Archive for the ‘HMT’ Category

h1

It couldn’t be…

February 18, 2014

If you remember this time last year, you may recall that I put in a budget suggestion that HMRC should stop traumatising pensioners who have given a bit more to charity than the tax they paid.  If they declare gift aid greater than the tax deducted from their pensions, HMRC seems to think “Aha!  Tax gap target reduction!” and treat them like evaders.  I’m sure that’s not the intention of anyone who has given the situation a moment’s thought.  Nevertheless it seems (to me at any rate) to be the effect of cutting staff and increasing targets, so that people make up their statistics in any way they can in order not to fall foul of the idiotic performance management system.  So ill-advised and over-generous pensioners are an easy “quick win” for someone.

My budget suggestion?  Just stop it!

I said a bit more than that, of course (you can read the full thing here)

So I sent it in last year and… nothing happened.

Being incorrigibly curious, I then put in a Freedom of Information Act request to find out what had happened to it – envisaging a correspondence between one team and another that went something like

  • “Shall we do this?”
  • “Who did it come from?”
  • “That Bradley woman.”
  • “Oh well then; no.”

But actually what I got was something a bit more interesting…

Nothing.

They had no record of having received my budget submission, even though it had gone through the dedicated “portal” that they set up last year.  I asked them to go back and review the FoI request and they came back and said, in effect, no, honest guv, we can’t find anything anywhere.

How odd, I thought.

So this year, I put the same suggestion in again.  This year the arrangements are slightly different: you send the suggestion in to a dedicated email address (rather than through a web portal) and you were assured you’d get an automated response.

My email went in at 15.55pm on 14th February.  The closing date was 14th February, so by any stretch of the imagination I was within the deadline.  And I confidently awaited my automated response.

And waited…

And waited…

Yesterday, I sent a follow up email to the Treasury’s general correspondence address asking them to check, because I really would like someone to look AT the suggestion this year, rather than just FOR it!

This morning?  I get an email from the Treasury budget.representations@hmtreasiury.gsi.gov.uk address which reads:

Dear Ms. Bradley,

I can confirm the safe receipt of your budget representation.

Thanks,
George

Now, that’s NOT an automated response (because, several days late and personally addressed?)

And… George?  George???  It couldn’t be, could it…?

h1

Um… hello?

May 10, 2013

efficient secondary legislation and engagement with the public through the medium of consultation is, in my view, the very bedrock of an effective and inclusive parliamentary democracy.  (The Earl of Lytton, Hansard  11 March 2013 Column GC34)

 

Maybe I’ve just lost my google-fu, my ability to find stuff on the internet? I don’t know.  I’ve been busy with the day job (I’m a PhD student by day and a writer of science fiction and fantasy by night) so maybe I’ve taken my eye off the ball.  But it occurred to me lately that, as well as finishing off my responses to the consultation on closure of the HMRC enquiry centres (the consultation closes on 24th May and I’ve already blogged about it here, here and here.  Oh, and here.  Not to mention here.) I should also check out what other tax consultations are around and plan what work I’m going to do on this blog over the next few weeks and months.

Um… hello?

So there doesn’t seem to be a tax tracker on the HMT pages any more.  The Treasury has moved all its consultations over to the new GOV.UK website, and the links on the Treasury site now take you to the consultations search page on GOV.UK, here.

Which might be helpful, except that, at the time of writing, there are 991 documents under the “consultations” heading on that page, they include open consultations, closed consultations, and consultation responses (and there’s no way to filter by “open consultations”).  Oh, and they’re in date order – of the date they were published and not by the date which would actually be useful, ie the date that the consultation closes.  (Has anyone told the Secondary Legislation Scrutiny Committee? (see para 54 here))

Filtering this with “tax and revenue” as the topic brings up five documents, the enquiry centre closure consultation and four closed consultations.

