Plough Monday

January 8, 2018

It’s Plough Monday, the start of the new working year (the first Monday after Twelfth Night and Epiphany).  So here’s a nice piece of intellectual work for you, a research question: how much does it cost to pass a piece of legislation?

No, not the cost of administering the law after it has passed or preparing it before it is presented to Parliament.  How much does it cost to print and promulgate a Bill, to give it a First Reading, to discuss it in the House of Commons, to call a vote, to discuss it in the House of Lords… how much does the parliamentary process cost, and then how much does it cost to, what, courier it over to the Queen for her to sign? (How does that part actually work?)

What I am getting at is, this is a fixed cost which doesn’t seem to me to have been factored into the impact assessment process.

An impact assessment – for tax, a TIIN – should tell you how much a piece of legislation will raise in taxes or cost in tax foregone, and how much administrative burden it will impose or relieve for those it impacts, and how much it will cost or save the administering department.

What it won’t tell you is that base cost of passing the legislation in the first place.

Why should we care?

Well, there are several measures in the latest OOTLAR where the TIIN shows no cost or benefit to the general population, the taxpayer or the department, and that the impact is on only a handful of businesses.

For example, Income Tax: Venture Capital Schemes: relevant investments (page 69 of OOTLAR) says it will affect “a maximum of 100 individual investors”  and “fewer than five companies have been affected by the provisions since November 2015”.

I understand that, following the Wilkinson case, there was a change in HMRC and the Treasury’s approach to extra-statutory concessions, so that a number of useful but trivial exceptions from strict application of tax law have either been lost or have been legislated.

It seems to me, though, that HMRC ought to have a base figure for the cost of the legislative process (divide the annual cost of running the Houses of Parliament by the average number of days it takes to pass a piece of legislation, say?) and a clear power to set and promulgate extra statutory concessions where certain rules are met.

What kind of rules?  What about the total costs and benefits of the change are smaller than the cost of passing a piece of legislation?  Perhaps an overall limit of one (two? five?) ESCs a year so that they don’t become an easy way out of messing up your drafting in the first place?  Perhaps a “one in/one out” rule so that they don’t become another overcomplicating factor (three pages of tax legislation accompanied by a thousand pages of ESCs is an undesirable an outcome as a thousand and three pages of tax legislation, after all).  Perhaps an “affects no more than x number of people/businesses, impacts of no more than y cost on any one business” rule?

But in any event: more options appraisal, less legislation, more ESCs.

What do we think?


Happy Heinlein Holiday

December 23, 2017

Bonus holiday bloggery: I have written in the past about tax and science fiction, or rather about tax in science fiction.  Next year, however, the distinguished critic Farah Mendlesohn is publishing a book about Robert Heinlein and has kindly answered here a couple of my questions about Heinlein’s attitude to tax and the future. So if you want to find out whether “don’t drink: you might shoot at tax collectors and miss” is something you need to worry about or not head over and read the interview.

See you next year!




December 15, 2017

What do we think? The House of Commons Finance Bill Committee are asking for written evidence on this year’s Finance Bill. Is there any point in my writing up my blog posts on measures with nil and negligible impact and asking them to consider a cull? Or would that be teaching my metaphorical grandmother to suck metaphorical eggs as surely it’s the essence of parliamentary scrutiny?


Glass of almond milk, anyone?

December 6, 2017

There are 100 open consultations listed on the gov.uk website this morning, and 13 of them are from HMRC… do we not think HMRC are legislating too much???

Having a quick flick through to see if there are any which expire soon I came upon this: the draft legislation for the soft drinks industry levy (the tax on sugary drinks).  It is, in my humble opinion, wretched stuff, trying to define in legislation when is a fruit drink different from a vegetable juice different from a milk drink and what constitutes a milk substitute drink.  Treble almond milks and years of anti avoidance legislation after amusing tribunal cases sampling kale, mango and almond smoothies all round?

However my eye was, of course, instantly drawn to the TIIN, or at least to where the TIIN ought to be.  Because, look, here is what it says at the end of the draft SI for the levy itself:

A Tax Information and Impact Note has not been prepared for this Instrument as it contains no substantive changes to tax policy.


