I am a great believer in the maxim “if you have nothing to say, then say nothing”. Sadly, my namesake Mr Hammond comes from a different school of thought.
Readers who were expecting Black Friday to come two days early in the form of fantastic deals presented to UK plc by the Chancellor of the Exchequer will have spent the best part of an hour and a quarter waiting for Santa Claus to arrive, to mix far too many metaphors.
Indeed, the Treasury has helpfully provided a highlights document entitled “25 things you need to know”. Having read it, my initial reaction is that this includes 22 things that I didn’t need to know.
You know that you in for a dull Budget when the man delivering it starts boasting about the massive savings that government is providing by failing to increase taxes rather than reducing them. Similarly, a letter from the Chancellor to the OTS explaining why he is not reducing the VAT threshold is hardly riveting. All of this is the kind of behaviour that makes one suspicious, potentially heralding the implementation of stealth taxes either now or not too much further down the line.
Investing £3bn in the fund to leave Europe is hardly encouraging either with 10 to 20 times as much to follow, while the boost for the NHS is significantly less than had been requested or is needed to prevent the service from disintegrating.
According to the BBC, the great man saved the best till last but frankly, a saving of a couple of thousand pounds on average for first-time homebuyers is far from exciting. The vast majority won’t be able to find the initial £300,000 to buy the property thus missing out on a pretty meagre kickback. Anyone living near me in North West London will not benefit anyway since one-bedroom flats now frequently cost more than the £500,000 limit set for the scheme.
This is about as illusory as the main announcement in my own field, employment taxes. While anyone charging their electric car at work will theoretically be better off as a result of the removal of the benefit in kind charge, I’d wager that it had never occurred to accountants, let alone Lehman, to declare this on a P11D in the first place.
A slightly better EIS deal for those investing in high-growth, knowledge-intensive start-ups is good news but is equally unlikely to boost the economy to any great degree.
On the tax avoidance front, with all due respect to Mr Hammond, he talked big but delivered small. A change to VAT for the likes of eBay might make a small dent in their profits unless they can spot some loopholes but catching them for a much higher level of corporation tax would have been far more effective.
The one document that initially seemed like compulsory reading has the snappy title “Tackling tax avoidance, evasion and non-compliance”. It stretches to 37 pages (including some blanks and titles, not to mention lots of historical data) but unambitiously starts off by boasting that the UK’s tax gap is one of the lowest in the world at 6%. It then moves into some tedious boasts about achievements to date, many of which are far from earthshattering.
Bizarrely, there were only a handful of new measures within this grand-sounding document, most of which seem unlikely to generate any significant amounts of income for the Exchequer. Can you get excited about the announcement that “The government will publish a consultation response on the proposed requirement for designers of certain offshore structures, that could be misused to evade taxes, to notify HMRC of these structures and the clients using them. This work will be taken forward in conjunction with the OECD and EU”? Why not take substantive action now?
Extending time limits for non-deliberate offshore tax non-compliance to 12 years will do no harm but once again, doesn’t impress.
The other changes are equally inconsequential and, in many cases, represent no more than consultations on issues that have been damaging the economy for many years eg fragmentation of profits, VAT fraud and depreciatory transactions.
“Stopping digital multinationals who hold intellectual property in low-tax countries from avoiding tax” sounds good, but is addressing little more than another drop in an extremely large ocean of tax avoidance and evasion. Frankly, a detailed analysis of the Paradise Papers would almost certainly bring in a more significant yield.
Those involved in the industry might get concerned about the position paper on corporate tax and the digital economy but, once again, they can probably make hay while the sun shines for several years longer.
Apologies if I have missed some of the juiciest cherries in the fruit bowl but remarkably I’m already missing the heady days when George Osborne cracked slightly better jokes and delivered rather meatier promises, even if you frequently fail to deliver on them.