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Dan Neidle at FAB | AccountingWEB | Through the eyes of Dan Neidle
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Tax through the eyes of Dan Neidle

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Barriers for new entrants to the tax profession, the industry’s ‘big problems’, concern around umbrella companies and the long-term reforms on HICBC were all on the agenda as headliner Dan Neidle saw out the first day of the Festival of Accounting & Bookkeeping at Birmingham’s NEC.

14th Mar 2024
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Dan Neidle has made huge waves in the tax industry over recent years, having found himself in the spotlight for – among other things – investigating the tax affairs of Nadhim Zahawi in a saga that ended with the Conservative party chair being sacked, and campaigning against the unfair treatment of subpostmasters in the Post Office Horizon IT scandal.

So anticipation was high for his headline appearance at the Festival of Accounting & Bookkeeping (FAB), with the Tax Policy Associates founder seeing out the day by discussing a whole host of subjects and highlighting notable concerns surrounding the profession.

“The reason that I’m here – the reason I founded Tax Policy Associates – is to get some media coverage of the stuff that matters, the technical stuff,” said Neidle at the top of his session.

Raising standards consultations

He highlighted the raising standards consultation as being the “one thing in the budget that everyone should read – it is going to affect all of you”.

The government published a consultation on options to strengthen the regulatory framework in the tax advice market and on requiring tax advisers to register with HMRC “if they wish to interact” with the agency on a client’s behalf.

Neidle noted that it suggests there is a “problem with standards in the tax profession”, with the move giving the impression that “we need more regulation – here are some options to achieve it”.

“Well, they’re wrong. Are there some poor standards in the tax profession? I guess – just as there are in dentistry or particle physics. But the real problem is not a lack of standards,” he said, before stressing that the real problem is in fact with “reckless idiots and fraudsters”.

“So this consultation paper is going to be more paperwork for all of you. It’s going to mean that people who do useful tax work, particularly on low incomes who aren’t currently a member of a regulated body, could be driven out of the market.”

Barrier for new entrants

It could also mean that new entrants into the market “have a barrier in their way”, warned Neidle. “And it means that some of the worst people damaging the tax system – damaging taxpayers and stealing tax from all of us – are completely unaffected.

“The other thing is DOTAS [the Disclosure of Tax Avoidance Schemes]. How have the bad actors responded to DOTAS? Answer: by magicking up false reasons to ignore it and then ignoring the rules, and by the time the tax tribunal looks at it six years later, they have the money and they’ve disappeared.

“So you can be sure that whatever rules are invented, the bad actors will ignore them one way or another.”

Much more targeted

Weighing up what the answer might be, Neidle reminisced on the Treasury Consent Rules – a “legacy of the 1970s capital controls”.

“If you did certain things that moved money from the UK to outside the UK, it was a criminal offence,” he said. “Now these rules are incredibly obscure and you have to be incredibly unlucky to fall foul of them but the fact it was a criminal offence meant that everyone took them amazingly seriously, and that’s what we need here.

“We don’t need regulation. We need people to be afraid of a knock on their door at 6am. That’s the answer. We need something much more targeted. We need something much more punitive.”

Neidle believes that if the government is serious about tax abuse and consumer protection for taxpayers, it needs to look at these kinds of issues, how to focus and target the bad actors, not “throw a bunch of new regulations at it”.

The gatekeeper

“What it comes down to is the government probably won’t receive those kinds of proposals unless there’s a lot of noise and it’s up to you – and everyone else in the profession – to help make that noise.

“There’s lots of good in the accounting profession – a strong profession that acts as a gatekeeper. The people who keep clients on the straight and narrow, the people who ensure that tax law is followed, are tax professionals and that is something that the government should be extremely careful not to damage. It’d be much better to focus on the problems.”

Touching on those “big problems” with the tax system, Neidle nodded to avoidance abuse, complexity and “too much automation”.

“I think there are numerous issues where the government could and should be focused. They don’t require investment and they don’t require spending – they require focus and they require understanding.”

