Archive for the ‘Consultation’ Category

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MTD: it means “making tax digital”. (Why oh why would we want to?)

August 17, 2016

There’s a big hole in the heart of the seven consultation documents the government published on Monday about MTD, the plan to “make tax digital”, and it is this: why the hell are they doing it in the first place?

Seriously.  The overview document begins

The way you interact with the tax system is changing. From 2018 it will become increasingly digital and most businesses, the self-employed and landlords will need to use software or apps to keep their business records, and to update HMRC quarterly. The underlying tax rules will be simplified to support these changes.

Note the passive “is changing”.  Not the active “we are changing it…”

The main business document tells us baldly that it is consulting on how and not whether to MTD (make tax digital).

At Autumn Statement 2015, the government announced that, by 2020, it would require most businesses, self-employed people and landlords to keep track of their tax affairs digitally and update HM Revenue and Customs (HMRC) at least quarterly via their digital tax account. This consultation considers in more detail how these new processes should operate.

The Ministerial introduction tries to allay any fears we may have:

Freeing businesses from red tape and allowing them to flourish is a central part of our long-term economic plan for Britain. Businesses want a simpler tax system.

This is why at the 2015 Spending Review the government announced it would invest £1.3bn to transform HMRC into one of the most digitally advanced tax administrations in the world. We want to create something that is more effective, more efficient and easier for taxpayers.

OK then, but why (in the impact assessment chapter, on page 60) do we identify administrative burden savings for business of somewhere between £85m and £250m globally as against a saving to the exchequer (page 67) of £945 million – plus an uncosted benefit to HMRC from “significant operational changes”, including the orwellian “enhanced risk rules which will build in upstream compliance through nudges, prompts and personalised messaging for businesses” (page 71)

My problem is I think there’s probably a good idea in there somewhere, but HMRC have lost their mojo as far as communications are concerned.  They can talk to “stakeholder groups” all they like but they aren’t reaching the rest of us – and it’s human nature that commentators *cough* who aren’t on the “stakeholder” lists are going to be a bit pissed off that they had to find out about the condocs from twitter or from the Daily Telegraph.  My sole (thus far) academic paper is entitled “Tax Prats and Citizen Stakeholders” and “argues that othering non-professionals as ‘tax prats’ should cease in favour of inclusion of ‘citizen stakeholders’.”  In other words, we are all stakeholders in our country’s tax system and the conversation about a change as sweeping as this one shouldn’t take place only between professionals, whether they be professional tax practitioners or professional commentators.

What would I have done differently?

Well look at online tax returns.  In 2015 85% of us, over ten million people, filed tax returns online.  In 2002 it was seventy five thousand.  Why the change?  Because it’s easier, there’s no compulsion, and because there are benefits for both sides (you can do it later, and it works out how much you need to pay).

I’d have built an app and put it out onto the app stores and let people see for themselves whether it was better.  I’d have had a Hector the Inspector avatar walk you through what to click to get it to work and hired Ewan McGregor to do his Alec Guiness lite voice over.

I’d have made it simple as a game and made it work with all the most common accounting packages.  I’d have made it like a fitness app or a calorie counting app, where you can get the data from elsewhere (a fitbit or a barcode on your shopping, or in this case a bookkeeping app) or you can enter the data yourself… and then press a button to close it off/agree it’s correct.  I wouldn’t have linked it to the HMRC systems but I’d have had it tell users that “if your results for this quarter were repeated for the rest of the year you would need to pay [x amount] of tax and NIC”… and then I’d have worked out a way to make final result (“if you’re happy with the figures, click here…”) flow to the HMRC system, even if that bit had to wait a year or two.  I’d have spent half a million developing a clever, cute little app that did at least some of what the MTD project is supposed to do and put it out there free of charge for people to try if they felt like it, use if they wanted to.  And THEN we could have had a meaningful conversation about how to get people to use it, without arguing about whether we’re talking about four tax returns a year, compulsory photographing of receipts and using the system as a “cash cow”.  If you build it, they will come.

