Archive for the ‘Uncategorized’ Category


New publication

April 1, 2021

You may have wondered where Tiintax has been for these past few months. You might have wondered if, like many other people in lockdown, I was simply sitting stupefied in front of daytime tv while eating my own weight in Fortnum’s coffee creams.

Au contraire, I can now reveal that I have, in fact, been working on a Secret Project for the Treasury. I was contacted this time last year and offered a major project which I could work on from home as a freelance consultant. I had the advice of several stakeholders in HMRC and HMT and, after suitable secrecy oaths were administered, from external stakeholders in the accountancy and legal professions, three Eng Lit PhD candidates and much of #TaxTwitter.

The project involved a complete rewrite of the Taxes Acts into a format which is much simpler and pleasant to read but also has the advantage of using rhythm and rhyme to make the concept and detail easily accessible and memorable to the lay reader. I can announce that the result of the project is the publication next week of the entire UK tax code re-written in Hiawatha metre.

This involved many practical and ethical decisions of course: the initial draft of the first line went

Pay your fucking taxes, people!

There were several editorial meetings about the use of obscenity and the edited version went

Everybody, pay your taxes!

In the end, however, I took the editorial decision to avoid the second person so the bulk of the text avoids referring to the taxpayer directly and in a more neutral, non-judgemental mode the final version of the first line now reads

Everyone must pay their taxes.

This took several months, but once the initial parameters were agreed and the first few hundred lines whipped into shape I was largely left alone to get on with the writing, turning it in via a super secure Treasury terminal which had to be air lifted to Yorkshire and installed at dead of night in a purpose-built shed at the bottom of my garden.

I confess to a rather mischievous desire to see what I could get away with at times – none of the clauses in my contract obliged me to make the tax code shorter, only simpler and more comprehensible. So for example I am particularly pleased with some of the language in the VAT stanzas (which, much against my better judgement, take up approximately seventeen million lines of verse in their current form). An example might help illustrate the shape of the problem:

Is a Jaffa cake a biscuit?

Leave it on the table, test it.

Cakes go hard but biscuits soften.

VAT is charged on cakes – no, biscuits –

No, on both, except for chocolate

Biscuits (what a silly system!)

The inclusion of the writer’s commentary may be startling to the professional reader in the first instance, but I am confident that, when the general public find themselves able to read and understand tax legislation in plain English and find helpful signposting to the dafter elements, there will be little political interest in further obfuscation of the intent, option appraisal and impact assessment of tax legislation. TIINs will be much clearer and more informative in future and indeed the second edition of The Lay of British Taxes may be several – perhaps many! – volumes shorter than the first.

All 437 volumes are available to purchase from next week, at a reasonable £38,500 for the complete set. (Disclaimer: I should reveal that I receive a royalty of approximately 1/42p per volume.) However a podcast of the entire work is available free of charge on the internet where various volumes are read by Benedict Cumberbatch, Stephen Fry, Helen Mirren, Lenny Henry, Rege-Jean Page and numerous other luminaries of stage and screen. The readings will also be broadcast as CBeebies bedtime stories for the next year and a half, in the hope of growing a new generation of informed and empowered citizen stakeholders.


Marking the government’s homework: the Brexit Impact Assessment

October 18, 2019

Impact assessment – no, don’t fall asleep yet – is a boring technical discipline. I know: I used to be the impact assessment specialist for HMRC and for all Treasury tax measures. The point is to regulate how governments regulate – the IA process is actually designed to be a brake or anchor on introducing new legislation. Supposedly you think through the impacts as you design the policy, so that by the time you get to the stage of introducing legislation you’ve already worked out the costs and benefits, got your stakeholders on side, and checked that you aren’t proposing anything that damages small businesses or has equality implications or offends against any other government priority. Actually in civil service terms it’s a fun job if you don’t mind a bit of unpopularity – you get to tell MUCH more senior people that they can’t ride their hobby horse till they fill in this form, and you get to play “my boss is senior to your boss” sometimes all the way up to the Minister’s private office, at which point they tell you to go away and come back when you’ve worked it all out.