Well OK then.  Filtering it again by department, brings up 87 documents under HMT, only three of which are open consultations. (Two on finance industry topics, the “special administration regime for payment and settlement systems”, and one on “opening up UK payments” which I may go back to, because from a cursory glance it looks to be about abolishing cheques) and – finally – a relevant one, yet another tweak to the REITs regime, the rules on Real Estate Investment Trusts.

Filtering it by department again but this time scrolling down to find HMRC brings up fifteen results.  Only one of those is an open consultation, and it’s our old friend “Supporting Customers Who Need Extra Help: A New Approach”, which is newspeak for “Closing the Enquiry Centres”

But look back at this time last year.  In April and May 2012 I was responding to a dozen open consultations resulting from Budget announcements and pointing out that there were no fewer than 21 formal consultations which were listed on the tracker as being due to open in May.

So where are the 2013 consultations?  Were there no tax changes announced in the 2013 Budget?  (They weren’t all consulted on in a fortnight via twitter while I wasn’t looking, were they???)

The HMRC Budget 2013 page says all consultations will be on the GOV.UK site.

So, um… hello?  Where are they?

 

h1

Return of the tax muggles

April 26, 2013

It’s like there’s this vast complicated otherworld existing alongside our own.  In the otherworld – let’s call it Taxworld, for the sake of argument – in Taxworld there are people who understand the mysteries of tax, who speak its language and share its assumptions.  Then there are the muggles, the rest of us, who live in the mundane world and don’t ever see the bizarre world of tax living alongside and parallel to our own, except when it thrusts itself into our attention in, say, a mysterious piece of code on a payslip or a scary brown envelope on the mat.

Me?  I suppose I’m a Squib: I know the Taxworld is there, and I know some of its funny little ways, but I’m on the side of the muggles, mostly.

So here comes the head muggle, “Tax Prat of the Year” Margaret Hodge and her merry band, issuing their PAC report into  Tax avoidance: the role of large accountancy firms

Their conclusions?

  1. The UK tax system is too complex and a more radical approach to simplification is needed
  2. There is no clarity over where firms draw the line between acceptable tax planning and aggressive tax avoidance
  3. It is inappropriate for individuals from firms to advise on tax law and then devise ways to avoid the tax
  4. Tax laws are out of date and need revising.
  5. Greater transparancy over companies’ tax affairs would increase the pressure on multinationals to pay a fair share of tax in the countries where they operate.
  6. HMRC is not able to defend the public interest effectively when its resources are more limited than those enjoyed by the big four firms.

The headlines, of course, are all about conclusion 3: is it appropriate for accountancy firms to loan out their staff to the Treasury and HMRC and then have them go back and work on the same legislation from the other side of the picture?

This is a red rag to a bull, so far as the accountancy and tax professions are concerned.  They think of themselves as professionals, and that they are more like the barrister who can give objective advice to a party to a court case whether the person is innocent or guilty.  They certainly do not recognise themselves in the “poacher turned gamekeeper” that PAC perceives.

To me the meat of the argument is in conclusion 6, but then I’m a retired tax inspector so I would say that, wouldn’t I?  But HMRC has lost 10,000 staff and many of its qualified and experienced staff are in their fifties and are leaving at an alarming rate – and there is very little “backfill” of people who have been through training and being seasoned by experience to fill those gaps.

Accountancy Live also reports that “hard working tax accountants” pay has risen by 10% in a year to an average of £79,670.  Which must be nice, because their HMRC equivalents have been frozen since 2011 at between £46,983 and £74,209.

So if HMRC is under-resourced, understaffed and underpaid, how are they to proceed except by borrowing staff from people who know about the subject under discussion?  Would it be more reasonable to take staff seconded from, say, a steel manufacturer or a supermarket?

To me, this is one giant red herring.  The responsibility for the existence of tax legislation and for the quality of that legislation lies with the people who make it, with Parliament.  Since the coalition came to power it has had a clear set of priorities for the tax system, set out at article 29 on page 30 of The Coalition: our programme for government:

The Government believes that the tax system needs to be reformed to make it more competitive, simpler, greener and fairer. We need to take action to ensure that the tax framework better reflects the values of this Government.

