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Next steps

December 22, 2015

Here’s a nice quiet Christmas tax return task for you.  OK, so you’ve made sure you can log onto your HMRC account and fill in your online tax return.  What you need to do next is to make sure you’ve got something to put on the return.

Now, in an ideal world of course, you would go to the box file sitting next to your desk, the one marked “current tax”, open it up and find all your invoices, receipts and other necessary bits of paperwork, neatly filed in date order.

In the real world, however, you’re looking for paperwork covering the period 6th April 2013 to 5th April 2014 and some of it may have… strayed?  We’ll take searching for the bits you’ve put in another safe place as read, but for today let’s look at practicalities.

What you need, is a diary.

No, hear me out.  I’m not talking to people who already have a neat set of business records but to the disorganised person whose business is so small they’re not entirely sure it IS a business.  If you’re in that category, don’t despair.  Do you have a diary?  Do you have 2013 and 2014 appointments diaries, neatly showing where you were and when?  Perhaps you keep a secret moleskine with handwritten musings neatly captured in turquoise ink?  (No?  That’s just me when I was a 13 year old girl, then?)

But what you probably DO have, in this internet age, is a Facebook account, and/or a blog, instagram, twitter or Linkdin.  Here’s what you do.  Get a big old notebook with twelve free pages (or twelve sheets of A4, or indeed a dozen brown envelopes).  Start of by writing the relevant months on them, from April 2013 to March 2014.

Now, open up your Facebook account and go to the archive (or, if Facebook is in one of its irritating modes where the archive isn’t visible, go to your home page and scroll down… and down… and down… till you get to April 2013.  Then read through the entries, and see what you were doing.  Note down on the relevant page anything that related to your business: publications, business trips, arguments with customers…

It will take you a good while, if you’re a regular FB-user, and will be an interesting exercise in itself, honest.

Do the same with your twitter, instagram or other social media profile: look at what you were doing and when, and note down month by month what you were doing.  Adorable baby pictures from that trip to Manchester?  Remember how you called in to see your niece on your way back from the business trip to see that new client… write down the business trip – we’ll look for the details later.

The point is to prepare as detailed a skeleton as possible of what you were doing in the tax year 2013-14.  Once you’ve got the bones of it, we’ll tackle fleshing it out.  But you have all of Christmas to reconstruct where you were in the 2013-14 tax year, and you’ll see all those amusing cat pictures again along the way.  What are you waiting for?  Go!

 

[Probably unnecessary advice but anyway: this series of entries is designed for the very smallest micro business like my own.  Are you a micro business?  Well, have you made any money, or seriously tried to make any money, from a skill or from buying and selling something?  Are you a writer, kitchen table entrepreneur, inveterate car boot buyer and ebay seller?  Read on.  But if you make more than the VAT threshold of 79k or sell something digital to private customers overseas, or already have an accountant for that matter, these entries aren’t for you – go and throw yourself on the mercy of your accountant, right now, sorry.)

 

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Nailed

December 11, 2015

They say that, if all you have is a hammer, everything looks like a nail.  Well, my particular “hammer” is regulatory impact assessment, particularly that contained in the TIINs for tax measures.  So when I was asked to comment on the draft CIS legislation here I naturally turned to the explanatory memorandum to see what it had to say about the TIIN.

This is what it says:

A Tax Information and Impact Note covering this instrument was published on 10 December 2014 and is available on the HMRC website at https://www.gov.uk/government/collections/ta x- inf ormat ion-a nd- impact-notes-t iins.

I’m not by any means a conspiracy theorist: I’ve worked in HMRC and seen what can go wrong with publication.  When I looked at this for the first time, on Wednesday night, I dropped a line to the HMRC contact and to their press office with a question and with a mild comment that I was surprised they had linked here, to the overarching list of ALL of HMRC’s TIINs, rather than here, to the actual TIIN for this measure.  You will see that someone has helpfully tried to remedy this since then, but for some reason the revision contains random spaces so isn’t a clickable link.