So does the Brexit agreement need an impact assessment? Well, does it have an impact on businesses? Yes it does. Is that impact more than £5 million a year? The last draft showed an impact in the billions, so, yes. Can you get out of it by saying Brexit is self-evidently a good thing so a further impact assessment isn’t required? Er, no, that’s not how it works.
(Side note: just a thought, but did they actually negotiate this new agreement without knowing what the costs and benefits of each change might be?)
What can anyone do about it? Judicial review – governments have said publicly (for example this government, here in this document) that they’ll do impact assessments and under what circumstances.
…and here’s the catch. You can bring a judicial review on the grounds of “legitimate expectation” – citizens can expect governments to follow their own rules, and the courts can force them to go back and do their homework properly under those circumstances. But parliament trumps courts: if a change is legislated, you have to assume that parliament understood they hadn’t got the impact assessment they were entitled to expect but decided to do it anyway.
In other words, my reading of the situation is that if someone wanted to bring a judicial review this afternoon they might plausibly argue that parliament couldn’t reasonably vote on the Brexit deal without an updated impact assessment showing the projected costs and benefits. But when the courts close today it’s too late – if the agreement passes on Saturday, then the presumption is that the parliament that passed it knew what they were doing…

The Palace of Westminster

May 8, 2019

The government has published a “Government response to the report of the Joint Committee on the Draft Parliamentary Buildings (Restoration and Renewal) Bill

What’s this about? Well, essentially the Palace of Westminster – the building that houses the House of Lords, the House of Commons and various offices, chapels and halls – is falling down. It’s a fire risk, bits of it keep falling off and narrowly missing people, and it’s a warren of unsuitable spaces with rubbish access and facilities.

It’s also, apparently, a World Heritage Site (which seems bizarre to me as it was only built in the nineteenth century albeit on top of some medieval buildings and incorporating some remnants) but which means it can’t just be left to rot.

Have we really got between £3-6 BILLION to spend on a building, though, however historic?

Usually the government’s answer to anything expensive is to offload it. Why aren’t we preserving the building by flogging it off to someone else, in the way that the County Hall buildings opposite were preserved? Give it to a hotel group for a peppercorn and let them spend the money?

If you look at more modern parliament buildings like the Scottish Parliament or the EU Parliament they are arranged differently, usually in a semi circle to facilitate civilised discussion rather than the yah-boo-suckery of the two-sides-two-swords-lengths-apart Commons. They have microphones that work and electronic voting systems that don’t rely on parliamentarians being wheeled through the lobbies “sick bucket on lap and high on morphine

So here’s a thought. There’s a perfectly adequate set of offices and chambers across the square, at the 100 Parliament Street building that houses the Treasury and other assorted Departments.

Move Parliamentarians into that.

There’s also a tragically underused circular car park at the heart of the building. Use that to build a twenty-first century debating chamber. Don’t faff about commissioning a new design. There’s an 800 seat theatre in the round sitting in the middle of the Royal Exchange building in Manchester, built in 1976 for a million quid. It’s a proven design using proven technology. A million quid in 1976 is about, what, seven hundred million now. Appoint an architect to oversee the project and give them a fixed seven hundred million budget and a firm closing date, and let them get on with it.

The Treasury? Move it into the Foreign Office building next door. Move the Foreign Office into the next building down Whitehall and so on, till the unlucky (lucky?) losers get to move into the Lord Moon of the Mall pub at the end of the road.


Till we have faces

March 13, 2019

Brexit has sucked the life out of the last  three years of government and here we are, nothing done, no energy for doing.

Here’s a thought. If a jury can’t reach a conclusion there’s no dishonour in a re-trial. This Parliament will never agree on the May deal, a no deal, a people’s vote or any other possible outcome.

So let’s stop. Don’t ask the EU for a postponement, which would need the unanimous agreement of the other EU members and which they have already said would come with conditions. No: let’s withdraw Article 50 and then do it right.

