2011

Business Records Checks – LITRG comments HMRC have announced their intention to implement a new series of checks, looking at tax records kept by those in business – ‘Business Records Checks’. LITRG supports this idea in principle, but with a view to the checks being primarily an educative rather than punitive process.
Care and support – the future - LITRG response Enabling people with disabilities to live independently and decide on their own care and support structure is an important government policy. But in order to function efficiently, it is essential for government to consider the tax implications for people using individual budgets. LITRG has reinforced these points in response to a recent call for evidence on care and support strategy.
Consultation on the abolition of 36 tax reliefs - LITRG response In general, we welcome moves which simplify the tax system. Most of the proposals in the current consultation either seem to achieve that or fall outside LITRG’s area of interest.
Disability Living Allowance reform – LITRG response Disability Living Allowance is to be reformed, to be replaced in due course by a new ‘Personal Independence Payment’. LITRG has responded to the Department for Work and Pensions’ consultation on the reforms. We are particularly interested in the interactions of the tax, tax credits and benefits systems and it is against this particular background that we have considered and commented on the proposals in the consultation document.
DWP specialist employment programmes - LITRG response The Access to Work scheme is extremely valuable for those people who use it. We are therefore encouraged to see proposals that will lead to an increase in the number of people who will benefit from the scheme and the acknowledgement of self-employment as a viable work option for people with disabilities.
Early Access to Pension Savings – LITRG comments Our response to this consultation focuses on a single area – the ability to cash in small pension pots for a lump sum (a process known as ‘trivial commutation’). By definition, this is an area likely to impact most on those pensioners with the lowest means.
Employer-supported childcare – Finance Bill comments LITRG has commented on draft Finance Bill clauses which will restrict the tax exemption for employer-supported childcare, including childcare vouchers. The proposals introduce a new layer of complexity for employers and employees alike and the mechanism is, in our view, unworkable.
Establishing the future relationship between the tax agent community and HMRC - LITRG response LITRG’s response to this consultation focuses on both the entirely unrepresented taxpayer and those agents or intermediaries, of various types, who try to help those who would be otherwise unrepresented and struggling to cope with HMRC-related matters alone.
European Commission: Green Paper on the future of VAT – LITRG response LITRG has responded to the European Commission’s consultation on reforming VAT entitled ‘Towards a simpler, more robust and efficient VAT system’.
HMRC Consultation: Working with tax agents: dishonest conduct - LITRG response LITRG welcomes the opportunity to respond to this consultation and HMRC’s efforts to engage with representatives and make amendments to the proposals since the last consultation on ‘deliberate wrongdoing’. Our previous concerns were that the draft legislation was far too broad and could have caught situations such as well-meaning friends or family seeking to help others, and volunteer advisers in the tax or general advice charities (or other pro bono capacity).
HMRC data gathering powers consultation - LITRG response LITRG responded to the consultation on HMRC’s data-gathering powers published as part of the Modernising Powers, Deterrents and Safeguards series. While much of the subject-matter of this consultation is beyond the scope of LITRG’s activity, one point concerns us to the extent that it may affect small businesses and particularly small charities.
HMRC Digital by Default Consultation - LITRG response We broadly welcome the strategy to encourage the businesses to move to digital channels where they are able to do so, in line with wider government policy. However,‘Digital by default’ should mean just that – that digital is the default option, not the only one and we strongly believe that HMRC must commit to permanent retention of a range of options.
Identity Authentication Service - EQIA - LITRG response HMRC introduced a new security system on the tax credit helpline in November 2009 which attempts to verify a claimant’s identity by asking questions based on their credit history.
Improving the operation of PAYE Collecting Real Time Information - LITRG response In this response we raise matters of particular importance to small and very small businesses, and vulnerable groups such as care and support employers.
Incapacitated person – a modern definition: LITRG response We are pleased that the HMRC consultation (prompted by LITRG), ‘Incapacitated person – a modern definition’, has stimulated a debate about how disabled people, including those with mental health difficulties, deal with the tax system. Now it is for HMRC and the Government to react accordingly, agreeing how to adjust both the law and HMRC’s practice.
