I vividly recall conversations with John Christensen in the early days of the Tax Justice Network when we discussed the threats we were really up against in taking on this campaign in 2003. Back then we appreciated that at its core we were in a fight for democracy itself. We first framed that in the context of the implicit but unstated threat that tax havens posed to the right of all elected governments to fulfil their mandates.
Things have moved on in the decade since that time. We do, regrettably, no longer face a subtle but very real threat to democracy; it's now blatant and very clearly out in the open. As the Law Society Gazette reported yesterday:
City lawyers have accused the government of ‘hugely damaging' reforms of tax legislation that ignore the importance of the rule of law.
The City of London Law Society revenue law committee has called for the creation of an independent body with the power to veto tax legislation.
The report continues:
In a response to the Office of Tax Simplification's competitiveness review, the committee says HM Revenue & Customs officials may have understated difficulties when briefing ministers.
At other times, policy has ‘clearly been driven from the political level without due considerations, with HMRC left to pick up the pieces'.
The committee response adds: ‘Whilst to some extent inevitable in a democracy, these phenomena are hugely damaging to the UK tax regime's reputation for stability, and the creation of a constitutional check to limit the scope for them to occur would in our view be of real benefit.'
You can feel the contempt oozing through those words. The City lawyers disdain for the long fought for right to democratic control of taxation in this country is swept aside in one sentence that demands the right of veto for this group who practice solely on behalf of the financial elite of the UK. And this, they claim, they are doing to uphold the rule of law.
Let me be abundantly clear: that is the very last thing that they are doing. Anyone who asks for the right of veto for law to be passed to an undemocratic body is taking us far away from the rule of law. They are very blatantly calling for the creation of neo-feudalism. No excuse will defend them from that charge, but they offer one, nonetheless, their claim being that:
The sense of policy confusion, especially when contributed to by frequent significant change after announcement, is very damaging to the UK as it undermines the objectives of delivering predictability and certainty.
Well let me offer these lawyers the predictability they want.
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“the one certainty in tax is that the will of parliament, if it has decreed that a charge shall be made, should be upheld and that what these lawyers see as their duty to challenge this is seen by the rest of society as an attack on the law”
How does your constant challenging of tax law as decreed by this government fit into your argument? Should society view it as an attack on the law? Or are you exempting yourself from these strictures?
I do not attack the law
I seek to change it
That’s very different
And this seems to be an attempt to ensure that changes made are not harmful. A veto does not give any power to change, it merely prevents some change.
Many changes which have been made recently are definitely harmful, and would have benefited greatly from being vetoed, at least until they could be put into a more sensible form. Partnerships, for example: I’ve lost count of the number of times I’ve had to tell clients that I can’t say what the rules in force are, as although by the end of July they’ll have been in force since April, at the moment the detail of what is currently in force is subject to change and so I don’t know yet what they will always have been. Shades of Orwell and Kafka.
So: you seek to change the law to suit your purposes, and that is OK in your book; they seek not to change it unless the change has been thought through, but that is not OK?
‘Not harmful’ in whose opinion?
Respectfully, you are sailing very close to being banned from this blog for anti-democratic opinion
In the opinion of expert commentators from a variety of independent backgrounds. Practice, industry, academia, government, the House of Lords, and the third sector (LITRG, Tax Aid, etc) spring to mind immediately.
HMRC and the Treasury have (necessarily) a limited awareness of the potential impact of new legislation. To get legislation which has a fair impact on taxpayers, they need to get external views. Consultation helps, but not when it is railroaded through – the fundamental problem is that consultation is controlled by HMRC, so it cannot act as a check on misguided legislation.
If you look at the partnership consultation, it was working reasonably well except that it had a deadline: it was going to be in FB14 no matter what. So when the proposals changed signifciantly, there was no time for them to be properly consulted on. Essentially, A was consulted on and found wanting, so B was put in place instead – with no time to consult on B.
Some mechanism which could control this sort of thing would be very welcome – even the House of Lords was suggesting deferring things until they were straightened out, but there was no way to make government take that into account.
In simple terms, the current process allows government to say that legislation will be introduced at a certain time, and will be made only as good as is possible within that arbitrary time limit. A better way would be for government to say that legislation will be introduced when it has been made as good as can reasonably be expected: let quality drive the process, rather than speed.
I hear only one voice in all those multiple voices – and that is the tax profession and its self interest
“I hear only one voice in all those multiple voices — and that is the tax profession and its self interest”
I think that says a lot about you.
No
That was a statement of fact
I’ve read all that stuff
LITRG = CIOT
Tax Aid is profession dominated
Lords heard largely from profession etc etc etc
I talk facts
OK, so can you tell me where outside the tax profession one can find a lot of people who know how the UK tax system works, in theory and in practice?
