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Key points
- Development land tax was a preoccupation for some until it was abolished in 1986.
- Setting up the charity Tax Help for Older People.
- The Low Incomes Tax Reform Group’s involvement with tax credits.
- Ensuring the direct recovery of debt process took into account needs of unrepresented taxpayers.
- A year at the Office of Tax Simplification.
When the deputy editor of Taxation asked me to write this article, she advised me to ‘focus on elements of [my] career that have given [me] the most satisfaction’. I have been lucky enough to have a very eventful career and it is hard to single out elements of particular satisfaction, there have been so many. But I have tried, in selecting a few, to illustrate two important principles I have learned – one, that it is possible to achieve change if you are determined enough; and two, that to do so involves robust, but constructive and patient, consultation, with an understanding of what is preoccupying the other side in negotiations.
Early tax studies
My interest in tax began in 1979 when studying what used to be called ‘revenue law’ at the College of Law, Lancaster Gate, in preparation for the solicitors’ qualifying exams. The lecturer, Peter Brindley, approached the subject with enthusiasm, recounting the bizarre stories of transactions in barely drinkable brandy and improbable quantities of toilet rolls with an ebullience which drew one ever deeper into the subject.
Early forays into tax practice
Back in the office, a country solicitors’ practice in Buckinghamshire, I gradually became the staff member whose opinion was sought if tax was an issue. In the early 1980s, development land tax (DLT) was a major preoccupation for many of our wealthy landowning clients until Nigel Lawson abolished it in 1986.
For one such client we achieved a considerable saving when he wanted to sell some farmland to a housing developer and by use of cross-options we split the sale between two tax years. The transaction was later challenged by the Inland Revenue on Furniss v Dawson grounds – that must have been one of the first such challenges – but because our split made perfect commercial sense in terms of the developer’s phased building plans, the challenge was quickly withdrawn. Happy days.
In between advising rich clients on how best to hang on to their wealth, I would sometimes see elderly or confused clients with little wealth or income who nevertheless worried about tax. In those days we had the Green Form scheme, which allowed someone to consult a solicitor for a low, fixed fee, payable by legal aid, for up to half an hour, on any matter. It was often used in conjunction with Citizens Advice, who would sometimes refer their clients to us. Often this would involve helping someone to complete a tax return, or reassuring those who were concerned about capital gains tax or inheritance tax that they had no need to worry about either. Helping people in that way was often more satisfying than much of the complex tax planning I was working on, and stood me in good stead for my later involvement with the tax charities.
Compiling UK tax legislation
In 1986 I took up a position at the law and tax publishing company CCH Editions Ltd, then new in the UK although its fellow group members were already well established in other parts of the English-speaking world. From 1989 onwards, one of our major tasks was to compile the company’s annual tax legislation series – the Red and Green Handbooks – between finance bill in early April and royal assent in late July.
As a company we formed an association with the great Philip Hardman whose technical tax skills were matched only by his flair for communication and ‘making tax fun’. He had the idea that annual legislation handbooks should contain not only the primary legislation, but also statutory instruments, extra-statutory concessions and statements of practice. Those days of working with Philip to design such a product that could fit into two volumes were indeed enormous fun. We added copious cross-references and as much important extra-statutory material as we could fit in.
Philip’s untimely death in 1991 robbed us of our early inspiration for the project but his idea survived him, and was copied the following year by our then rivals (Butterworths) – although the rapid growth of the UK tax legislation soon outgrew two volumes. It seems incredible now that there was a time when practitioners were given only the plain text of the primary legislation and had to find the rest out for themselves.
LITRG – early days
In 1998 John Andrews, then Chartered Institute of Taxation president, called for volunteers to serve on the Low Incomes Tax Reform Group (LITRG) which he had set up during his presidential year. Having put myself forward with CCH’s blessing, I found myself working with John, David Brodie the founder and first director of TaxAid, and a stimulating group of volunteers, many with impressive careers in tax, government, welfare and social policy. I was also given the opportunity to edit TaxAid’s website, a valuable grounding in online skills.
Membership of LITRG also brought me an unexpected piece of good fortune – I struck up a friendship with Jane Moore (then advice manager at TaxAid, later editor of TAXline) which started with a trip to the Plumbers Arms down the road from the CIOT offices and led to marriage. A shared interest in tax has been just one of the many things we have enjoyed together over 20 years.
Starting a charity
My first task at LITRG was to research the volunteering schemes set up in the US and Canada to help low-income taxpayers file their returns. I had the fascinating experience of travelling to Washington DC and Ottawa to talk to government officials and people in the voluntary sector there, who were most welcoming and informative.