Set up a Royal Commission to look at what Brexit means: we want from it, how we will act during any transition period and after, the risks and rewards. What May should have done after the election, essentially, so there’s cross party agreement. The Royal Commission should also take advice from a Citizens’ Jury, as was done in Ireland on the abortion debate, an issue at least as toxic as Brexit.

The police investigation into any wrongdoings during the referendum should continue alongside the Commission and any prosecutions should go ahead independent of the Commission’s deliberations.

There would be another election in the usual course of events but campaigning would be on the issues – tax, spending, welfare, education, NHS, defence… and not on the slow grind of Brexit.

A new Parliament would look at the Royal Commission’s plan of action and then vote on whether to trigger Article 50 again, this time with a clear road map of agreed actions, or whether the new proposals should be put back to a new referendum.

One tiny snag, as I’m sure you have noticed… in order to withdraw Article 50, Parliament – this Parliament – would have to vote to do so…






December 4, 2017

Let’s take a break from the Budget TIINs for a moment and look at the open consultations here.

There are fourteen open consultations, most of them from last week.

How, exactly, does anyone envisage this is going to work, please? Are representative bodies really going to be able to consult with their members before Christmas? Or in January (tax return season, remember?)

Question for the group: is the quality of HMRC legislation improving, or deteriorating, do we think? And does adequate consultation tend to make the resulting legislation better, or worse?

Just a thought


Legislative v administrative

June 12, 2017

There’s a hung parliament.  Things are moving quickly: in my head, I imagine someone taking on a new job, running “legislative affairs” like Josh Lyman  in the West Wing.  Someone whose job it is to ring round the new MPs to see if they will stand for this policy or that, as each new idea for the Queen’s Speech has to be fought through separately.

Leaving aside my fantasies about there being someone competent and grown up behind the scenes, let’s look for a moment at what a hung parliament means for taxes?

Three things.  First of all, there’s unlikely to be any huge legislative change.  It’s entirely possible that the proposals to make it compulsory for businesses to keep their records on an app or computer programme and update HMRC four (five?) times a year, MTD (“Making Tax Digital”) for short, will fall.  Why would anyone back MTD when it is going to be as popular as a cup of cold sick with small businesses once they learn how it will affect them?  Kick it down the road and make it Someone Else’s Problem, would be my instinct.

Second, the difficulty in making legislative change is unlikely to apply to actual tax rates: there are different rules.  But then why would a “continuity” government want to change the rates they themselves introduced five minutes ago?  They may have to give sweeties to their supporters (abolition of APD for Northern Ireland, would be my best guess from the weekend press).

But the third thing is that administratively, things will carry on much as before.  The rule for the Civil Service is to carry on doing your job until someone tells you differently.  So the idiotic decision to carry on with the “building our futures” plan and move HMRC into big lumps instead of a distributed network of local offices will probably carry on.  There will be a new Minister, after all.  (Jane Ellison lost her seat so there will be a new Financial Secretary to the Treasury but at the time of writing I can’t see an announcement of who replaces her) so there is no-one with a vested interest in saying “no” and the inertia of “keep calm and carry on” may let this go through.

I think that’s a shame: you may not. But what IS a shame is that there will be no will to change the way policy is made. When the coalition government came in there was a will to do things differently and the political space to think them through . No-one had a vested interest in continuity but in Getting Things Done. So we had Making Tax Policy Better and the invention of the TIIN. Sigh. Ah well, business as usual, at least for a while.




Your Friday moment of zen…

May 6, 2016

I’m sorry to do this to you, but I have a terrible ear worm:
Panamana (tune: “Ma na ma na”, the Muppets)
Mossack Fonsecka
Dave Cameron…
And then George Osborne, the expats, the non-doms, big business and the multi nation als

Wealth doesn’t trickle down, it just gets stashed
Just gets stashed
Just gets stashed….



April 5, 2016

Day.  A plane takes off.  Our reporter looks manfully into the camera.  “Tax haven,” he says.  He walks down a sunlit beach towards a generic office building.  “Look,” he says, “why would a lawyer have an office in a tax haven?”