Part of that framework was set out in Tax policy making: a new approach which led to the invention of the TIIN – the Tax Information and Impact Note.  So each Budget they publish their proposals, consult on them, and then bring the legislation to Parliament along with a TIIN which tells you what the legislation does and why, how much it will raise and how much it will cost, and who will be affected.

Does Parliament ever look at them?

Do MPs ever challenge the legislation, and if they do, are any changes ever made?

Meanwhile the big glaring elephant in the room is the commitment to a tax system which is “more competitive, simpler, greener and fairer”.  In Taxworld, a “competitive” tax rate is a lower tax rate – a rate which competes for business with other tax jurisdictions.  Yes, it’s official coalition policy that, in the great multinational tax race, the UK should do its best to win the race to the bottom.

h1

Work in progress

March 8, 2013

Come on, HMT, tell us what’s happening with the tax tracker page which you STILL haven’t updated (85 days and counting!) since 14th December.  If you’re putting your updates somewhere else, then will you please archive this page and put a damned link to the new one?

Oh, but everything will be wonderful once all government websites migrate to the gov.uk site.  Let’s have a look for tax consultations there, shall we?

OK then, we’re on the front page.  Now which of those headings do you think would cover open consultations on tax?  Let’s try… money and tax?  Hmmm.  Well that offers us six further options:

  • Court claims, debt and bankruptcy
  • Income Tax
  • Inheritance Tax
  • National Insurance
  • Self Assessment
  • VAT

which doesn’t look good.  So how about (going back to the first options page) “Inside Government: learn about government departments, policies, announcements and more”  That looks more promising.  Let’s go there.

Yes, there’s HMRC on the list of non-Ministerial departments.  So let’s go the HMRC home page.

OK, some stuff about RTI, that’s good, that’s up to the minute.  Scroll down.  Five picture windows, three of various “HMRC names tax cheats” or publishes prosecution details.  Well, OK, warn off the miscreants.  One window about child benefit disclaimers, OK, probably what lots of people are looking for.  And a new item about HMRC getting an award from the Prince’s Trust.

Scroll down a bit more.

“What we do”

Scroll down

Our policies

Scroll down…

Yes!  Success! “Our Consultations”:

Our consultations

Um… you know you’ve linked to the two CLOSED consultations, right?  Although the “see all of our consultations” link takes you to a gov.uk page which lists the same two OPEN consultation as on the HMRC site, but has different closed consultations…
Let’s try just putting “HMRC consultations” in the search box on the gov.uk first page… which gives you a list of results, but the first of them is this page which purports to list ALL government publications.
Work in progress, then.
(Um… does anyone actually KNOW where the 2013 Finance Bill clauses out for “technical consultation” are or were published?  Anyone?  Bueller???)
This post is the fourth of ten posts I intend to write between now and Red Nose day.  I have now reached (and in fact exceeded) my £50 fundraising target so a big thank you to everyone who donated.  And if you’re still getting round to it… my JustGiving page can be found here.  And thanks again!
h1

In which I am grumpy and middle aged about the government’s ability to manage the consultation process

January 28, 2013

Anything happening?

Have the Treasury updated the tax tracker since December 7th?

Erm… that’d be a “no“.

Has the government decided to follow the advice of the House of Lords Secondary Legislation Scrutiny Committee and appoint someone like the NAO to undertake an urgent review of their changes to consultation policy?

Erm… that’d be the people who accused them of “sneaking” their consultations out just before long holidays?  Unlikely.

If they DO decide to review the changes, are they planning on meeting the House of Lords suggested deadline of reporting by Easter?

“We believe that the process needs to be reviewed urgently.  We are calling for the review to be done by an independent organisation such as the National Audit Office, and for the outcome of the review to be published by Easter.”