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Holiday reading?

July 20, 2016

If I’m reading the Parliament website correctly (and always assuming nothing has changed with the change of Prime Minister), then Parliament “rises” – goes on holiday – tomorrow, 21st July.  They will be off for the summer, coming back briefly for ten days in September before the party conferences, until term starts properly again on 10th October.   (And even then the poor dears will need a break for a week in November – what DO they do all day! – to see them through to Christmas.)

It really makes you wonder about the 65 open consultations listed on the gov.uk website today, doesn’t it?  Are people really going to give up some of their time to give their views on, say, the future of the inter-city West Coast rail franchise (closes 8th August) or the Personal Independence Payment (PIP) assessment: second independent review call for evidence (closes 16th September) when the Minister who signed off on the actual consultation may not be in place when the results are in, and in any event policy priorities are likely to have changed?

HMRC has six open consultations: each of them opened on 26th May and each has a closing date in August (and, great flying spaghetti monster, after all this time and a positive recommendation from the House of Lords Merits Committee why can gov.uk STILL not manage to let you list consultations in order of closure date???)

HMRC also has a new minister: Jane Ellison MP, the new FST.   Maybe the most useful thing she could do on her last day before the recess might be to have a quick look at the six consultations, check whether they still align with the new priorities she’s (presumably) going to be setting for the department, and decide whether they need to go ahead.  It’s my guess that a notice on the website (plus an email to “stakeholders” and other “usual suspects” who might be working on responses to the consultations) to the effect that they’ve been put on hold: take the summer off and come back in September… might be quite welcome.  What do we think?

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Quick update

June 1, 2016

Just a quick update to say that I have now received an acknowledgement of my response to the Land Registry consultation.  Nothing so far from the BIS consultation coordinator about why there were two different consultation email addresses on the website and what assurance there is that all our responses were received.

If you responded, I strongly suggest you check: did you get an acknowledgement?  Even if you didn’t explicitly ask for one, re-send your email to lr.consultation@ukgi.gov.uk with a copy to the BIS consultation coordinator angela.rabess@bis.gsi.gov.uk and make sure.

If you responded and did get an acknowledgement, please let me know in the comments below – and which address did you send it to?

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Land registry: and another thing

May 27, 2016

The Land Registry privatisation consultation closed last night at quarter to midnight.  So I had a quick look yesterday evening to see if I’d had the acknowledgement which I’d asked for by ticking the relevant box on the response form and explicitly in the covering email.  I hadn’t.

On the principle of “it’s probably me”, I had a quick look to make sure I’d sent it to the right email address…

…and I found a curious thing.

If you look at the covering page for the consultation on gov.uk you will see you were directed to send your responses to lr.consultation@ukgi.gov.uk

(The page has now been changed to show the consultation as closed, and, dammit, I didn’t think to take a screenprint.)

But the consultation document itself gives the response address as lr.consultation@ukgi.gsi.gov.uk.  Party, brewery anyone?  I tweeted about it before the deadline (just!)  I also wrote to the consultation coordinator at BIS (named in the condoc) last night and asked for assurance that both email addresses are live and that everyone who responded will have their responses considered – watch this space.

The addresses are interesting, though.  I did wonder about the “ukgi” element, thinking perhaps that the civil service had moved to a new provider and that instead of “gsi” the format would now be “ukgi” – but that didn’t make sense when you had an address which had both “ukgi” AND “gsi” in it.  The usual format of civil service email addresses is firstname.surname@dept.gsi.gov.uk

…and so I looked again at the condoc.  Which says it is produced by BIS, the Department for Business Innovation and Skills, on the face of the document.  But on the consultation website, it’s listed as a production

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Fire sale

May 24, 2016

Yes, I know I said I’d be away for a fortnight.  I am “away”, insofar as I’m away from home on a writing retreat, but my plans for a digital detox have had to be put on hold.  Because this one is important: look.  They’re after the Land Registry again.

