God bless HMRC

HMRC Online Services proved to have a sense of humour today.  I visited one of their Help pages to find out exactly what was meant by the 'Establisher'  of a registered pension scheme.  Here's a screen shot and the text including the link:

Section 154 Finance Act 2004 lists those who may establish a registered pension scheme

For further guidance on the establishment of schemes select the Registered Pensions Schemes Manual link in the left hand bar and refer to RPSM02300060.

It's delightful: the link takes you to a page that lists UK Public General Acts, supplied by the National Archives.  Just what you need as help for a technical question and to make sure you fill out the pension scheme registration form accurately. 

Border Force targets

According to The Independent today (3rd May):

Under its targets, the Border Force must get non-EU passport holders through immigration at Heathrow in less than 45 minutes for 95% of the time.
Its target for EU passport holders at Heathrow is less than 25 minutes for 95% of the time.

When you've travelled from, say, Paris, the time in the air is likely to be little more than the target time quoted above for non-EU passport holders. Who thinks such loose targets are acceptable? In many hundreds of business flights, it was almost always my experience as a returning UK citizen that border formalities would take minimal time. That's how it should be. In my view, 95% targets of ten minutes for UK/EU citizens and 30 minutes for non-EU citizens would seem to offer reasonable service. That would give median waiting times nearer 5 and 15 minutes respectively.

There's no reason at all why the Border Force can't know at any time of any day exactly what volume of passengers is due to enter the country at any time in the next two hours, and to a high degree of accuracy also in the next day, week and month. Once passengers are on their inbound plane and the plane is in the air, the border staff should be rostered to meet them. It's not rocket science.

Charity tax debacle - update

The Spectator has a lot more information than my simple opinion piece, blogged yesterday, in its Coffee House blog: How Mitt Romney inspired the British charity tax debacle. Fascinating insight, and certainly confirming that the Departmental ministers for Business and for Culture, Media and Sport were cut out of the policy-making loop.
The Times gave five cases where HM Treasury say that charitable donations are abused. These all look pretty tenuous and could be handled under existing rules if the Charities Commission and HMRC do their jobs properly. To summarise the abuses and the charities' response:

	Treasury case	Charity response
1	Shares donated to charity found to be worth less than claimed	Relief is based on fair market value
2	Business gives money and claims relief. Money is then lent back.	Government has already cracked down on 'tainted donations'
3	Relief claimed for donation to a dubious charity that doesn't do much charitable work	This is for the Charities Commission to police
4	Tax relief claimed for donation to a dubious foreign charity	It's not allowed to claim relief on donations to charities outside the EU
5	Tax relief given on donation to UK charity which passes the cash to a dubious charity abroad	UK charity has to satisfy HMRC that the foreign charity would qualify

In a final dagger thrust to the Government's credibility, it also vented rumours that Oliver Letwin is to be asked to sort out the political mess. For heaven's sake!

Charities tax breaks - impact analysis?

The UK government has decided to limit the tax breaks that are available for charity donations because there are some cases where people use their donations to reduce their effective tax rates to very low levels. The feeling seems to be that money donated to charities is unjustifiably lost tax. The policy appears to have been introduced without proper planning or impact analysis. Other Government departments seemed not to have been consulted.

David Gauke MP, the Treasury Minister responsible for defending the policy on BBC2 Newsnight programme tonight (12th April) mentioned charities that don't distribute much money to real causes, but refused to name them. Apparently some charities lend money back to companies controlled by their 'donor'. To me this is a sign that the Charities Commission isn't doing its job properly, not a reason to cut off significant flows of major donations to key charities that support (to pick a few from many) health, social causes, sports, and the arts.

Whether he was completely out of his depth, or just defending the indefensible, is hard to say. But to me, without names and evidence, this just looked like bullshit being raked together to defend a poorly thought-through policy announcement.

Mansion tax - jobs for the boys (and girls)?

We're in the run-up to the Budget, and the temperature is rising.

Today there's been the spectacle of the Business Secretary trying to dictate the details of the Chancellor's proposals, in a way that would be slapped down very quickly in a single party Government, but which is apparently acceptable in a coalition.

Time and again, under the last Government and under this one, proposals are made and then become policy without the support of a proper impact analysis.

The 50p Income Tax rate was brought in as a political headline grabber without a decent analysis of its likely impact. There's always been concern that by driving away potential high earners, by making the UK appear less business-friendly, and by giving people a greater incentive to optimise their tax arrangements, this has actually had a negative effect on the total tax take. At least it's easy to collect, through the normal income tax system of PAYE and self-assessment returns, and payments are made direct to HMRC.

Now Dr Cable is trying to hit the rich through a so-called 'mansion tax', in exchange for which apparently his party would be happy to see the 50p rate abolished. Someone said on the BBC this morning that a 1% per annum tax on the value of properties above a £2 million threshhold could for some given set of assumptions bring in £1.7 billion, which is an improvement on the most optimistic guesses for the 50p rate. By the way, that's at least £10,000 that the owners of a £3 million property will have to cough up. Each year, and whether they have any free income or not.

Issue	Impact
No mechanism in this country for annual charges by central government on the owners of property - it only gets involved at sale or inheritance	Would the Government ask local authorities to collect the tax and hand it over? Would they pay local authorities a proportion of the collected amount for this service? And would they ask them to identify the target properties or would a whole new register, inspectorate and system of appeals be needed?
Tax would be assessed on unrealised gains	Either taxes have to be paid by liquidating some other asset or they have to be put on account and collected when the asset in question is sold or transferred. And that could be a very long wait.
Valuations can go up and down	It's fair to charge tax against capital gains when the gain is realised, but it must also be possible to reclaim or offset tax if a loss is made

I don't have a mansion or even an average-priced London house, but I fear that yet again, the UK is in danger of introducing a whole new piece of complexity to the taxation system. This will create jobs for the boys and girls - lawyers, tax collectors, surveyors and other hangers-on. However, it's quite likely that there will be little real positive benefit (after these costs) for the public purse, and an increasing level of misery for those affected.

It would be much better to direct the lawmaking effort aggressively at the Stamp Duty system, bringing all property in the UK under its scope, regardless of ownership, and then only giving relief against it under carefully-assessed criteria.