Archive for the ‘HMRC’ Category

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How to prepare a TIIN: the tax impact assessment

February 10, 2017

You may remember that I asked HMRC for the current guidance on how to prepare a TIIN (this was published here on my blog) but that the guidance referred to further guidance on how to do the tax impact assessment part of the process.  I have now received, by way of a further FoI request, the attached tia guidance

Note that the “redacted” areas are where the names of the particular officials responsible for different policy areas have been redacted.  Apparently the “more” areas refer to links to further internal guidance which was not considered to be covered by the scope of my FoI request.

More interesting, though, is the response I had to my question of why this guidance is not part of HMRC’s routine publication schedule, particularly as the TIIN is the tax version of a Regulatory Impact Assessment, and the RIA guidance and instructions are routinely published.

We have not published this guidance routinely for two reasons. Firstly it does not affect the computation of the tax that a customer pays and is therefore of interest only to a small community. Secondly, as you point out, it mirrors cross government impact assessment guidance for internal HMRC use and is not intended to materially differ from it, except to the extent that the impact assessments provided for tax provisions are presented in TIINs, and to explain to HMRC staff how to engage the right processes to generate the impacts.

Hmmmm… I am tempted to point out that another possible reason could be that other government departments’ impact assessments are subject to external scrutiny.  As impact assessment programme manager in HMRC, my job for several years included going to cross governmental meetings and saying (in effect) no, hands off, tax is different!  These days?  I’m not so convinced…

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Yes, and, but.

February 3, 2017

Is there a communications manager for Making Tax Digital yet?  Because – apologies if there is – but it seems to me the communications so far have been, well, pants.  Apparently we are no longer MTE (Making Tax Easier) or even Making Tax Digital (MTD) for example, but “MTDfB”.  This inelegant acronym stands for “Making Tax Digital for Businesses”, presumably because we don’t want to frighten the taxpayers horses by suggesting that pensioners and others on PAYE will have to play.  Yet.

More importantly, there seems to be no plan to communicate with anyone outside the rather small circle of people who are already tax mavens, with those unrepresented businesses who will be hardest hit by the changes.  You don’t believe me?  Put “making tax digital” into google and hit the tab for “news”.  There is virtually nothing in the general press, although the professional press is of course full of it – but no-one at HMRC is, seemingly, listening to them.

Look, there’s a serious misunderstanding here.  The consultation response says that “respondents overwhelmingly support the move to a digital tax system.”  No, it’s a recognised letter-writing technique.  You don’t think your bank really means you’re “dear” to them when they write to you, do you?

Well, generations of people have been trained to deliver unpleasant messages using the format “yes, and, but…”  You start off by finding a point of commonality, something you can agree on.  (Yes, it would be good if HMRC had a modern computer system.)  Then you go on to add something else you think you can agree on.  (Yes, it would be great if tax returns were prepopulated with the information HMRC already holds) and only then do you deliver the unwelcome message. (But making it compulsory to keep electronic records and update four times a year are terrible ideas!)

Yes, and, but.

It’s plain as the nose on your face if you look at the Treasury Select Committee’s report which helpfully summarises the responses under the heading “support for the principle” – yes, we welcome the digital principle, and we think the changes go with the grain of progress BUT… we’re worried about the timetable, about the lack of free software, and above all about mandation.

The whole basis of the current proposal is undermined in HMRC’s own Impact assessment.  The projected extra tax in this parliament (to 20-21) is £945m. The projected extra costs to business in the same period? £920m.  Extraordinarily, the impact assessment quantifies no costs for HMRC for the proposal, although the original consultation document justified mandation by saying that without it “the return on the £1.3bn investment in transforming tax administration would not have been realised” (para 2.6)

In short, HMRC, your comms are pants, you have misunderstood people’s feedback, and your numbers don’t add up.  Sorry and all that.

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MTD, the response documents

January 31, 2017

Well, here we go: the responses to MTD are now live.  There’s a ton of stuff to read, so I’m going to post my immediate responses “live” as I go through them.  Watch this space! (or, temporarily turn off notifications if you get update notices)

  1. The overview.  It’s not easy to find.  Starting from the “consultations” page on gov.uk I got all excited when today’s list showed MTD updated 31 January.  But when you go to it, it’s not immediately obvious what’s been updated at all.  The actual response document is linked from the paragraph that reads

Over 1,200 people responded to this online survey and individual responses were fed into the other consultations to support the government’s thinking. Many of the responses helped influence key outcomes.