“Have the Government failed to notice that the Land Registry has a customer service satisfaction rating of 98% – a rating that many large-scale, international and well-known organisations would love to have – that it operates at no cost to the taxpayer and that it made £98.8 million last year for the Treasury?” (Sian James, Westminster Hall debate)

When the former coalition government consulted on separating out some of the functions of the Land Registry into a company that could then be sold off, they were flooded with responses.  Responses from individuals hit three figures (trust me, I’m usually one of a very small number of individual responders, and the government has a tendency to consider individuals who respond to consultations as cranks anyway – see the response document here at para 29, which appears to dismiss the responses from the “number of respondents (who) were strongly opposed to the underlying proposals”.  Well, duh!)

However.  “91% of respondents did not agree that creating a more delivery-focused organisation at arms length from the Government would enable Land Registry to carry out its operations more efficiently  and effectively” (same response document, para 30)

So why the hell are we here again, with this consultation which closes on Thursday night (26 May 2016 11.45pm) quite explicitly seeking views on Land Registry: moving operations to the private sector

It’s blunt.

This consultation sets out options to move Land Registry into the private sector.  A sale of Land Registry is expected to deliver a capital receipt for Government.  This can be invested elsewhere for the benefit of the tax payer.  In addition, it is expected that a transaction could support Land Registry to be run efficiently and effectively and support the UK property market

A capital receipt.  If you have savings, perhaps an ISA, it’s like closing one account and opening another.  You sell the shares that are sitting in your ISA and get a sum of money you can invest somewhere else.  Wouldn’t the first question you would ask, though, be whether you could get a better rate of return somewhere else???  Do we believe the government – this government – plans to “invest” any money it gets from flogging off our assets into anything except day to day spending?

Also, it is “expected” that it “could” make it run efficiently and effectively?  When the evidence is that it is already running both efficiently AND effectively now, as a public sector organisation?  Why move from certainty to probability?

OK, let’s look at it.

Q1: Do you agree that ownership of the Registers should remain in Government?

Yes (“The Registers” are the result of the work of the Land Registry and the accumulated knowledge and data it has acquired over its history.  Of course that’s a key government task, to know who owns the land.  But the knowing is only achieved by the acquisition of knowledge: what value the registers if you then privatise the processes by which they are updated?)

Q2: What steps should government take and what safeguards should it put in place to ensure continued and improved access to high-quality and reliable Land Registry data?

Paragraph 33 of the condoc: “As the organisation becomes more digital, so the potential value of the data increases.”  It is foolish to sell off an appreciating asset: the best safeguard of its continued quality would be to retain it in public ownership.

Q3: How could government use this opportunity to improve the quality and accessibility of data produced by Land Registry for all sectors of the economy?

The government thinks we gave the wrong answer the first time they consulted because we didn’t understand the question.  The Land Registry didn’t make a “profit”, it accidentally produced a “surplus” because it did more searches than it had forecast and the surplus can’t be a profit because it’s not allowed to make a profit: “it is not currently allowed to generate a profit from core statutory functions, because fees must not be used to generate revenue for the Government to spend elsewhere – that is the purpose of taxation.”  Here’s an opportunity then: let it use its accidental surplus to improve its services and produce better quality and more accessible data.  Just don’t call it a profit…

Q4: On what basis should government manage the relationship with a privately owned Land Registry to ensure Land Registry meets, as far as is reasonable, the data quality and availability requirements of all stakeholders?

Because this works so well in other, arms length organisations, doesn’t it?  Outsourcing the buildings governments work in and their day to day management to opaque owners in tax havens really helps get the light bulbs changed and the bog rolls restocked.  Basically the story goes like this: send something outside of the public sector.  The expert staff go with it and get a stonking pay rise.  The remaining department tries to manage the relationship.  The agile private sector organisation runs rings round them, because they took all the knowledge and expertise – that the taxpayer had paid for and which is invested in the staff – with them.  The simple answer is: don’t do it!