Back in the committee room at the CIOT, we were inspired by one of those schemes, Tax Counseling for the Elderly (TCE) in the US, to set up pilot schemes in the UK to test whether older people on low incomes could benefit from free tax advice from professionals. We set up two pilots – one in the rural South West and one in the urban West Midlands – for one year, funded jointly by the CIOT and the Nuffield Foundation. Advice sessions would be held in the premises of local charities such as Age Concern (now Age UK) and the Royal British Legion, and run by local tax professionals who were CIOT or Institute of Chartered Accountants in England & Wales members and whose enthusiasm for the project was a big factor in its success. The Inland Revenue, initially sceptical, soon supported us by allowing our volunteers direct telephone access to their local offices during advice sessions so that clients’ details could be verified, problems identified and any necessary changes made to their record on the spot.
I was struck by how fearful our clients were of opaque official documents arriving in brown envelopes, even if they contained good news such as that they were due a refund. One brave elderly gentleman was full of tales of his active service in the North African desert during the war, but receipt of a form P800 reduced him to a state of distress and bewilderment. When the adviser explained to him what was going on, it was as though a great burden had slipped from his shoulders.
By the end of the year, demand was such as to justify continuing with the scheme on a permanent basis – so Tax Help for Older People (TOP) was born and formed into an independent charity under its first chief executive officer, Paddy Millard.
Welfare reform
There followed an exciting time for those interested in the impact of tax systems on people on low incomes. In 1999 the new Labour government began the process of transferring parts of the social security system – support for children and in-work welfare – to the Inland Revenue and converting the old benefits into tax credits. After a rapid series of early changes, the new tax credits – working tax credit and child tax credit – emerged in 2003, with childcare support included in the former and child benefit running alongside the latter, all three administered by the Inland Revenue.
This revolution in welfare policy and bringing key aspects of social security closer to the tax system was meat and drink to the intellectuals on LITRG’s committee, especially the retired Inland Revenue officials, and I think we made a positive contribution to the development of the new regime.
In time LITRG developed a unique expertise in the interactions of tax with welfare benefits and their effect on the finances of low-income households. Our advice on tax matters was sought by charities, and we chaired an effective coalition which included bodies such as Citizens Advice, Child Poverty Action Group and Gingerbread to represent the interests of claimants in consultations with government about the new tax credits.
In many sessions of frank but constructive dialogue with first the Inland Revenue then HMRC, we worked through many of the difficulties which the new system inevitably threw up, particularly with managing overpayments, enforcing compliance, eligibility for childcare and support for disabled workers, management of personal data and resolving complaints. Now universal credit is raising yet another set of problems for LITRG and other charities to study and work through, but I fear with rather less responsiveness from the Department for Work and Pensions than HMRC showed in the days of tax credits.
Working with ministers and parliamentarians
Members of both houses of Parliament were eager for expert advice on the impact all this change was having on their constituents, and keen to be briefed on problematic areas. A good briefing for an MP can raise the profile of a charity through its being quoted in parliament. The best briefings were those which the MP could easily turn into a speech and simply read out to the committee or on the floor of the House. Finance bill briefings from LITRG would usually be accompanied by a draft amendment or new clause for the MP to table in proceedings – only rarely would the amendment or new clause become law, but importantly a point had been made and often the minister, in replying to the debate, would promise to come back with their own, government-backed, amendment, or to instruct officials to consult with us.
Meetings with ministers were similar. We had between half an hour and an hour to make an impact – it was necessary to be brief, persuasive, and highly focused. I found the best meetings were those for which we had provided an agenda, with brief explanations of our position on each topic. This enabled civil servants to prepare the minister for the meeting in advance, so more could be achieved in the time available. We were fortunate to have had good relationships with all Treasury ministers with responsibility for the tax system from about 2005 onwards, and much was accomplished through those constructive discussions.
Recognition for LITRG
The year 2012 was a milestone in LITRG’s history. The website revenuebenefits.org.uk, a comprehensive source about tax credits, child benefit and other aspects of HMRC’s paying function, won best technological innovation at the Taxation Awards ceremony. Our colleague Kelly Sizer won Taxation’s rising star, while our founder and long-serving chairman John Andrews (by then OBE) won the lifetime achievement award. Tax personality of the year went to our ebullient new chairman Anthony Thomas who had just completed his term as CIOT president.
Trusts for vulnerable people
The tax credits decade had shown me what could be achieved through patient and constructive, though robust, consultation.
In 2006 the Labour government’s overhaul of the taxation of trusts, in its focus on anti-avoidance, seemed to overlook that trusts could also serve a useful social purpose, such as enabling people who were unable to manage their own affairs because of a disability to have their property and income looked after by trusted advisers or relatives.
The so-called disabled or vulnerable trusts, set up for precisely that purpose, did not enjoy a favourable tax regime under the 2006 reforms, and it took many years of patient argument to reach a situation where all who needed such protection could have their trust income and assets taxed on a look-through basis, as though they belonged to the disabled person rather than the trustees.
