifogging. Unnecessary.

I challenge MPs to do their job. I will write to my MP and ask him to do his. I challenge you to do the same with yours.

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Risky business

October 31, 2017

I never worked in the Large Business section of HMRC so my ignorance on the inner workings of the section is largely an exotic fruit with the bloom still upon it. However we all have a stake in making sure that the revenue authorities play fairly in treating both large and small businesses equitably and efficiently so we all have a stake in the way HMRC deals with its Large Business customers.

What is a “large” business? In HMRC’s world, it is one with either a turnover of more than £200 million, or else it is part of a large multinational group even if its UK “footprint” is relatively small.

Currently HMRC uses a process called “Business Risk Review” (BRR) to divide large businesses into sheep and goats – they are assessed as either Low Risk or Not Low Risk, with “Low Risk” being rewarded by less contact with HMRC, fewer questions, less frequent reassessment of the risk. Six criteria are used to divide the sheep from the goats:

Inherent risk

  • the size of the business
  • its complexity
  • the amount of change to which it is subject

Behaviour

  • attitude to tax avoidance
  • systems and processes
  • openness with HMRC

You can easily see that, although low risk/not low risk is a binary, it is not a pejorative binary: being “not low risk” need not be because a business is trying it on in some way, but simply because it is  E X T R E M E L Y   L A R G E  or particularly complex.

 Someone, somewhere – a politician, or else some bright spark in HMT or HMRC – is busy pondering whether this is enough and whether

A more granular risk classification will help HMRC focus resource on the highest risk businesses, and increase the behavioural influence of the BRR process within business.

Here’s the consultation: it opened on 13th September and closes at quarter to midnight on December 6th.

Here’s what I think. First of all: why? Why change at all? What policy or practical issue are they trying to solve here? Does the current classification system not work? Is it taking up too much time or resource, is someone complaining about it, is there an actual need for change? I don’t see it in the consultation document. I honestly don’t see it at all.

Secondly, let’s look at paragraph 3.2 on page 10 of the document, where there is a flow chart setting out the BRR process. Look at the final point, where HMRC asks itself whether “HMRC can trust the customer to set the agenda for interactions with them”. This seems to me fundamentally misconceived. Of course a business or an individual has a perfect right to abstain from contact or cooperation with HMRC, in exactly the same way as we all have the right to remain silent if asked questions by a police officer. If a police officer turns up on your doorstep and asks you questions you are perfectly entitled to tell them to go away or not say anything at all. If they want to question you badly enough, they are entitled to arrest you, but then you are entitled to have a lawyer present while being questioned, and to answer “no comment” to anything you are asked – and neither guilt nor innocence should be inferred from silence. Rights are only rights if they are exercisable. But it is not up to the individual to decide whether or not they will be investigated by the police, questioned or arrested – it is the police’s decision whether or who or how to investigate.

So HMRC can offer a cooperative relationship to large businesses if they fulfil certain criteria, but it is not up to the business to “set the agenda for interactions” with HMRC and I am astonished that such a phrase has appeared in the consultation document at all. HMRC should run the show, decide what risks the taxpayer presents and how they will address them.

But if HMRC is, indeed, running the show, it is not at all clear to me how a more “granular” approach to risk assessment will be of benefit to anyone. At present the low risk/not low risk categorisation does not imply any wrongdoing on the part of the business being assessed. If they were assessed as one of “low risk, low-moderate risk, high-moderate risk, high risk and significant risk” would that not introduce new opportunity for conflict? Is “high-moderate risk” a pejorative designation? Would it be better to be “low-moderate risk”? Do the classifications depend on whether the risks are inherent or behavioural? What good does it do anyone to classify risks like this?

Again, if you were arrested, would it help to know you were considered low-moderate risk offender rather than a high-moderate one? Would it help you, would it help the police, would it help anyone?

Don’t do it, would be my response to this consultation. Or at least, if you must, explain why.

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Back to school

September 27, 2017

…and then suddenly you look around and see that you haven’t posted for a month, because – overwhelmed by the futility of it all – you realised that there wasn’t anything to say.  And yet, and yet…

There was a point where there were no open consultations from HMRC at all.  For perfectly sensible reasons (change of Budget date, the enormous administrative changes going on in HMRC and, of course, the reduction in flow of legislation from clearing the decks for Brexit) but still a bit concerning.  Maybe no public consultations, but were there still those cozy chats with “stakeholders”? (Was there an “annual stakeholder conference” at all this year?  Or has it happened and been kept wery, wery quiet?)