Night.  A plane is landing, silhouetted against a London skyline.  Our reporter is seen in profile, sitting in his car, looking manfully at a pile of documents in a folder on the seat beside him.  “Hundreds of thousands of documents,” he says.

Day.  Our reporter is walking alongside another white man, on a path through a field.  “But did you?” he says.  “Look,” the other man says, “I have already emailed you the answers to your questions and I’m not going to give an interview.  Now can you go away please?”  “Yes, but DID YOU???” asks the reporter.  “Go away,” the man says, going through a gate into a garden.  The reporter stands outside the gate and looks mournfully into the camera.  “Well, did he?” he asks.  “We may never know.”


Spending review

November 25, 2015

It fascinates me that there are people and organisations that don’t take twitter seriously.  Although often it’s just a bit of fun (and occasionally a screaming pit of insanity), it’s also the place where you can see the first draft of politics – which is itself the first draft of history – being hashed out.

For example are you on the #spendingreview or #SR15 hashtag?  The BBC and most of the people I follow on twitter seem to be using #spendingreview which is comprehensible but longer and takes a chunk out of your 140 characters, whereas the Treasury and the George Osborne twitter feeds are using #SR15 which is short but muggle-exclusionary.  If that’s a thing.  (Well it is now).  More follows.  Probably.

(By the way I’m live blogging this, and it’s the first time I’ve done so.  If you’ve subscribed to the feed and find it’s sending you multiple emails, you might want to unsubscribe for a bit or at least ignore anything that comes to you from tiintax before the end of the spending review speech)

12.30  Here we go.

All I’m getting from the first few minutes is security, security, security – sounds a bit…. no, Godwin’s law.  And a notable lack of verbs.  I wish governments would start employing speech writers who would write actual speeches and not bullet point lists.

12.46 a giant sneer at Labour over borrowing £8bn less than forecast so “mending the roof while the sun shines”.  Where did this idiotic roof metaphor come from?  What metaphorical sun is shining on the country at present?

Next the tax credits.  I can’t pretend to understand the detail from the speech alone, but what I think I heard was, we’re not going ahead with the changes to tax credits because they’ll all be washed out by the introduction of the universal credit.

“HMRC is making efficiencies of 18% of its own budget”  Good grief, are we taking the putative savings from closing down the network offices *before* the putative improvements in digital service that will allow the savings to be made???

Fighting tax evasion… seems to mean some kind of action on disguised employment.  Which will be interesting. And there was some kind of commitment to make CGT payable within 30 days of the disposal of residential property.  The detail of that will be interesting – main residence relief means most residential property doesn’t incur CGT surely?  And if we’re talking about property development, why only residential and not offices etc?

13.00 Social care: two billion more, but it comes from Local Authorities sticking a hypothecated 2% onto council tax.  So the government won’t be unpopular about it, just the local authorities, so that’s all right, yes??

13.05ish Osborne sneers at Scotland, or more specifically at what a Scottish spending review would have looked like (given the fall in oil prices) if there had been a different result in the referendum.  Have weird deja vu, till I realise he’s saying exactly what Cameron said towards the end of PMQs.  they’re plagiarising each other’s speeches now?  Or do they learn the insults and sneers in the same bullet-pointed list they take their talking points from?

All right, why is hypothecating the tampon tax a problem?  Because tampons are not “luxury items” and the EU needs to get its act together to recategorise them into the nil rate band for VAT.  But Osborne crowing that he’s going to donate the VAT raised to women’s charities is – as I said on twitter – patronising bollocks (and, yes, I use the gendered language deliberately).  Because why do women have to pay the bill for violence against women?  Why is violence against women only a cause of concern for women?  He’s conflating different issues and trying to make himself look good.  Must check later to see if the Macho Fund (for guide dogs for servicemen and something to do with Winston Churchill?  My womb was wandering too much to take in the detail) is bigger than the Gurlydosh.

Extra stamp duty on buy to lets.  Interesting.  “We will consult on the details” is code for “we haven’t worked out how to do it yet” you understand.