No, the other piece of draft legislation (the enforcement provisions, here) has the identical final paragraph.

No.  Just, no.  The TIIN is there to inform parliament about the legislation they are being asked to rubber stamp.  There is little enough genuine scrutiny of this kind of legislative gunk as it is, and at least attaching a TIIN gives readers the chance to see what the likely impact is of letting this go through on the nod.

I was getting ready to write a righteous screed in the manner of Angry of Tunbridge Wells about how it really is appalling that no TIIN has been prepared for this entirely new tax…

…and then I used google.  And of course there WAS a TIIN, and it’s here, from when the primary legislation was published last year.

In order to inform Parliament, surely the last sentence of the draft instruments should read something like “The TIIN for this measure was published in 2016 and may be found at https://www.gov.uk/government/publications/soft-drinks-industry-levy/soft-drinks-industry-levy”

And then I thought, oh, they’re asking for feedback on the draft legislation, and that IS feedback…  So there you go.



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


Quick and dirty Budget analysis #5: even more negligible

November 30, 2017

Income Tax: armed forces accommodation allowance exemption (page 72) Apparently members of the armed forces are provided with living accommodation free from the usual benefit-in-kind tax charge. Apparently the government intends to provide them with an accommodation allowance (if they’re stationed in the UK) instead, so they’re going to be excluded from the tax and NIC consequences of that, too.

Whilst I’m all in favour of the Armed Forces Covenant (people who are willing to get shot in our defence deserve decent treatment after all) I’m not convinced the best way of dealing with this is through the tax system. Maybe try providing better accommodation and/or better pay? Just a thought.

Income Tax: extending Seafarers’ Earnings Deduction to the Royal Fleet Auxiliary (page 75) This will affect about 900 employees of the Royal Fleet Auxiliary who have been getting Seafarers’ Earnings Deduction on a concessionary basis by disapplying the definition of “Crown employment” that excludes them from it. Sticking plaster for previously defective legislation, in other words. Sigh.

Corporation Tax: exemption for Northern Ireland Education Authority (page 116) Education authorities are exempt from corporation tax. In 2014 Northern Ireland re-organised its education authorities into one, but along the way no-one seems to have realised that, while the existing bodies were exempt from corporation tax, the new one wouldn’t be unless someone did something about it. In other words, another sticking plaster for some badly-thought-through legislation.

By the way, whoever wrote the equalities impact – about five minutes before it went to print, judging from the way it’s in a different font from the rest – is taking the mickey, surely?

As the measure does not impact on people, there are no equalities impacts

Stamp Duty Land Tax higher rates: minor amendments (page 159) When you look at a measure which affects “Schedule 4ZA Finance Act 2003” you have to ask whether the added complexity (seriously, the schedules get to a Z?) is justified by the gravity of the problem to be solved. In this case, it’s people getting divorced suffering higher rates of SDLT when they reorganise their property. I’m not convinced, but then I’m also not divorced.

Income Tax: scope of Qualifying Care Relief for self-funded Shared Lives payments (page 166) Qualifying Care Relief is a simplification scheme that lets people paying for their own care (for example when a local council gives you funds to pay a carer instead of providing a carer themselves) use a standard deduction rather than keep detailed records of expenses. At present it applies to a scheme called Shared Lives but only if the council pays for it and not if it’s self-funded. This piece of legislation gives the self-funded people the same option.

I have two objections here. First, does this not seem to be another sticking plaster on badly devised legislation? But more importantly, the TIIN says “up to 170” carers will benefit. I know that since the Wilkinson case there has been a huge reluctance to create Extra Statutory Concessions (ESCs) because the Court of Appeal didn’t think HMRC had the power to do so. Wouldn’t it be a great idea if, instead of faffing about with legislation like that, Parliament just gave HMRC the power to make ESCs again?

