Should HMRC and HM Treasury be the ones explaining themselves in court?

Let’s have a look at the Tax Information and Impact Notes published in December 2013, signed off by David Gauke, Financial Secretary to the Treasury, specifically relating to this particular area of indirect tax.

Now, there are all sorts of holes to be ripped in this particular document and its reasoning, by far better qualified folk than me. Meantime, two things catch my eye in the section dealing with VAT: place of supply and the introduction of the Mini-One Stop Shop starting p.133 of that document.

Equalities impacts. The Government has no information about the protected equality groups of any individuals who may be affected but no specific impacts have been identified for any protected equalities group.

Really? Absence of evidence is not evidence of absence and the point’s been made time and again that the smallest online businesses are a way out of benefits for the housebound, carers, the retired and the disabled. Not to mention the unemployed, who Job Centres actively encourage to use their skills to go self-employed. Using digital skills is one realistic way to do that because you can set up a business investing time instead of money.

It also doesn’t look like HMRC have learned anything from the legal judgement that’s already gone against them, as reported here, stating that mandatory online VAT filing is breach of taxpayers’ human rights. There were no exemptions for those who found online filing difficult, for any reason.

I’m guessing their first argument here would be that anyone running an online business must self-evidently be computer literate. But there’s a world of difference between running a small online business using a free plug-in to enable downloads alongside a PayPal ‘Buy Now’ button and having to manage a e-commerce system fully integrated with PayPal’s API, with all the costs that entails – and that’s before we get on to the record keeping and reporting issues.

Did HMRC ever actually look into any of this beyond making the most superficial assumptions?

Then there’s the final note on ‘Other Impacts’.

Small and micro business assessment: small businesses that provide e-services direct to customers in other member states may incur additional costs, although these are expected to be partially mitigated by MOSS.
Businesses currently unregistered in the UK who choose to register for MOSS in the UK will also have to obtain a UK VAT registration and their UK supplies will therefore also become liable to VAT.
Other impacts have been considered and none have been identified.

Really? None? I really would dearly love to see the people who set all this up explaining in court just how they went about considering other impacts and how exactly none have been identified!

And those costs little businesses may incur which are expected to be partially mitigated? How about that for vague and conditional language? Was there any actual research done here? With actual y’know, numbers? And where and who exactly did this information come from?

Because we know full well they didn’t even go as far as consulting, let alone notifying the UK’s 370,000+ registered sole traders. That’s registered with HMRC so it’s not as if they had far to go to find out who they were and there are already systems in place for notifying them of tax changes!

Well, I am not a lawyer, nor anything close, and sadly I don’t have the funds to pay anyone who is to launch any legal challenge along these lines.

So we have to carry on challenging this appallingly flawed legislation in letters to our MPs and MEPs.

And as far as that HMRC and HM Treasury impact assessment goes? You can use this particular website to register your own disapproval of David Gauke offering this appallingly complacent and ill-informed document as an answer David Morris’s written question of 19th January, asking for a comparative assessment of the level of administrative burden the EU VAT place of supply rules places on (a) micro businesses and sole traders and (b) large multinational companies.

Click through and look at the right hand side of the page. Does this answer the above question? If you don’t think so, click on ‘NO!’

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