I suspect you’ll struggle: as the profession is unregulated, there are no barriers to entry: it is therefore basically defined as anyone who knows how the UK tax system works.
Unless you can find me someone who, as an amateur, has accumulated considerable experience of the system (there may be one, but I’ve never heard of them), the choice is either to ask the advice of someone who doesn’t know what they’re talking about, or go to the profession.
Secondly, you talk as though the profession is some monolithic body. Quite apart from the fact that it’s split into CIOT, ICAEW, ICAS, ATT, AAT, HMRC, STEP, Law Society and many other professional bodies – plus a few who are in none of the above – tax people have many different interests and agendas.
Are you really going to say that all the tax directors in the FTSE have the same agendas as the Big 4 people they argue with about fees, the accountants dealing with SMEs in small firms, STEP practitioners doing IHT planning, Tax Aid volunteers helping pensioners, lawyers advising on property transactions, LITRG people trying to ease burdens on the low-paid, and so on and so forth… do you really think that all those people have aligned interests?
Andrew
I increasingly come to the opinion that you want to show yourself to be what is most politely called stupid
You know only too well those with the time to represent the profession almost all come from a very tiny interest group within it or are funded by them
Why claim otherwise when you know it is not true?
It really does not help your case
But it does prove you are wasting my time
Your reply had better be intelligent or I’ll delete it
Richard
Richard,
You have called me stupid a number of times over the last few years. In every case, it has been because I have not blindly accepted something you claim to be self-evident – so self-evident that you feel no need (indeed, actively refuse!) to provide any supporting evidence, and you disregard any opposing evidence.
I think that says everything that needs to be said about our relative intelligence.
Andrew
Oh come on
You claim for example LITRG is an independent body – it’s run by the CIOT
I am always very happy to evidence my claims – unless of course they are self evident
Your claims are insulting to intelligence
And if you don’t like me saying so, please do not bother to comment
I didn’t at all claim that LITRG is independent of CIOT – I know its status full well.
I do however dispute your suggestion that tax professionals associated with the LITRG are necessarily of one mind with all other CIOT members. What evidence do you have for that?
I’m happy for you to attack straw men, but *you* doing so doesn’t make *me* stupid 🙂
Since when did the CIOT represent its members?
It represents a corporate interest; the same one that is represented by it on the LITRG
Let’s not pretend these bodies represent their members – the same as the ICAEW does not – they represent the view of those who have captured them for their use
The CIOT has served me perfectly well all these years – I have no complaints (well, fees could be lower…).
On the other hand, you seem to have a problem with the ICAEW. Are you not a bit uncomfortable remaining a member of an institute that you feel doesn’t represent you – which in fact (if you are correct) is directly countering the values you hold?
I have little choice I need its regulation
And I am not in the slightest bit surprised you’re happy
Of course I’m happy. I work with individuals and SMEs with a variety of tax issues. The CIOT got me a good qualification meaning I have an awareness of the issues that might arise, and helps me keep up to date. If I have an odd question it gives me a source of technical help (though I’ve not used it much), and the CTA after my name assures people that I’m competent. What’s not to like?
Andrew is not stupid, he is compartmentalised. He is like tired old Dray horse wearing his blinkers, being a good fellow and faithfully pulling the load for the vested interests. He never stops to question the current paradigm, because he is so imbedded in it.
It is such a shame, but he is far from being alone from not seeing the spectre of totalitarianism materialising in plain view!
“Andrew…is like tired old Dray horse…”
Have we met? I suspect not, as no-one has every accused me of that before! Quite the reverse, in fact 🙂
Lots of people see spectres that I don’t see. Grey ladies, headless horsemen, monsters under the bed… you seem to be (like Richard) simply asserting that your beliefs are true and that anyone who disagrees is ignorant or stupid. I do not believe that to be a productive mode of thought.
Respectfully – I think further comments like this will be deleted
But Andrew – I really do think you need to open your eyes a little wider
And I think you need to take off the tinted spectacles you wear – we both think the other is seeing a distorted picture.
The difference between us is that you say that your view is clearly and objectively true, whereas I merely question how you know that – and why I should believe you, when the only evidence you give is “it is self-evident”.
If you honestly think that over 8 years and 3 million words on this blog I have provided no evidence why waste your time reading it?
Knowing what other people think is never a waste of time.
If you only ever pay attention to your own thoughts, or those of people who agree with you, how can you ever learn anything?
THere is no parallel. Richard may campaign for tax changes as much as he likes and he is quite happy for othrs to do the same, I think. What he hasn’t proposed is the creation of a statutory “Richard Murphy” one man committee with the power to veto legislation.
Andrew
I apologise if I pushed my tongue too far in my cheek when making my remarks. You may be a fine upstanding gentlemen and full of energy :-). However, history is littered with examples of honourable people being caught out by those who wield power, but operate on an entirely different level.