Extend First Year Tax Credits for 5 years and reduce the rate of claim (page 174) It’s a thing where loss making businesses can get a tax credit instead of capital allowances. (they would have got 100% capital allowances on water and energy saving plant and machinery except they haven’t got profits to set them against, so they get the tax credit – cash – instead). It was brought in with a five year sunset clause so it expires this year. It’s being extended.

Well fine: but where’s the analysis of whether it’s achieved its original policy objective and what the costs and benefits have been, huh? Isn’t that, you know, the idea of having a sunset clause in the first place???


Negligible (Quick and dirty Budget analysis #4)

November 27, 2017

What does “negligible” mean?  Well, if you will turn to page 37 of OOTLAR (the overview of tax legislation and rates) published with the Budget last week, you will see (para 3) that

Where the exchequer impact is negligible, the impact is less than £5 million in any one year.

In a country with thirty million individual taxpayers,  a million corporation taxpayers and two million VAT payers (figures rounded from the spreadsheet here) you have to work quite hard to get a “negligible” impact.

Income Tax: Marriage Allowance claims on behalf of deceased partners (page 44) is clearly negligible – the pettifogging rules around the transfer of allowances between married couples are already bad enough. It’s a purely cosmetic political measure designed to “reward marriage in the tax system” without unwinding independent taxation of men and women and the sooner it’s abolished entirely in the name of simplification the better in my view. However, if we have to have it, then yes, we shouldn’t faff about with it when one of the partners dies, I suppose. But why did no-one think of that when they introduced it in the first place?

Income Tax: mileage rates for unincorporated property businesses (page 46) however is a classic example of how not to simplify the tax system. Repeat after me, options are not simplification. Adding a different way of claiming travel expenses in a property business doesn’t make the taxation of property businesses simpler, it makes it lighter.  It means that any properly advised property business is likely to want to work out its travel expenses twice to see which method is most advantageous. Also, this seems to be a “this is the way it’s done for other unincorporated businesses” measure, which means there was, somewhere along the way, a missed opportunity to add “and property businesses” into the legislation, creating the gap this piece of nonsense is filling.  In other words, this is tinkering that would, in a properly regulated system, have been entirely unnecessary as a separate measure, because you’d have done the thing right in the first place.

Partnership taxation: proposals to clarify tax treatment (page 52)

While the rules governing the allocation of partnership profits for tax purposes and the return of those profits are clear in the majority of situations, their application in certain modern commercial arrangements is not always without doubt

Yeah.  This is why the tax system can’t have nice things.

Income Tax: venture capital trusts: limiting the effect of anti-abuse provisions on commercial mergers (page 56) is a reverse anti-avoidance measure!  There’s an anti-avoidance rule that restricts the tax relief you get on a venture capital trust if you sell the shares and then subscribe for new ones in a trust which merges with the old one, in other words stops people setting up a scheme where the investors ping in and out.  But, no!  Sometimes they do that for commercial reasons!  And it’s not fair waaah if the anti-avoidance provisions hit them then!

I have no patience with changes to tax law that are piling on the clauses for nugatory benefit: personally I’d abolish the relief entirely.  But this “problem was raised by a representative body after it was contacted by a VCT planning a merger”.  They couldn’t plan their way out of it?  Compensate their investors some other way?  Suck it up and get on with it?  Nope: they got the law changed and added another level of complexity for a change where “the number of individuals affected is not known but is likely to be fewer than 1000”.

Income Tax: Venture Capital Schemes: relevant investments (page 69).  This is just bad lawmaking, or at least this is putting duct tape on the holes in existing bad legislation.  There’s an overall annual limit on the amount of EIS and VCT investment a company can receive; then they twiddled with that to make sure it wasn’t retrospective, then there was another tweak that included a lifetime investment limit, but that didn’t take account the transitional provisions that were already in place so some pre-2012 investments are accidentally left out of the lifetime limit… and this remedies that!

It will, says the TIIN, affect “a maximum of 100 individual investors”  and “fewer than five companies have been affected by the provisions since November 2015”

Congratulations, then: this is the most pointless piece of legislation of the clauses covered by this batch of TIINs… so far…