Erm… given it’s practically the end of January now and Easter is in, what, 61 days (and that’s calendar days, not working days) I leave that question for discussion.  Please use one side of the paper only, and be careful to show your workings in full.

h1

Tax simplification and better regulation

December 11, 2012

Does the use of “better regulation” tools like consultation and impact assessment promote a simpler tax system? (And, yes, I know it all depends what you mean by “simpler”, thanks)

Well, the coalition has four objectives for the tax system – they’re written into the Coalition Programme for Government, no less.  They  say (at item 29, page 30)

The Government believes that the tax system needs to be reformed to make it more competitive, simpler, greener and fairer

So I did a “quick and dirty” analysis of OLD (the “overview of legislation in draft”) published today on the Treasury site – yes, I know it’s on HMRC’s too, but a helpful twitter correspondent pointed out that HMT had it earlier. (Oh, and while I’m here: hint to the Treasury.  When you compile the TIINs into one document, you could add numbers instead of bullet points, so that we didn’t have to manually count them to realise there are tax information and impact notes for eighty-four measures in it.  And a decent editor could have cut out quite a few extraneous blank pages.  And added page numbers that were actual consecutive numbers instead of “A267”.  Ahem.  Yes, well.)

I had a quick look at the “policy objective” field for each of the 84 TIINs and tabulated which ones say they are aimed towards making the tax system

  • more competitive
  • simpler
  • greener
  • fairer

and the results are:

 More Competitive   2
 Simpler  10
 Greener    1
 Fairer  20
 Other  53
and, yes, I’m well aware that this adds up to 86 rather than 84, but there were two measures which plainly said that their policy objectives were to be fairer AND more competitive, and simpler AND fairer.
Like I say, it’s only a “quick and dirty” analysis and if you go through and do it for yourself you might come up with a slightly different answer, depending on how much inference you’re willing to put in.  I resisted inferring policy objectives this time around and stuck to straightforward statements.
Why does this matter?
Well there are some obvious questions – the “greenest government ever” ™ can only manage to come up with ONE tax change aimed at being green?  (It’s page A115 by the way: capital allowances for business cars, and it’s fair to say that it’s one where I actually did have to infer that the “environmental objective of reducing overall CO2 emissions” was a green objective.  It makes a difference of a fair few millions in tax and thousands in administrative burden, but produces an unquantified “indirect impact” of reduced carbon emissions.)
A remarkable number of measures are in the “other” category because the policy makers don’t seem to have answered the basic question of “why are we doing this?” which, yes, I recall from being involved in designing the TIIN process, is actually one of the considerations they’re supposedly taking into account.
Look at page A267, for example. Why are we cancelling the fuel duty increases?  Because “This measure will ease the burden on motorists and businesses”.  OK then.  That isn’t one of the objectives the coalition set itself, but you could, I suppose, say it’s a legitimate policy objective (even if it is startlingly anti-green in context!)
But what about this, from page A171:
This measure will encourage UK bingo promoters to grow their business and expand their customer base by amending bingo duty legislation to modify the restrictions and allow UK bingo promoters to link with overseas operators to offer ‘combined’ games of bingo
Are you seriously telling me that encouraging UK bingo promoters to “grow their business” is a legitimate objective of tax policy?  Or, if it is, is it not part of the overall narrative of making the UK a more “competitive” tax system?
But look at page A75 and tell me where there is an actual policy objective and what it might be:

Policy objective

The measure ensures that the switching of assets in a trust settled by a non-UK domiciled individual to investments in OEICs and AUTs is exempt from IHT charges. It also ensures that no tax will have arisen on those trusts which held OEICs or AUTs when the changes introduced in 2003 came into force.

I’ll have a closer look over the next few days at the ten measures aimed at making the system “simpler” – again, watch this space.

 

h1

A no brainer.

December 6, 2012

Anyone with a home worth over £1million now facing a visit from elite tax inspectors” Well, up to a point, Lord Copper!

Let’s have a look, shall we?

The announcement was of a further 100 staff for the “affluence unit”, the bit of HMRC that looks at the tax affairs of people with more than a million quid. As the Telegraph article says

The unit, comprising 200 investigators and technical specialists in six locations across the UK, focuses on people who are evading or avoiding tax.