Now some infantile gamesmanship on the police.  Suggest you’ll be making huge cuts to the police.  When Labour suggest cuts should be no more than 10%, recast it as “we have had representations” from the other side to cut the police by 10% – we’re cutting to zero.  Childish and insulting.  And followed by hideous baying sounds from the government benches.  Sometimes I’m ashamed we let these people represent us.

I’m going to take a walk and cool off a bit.  See you soon.


The VATMOSS Threshold Paradox, Reasons Why Countries Are Wary & Why We Need Action NOW

September 17, 2015

If we’re to find a way forward to save the European digital economy – and every passing month sees yet more damage done – EU countries need to realise they can actually profit by taking small businesses out of cross-border digital VAT. On the other hand, it’s equally important to realise why different nations may be reluctant to agree to a VATMOSS threshold, despite the arguments in its favour.

Granted, at first glance, the idea that giving any businesses an exemption from tax would make any nation’s Treasury better off doesn’t seem to make much sense. Especially when countries worldwide are seeing their economies suffer from tax-base erosion and profit shifting. Which is what happens when global corporations from Amazon to Starbucks set up subsidiaries in tax havens with minimal taxation, and shuffle the paperwork to ensure they can do business worth millions of pounds/euro in the UK, France, Germany or elsewhere and only pay a fraction of the tax that would be due if those businesses were actually based in that country. These are legitimate concerns for governments and the new EU digital VAT regulations are intended as a first step to frustrate such financial fancy footwork.

But effective taxation is all a question of scale and this applies most particularly when dealing with the smallest businesses. There’s a crucial point where the fixed costs of collecting a tax are more than the money that comes in. This is a central concern with VATMOSS, given so many small-scale direct digital traders are making quarterly returns of under £/€20.

After six months of these new regulations, HMRC has revealed that 78% of the VATMOSS returns being processed in the UK only bring in 1% of the total revenue they get from this scheme. And that’s not even counting all those people submitting zero returns because they don’t happen to have made a cross-border sale in that quarter.

Is that 1% of revenue covering the cost of all that added administration? If not, then taking those smallest traders out of this system will mean the Treasury’s better off overall. It’s basic cost-versus-benefit analysis which every EU state now needs to do as a matter of urgency. They have the data. They need to use it NOW.

More than that, countries need to consider is this 1% or so worth having in the short term, compared to the losses of tax revenues that they will see in the medium and longer term?

Because there’s a tipping point for small businesses when considering the tax to be paid and the costs of paying that tax in administration and accountancy fees. There’s a point where those costs use up such a high percentage of a business’s turnover that it simply makes no sense for an individual to carry on trading for what little income is left.

If giving up their fledgling enterprise means going onto unemployment and other benefits, then that person’s government will see their social security bill go up. That country would be better off forgoing a comparatively trivial amount of tax in return for this saving on welfare.

Longer term, these small businesses which are currently being killed off with every passing month can never grow into the medium and larger companies which would have paid worthwhile amounts of tax as well as generating employment and overall economic growth.

When a small business’s income is subject to a particular tax from the very first penny, the loss of potential is even greater. The expense of compliance added to other start-up costs has now created such a forbidding barrier to entry that promising enterprises are being abandoned at the planning stage. Companies which could have become world leaders will never see the light of day.

This is especially true in the digital economy where multinational corporations have quite literally started at kitchen tables (Dunnhumby) or in garages (Apple). In the 21st century, online enterprise means investing time to start a business instead of a whole load of money up front. A single entrepreneur can turn a good idea into a digital product and take it to a global marketplace using freely available computer resources to learn new skills and the marketing reach of blogs, social media and online interest groups. As soon as a trickle of money comes in, services like web hosting and domain registration are easily affordable. As the business grows, more aspects can be contracted out, all generating economic growth and employment. All of that activity increases a country’s tax base.