Nevertheless, if we look at the TIIN for “Improving the operation of the Construction Industry Scheme” published on 10 December 2014 (and there is only one listed) we can see that the impact on business reads as follows:

These proposals are expected to relieve some of the regulatory burden of the CIS scheme.

The following measures, nil returns, joint ventures and repayments are expected to have a negligible impact on businesses. The measures simplifying the qualifying conditions for gross payment status will Benefit companies and partnerships by increasing their cash-flow.

The main changes to the CIS will take place in 2016 and 2017 and it is anticipated that it will affect approximately 40,000 businesses. Approximately 5 per cent of sole-trader contractors (2000) may require additional support as legislation is introduced to make verification and online filing mandatory.

Estimates of the impact on businesses will be established and published once details of the measure have been finalised.

(my emphasis)

Now, my question to the responsible official and to the HMRC Press Office was, where are the revised estimates for the impact on business, as the measure, or at least this bit of it, is about as final as you can get, surely?

Impact assessments are an enterprise that ought to be at the heart of government – an explanation of the evidence that underlies a policy decision, made transparent for the citizen to see for themselves that the government is making good, rational decisions.  They are important in the making of delegated legislation like Statutory Instruments because no parliamentary time is devoted to the Instrument’s discussion.  SIs are passed or not as they stand, and the mechanisms around their production are supposed to ensure that all the relevant factors have been taken into account before they are put before Parliament to be rubber stamped.  The Explanatory Memorandum should tell us what is being done, why, and in what policy context, that equality and human rights have been considered, that there has been consultation with those affected and the impacts have been considered, with a special mention on those impacts on small businesses, and that there is appropriate guidance in place.  Parliament should be able to take it as read, that all that needs to be done, has been done.

What we have with this draft SI is a link to an impact assessment which promises an update, but what we don’t have is an update which supports the legislation.  I suspect that the problem is simply that the original TIIN was badly drafted and that the promise of further consideration of the impacts refers to the previous paragraph, the difficult bits about mandatory electronic filing that haven’t been legislated yet and not to the whole package, but that’s not actually what it says.

It depends on your point of view.  If I had still been working for HMRC then I would have told the official what I have said above, and asked that the TIIN was updated or else the original clarified, perhaps by a note in the EM.

If I were an MP, I would consider it insulting to be asked to rubber stamp something that wasn’t ready to be passed on the nod (and I might well be asking my researcher to talk to the HoC library about his entry in Wikipedia “The last time a draft statutory instrument subject to affirmative procedure was not approved by the House of Commons was on 12 November 1969 when the House rejected four draft Orders relating to parliamentary constituencies.”)

If I were a member of the Joint Committee on Statutory Instruments I might want to draw the attention of the House to this SI on ground ix: “any other ground which does not go to its merits or the policy behind it” i.e. that the impact assessment has not, as promised, been updated.

It’s a small thing, but it shows either a contempt for the Parliamentary process or – and much more likely – that HMRC’s staffing levels have, finally, reached breaking point.

Posted in HMRC, Regulation, TIINs | Leave a Comment »

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More equal than others

December 8, 2015

How not to do equality impact assessment.

  1. Throw together a ragbag of things which might conceivably have a positive impact on women or people with disabilities
  2. Relentlessly ignore anything else, particularly anything which might have a negative effect on women in comparison with men.
  3. Do not, whatever you do, think about things in a joined-up way so that you look at the cumulative impact of a number of smaller changes.
  4. Publish, smugly.

Yes, HM Treasury, I’m looking at you.

Here, by way of a little light relief, is the women’s budget group’s analysis of the Autumn Statement and Spending Review.  I’m not sure what else to say, except Grrrr!  Argh!!

Posted in Bit of politics, Equality, HMT | Leave a Comment »

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Two fingers of tax

November 28, 2015

My theory is that you should do your tax return in bite sized pieces, none of them taking more than the time it takes to drink two fingers of scotch.

I would also like, just once in my life, to get my tax return in before January 31st!

So walk with me as I complete my tax return, and think about getting on with yours. The first thing* – the absolute first thing – to do is to check you can still get into the HMRC website.  Because you’re too late, now, to do a paper return, and it’s not December yet so there’s still time to get yourself registered with HMRC or get new passwords or whatever if you don’t have access.