But normal service has resumed.  We are back to consultations: four of them, in fact, if we are to believe the gov.uk consultations page, sorted for “open consultations” from HMRC…

 

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So gov.uk’s “consultation” page manages to list consultations like, oh, the Forestry Commission’s plans to change public access to open access land at Harwood Village in Northumberland, (See here) but not “eight policy papers” from HMRC?

Sigh.  What was I saying about the futility of existence?

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Summertime blues

August 23, 2017

It’s August, Parliament is not in session, Big Ben’s bongs are silent: yet there are still 62 open consultations listed on gov.uk.  Less is more, guys, please!  (At least, in the sense that we want less legislative activity and more administrative competence from our government, not that we want fewer consultations on what legislation they DO introduce, of course.)

However there are currently zero, count them, zero consultations listed from HMRC. Hurrah!  and, is this unprecedented?  Enquiring minds want to know!  The sole HMT consultation is on developing the supply of capital for “innovative firms” (Bank of Dave, anyone???)

However – should you still be sitting in an office somewhere idly reading blog entries and pretending it’s work – there is another way you can contribute to the government’s developing policy and administrative agenda: yes, you too can Help Make Gov.uk Better by joining the panel of service users contributing to their research.

Yes, I’ve joined.

No, they still haven’t found a way of listing consultations in the order in which they close.  Sigh.

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The Navy Lark

July 20, 2017

All quiet on the consultation front. Which is as you would expect, really, because this is not a government embarking on a frenzy of domestic legislation on which it needs to consult, but holding its fire ready for the transposition and/or abolition of EU law after Brexit.

Except…

…well, there are still more than 40 open consultations listed on gov.uk. There are equality and other impact assessments around the HS2 proposals, open access restrictions proposed on different Nature England sites, odds and ends of changes to the way statistics are compiled and…

This. Proposed cessation of the Ministry of Defence’s military aid to civil authorities I wondered what it might be about.  Surely the MoD weren’t going to stop helping out in times of disaster; fear, fire, foe, flood?

No. It’s an odd thing. It seems to be a proposal to stop telling us about something we’re not much interested in, but not to stop doing the thing itself.

This is an annual publication that provides information on the number of vessels boarded by the Royal Navy Fishery Protection Squadron (RN FPS) within British fishery limits, and the number of court convictions and financial administration penalties (FAPs) issued as a result of the boardings.

We are proposing to cease production of this publication

The consultation closes on 14th August and it’s only a one page document and I honestly recommend you read it in full, because, well, I just don’t get it. Under “reasons for the proposed change” it says

The number of vessels boarded by the RN FPS has fallen from 1335 in 2006/07 to 460 in 2015/16, a decrease of 66% over the decade. The number of convictions and administrative penalties has fallen from 53 in 2006/07 to 4 in 2015/16, a decrease of 92% over the decade.

The number of web-hits for the publication page has fallen from 535 in 2015/16 to 343 in 2016/17, a decrease of 36%.

Something that is happening less and less, and being enquired about less and less, so we can stop publishing stats about it? Well OK then but I still have questions. First of all, presumably people will still be able to make a request for the figures under the Freedom of Information Act (or by asking their MP to ask a Parliamentary Question). Does’t it cost more to respond on request than it would cost to carry on chucking the figures routinely onto a website?  Seriously?
Secondly, does it cost money to collect the figures in the first place? Is there some process (“Damn it Caruthers, we may have caught the blighters but there’s still a thirty-six page form to fill in explaining how we did it”?) involved in compiling the figures in the first place that’s going to be stopped?
And finally… well, Brexit, I suppose. Isn’t policing the UK’s fisheries going to be a higher priority for the RN after Brexit, and wouldn’t you therefore expect these stats themselves, as well as interest in them, to go up substantially in the next few years? Remember the Cod Wars? The timing of this seems weird to me.
But, hey, what do I know? I’m neither a fisheries nor a naval expert and maybe this all makes sense to the people who know about it. Wouldn’t you think, though, that before you issued a consultation document you might have read it and maybe wondered whether you’d included sufficient detail for other people to understand where you’re coming from? Particularly if you’re going to say “As long as there is no objection during the consultation period, the cessation of the report will proceed as planned and the June 2017 bulletin will be the final annual report produced.” No objection? None? Anyone?
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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.