Consultations by the dozen

  • Author : Martyn Gowar
  • Date : December 2012
ABOUT THE AUTHOR: Martyn Gowar TEP is a Partner at McDermott Will & Emery UK LLP and an Editor of the STEP Journal

When the UK coalition government came to power in 2010, it set out very worthy objectives about a consistent consultation process for planning new tax law. Over the summer of 2012, there were a plethora of such documents. They were all well written, thoughtful and challenging.

Some of the consultations, such as that on the statutory residence test, fulfilled the letter and the spirit of the government’s original principles. In particular, stages one and two of the consultation process as set out in the ‘Tax Consultation Framework’ include setting out objectives and identifying options, then determining the best option and developing a framework for implementation, including detailed policy designs. That is how it worked in the statutory residence test consultation, and I sense that, both in HMRC and among the respondent professional bodies, the result of their labours gives cause for quiet satisfaction and pride. Only time will tell whether that feeling is justified.

Another good example of the consultation process is the one on inheritance tax (IHT) and the simplification of charges on trusts. There is an open debate, but in this case I would find fault that there is no acknowledgement that the reason the consultation needs to be held is that it comes from further unintended consequence of the shambles that was the policy thinking behind the Finance Act 2006 and the rules relating to the IHT treatment of trusts. But I welcome the open consultation, and the analysis of the real problem has been covered in many responses.

There has also been highly politicised consultation on the general anti-abuse rule, but there has been an open debate, and the fact that many feel that the government is misguided in its approach cannot detract from that.

However, there have been several consultations that owe much more to the philosophy of ‘my mind is made up, please do not confuse me with the facts’. In this category, I count the budget announcements about the taxation of high-value residences in non-natural personal ownership, and the consultation on the cap-limiting income tax relief.

At the time of writing, the consultations are complete and we wait to see what the government will do. Sadly, I hold out little hope that there will be good news at the end. Neither of these measures is going to make any significant impact on decreasing the government’s deficit, and both were short-sighted attempts at grabbing headlines that will backfire, as they complicate the tax system and undermine the integrity of individual taxes. We know from the representative side that Treasury and Revenue officials will listen politely and will perhaps tell Ministers their concerns – but Ministers, once they propose something, seem to have a complete inability to admit they were wrong. Those consultations completely ignore stages one and two of the process, and they are dispiriting to those who comment on them.

So often respondents put in an awful lot of work, and feel only complete frustration. At the end of this past summer, after dealing with so many consultations, consultation fatigue may well set in. If the consultation process is to make any sense it has to be true to the framework and not used cynically merely as a sop to say that the process had been followed.

STEP’s consultation responses

STEP responds to many consultations of relevance to members in the EU, the UK and internationally (in some cases these are handled on a regional level). The STEP UK Technical Committee alone has responded to more than 20 consultation documents on behalf of the Society in 2012. STEP’s consultation responses can be seen online in STEP’s Consultation Tracker


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