I went to gov.uk and followed the links to self assessment.  And, lo!  My computer automatically filled in my HMRC registration codes and I was online!  Yay me!

The system also has a built in security feature which tells you when you last logged on to it (presumably so that if it tells you that you logged on at four am you can investigate who has been impersonating you).  When did I last log in?

31st January, of course!  But I filled in the first page, and my tax return is 1% complete already and it isn’t even December yet.  Two fingers of tax, two fingers of scotch.

 

 

*unless you use an accountant, in which case the very first thing to do is speak to your accountant.  Imagine all their clients pass them a carrier bag full of receipts on January 31st… If you haven’t given them all the necessary records yet, I suggest you have a conversation with them about what they’ll need from you if you want them to do your return this year.  They may need more than two fingers of scotch from you – I recommend a bottle of Talisker at least!

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The sheep thing

November 27, 2015

Have a look in Hansard at the debate about the HMRC closures:

Chris Stephens

Many MPs and tax experts support the view that a visible and local HMRC presence is essential to maintaining ​confidence in the tax system. Does he not believe that the measures that have been announced by HMRC will open the way for more tax avoidance?

Mr Gauke
No, I do not. As I have made clear, the number of HMRC officers has been falling since its creation in 2005, including over the past five years, and we have seen the closure of inquiry centres, as has been touched on, but HMRC’s success in dealing with tax avoidance and evasion over that period has been marked and has improved. The truth is that HMRC deals with tax avoidance and evasion principally through sophisticated data analysis and by bringing together highly skilled people. The more that we can do of that, the bigger the difference we will make.

There are several issues raised by the prospective closure of HMRC’s network of offices, and it does no-one any favours if we braid them together and pretend they’re all one and the same.

First of all there’s the argument that “tax avoidance and evasion” are fought “principally through sophisticated data analysis”.  I have no recent practical experience of whether or not that’s true – the last time I looked at a set of accounts in anger, the dispute was over whether an inspector’s judgement was more effective than a “package” of data sent from a remote analysis unit.  At the time it wasn’t, but I strongly suspect the balance has swung the other way and this is the way most cases will be broken in the future, particularly the larger ones.

But that isn’t the same argument as this one: “Many MPs and tax experts support the view that a visible and local HMRC presence is essential to maintaining ​confidence in the tax system.”  A remote analysis unit can’t do that job.

It’s an oversimplification, but think of it this way.  HMRC exists to serve us, the taxpaying public, by bringing in the money which funds public services.  They do that to a large extend by administering the tax system so that we, the taxpaying public, can pay our taxes.  That sounds like tautology but in fact it’s a profound truth.  I want to pay my taxes.  I want to pay the right amount at the right time.  I want to do it with the least amount of contact with HMRC possible, but if I *do* need to speak to them, I want them to be there, where I can get at them, to be contactable, and to be courteous, authoritative and knowledgeable when I speak to them.  And – as a taxpayer – I want them to come down in righteous wrath on the people who don’t do that.

There are two constituencies to be served, in other words.  The avoiders and evaders might well best be tackled by specialist accounts factories in remote locations: the first time an evader needs to contact HMRC is when they knock on their door with a warrant.  The rest of us, however, need an entirely different kind of service: local, accessible, friendly, helpful.  Treat avoiders and evaders like regular taxpayers and you may “nudge” some of them into normalising their relationship with taxes and behaving like the regular taxpayers they’re being taken for.  Treat regular taxpayers like avoiders and evaders, however, and you risk them saying to themselves, well, may as well be hanged for a sheep as a lamb…

Posted in HMRC | Tagged | 1 Comment »

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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.

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Autumn statement and spending review day

November 25, 2015

I can’t make it to London to watch the Autumn Statement/Spending Review with the Women’s Budget Group today, but I’ll be watching it on tv and on twitter and may come back with some thoughts later on, particularly if there are any TIINs published.  Although I’m not sure why anyone should care, as the Autumn Statement doesn’t seem to require the same amount of secrecy as the Budget, and Budget secrecy has been thoroughly exploded by selective leaking over the last few years.  So we already know there is money down the back of the national sofa for defence, there may be some stuff about housing benefit, and there’s some secret squirrel stuff about the tax credits fiasco.