Now, maybe it’s just me, but I wouldn’t immediately have thought that “other consultations to support the government’s thinking” was a signal for “look!  Here’s the responses doc!” (updated 3.20pm)

2. Ah!  I see!  There’s an overview document (like there was for the original pack of consultations)  Right then: here’s a link to the overview.  Speed reading: first reaction?  Great flying spaghetti monster but it’s a complacent piece of spin.  Everything is for the best in the best of all possible worlds, and a committee of MPs has published a report but we’ve addressed “many” of their recommendations.  (As I recall, the Treasury Select Committee report wasn’t happy at all).  Not sanguine!

3.40 pm.  Aha!  I just had an email from the MTD correspondence address:

Dear stakeholder,

Thank you for responding to our consultations on Making Tax Digital last year. We’re extremely pleased with the level of response to the consultations and grateful for the time and effort that you took to send us your views.

A summary of feedback received, the government’s decisions and our next steps have been published today in six response documents on GOV.UK. If you’re short of time, we’ve also published a short overview which draws out the key conclusions from each of the consultations.

Over the consultation period, we held a number of events with interested parties to communicate and discuss the proposals, including face-to-face meetings, and webinars for the public and tax agents, which attracted over 3,000 participants. HMRC also attended a range of conferences and events to reach as many stakeholders as possible. Feedback from these events has also been considered as part of the formal consultation exercise.

Your input is important as it has not only informed the development of policy and draft legislation, but has also helped give us a clearer understanding of the needs of our customers as we implement Making Tax Digital.

Thank you again for your participation.

Jim Harra

Director General, Customer Strategy and Tax Design, HMRC

Onwards!  Next reading: the revised impact assessment.

4. The impact assessment.  Er, the admin burden savings figures have been revised.  A lot.  And, lo!  The transitional costs of £100m, £500m and £350m to 2020 add up to £950m.  Now, where have I seen that figure before…????

The MTDfB changes will contribute £945 million to the Exchequer by 2020 to 2021.

Oh yeah, that was it.

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Tax return (MTD will be different, right?)

January 31, 2017

Yes, I did my tax return (two days before the deadline in fact!  Yay me!)

Have I achieved Inner Peace?  Hell no!

The problem was that I had signed up for a personal tax account earlier in the year. I’d been deeply annoyed to find that, having done so, I could get details of my national insurance payments back to the 1970s but I couldn’t get into my tax returns. This apparently was because I had signed up to the self assessment service with different details. This was a baffling message to me (you only have one UTR, after all).

So I spent twenty minutes going round in circles with the website trying to find out how to get back to the familiar landing page for self assessment and getting frequent messages on my mobile with a six digit number to log back into my personal tax account. In the end I found, more or less by accident, that I could sign up again using the log in details I found at the front of my account book, but then had to go through the whole verify-yourself-by-handing-over-your-passport-details thing (how on earth do people who *don’t* have a passport do it?  It isn’t compulsory to have a passport, after all)

Well, long story short, I made it into the self assessment service…

…and then, after I had entered my return details and checked the tax calculation, I thought I would pay up.  Yes, more yelling profanities at my computer screen, because what kind of evil genius designs a programme that works out how much you have to pay, takes three or four clicks to get you to the place that you actually pay, and then presents you with a blank “amount” field?  I mean, carry the figure over from one screen to another, it’s not rocket science surely?

This is what I wrote on twitter:

 

I think the problem is simply that the reassuringly familiar architecture of the self assessment system is still there, but a shiny new “personal tax account” front page has been cobbled together onto the front of it.  It works, just about, but it’s a cheapskate spatchcocked hotchpotch.

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Tax simplification and better regulation.

January 18, 2017

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

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

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

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

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

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

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

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

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

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

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

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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!

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TIIN instructions

January 13, 2017

I have now received a response from HMRC to my Freedom of Information Act (FoI) request for the current TIIN instructions: there are some embedded in the TIIN template here:

170104_tiin_template

and some further guidance here:

170104_wendy-bradley_tiin-guidance

I am obliged to the HMRC FoI team for sorting this out, although of course it is evident from looking at the files that there are further instructions in the TIA (Tax Impact Assessment) guidance which has not  been included.  Nor is there any explanation of why this information isn’t part of the routine publication schedule – there really isn’t anything secret about it, and it’s useful data for those of us who take an academic interest in the way tax legislation is developed and produced, as well as for legal, accountancy and trade organisations who routinely give comments on tax proposals.  How about it, HMRC?