SOME RANDOM THOUGHTS - 1

 

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SOME RANDOM THOUGHTS - 1

 

I have been collecting together over the last few weeks a number of things for which I thought about blogging but which don’t warrant saying much about so I thought I might comment on them together.

 

The first is an HMRC Press Release, “Thousands of teenagers missing out on Child Trust Fund cash”.  Child Trust Funds were a child of the Blair government in 2005.  They were an investment product under which parents or guardians could put in a small amount of money for children born after 1 September 2002 and it could grow free of tax.  The child could take control of the trust fund at age 16 but could not withdraw the money until they became 18.  The government also contributed an amount of £250 to the fund (a but more for older children). If a parent did not set up a Child Trust Fund, HMRC would set it up for the child.  The HMRC Press Release explains that parents or guardians set up around 6 million CTFs before George Osborne put an end to CTFs in 2011.  HMRC themselves opened a further 1 million CTFs for children whose parents had not opened one.

 

In the Press Release, HMRC is “urging young people to check if they have a hidden pot of gold”.  I doubt that most people would regard £250 plus the interest earned thereon for 20 years to amount to a pot of gold.  Where a parent topped up the Child Trust Fund, it is unlikely that they forgot that they did so. What is much more likely is that they didn’t want the child to have the money at age 18 because at that stage they did not feel that the child was mature enough to receive a windfall.  Given that the vast majority of CTFs were set up by parents, it seems to me that the HMRC Press Release is urging youngsters to check if a parent has set aside money for them.  I question whether it is, or ought to be, part of the role of HMRC to interfere in the relationship between parents and their adult children by suggesting to the child that they should check whether the parent has set aside money for them but is choosing to keep that fact from the child at the current time.  Whilst CTFs might now be a nuisance to HMRC, I do not think that can justify HMRC risking damage to family relationships!

 

Another article I set aside was by the news editor of ConservativeHome, which is a Conservative party website.  This seems to suggest that to stop Nimbys blocking housing developments, the current government should introduce a bedroom tax or something similar, i.e. voters should be punished if they oppose housing developments.  I find this intriguing because, of course, an earlier Conservative government came in for a great deal of flack when they reduced housing benefit and Universal Credit where a claimant has more bedrooms in their house than their local Council thinks they need.  Accordingly, the suggestion of extending such an impost more widely seems an odd proposal for Conservatives to put forward. 

 

I also read an article on CapX, which is an offshoot of the Centre for Policy Studies, a Thatcherite Think Tank, supporting the Labour party’s pledge to remove charitable status from private schools.  Of course, CapX commissions articles that it thinks might interest its readers, but it seems going a bit far to commission an article in opposition to established Conservative party policy.

 

Another CapX article, this time by Harry Phibbs, another staunch Conservative, urges Rishi Sunak to simplify the tax system.  However, Harry, like most who call for simplification of the tax code, seems completely oblivious to the practical problems of doing so.  There are two major problems.  The first is that much of the complexity arises from a desire of successive Chancellors to target taxes to try to achieve fairness.  As those who have studied reports from the Office of Tax Simplification will have probably realised, in most cases the easiest way to simplify the tax system is to abolish reliefs.  Whilst Mr Phibbs may be happy with a simple but unfair tax system, I suspect most people would rather have a complex and fair system, and realise that the two are trade-offs for one another. 

 

The second area of complexity is that the draftsman tries to cut off scope for avoidance, which inevitably means that a simple idea translates into complex legislation.  The government would deserveably come in for a lot of criticism if it were to go through the tax code and abolish the anti-avoidance bits of it.

 

Of course, Mr Phibbs may want the system to be simplified by expressing taxes in broad terms only and leaving it to the discretion of HMRC to decide what it thinks each of us should have to pay.  I doubt that many would support this either.  Indeed, the prime thing that businesses want from a tax system is certainty.  The economy would cease to function if people could not know at the time they enter into a transaction the tax consequences of doing so.

 

About the only practical way to simplify the tax system is to limit its objective to raising money and to stop using it to try and change behaviours by granting special reliefs to particular industries, to investment, or other behaviours that the government wish to encourage, or to punish perceived evils such as smoking or drinking or gambling that politicians wish to discourage.  The likelihood of any Chancellor choosing to do that seems highly improbable.

 

Finally, I am heartened by the number of businesses that seem anxious to employ elderly people like me.  I have received an e-mail from someone called Dubai Jobs telling me they found my profile on LinkedIn and that my valuable skills and work experience will help to push my profile for the 36 plus employers who are anxious to employ me in Dubai.  As my profile shows that I started Grammar school in 1953, it does not take a lot to work out that I am getting on for 80.  However, I keep getting e-mails from employment agencies wanting to join my LinkedIn network and I even had an e-mail from LinkedIn itself extolling the opportunities for me to take a job at a start-up.  Accordingly, it seems clear that demand for people like me is as widespread in the UK as in Dubai.

  

ROBERT MAAS