The interesting bit, for me, will be this blather about a “Northern Powerhouse”.  It doesn’t look very powerful from where I sit in the putative middle of it.  It looks, in fact, like an attempt to roll back the state to something like the competing tribal nations we see in The Last Kingdom.  Let’s give the northerners a few quid if they’ll get together and agree someone to give it to.  (Didn’t we vote against the idea when we were asked?) But, hey, let’s ignore that and go with whatever we can cobble together.  Let’s ignore the views of local people and see if we can get some kind of oligarchy together that will take our money and then go away and manage them quietly.  Thanks George.  Or should that be Uhtred?

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Why closing down HMRC’s network won’t save money either

November 22, 2015

A correspondent draws my attention to another reason why closing down HMRC’s network offices to concentrate in 13 regional centres is a bad bad bad idea.  It may not save the money anyway.

As I already suggested, it seems unlikely that HMRC can achieve spectacular savings in rent by announcing its preferred locations and only *then* negotiating for new premises.  I know office space isn’t exactly at a premium outside of London but are there really modern buildings which can house thousands of staff to be had for the asking?  There are unlikely to be so many suitable premises in each location that HMRC can sit back and expect a reverse premium for their willingness to move in: is it not much more likely that landlords will have seen them coming and hold out for substantial rents, as high or higher than the sum of the small office spaces being given up?

My correspondent, however, also suggests it is worth a look at the costs and patterns of employment.  In Wales, Scotland and for much of England it seems there are jobs being moved from areas of high unemployment to areas of low unemployment.  The current prediction is that 90% of the affected staff can move with their jobs to the new locations.  However around 70% of HMRC’s staff are in junior grades and – my correspondent suggests – 70% of those junior grades are part-timers on fewer than 20 hours a week.  Junior staff who are in part time work tend to be mainly women, mainly because they have other responsibilities.  This is a demographic unlikely to be able to commute for an extra hour each way every day. It’s a plan put together by people in London, for whom and hour and a half commute each way is a regrettable fact of life if you want to live somewhere bigger than a rabbit hutch.  Outside of London, however, the work/life balance is different.

So how will that work out? If someone is offered a post in one of the new HMRC Regional Centres an accepts it, will HMRC have to pay the excess travel costs, at least for the first year or so, as is usual in the Civil Service?

If the office space is expensive and employment costs increase, then how will there be savings?

The only savings I can see come from, well, shafting the employees.  If someone refuses a transfer to an office an hour and a half away, will they then  be considered to have made themselves voluntarily unemployed?  With the civil service pay cap and the abolition of pay progression, any new employee taken on to replace them would be on the lowest point on the scale and likely to stay there.  So you exchange one employee on a decent salary and one person on jobseekers allowance for one new employee on a lower salary and one former employee on… nothing at all.  Ka ching?

Posted in HMRC | Tagged | 1 Comment »

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Why closing all* the HMRC offices is a bad, bad, bad idea

November 18, 2015

*all but 13

HMRC announced last Thursday that their “modernisation” programme now requires them to close all their “expensive, isolated and outdated offices” and bring their remaining staff together in 13 “regional centres”.

This is a bad idea for so many, many reasons.  Here are a few of them.

  • HMRC as a national network used to have a mix of people who worked locally (who would notice a new business starting up or a conspicuous show of unexplained wealth) and people who were moved around the country for promotion (so the standards of service were national).  In the new plan, whole swathes of the country will have no physical HMRC presence.
  • Regional centres where someone spends their whole career have the potential to develop into fiefdoms with their own customs and practices – a national system becomes a postcode lottery.
  • A national system with regular staff mobility has an in-built anti-corruption apparatus**. A static regional team will need another bureaucracy of inspection and quality standard-setting.
  • As the PCS points out, there was no public consultation or parliamentary discussion of the plans. HMRC is a non-ministerial department but that doesn’t mean it can behave like a private company and arrange its affairs to suit itself rather than the public it services.  Obviously we need a tax administration fit for a twenty first century tax system… but who decided this was it?