This was achieved by detailed consultation between LITRG and other professional bodies with a lot of assistance from eminent practitioners such as Emma Chamberlain, as well as HMRC and Treasury officials, strongly supported by ministers both before and after the 2010 general election.
Power of the press
Just occasionally it seemed necessary to speak to the press or media, no holds barred. On one such occasion I was speaking to a Daily Mail journalist about the newly announced ‘direct recovery of debt’ (DRD) process, whereby HMRC sought in some cases to collect a debt directly from a taxpayer’s bank account without going through the courts, a move which the profession saw as constitutionally repugnant. It seemed that the views I expressed were so trenchant as to merit a mention on the front page of the next day’s paper, and to be picked up by the Radio 4 Today programme to which I gave an interview late at night. The next day I spent in radio and TV studios being critical of the government’s proposals.
A day or two later we were contacted by the team of officials responsible for DRD policy and invited to a meeting to discuss our concerns. While leaving the broader objections to CIOT colleagues and other professional bodies to argue, we in LITRG pursued one single aim – the protection of the innocent, unrepresented taxpayer who had simply got into a mess. The result: the enactment of F (No2) A 2015, Sch 8 para 5, which started life as an LITRG-drafted new clause for tabling during Finance Bill proceedings. HMRC solicitors took up the idea and settled their own draft, which required HMRC to take into account ‘any matters as a result of which the person is, or may be, at a particular disadvantage in dealing with the person’s Revenue and Customs affairs’ and accompanying guidance, before deciding to proceed with DRD.
Once each side understood what the other wished to achieve, the discussions on DRD turned out to be one of the most satisfactory consultations I have been involved with.
Bishop – a landmark case
Another such process followed the taxpayer’s victory in LH Bishop Electric Co Ltd and others (TC2910) in which three of the appellants were represented pro bono by Anne Redston and supported by LITRG. The outcome was a change in the regulations about exemptions from digital reporting which are now written into HMRC’s making tax digital programme.
The three appellants in Bishop carried on small businesses as sole proprietors. Two lived in the West Midlands, one in rural Wales. Owing to their age and disabilities they found use of computers and the internet particularly challenging, and the Welsh appellant lived a long way from any reliable internet signal. None would have been able to comply with HMRC’s requirement that they file their VAT returns online. After a hearing lasting many days, the tribunal found that HMRC’s previous regulations mandating electronic VAT returns without allowing for a taxpayer’s disability, age or remoteness of location were contrary to the appellants’ human rights and unlawful. HMRC was not expecting to lose. But after the decision, it was clearly focused on making its regulations human rights compliant and obviating the need for further appeals on the same issue.
A year of simplifying tax
I stepped down from running LITRG in June 2018 after 15 years as technical director, leaving the team in Victoria Todd’s eminently capable hands. After a leisurely summer and early autumn, I was fortunate enough to join the Office of Tax Simplification (OTS) on a fixed term appointment, working on a report on the taxation of life events. The purpose was to highlight points when the tax system affected individuals going through particular life events such as childbirth, starting work, saving for or drawing a pension, needing help from friends or family with their tax, in a manner that caused confusion, annoyance or distress, and to make recommendations.
I learned two valuable lessons during that year at the OTS. The first was that however robust the discussions I had held with officials in my LITRG role, they were no less robust than the discussions officials held among themselves when developing policy. The other was that the welfare of low-income, unrepresented taxpayers was not the only factor policy makers had to take into account in advising ministers – rather obvious, maybe, but there is nothing like a spell working in the civil service to help one appreciate the wider picture.
That is not to say that external advocates should not pursue their objectives with determination – but just be aware of other pressures on government officials and if possible be prepared to help alleviate them by meeting them part-way.
The OTS was a very enjoyable rounding-off to my career in tax, with an excellent working environment and agreeable colleagues, and I would recommend anyone who has the chance to work there to do so.
Conclusion
Earlier this year I was once again immensely proud of my LITRG colleagues when they won the best specialist team in a public/not for profit organisation prize at the Taxation Awards 2020, and of Meredith McCammond as she won Taxation’s rising star – a hat trick of awards counting my lifetime achievement, and a fitting reprise of our 2012 success.
It had always been my hope, since helping set up TOP, that pro bono work by tax professionals would be seen as an essential part of a rounded career rather than as an occasional extra, and when Stephen Banyard on retiring from the HMRC board set up Bridge the Gap to raise funds for the tax charities, much was done to bring that about. The tax profession should look on Bridge the Gap, along with Tax Help and TaxAid, as its proprietary charities and ensure they are well resourced to carry out their essential task of serving people who lack the means to guide themselves through the pathless jungle of the tax system.
I hope to continue to volunteer for LITRG for many years to come, and would like to thank all my colleagues, past and present, for all their dedication and companionship over the years.