Integrating the operation of income tax and NIC We believe the objectives of integration to be fair, but emphasise the need to consider equally the position of employers who are not in business and the impacts on individuals – whether employees, pensioners or the self-employed.
LITRG evidence to Treasury Sub-Committee on HMRC There are some very dedicated officials working within HMRC. But from the perspective of unrepresented taxpayers on low and modest incomes (probably the majority), HMRC is now too often seen as an organisation that is unable to collect the right amount of tax, increasingly difficult to contact by phone, letter or in person, yet unforgiving of customer error and relentless in its pursuit of small debts.
LITRG response to Independent Police Complaints Commission consultative document Serious complaints about HMRC can be investigated by the Independent Police Complaints Commission. But how does anyone find out about this? And how does it fit with the other routes for pursuing a complaint about the Department? LITRG raises concerns in response to the IPCC’s consultation on new guidance for HMRC.
LITRG response to PAYE Technical Paper HMRC plan to collect more and larger tax debts by getting employers to take them straight out of employees’ wages. LITRG is concerned that this could put low-income taxpayers into financial difficulty.
LITRG response to the Child Support (Miscellaneous Amendments) Regulations 2011 consultation Following on from our earlier response to the DWP green paper on the future of child maintenance, we highlight once again the issues surrounding the use of date from HM Revenue and Customs in the child maintenance process.
Localising council tax in England - LITRG response In our view any system of council tax and council tax benefit should be transparent, as simple as possible and related to the ability of the individual to pay.
Mobility Aids OFT Market Study – LITRG comments The Office of Fair Trading (OFT) has launched a study into Mobility Aids.
OTS interim report on tax reliefs – LITRG comments The Office of Tax Simplification (OTS) was created in the summer of 2010. One of its initial projects has been reviewing tax reliefs and exemptions. LITRG has submitted comments on the OTS’s interim report, setting out our views on the methodology of the review, the initial reliefs sampled and our reactions to some of those reliefs selected for early review where there could be impacts on low-income taxpayers.
OTS small business income tax discussion paper – the LITRG response We believe there is considerable merit in debating how to simplify income tax (and, in turn, class 4 National Insurance) for the smallest businesses and we therefore welcome this Office of Tax Simplification discussion paper.
Pensions Tax Relief, draft Finance Bill 2011 clauses – LITRG comments When the proposals to reduce the lifetime allowance (‘LTA’) were first announced, we were concerned at the potential impact on those on low-incomes arising from a measure designed to limit the tax-advantaged pension saving rules for wealthier taxpayers.
Reform of Legal Aid in England and Wales - LITRG response LITRG welcomes the opportunity to contribute to the consultation of the Ministry of Justice on the reform of legal aid.
Reform of the taxation of non-domiciled individuals - LITRG response A major hurdle for low-income migrants to the UK is a lack of understanding of the tax rules they will face on arrival, compounded by almost non-existent avenues of advice. Unable to afford professional fees, most will fail to comply, not through unwillingness but unawareness.
Relief for income tax losses LITRG welcomes HMRC’s commitment to a fairer, simpler tax system. This response highlights our concerns about HMRC’s proposals to restrict relief for income tax losses. We are concerned that such a broad brush approach will mean those who make genuine business losses will be penalised and recommend that HMRC devise proposals that focus only on those who are actively engaged in high risk avoidance schemes.
Response to call for evidence from Scotland Bill Committee The Scotland Bill proposes a Scottish income tax derived from reducing the UK rates by 10 pence and giving the Scottish Parliament the power to add a fixed amount on to each of the basic, higher and additional rates. As our mandate is to represent the interests of the low-income unrepresented taxpayer, our sole concern with the Scotland Bill is with the likely effect on that constituency of introducing a Scottish rate of income tax.
Scottish Government consultation - Self-Directed Support - LITRG response Over recent years we have carried extensive research into care and support matters, with particular regard to issues surrounding direct payments. Whilst we believe there are undoubted benefits to recipients of personal budgets, and within them direct payments, they are often lessened by the burden of responsibilities that using these payments brings to them. Addressing these issues could lighten the burden and also ensure that better use is made of available funding.