And, looking for the official announcement that was the initial impetus for this non-story, I see that Danny Alexander announced the unit was expanding from 200 to 300 staff, and with a remit to look at people with £1 million rather than, as before, £2.5 million.

OK then.  So how many millionaires are there?  The Treasury press release estimates half a million but – going back to The Telegraph, where we started – that seems to be a pre-crash figure and their current estimate is 280,000.  I’m not saying I prefer the Telegraph’s figures to the Treasury’s, you understand!  But let’s be generous and take the lower figure.

So we have 300 HMRC staff looking into the tax affairs of 280,000 people.

280,000 divided by 300 is 933.333 according to my calculator.  So let’s round it down and say each of these HMRC staff deals with the tax affairs of 900 millionaires.  Yes, according to the Telegraph’s own figures each worker in the Affluent Unit will need to spread their investigative powers over 900 millionaires.  According to the Treasury’s, over perhaps twice that.  Where on earth will they find the time to go nosing around blameless individuals whose houses have just drifted up in value?  It’s scaremongering, forget about it.

What is more interesting is the announcement that HMRC will have more resources in the autumn statement.  It’s here, in line 32 of the policy decisions:


 £ million
 Head 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
+
32 HMRC investment Spend -10 -80 -25 0 0 0

Ten million in the current year, eighty million next year, £25m in the final year of the coalition and then zilch.  Hmmm… David Gauke’s written ministerial statement on December 3rd clarified this a bit: the 100 staff for the affluent unit are in there, plus some warm words about transfer pricing and centres of excellence.  But the figures are a bit off:

 A further £77 million will be provided to HMRC in this spending review period to further expand its anti-avoidance and evasion activity focused on offshore evasion and avoidance by wealthy individuals and by multinationals.

Well, 10+80+25 = 115 in my book, so if HMRC are getting 115 million and using 77 million on anti-avoidance and evasion, what are they going to use the other  38 million on, do we think?  I’m sure it’s hidden in the small print somewhere but I haven’t come across it yet – anyone?  (maybe they’re upping the £42 they can spend on each business for RTI by another, erm, sixteen quid apiece?)

But look here, at the ARC union website.  Now, ARC stands for Association of Revenue and Customs senior staff and it’s the branch of the FDA which covers senior staff in HMRC, tax inspectors, lawyers, senior managers and a bunch of other professions, economists and the like.  And they have a paper, Reducing the UK Tax Gap – Proposals from ARC. (which isn’t exactly prominent on the site, but if you look at the entry for December 3rd you’ll find it in the “notes for editors” from a press release they apparently put out on 30th November, presumably by leaving it in the statutory locked filing cabinet in the basement office marked “beware of the leopard”!)

What interests me is the suggestion that you could put resources into HMRC’s legal services:

Additional legal resources, 150 trained lawyers and 50 legal assistants, to accelerate litigation of the Tribunal backlog and accelerate yield. Cost £35m. Projected yield £2000m

One of the things that worries me about the extra hundred staff for the affluent unit is, where are they going to come from?  Because trained tax professionals don’t actually grow on trees, and HMRC has always been rubbish at planning for the future and making sure it has enough trained tax professionals coming online to replace natural wastage from retirements and resignations.  You can’t just go out and hire a hundred trained tax professionals – largely because the accountancy profession, where you might find people with at least analogous skills – pays a damned sight more than HMRC.

But you could go out and recruit a hundred and fifty lawyers tomorrow.  Because lawyers train themselves, or at least pay for their own training, and there are supply and demand issues in the legal profession which there aren’t in tax at the moment.  So you couldn’t find 150 trained tax lawyers – they get shedloads more than HMRC tax lawyers, I’m told.  But you could get 150 criminal lawyers, trained litigators, and start taking some of the backlog of tribunal cases to tribunal as fast as the tribunal could accommodate them.

ARC think an investment of £35m could bring in two thousand million.  And HMRC seem to have £38m left over, so it’s a no brainer, surely?  Why on earth not?