Q5: do you agree that the suggested safeguards should be included in any model?

Q6: are there any other safeguards that you think should be included?

First, don’t sell it.  Second, if you have to sell it, supervise it.  Third, if you’re going to supervise it, make sure the supervision isn’t done only by the usual suspects: have some sort of supervisory board that includes representatives of citizen organisations as well as big businesses.  You could, for example, have it supervised by a Parliament of representatives elected by ordinary citizens… if you didn’t sell it in the first place.

Q7: Do you agree with the preferred option?

Q8: What are your reasons for your answer to question 7?

No: the preferred option is to flog off everything about the Land Registry except the actual Registers.  I much prefer the “status quo” option dismissed at para 89 because it does not meet the government’s objectives.  However the government objectives of “reclassification from the public sector” and its “clear requirement of maximising capital receipt” are not supported by evidence.

Q9: Do you think an alternative model would be better and why?

Yes: the “BBC model”.  Government should set the Land Registry free of the requirement to charge only what covers its costs and instead allow it to raise its charges by a capped formula (inflation +x%, as is done in the privatised railways)  It would remain, like the BBC, a non-profit organisation owned by the nation and run for the benefit of its citizens.  However its day to day running would be a matter for its own Board of Management and it could achieve “reclassification from the public sector”.  Maximising capital receipts would not be met, but instead it would produce an income stream.  Like refraining from selling the flat you inherited from your granny, but instead letting an agent manage it and enjoying the profits.

Q10: Are there other key costs and benefits that you think we have missed?

You were being disingenuous about the capital receipts thing at the beginning, weren’t you?  “Finally, it would raise revenue for Government that can be used to reduce the unsustainable level of public debt or be used to fund other public spending which is a key objective”.  (para 93)

Please think about going here and contributing a response to the “consultation” if you can: if all else fails and you don’t have time, simply email lr.consultation@ukgi.gsi.gov.uk with your thoughts.  Before 11.45 pm tomorrow!

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Simple

May 17, 2016

The guidance for the Civil Service on the so-called “purdah” period before the EU referendum is contained here, in the letter from Sir Jeremy Heywood to Sir Nicholas Macpherson dated 23 February.  It is slightly different from the usual election guidance in that it acknowledges that Ministers can be arguing either side of the case and still expect support (support in the sense of provision of information and services, not in the sense of  cheerleading or even agreement) from their Departments.

Consultations on tax changes are usually in the “don’t publish” category before elections (“government consults on whether to give us all £5000 after the election.  And a pony!” doesn’t go down well with the other parties, after all.)  But equally, this is the time of year you would be hoping they would publish the batch of any consultations coming out of the Budget, so that people have time to look at them before they go on holiday and get a response in before the Autumn Statement.

So what have we got?  Not, frankly, a lot.  The first date is the closure date, not the publication date, of course.

(plus the one about licensed tobacconists I have already briefly discussed here, a purely HMT consultation about corporate contributions to grassroots sports, and a joint DCLG, HMT and VOA consultation on business rates and revaluation)

Is that the right number of consultations for this time of year, with a referendum on the horizon?  Too many?  Not enough?  Who knows!  But it puts an idea into my head.

First of all, enough with the fiddle-fiddling around with bits of the mechanism, like a hobbyist playing with his hi-fi.  It doesn’t matter where you position the speakers, where you put your chair, whether you can hear a difference between the CDs and the vinyl and whether or not you carefully place a sixpence on the record arm.  Stop playing with the system for a moment and just listen to the music!

The tax system, in this analogy, is a complex orchestral piece that will never be finished and never be perfect.  It’s creaking along, and all you are doing by fiddling with it is stopping it from falling over altogether.  Maybe instead of a “purdah” we could have a self-denying ordinance and simply Stop Changing The Tax System for a while: how about, for the rest of this Parliament, say?  Give it a rest!  Listen to the silence!

Yes, I know HMRC and the Treasury will argue they need to stop up the holes that busy people keep nibbling away at the walls.  I call bullshit.