But not if that business never starts up because of VATMOSS compliance costs. We already know that enterprises expecting to pay under £/€100 annually in cross-border digital VAT are facing anything from £500 to £5000 in added costs. No wonder so many people are giving up on the very idea of starting a new digital business now that they have to find that sort of money up front, before they’ve even earned a penny.

You don’t need to just take our word on all this. The OECD Secretary General has just issued a key report to the G20 Finance Ministries on taxation including VAT issues for small and medium enterprises (SMEs). You can read the whole thing here if you’re keen but these are some key points:

“… Tax compliance costs typically have a significant fixed cost component, tending to impose a relatively higher burden on SMEs than on larger enterprises which can benefit from returns to scale in complying. Tax compliance costs may affect a number of economic margins faced by the owners and operators of SMEs, notably, whether to become self-employed, whether to employ others and whether to operate in the formal economy.” (page 105 para 207)

“Along with other taxes, VAT imposes compliance costs on businesses and administrative costs on tax authorities. Although VAT is designed to be neutral for business taxpayers, VAT is often classified as particularly difficult and burdensome for SMEs to collect and comply with. Hence simplified VAT regimes for SMEs are often an efficient way to promote compliance.” (page 118, para 262)

“Exemption thresholds set a level of turnover below which there is no obligation to comply with VAT regulations. Entities under these thresholds do not account for output VAT and consequently are not entitled to deduct input tax incurred on purchases of goods and services. This is a commonly-used and straightforward option to address VAT compliance costs.” (page 118, para 264)

So why is there any debate? Why wasn’t a threshold included from the start, when the VATMOSS system was agreed?

Well, as with so much in life, it’s more complicated than that. The OECD hasn’t produced a 160 page report analysing taxation issues in detail for the fun of it. As this document also says:

“Whether to establish a threshold is an important issue for VAT design. The level of the threshold is often a trade-off between minimising compliance and administration costs and the need to avoid jeopardising revenue and/or distorting competition. Exempting small firms from the VAT system may forgo little revenue, however, the balance between cost savings and revenue losses shifts as thresholds increase and at some point the forgone revenue will exceed the compliance and administrative costs. At some intermediate point an optimal VAT threshold can be identified, at which the cost savings and revenue losses are equal. Further, there are a number of other factors including distortionary effects inherent in the application of thresholds that should be taken into account. All these considerations make the identification of the optimal threshold for each country a difficult question to determine and one which may vary across the heterogeneous SME population.” (page 119 para 271)

If identifying an optimal VAT threshold for an individual country is difficult, how much more challenging is that going to be for the entire European Union?

The 28 member states vary hugely in geographic size, location, resources and population, just to begin with. Every country’s economy has different strengths and weaknesses. Every nation sets its own priorities with regard to regulation or liberalisation of market forces and in terms of the social contract between government and citizens. Each exchequer and finance ministry sets its own budget accordingly, balancing direct taxation on income and indirect taxes like VAT, and accountable to the electorate giving its politicians their democratic mandate.

So it’s hardly surprising to see different countries oppose sweeping proposals for some one-size-fits-all, universal VAT threshold applied to all small companies’ total turnover.

This is why the EU VAT Action Campaign’s call for a VATMOSS threshold specifically states that this should only apply to cross-border digital sales. Every country’s own domestic VAT regime would still apply outside that, leaving national sovereignty over taxation unchallenged.

Working out the fine details will be a complex task and such things invariably take time. Unfortunately we have no time to spare, now that these regulations are already in operation.

The damage is already being done as businesses close, scale back their digital sales or lose income vital to their future growth in 3rd party marketplace fees. All of which erodes every EU country’s tax base and potentially adds to its welfare bill.

This is why the EU VAT Action Campaign is calling for immediate interim easements to save the small businesses worst affected from going under in the two to five years it will take before these laws can be changed at EU level.

Whether these interim thresholds or suspension come centrally from the EU Commission or individually from national governments using their discretion to protect their own economies as they see best is a secondary consideration. The primary issue is practical action to save the digital, knowledge and skills-based economy needs to happen NOW.

(reblogged from by kind invitation, which is very much appreciated, Juliet E McKenna)