Decisions that may seem perfectly reasonable to you and your clients may be thoroughly unreasonable to others that do not benefit and are in fact affected adversely, possibly indirectly, by those same decisions.
The response in question is available here: http://www.citysolicitors.org.uk/attachments/article/105/20140605%20Response%20to%20Office%20of%20Tax%20Simplification’s%20'Competitiveness%20review%20-%20initial%20thoughts%20and%20call%20for%20evidence‘.pdf
The “Veto” text (at 5.6 in the doc) is as follows:
“Ideally, to, effect this recommendation, we would like to see the introduction of a formal check to the legislative process (an Office of Tax Changes, perhaps) which would be independent of Government in the same way as the OBR. This agency should have the power to prevent legislation being put forward in circumstances where it is not yet adequately formed, having regard to its proposed effective date.”
The OBR is not independent
The real comparison is with the Bank of England – control by the City for the City
My immediate thought; who pays the mortgage for the OBR personnel and how independent in real life can that leave them? The same would go for any new agency created under similar terms. However, here overall we have a timely reminder of the dictum that there is no such thing as ‘fair’; there is only what you fight for and win. If the City fight for this and win, well, who could then argue on the basis it was unfair?
Sounds great in theory, but beware of weasel words! ‘[B]eing put forward in circumstances where it is not yet adequately formed’ can mean anything you want it to, particularly if you want to badly enough.
What a bizzare suggestion from the law society
“The first thing they should consider predictable is that parliament is sovereign.”
Not in tax it isn’t. The EU is.
Cadbury and Vodafone over CFC rules. Which was the relevant law? Westminster or Brussels? The EU states that it is illegal for any member state to try and tax interest or royalties flowing to a company in another member state. UK or EU law is paramount here? Could the UK bring in taxation of a corporation changin its domicile out of the jurisdiction? Nope: EU law would not allow it in any manner at all.
Westminster is not sovereign in these matters, is it?
Subsidiarity Tim
You forget it applies on this issue
Richard, I agree with you, this is a backward step.
It got me thinking whether there should be any limits on the sovereignty of Parliament to tax (and therefore any independent oversight of that, through the higher courts).
My hazy recollection of Australian constitutional law studied nearly 30 years ago: Parliament does not have the power under the constitution to tax religious activity.
Something I agree with — otherwise it becomes a tool for the tyrannical majority to persecute minority beliefs. As a result, Australia is one of the most tolerant countries when it comes to religion.
But are there any limits on the sovereignty of the UK Parliament (via a written constitution if we had one) which you (and your readers) would endorse?
I believe in the need for a written constitution, so yes
“I believe in the need for a written constitution”
Would you want any sort of safeguard to protect this constitution to prevent Governments overstepping their authority?
An independent body, perhaps, which could veto unconstitutional laws?
Yes – but even that mist ultimately be politically accountable – as it is in the USA at the time of appointment
So if the membership of this proposed “Office of Tax Changes” was subject to approval by the legislature, there would be no longer be a problem with it being a ‘threat to democracy’ (albeit it may well remain a bad idea for other reasons)?
This is how supreme courts work
But given they still do not veto legislation ( the US has a president to do that) no I still do not agree
I will stick to the supremacy o parliament
http://notesbrokensociety.wordpress.com/2014/06/07/privatising-the-roads-the-policy-time-bomb-in-the-infrastructure-bill/
Nothing like rendering government impotent……
The proposal seems to follow the general rule of user feedback, in that users are generally very good at identifying what is wrong, and very bad at identifying solutions.
The bulk of the CLLS’ complaints seem entirely reasonable (indeed they raise some points I would expect Richard to strongly support), but their preferred solution is, to put it politely, misguided. Quite aside from government’s occasional legitimate need to legislate urgently, I rather doubt parliament would be happy to cede the authority.
One possible solution could be to develop a system that encouraged (but did not require) well-conceived legislation. Set up the OTC as suggested, but instead of giving it a veto, instead require that all tax legislation is either signed off by it, OR accompanied by a report from the chancellor, explaining why, in his opinion, it is necessary that it be passed without OTC approval.
I regret I cannot agree because the OTC would be captured by the likes of the City lawyers
The pressure on the Chancellor to obtain sign off (rather than issue his own report) would come entirely from the credibility of the OTC. If it is widely seen to be nothing more than the puppet of City law firms, the publicl would think no less of him for choosing to ignore them. It is only when the OTC was seen to be respectable and knowledgeable that there would be real pressure to follow their advice.
Of course, I’m assuming that public perception accords with reality on this, but presuming appropriate transparency is built in, and given the presence of a moderately lively press and an active blogosphere, I think we could trust in the judgment of the British people.
You assume benign intent in creating such a committee
I would not
And where else is the opposition on UK tax if not here?