There are also a couple of missed opportunities in the announcement

  • “The new regional centres will bring our staff together in more modern and cost-effective buildings in areas with lower rents”  I spent the last two or three years of my HMRC career living in Sheffield and working in London.  Because 90% of what almost any HMRC employee does can be done on a computer, and the computer could be located anywhere.  If HMRC invested in a decent network of secure laptops they could let large numbers of their staff work from home: do staff need to be concentrated in accounts factories to do their jobs?
  • The locations have been announced.  The buildings to be used in each location … haven’t.  Good luck with negotiating those “lower rents”, then!

 

**see for example Christopher Hood The Art of the State (p162) on the “gaming machine model of organisational design in traditional tax bureaucracy”

Posted in HMRC | Tagged | 6 Comments »

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Oh no you didn’t!

November 12, 2015

I find the Sheffield Theatres website appallingly difficult to use: one of those annoying merchants who won’t sell you anything unless you have an “account” but won’t open you an account because it tells you there’s already one connected to your email address but won’t for love nor money let you log into it.  I wanted to buy some panto tickets and wound up sending a complaining email instead…

… and they responded by emailing back, then telephoning me and walking me through the transaction,  and explaining that their website will be completely revamped in January.

And that’s what customer service looks like!

HMRC’s customer service, on the other hand…

HMRC’s customer service, and particularly their call handling, is criticised in the latest PAC report.  As Meg Hillier, the chair, said:

“It beggars belief that, having made disappointing progress on tax evasion and avoidance, the taxman also seems incapable of running a satisfactory service for people trying to pay their fair share.”

I’m interested in how the call handling figures are put together: according to the latest quarterly figures I can find, HMRC answered 67.1% of calls although the Guardian reports there’s a March 2015 figure of 68.3%.

But look at the response.  There are 3000 more staff handling calls, or, more precisely:

In the summer, HM Revenue and Customs (HMRC) recruited 3,000 additional staff into customer facing teams. The recruitment process included bringing people in on contracts to work in the evenings and at weekends, thus building capacity to handle calls outside of normal working hours. (David Gauke, PQ)

So is that 3000 new people recruited into HMRC?  3000 full time jobs?  3000 FTEs (“full time equivalent”) posts i.e. it might be more bodies working fewer hours but adding up to 3000 x 37 hours a week?  Or was there some internal “recruitment” of staff from existing jobs within HMRC into “customer-facing teams”?  I can find some anecdotal mention of there having been “1600” jobs advertised, but that is from a website of students complaining about the slow pace of the recruitment process (reply 19 here).  It seems from a twitter conversation that it was likely new bodies – 2000 full time and 1000 fixed term appointments – but it’s a sad indictment of the current state of public discourse that the text of David Gauke’s answer sounds like weasel words rather than an actual attempt to answer the question asked.

Why do I think that?  And why should you care?

Well, Jolyon Maugham starts from the same PAC report (in his Waiting for Godot tax blog) and lays out a compelling case leading to the  startling conclusion that

HMRC set out to mislead you as to its success in tackling offshore tax evasion. Not lying – because the document does not explicitly state that those are charging decisions in relation to offshore evasion – but an attempt to mislead.

When something goes wrong – like the Sheffield Theatres website – or looks as if it might have gone wrong  (because in the end it turned out that it was just my having logged into the site with Facebook instead of with my email address that was causing the problem) the way to deal with it is to deal with it.  If HMRC have recruited 3000 new customer service staff but found their resource insufficient to prosecute offshore evasion then they should say so.  And we should be able to trust what they say means what it sounds like, without the need for careful parsing and double checking.  No-one expects them to be able to do everything.

But if they imply they have prosecuted numbers of tax evaders in the hundreds we should be able to resist the urge to say “oh no you didn’t” (it was eleven, and the hundreds of prosecutions included all kinds of other offences).  If we stop trusting the integrity of the tax authorities, we’re in a whole new space.

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