Let’s find out how much it costs to pass a piece of legislation.  Yes, I know all about administrative burden, but I’m not talking about that.  I’m talking about “legislative burden”, if you like.  How much does it cost us, the taxpayer, to have HMRC issue a consultative document and read and analyse the responses, for Ministers to reach a decision on whether or not to go ahead and give instructions to continue, for MPs to sit in Parliament and discuss it, for the building not to fall down round their heads while they debate it, for Hansard to report it, for Parliament TV to broadcast it, for it to be printed onto archival quality paper and on vellum and for someone to walk round to Buck House and wait while her Majesty puts her signature on it, for it to be printed and put on sale and put onto the internet…

Let’s look at the TIINs.  Let’s add the legislative burden to the administrative burden and then take away the exchequer impact, and let’s think of a number.  Say, what, ten million quid a year?  Let’s simply make it a rule that no tax legislation will be put before parliament unless the TIIN shows that, after netting off the legislative and administrative burden, the change will bring in at least ten million quid a year.

Tax simplification?  It would be a start.

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Clearing the decks

March 15, 2016

It’s the day before the Budget. You would think that HMRC and the Treasury would have cleared the decks ready for the raft of new measures presumably coming towards us after the speech.

So I was rather surprised when a quick check of the “open consultations” tab on the gov.uk website brought up one outstanding HMRC consultation and four for the treasury.

The HMRC one is mildly interesting: “a consultation on the control of tobacco manufacturing equipment and possible licensing of those involved in the supply chain for tobacco products.” Woah, you might think: we’re going to have licensed tobacconists??? Turns out from reading the consultation document that there are already arrangements in place for tobacconists in Scotland, Wales and Northern Ireland to be registered: the issue for most of us will, I imagine, be how to get an equivalent process in place for England without on the one hand opening up a market in cross border arbitrage and on the other slapping an enormous administrative burden on some relatively marginal small businesses.

The four Treasury ones? The first two: Reforms to the investment bank special administration regime and Insurance linked securities are Letwin consultations. By Letwin consultations I am of course referring to Oliver Letwin’s explanation that the point of consultation isn’t to get “views” but to look for unintended consequences. No-one at the Treasury cares what you or I think about the investment bank special administration regime or about index linked securities. What they want from the consultation is for investment banks, accountancy bodies and major law firms to do some work for them on whether their proposals – whatever they are – work at all, work as intended, and will pass through parliament without annoying lobbying from the industries affected.

I sort of feel that, as this started as a blog looking at consultations, I really ought to read both consultation documents and attempt to form a view whether they are good proposals. I feel, however, that a Letwin consultation is designed to induce somnolence in the general reader, and I just don’t care enough today to even try, sorry.

I will reserve my indignation for the other two Treasury consultations. If you have the time and the inclination, I recommend looking at this one: the proposal to create a National Infrastructure Commission, or at least to put the “shadow” one that has already been set up onto a statutory footing.

This consultation closes on Thursday night (11.45pm 17th March) and asks, in effect, if we think it’s OK that the Treasury sets up a quango – sorry, that’s not politically correct these days, is it? Now we call them “non-departmental public bodies”. The Treasury will set up an NDPB which will produce a National Infrastructure Assessment (NIA) and do we agree that a GDP envelope would provide the most effective fiscal remit for the commission…

Can we imagine the post-war Attlee government setting up the National Health Service like this? The National Health Infrastructure Board would still be holding meetings to decide whether the GDP funding envelope would allow them to start building a hospital at some point in the not too distant future, if the existing providers didn’t mind too much and the government accepted their latest Health Infrastructure Advisory Report…

And the final Treasury consultation? They want to make public sector exit payments “fairer, more modern and more consistent”. In other words, they want to get rid of huge swathes of the civil service and they don’t want to pay the going rate for doing so. What? You thought any of those weasel words meant that they were suggesting consistent or modern fairness to their workers?