Sleight of hand on disappearing red tapeby
Something odd seems to be going on with the way the government measures administrative burden or “red tape”, the cost to taxpayers of paying their tax. Wendy Bradley investigates some anomalies emerging from the Budget 2020 paperwork.
Something odd seems to be going on with the way the government measures administrative burden or “red tape”; the cost to taxpayers of paying their tax.
This is not about the tax itself, but the cost of filling in forms and fulfilling other obligations in the tax legislation.
In this year’s Budget tax and information notes (TIINs), the format of the impact assessment changed from three numerical impacts previously shown: tax effect, admin burden increase/decrease and impact on HMRC or other departmental costs.
In this year’s Budget TIINs the admin burden is folded into the “business and civil society organisations” paragraph with the statement: “For tax measures, costs are calculated using the “Stand Cost Model”. Where the costs are significant, they are set out in a compliance cost table. Most measures do not have a significant cost.” OOTLAR Annex C page 3 or 64, my emphasis)
The Budget overview of tax, legislation and rates (OOTLAR) is published here as one complete document and here as separate documents but the page numbering is different in the two different versions, hence the two page references.
The “Stand Cost Model” is a typo for "Standard Cost Model", the methodology used to compile the database of existing admin burdens.
Last minute adjustments
Treasury ministers appear not to have noticed or at least to have cared that, for example, the Equalities Impact section of the TIIN for 'Pensions Tax: Changes to income limits in calculating the tapered annual allowance' is (page 70) in a different font from the rest, indicating to the suspicious mind that it was a last minute addition rather than a consideration during policy development.
Our eagle-eyed readers noted in our Budget round up, different versions of exchequer figures appearing in different versions of the Digital Services Tax documents.
These are strange times, and maybe we can cut the civil service some slack if they were short staffed and light on detail, although – speaking as someone who used to proof read OOTLAR myself – there would seem to be plenty of people they could have called in on a consultancy basis for a couple of days to “Get the Budget Done”
Where did it go?
Measurement of admin burden figures seems to have evaporated almost entirely for this Budget. The point of recording admin burden figures for new measures is to bear down on the cost to business of changes to the tax system, and on the basis that if you don't measure it, it doesn't get done, it is worrying that this ambition seems to have been downgraded.
I imagine that from this government's viewpoint the problem with having a target for reducing admin burden is the way the standard cost model works: you look at the cost (which depends on, for example, what pay grade of staff carries out the task) and multiply it by the number of businesses affected.
Imagine HMRC reduces the burden by simplifying a process, whilst at the same time the levels of pay across the industry may rise, and the number of businesses in a particular area may expand. HMRC may bring about a major simplification and still have the figure for the overall burden rise. You can see the attraction of simply saying the game isn't worth the candle.
Who is checking?
There is a guardian of admin burden reduction baked into the HMRC structure. The Administrative Burdens Reduction Board (ABAB) is a panel of the great and good who provide an "external challenge" and act as a "critical friend" in respect of HMRC's treatment of small businesses.
You would expect them to be the guardians of the standard cost model and of the admin burdens database that underpins the work of bringing the costs down. Yet their last annual report and the minutes of their last year of meetings show no evidence of their having been told of any change to the recording and presentation of admin burden figures. Has the ABAB simply gone native? Does HMRC even have a numerical target for reducing admin burden any more?
Do agents and taxpayers value downward pressure on admin burdens? If so, maybe we need to "tell ABAB" about what's going on and ask them to do something about it. Their email address is [email protected]