Security for PAYE and NICs – LITRG response The net has gradually been closing on employers who deduct PAYE and NICs from employees’ wages but fail to pay it over to HMRC. The proposed draft legislation to force problem payers to put up security is up for debate. LITRG thinks more protection is needed for the innocent.
Simple financial products consultation - LITRG response Very often, where financial products are launched for those on low incomes there is a general tendency to consider any practical tax (or benefits) issues as a matter for later consideration. We would like to see such issues taken into account at the design stage so that a fuller understanding of the day-to-day problems created can be addressed early on.
Specialist Disability Employment Support – LITRG comments While much of the subject‐matter of this Department for Work and Pensions’ call for evidence is beyond the scope of LITRG’s activity, we comment on it from the viewpoint of our experience of tax issues relating to Access to Work.
Specialist Disability Employment Support – LITRG comments While much of the subject‐matter of this Department for Work and Pensions’ call for evidence is beyond the scope of LITRG’s activity, we comment on it from the viewpoint of our experience of tax issues relating to Access to Work
Statutory definition of tax residence - LITRG response Migrants to and from the UK are a mixture of people with varying personal circumstances. But we believe that by far the greatest in number are migrant workers (and students) on low incomes – unrepresented taxpayers who cannot afford professional fees and for whom sources of tax advice are almost non-existent. For too long, tax rules have been created to deal with the issues facing highly-paid or wealthy citizens with little regard for the practical impact upon those with little resources.
Tackling VAT evasions on road vehicles brought into the UK In our response to the joint DVLA and HMRC consultation ‘Tackling VAT evasions on road vehicles brought into the UK’ we highlight the problems that low income individuals, particularly migrant workers coming into the UK, will experience in complying with the proposed new communication and timing procedures.
Tax policy-making – LITRG submission Overall, the direction of travel on tax policy making is positive, for example with advance publication of draft Finance Bill clauses for external scrutiny and comment. However, LITRG believes there is still more work to be done as it seems to us perverse on the one hand to establish the Office of Tax Simplification with a view to making the tax system easier to understand and comply with, but on the other continue to develop complex new tax policy.
The future of child maintenance - LITRG response to DWP Green Paper While the Child Maintenance Act 2008 was in development, LITRG sat on a DWP working group examining child maintenance variations. Amongst other things, this looked at the issues surrounding use of data from HM Revenue and Customs in the child maintenance assessment process. Most of the issues we had put forward were left unresolved.
The Simplification of Regulatory Penalties - LITRG response To make sense of and then to simplify the current system of regulatory penalties is certainly a big challenge. The sheer number of them, and the lack of consistency in the nature and size of the penalties, along with the frequency with which they have been added to legislation, suggests that in the past little thought has been given to whether they are proportionate or effective.
Transparency consultation - LITRG response In common with other government departments, HM Revenue and Customs are charged with achieving greater transparency in order to deliver better value for money and enable the public to hold them to account. In response to HMRC’s draft plans, LITRG has called for less technical jargon, more detail and a commitment to ongoing review.
Treasury Committee Budget inquiry - LITRG evidence
Treasury Committee Inquiry into tax policy – LITRG written evidence In January 2011, LITRG submitted written evidence to the Treasury Committee’s Inquiry into the principles of tax policy.
VAT: consultation on the next steps for moving VAT online - LITRG response Encouraging businesses to move to digital channels, where they are able to do so, is welcome provided it does not increase compliance burdens. But we are concerned that, in contrast to the parallel ‘Digital by Default’ consultation, this consultation makes no reference to the statement by the Minister for the Cabinet Office that ‘those Groups less likely to access the internet will not be left behind',
Welfare Reform Bill Evidence to the Public Bill Committee The Welfare Reform Bill is being scrutinised by the Public Bill Committee, to whom LITRG has submitted evidence on the Bill’s proposals for universal credit.

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