The push for engagement

Neidle continued: “At Tax Policy Associates, we can do a bit to try to push the media agenda but it’s something that really needs the profession – it needs everybody to be engaged.

“Write to your MP, start a dialogue with your MP – they are often desperate to speak to people with expertise. Become that person. Cultivate that relationship with policymakers, with journalists.

“Bit by bit, we can maybe try to move the agenda away from the clichés, away from the unimportant stories and towards stuff that matters. That is a big medium-term problem for the profession.

“The short-term challenge, I think, is this consultation and trying to, ideally, completely refocus towards where the actual problem is.”

The umbrella companies problem

As questions started to come from the audience, the discussion moved towards there still being an “awful lot of umbrella companies out there that are operating disguised remuneration schemes”, with Neidle agreeing that such businesses are huge problems.

“Right now, they’re getting away with it and making a huge amount of money but when it all goes wrong – and it will all go wrong – the people [involved] will have vanished and the taxpayers will end up footing the bill.

“There was a government consultation on this which closed in the summer. I and many others replied to that saying the solution here is obvious – you make the liability stick.”

Neidle also nodded to his “rather unimaginative solution” of “simply prosecuting the people collecting liability for people, and being aggressive as an enforcement function”.

“But right now umbrella companies are a huge problem.”

Sinner who’s repented

At the Spring Budget, Jeremy Hunt said he was going to “end that unfairness” of the high-income child benefit charge (HICBC) but warned that it requires “significant reforms to the tax system, including allowing HMRC to collect household-level information”.

He said the government will consult on moving the HICBC to a household-based system by April 2026 but because that is not quick enough, from April the HICBC threshold will be raised from £50,000 to £60,000. Hunt said this will take 170,000 families out of the regime.

“I guess first of all, we should welcome a sinner who’s repented,” said Neidle. “It’s progress. More than the numerical value, it shows that the campaign on the issue has got through to politicians and I think there’s an awareness of it in all four main parties.

“But the longer-term reform we’re promised – requiring HMRC to track household income – strikes me as a disaster. It requires something new, something complicated, something easily manipulated, something people are going to get wrong.”

Neidle added that a “really principled and brave politician would instead simply abolish the high-income child benefit charge”, adding: “If we want to tax people on higher incomes, we do that by increasing tax on people with higher incomes.

“We don’t do it by a succession of half-arsed tricks which create bizarre marginal tax rates, and I think that message is slowly, slowly, slowly making its way through to politicians.”

Transparency for politicians

The audience stayed with the political theme, as Neidle was quizzed on having greater transparency for politicians when it comes to publishing tax returns.

“I am dead against transparency for politicians,” he said. “Why? Let’s imagine I’m a politician and I’ve avoided tax, evaded tax – done who knows what. How visible is that going to be on my tax return? I think the answer is: not at all.

“So what are we gaining? What are we losing? We get an interest in people’s private financial affairs, potentially driving more good people out of politics.”

The Festival of Accounting & Bookkeeping continues today at the NEC, Birmingham with the likes of author Kate King, entrepreneur Chris Ducker and industry legend Rebecca Benneyworth all speaking.

Replies (11)

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By Justin Bryant
14th Mar 2024 10:45

That headline's a camel joke, right?

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Replying to Justin Bryant:
Intercity
By Mr Hankey
14th Mar 2024 12:19

I can't see any joke, it must be well camelflaged.

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Replying to Mr Hankey:
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By Justin Bryant
14th Mar 2024 12:52

It's that nominative determinism thing again.

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Replying to Mr Hankey:
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By More unearned luck
14th Mar 2024 13:24

Matthew 19:24

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Replying to More unearned luck:
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By mumpin
16th Mar 2024 10:22

I'm lying in a hospital,
I'm pinned against the bed.
A stethoscope upon my heart,
A hand against my head.
They're peeling off the bandages.
I'm wincing in the light.
The nurse is looking anxious,
And she's quivering in fright...
I'm looking through Dan Neidle's eyes.

