Supplementary memorandum by the Association
of Chartered Certified Accountants (ACCA)
OPEN AND
TRANSPARENT CONSULTATION
We hear a great deal about open and transparent
consultation. This is rarely lived up to in real life. The consultation
process tends to be flawed in that it is quite often held in an
environment where the Government has usually dictated an agenda
or would prefer one option against another and is largely going
through a process so it can claim it conducted a consultation
even though it did not listen to it. We would like to see true
consultation starting with a clean sheet of paper where the options
were properly considered and their was an audit trail through
clear unambiguous minutes and written responses.
We also think this principle should apply across
from the consultation to the tax measures themselves. Too many
taxes are stealthy (eg excise duties and fiscal drag).
THE ROAD
MAP
There needs to be a clear understanding of where
we are currently in a given tax area and the Taxpayer, Government
and International perceptions of that tax and where we consider
policy should go.
Under our other suggestions we have indicated
ways in which the neutrality of proposals could be achieved, certainly
much more than currently, by taking the politics out of tax through
the idea of the Tax Policy Committee. We recognise however that
to expect politicians to leave the tax system alone is highly
unlikely therefore most consultations will be a compromise.
THE MEASURES
Where a particular area for potential change
has been identified the Government should openly say what level
of revenue it expects from the tax after the changes are made.
Should it be tax neutral should it raise £x millions more
or less tax. The consultation could then formulate policy with
those political wishes in mind.
THE STEPS
(i) In opening the consultation HM Treasury
or HM Revenue and Customs should prepare a full and transparent
document to circulate. This should set out the options and where
certain ideas are not put on the table it should stated clearly
and openly why they were dismissed.
(ii) All taxpayers should be able to participate
in writing in the consultation process. But all significant representative
bodies should be called in for face to face meetings. Not as happened,
as an example of how not to consult, for the Capital Gains Tax
changes for 2008 where only four trade bodies were called in for
the whole "consultation" for such a fundamental and
critical area of change. It is important to make sure that the
deadlines set for this part of the process is sufficiently long.
A minimum of three months is generally considered to be reasonable.
(iii) It is important that the consultation
document should come with a full impact assessment of the options
for consideration.
(iv) Once the meetings and the written consultations
have been received, and the deadline has passed HMT or HMRC should
prepare an impartial synopsis of the feed back during the consultation
period.
(v) The synopsis should then be discussed
with the representative bodies and the conclusions decided upon.
(vi) In formulating the conclusions, which
will go on to become the changes, dissenting views or material
disagreements should be noted and revealed for all to see. Everyone
who participated in the process should feel that they were taken
account of.
(vii) Finally the legislation should be drafted
and circulated for comment before formal publication.
CONCLUSION
In conclusion one would also add that it is
becoming clear that the separation of tax policy and tax administration
is not working effectively and it is time that the two parts were
brought back together. The separation happened when HMRC was created
and tax policy moved to HM Treasury. Consideration should be given
to putting policy and the consultation surrounding its formulation
back into a single arm of Government, which should probably be
best within HMRC.
8 May 2008
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