Friday, March 18, 2011

BLOG 103


A: When David Gauke, the Exchequer Secretary to the Treasury, is involved. I was reading over the weekend last October’s debates on the Finance (No 2) Bill. (Yes, I’m a bit behind with my reading but there’s an awful lot that I try to read).

David was explaining to the Finance Bill Committee, Clause 8 (which is now section 8 of the Finance (No 3) Act 2010). This gives HMRC power to regulate the time at, and manner in, which people who are required to deduct tax from certain interest payments have to account for it to HMRC. I thought his explanation worth sharing. To assist those not used to parliamentary language, I have put my plain English interpretation in square brackets.

“I am sure that the Committee is united in working to ensure that tax forms are as accessible and convenient as possible … HMRC has carried out a lot of work on customer segmentation and it is important that the customer segmentation that it has identified as being willing and able is as big a part of the population as possible [HMRC has divided taxpayers into those it believes want to comply but don’t know how, those that want to comply and try their best, and those that don’t want to comply]. There are many who are willing, but not necessarily able to comply, as they would like. HMRC must engage with such people and ensure that the payment of taxes when they are due is as accurate, accessible and convenient as possible …

The aim of the clause is to provide a regulation-making power for payment of interest. The current procedures can be difficult for taxpayers to use. [The procedure was that the taxpayer had to write a letter to HMRC saying that he had made a payment of £X of interest to Y, he had deducted tax at 20% and was enclosing a cheque for the amount deducted]. For example, at present, the procedures state that the taxpayer must send an account of payment to HMRC without delay, without specifying what “without delay” means or in what form the account must be sent [which as far as I am aware has not given rise to major difficulties for taxpayers but did of course mean that it was very difficult for HMRC to impose a penalty if people were a bit tardy or did not provide all of the information that HMRC want].

With the new regulation-making power in place, it will be possible to modernise the old procedure [“modernise” is a great synonym for “complicate”]. For example it will be possible to provide a bespoke form, and consideration can be given to aligning the procedures with the equivalent rules that apply to companies for which there are long-established regulation-making powers [Actually there aren’t. For companies the rules are set out in primary legislation, but David obviously does not feel it reasonable to ask parliament to spend time on legislating for mere individuals. That can be left to HMRC. The rules on companies, incidentally, are that they have to make quarterly returns]. Any regulations made under the power will be subject to consultation and an impact assessment [We don’t know if we are going to make regulations; it is simply that the Coalition feels it important to give the appearance to citizens that the State is all powerful so it is important that HMRC are seen to have very extensive powers even if they don’t actually want to use them. This will indicate to citizens that anything HMRC want to do is probably authorised by parliament].

… It is precisely because we are mindful of the need to have regard to the convenience of the taxpayer that the regulation-making power is needed. Without it, it would not be possible to improve the current procedures in this area, provide certainty for taxpayer or reduce compliance burdens”.

[I really like that last bit. We have a legal myth that citizens know the law. In tax this myth is actually a State cudgel, as if taxpayers know the law and don’t make their tax returns in accordance with the law, that surely means that they have not taken care to get the return right and should be charged a penalty to encourage them to study the law more thoroughly. Be that as it may, Mr Gauke wants to “reduce compliance burdens” by requiring a citizen not only to know the law, but also to know the regulations and, instead of simply writing a letter to HMRC, to download a form from HMRC’s website (and even HMRC staff tell me not to use the HMRC search engine as is easier to Google what I want from their site), fill it in and send it to HMRC].

The sooner the electorate brings back Labour the better if the Big Society actually means more and more regulation of things that even Mr Brown and Mr Blair trusted us to work out for ourselves.



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