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Replying to mumpin:
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By FactChecker
16th Mar 2024 17:25

I know, whatever his good & bad points, that Dan loves the limelight ... but even he might flinch at being compared to Gary Gilmore!

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By jon watkin
15th Mar 2024 12:17

You read it here, although probably not for the first time. As gatekeepers we can either put our heads in the sand or act on Dan's sage advice and make our voices heard. It's always frustrating to hear about abject fraud dressed up as "clever" tax avoidance and hiding the truth and then having yet more excessive regulation and disclosure imposed whilst the true perpetrators go unpunished.

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By Les Smith
15th Mar 2024 13:38

I attended Dan's talk and totally agreed with 99% of it but Jon Watkin has inadvertently identified what was totally wrong about it. Jon use the phrase "tax avoidance abuse". There is no such thing as "tax avoidance abuse" . There is "tax planning", " tax avoidance" both activities totally legal if not socially acceptable, and "tax evasion" and "fraud" whose perpetrators should be prosecuted.
What happened in the 2010s was that the country was broke and Cameron using a firm of "nudge"
physiologists (to whom he paid millions) who were able to (in the publics and judiciary minds) conflate legit tax avoidance with illegal tax evasion. This enabled HMRC to get away with introducing retrospective taxation by way of the loan charge.
That tax avoidance did not previously attract this venom is reflected in the tax histories of many of our politicians (of all parties) who have been able to receive millions of pounds from previous generations without worrying about IHT. They might not have been on the scale of the Duke of Westminster (£10bn tax free) but the Conservatives actions since 2010 strike one as "pulling up the ladder" to prevent others obtaining the advantages they have had.
This should not detract from Dan's suggestion to make tax fraud a criminal offence and his other comments about tax trickery and why is it that no action has been taken on "carried interest"

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Replying to Les Smith:
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By AndyC555
15th Mar 2024 17:02

"What happened in the 2010s was that the country was broke and Cameron using a firm of "nudge" physiologists (to whom he paid millions) who were able to (in the publics and judiciary minds) conflate legit tax avoidance with illegal tax evasion."

I call it the Dodd/Carr shift.

In 1989 Ken Dodd was charged with tax evasion. Although acquitted of that charge it was still clear that he had not paid what was legally due. Far from harming his career, he incorporated tax jokes into his act and got laughs.

Avoiding paying tax was something everyone did if they could.

By 2012 Jimmy Carr's involvement in an ill-conceived but as far as he knew legitimate tax avoidance scheme led to him being booed on stage.

Suddenly it was everyone's 'moral' duty to pay as much tax as they could.

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Replying to Les Smith:
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By jon watkin
18th Mar 2024 11:12

Thanks Les, I'm aware of the tendency to confuse tax avoidance with tax evasion, it's easily done, but I did not use the phrase that you state in quotes, so please do not misquote me. Tax planning is of course a legitimate exercise but unfortunately it is sometimes taken to extremes and it's then that the whole concept attracts a bad name. Whilst reading Dan's article, I was reminded of specific examples of consultants that I have batted away in the past including the operator of an offshore payroll scheme for UK workers to save NIC and PAYE and R&D agents that really did push the envelope beyond that which is credible. I'm glad I did refuse them because it saved my employer and fellow employees much grief from the consequences of when these 'clever' schemes inevitably unravel.

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By johnthegood
15th Mar 2024 15:08

I only partly agree Dan, right now just about anyone and their dog can hang up a sign offering tax advice and accounting services, and in my 25 years experience I have seen businesses being given terrible advice from people that call themselves accountants but clearly have not got a clue. So, yes there should be a barrier to entrants.

Of course I have seen terrible advice given by qualified as well but that is a totally different issue.

The initial barrier should at least be that an individual has gone through training and exams before they hang up their sign.

I mean no disrespect to anyone at whatever level they are, but time and again I see people who can "use software" without having the fundamental knowledge behind what they are doing, preparing accounts and giving tax advice when they are clearly not in a position to do so, anything that improves that has to be a good thing.

The method for improving standards is however open for debate.

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