New initiatives from the Better Regulation Consultative Committee
Background At a recent meeting of the Better Regulation Consultative Committee (BRCC) HM Revenue and Customs (HMRC) gave the following presentations which they have agreed we can publish.
These presentations cover one major area of current HMRC work, that of meeting the Government’s better regulation agenda. For more information on this agenda go to: www.brtf.gov.uk/responses.
The BRCC asked specifically, and would very much welcome, CIOT involvement in the Administrative Burdens exercise, either by:
- CIOT members volunteering to be involved and interviewed as part of the measurement process; and/or
- Someone from the CIOT sitting on the Advisory Group: or the panel of experts to help with the actual measurement of the burdens.
(See slides 20 and 21 of the second presentation).
The Technical Department would very much like to hear from any members who would be willing to be involved in this project. We see it as a major, and high profile exercise aimed at reducing regulation and promoting simplification. Members should contact the Technical department in the first instance at: technical@tax.org.uk and as soon as possible.
As is often the case with these initiatives, time is tight and, as the slides show, the hope is to complete the measurement interviews by the end of November 2005. We have also been told that the Advisory Group is likely to be meeting several times over the Autumn. By May 2006 HMRC hope to have “measured the administrative burden and set a timetable for reduction” (see slide 3 of the second presentation).
More background information on the work has been given by HMRC, as below.
The work itself
Through the auspices of the BRCC HMRC have told us that they see the overall process of simplification and better regulation as follows:
- Mapping and measuring the stock of regulations imposing administrative burdens.
- Using that baseline to set a target for reducing those burdens.
- Using business input and the baseline measure to suggest areas for simplification.
- Producing a Regulatory Impact Assessment (RIA) for a proposed change.
- Implementing that change.
- Then reviewing the RIA (through a Post Implementation Review) at a later date.
HMRC are undertaking three key pieces of work to support this process:
- In the 2005 Budget the Government accepted two reports – one from the Better Regulation Task Force (BRTF) entitled “Regulation – Less is More” the other from Phillip Hampton resulting from a review of public sector regulators. The BRTF report recommended that the UK adopt a system developed in Holland for mapping and costing the administrative burden that government regulation places on business as well as a number of ways in which legislation could be simplified and rationalised. The Hampton review recommended a package of reforms including rationalising and reducing the number of regulatory bodies and refocusing the regimes that they run in order to reduce the burdens on compliant businesses.
- HMRC’s Small and Medium Enterprises (SME) & Employers Unit was set up shortly after the integration of Revenue and Customs. The idea behind it is that it can channel the new Department’s efforts on behalf of small business in a way that would deliver real benefits to small businesses by reducing the administrative burdens that the tax system places on small business and by improving the Department’s relationship with them.
On 16th March 2005 HMRC launched a consultation called “Working Towards a New Relationship.” The paper contained a number of proposals for delivering efficiencies and reducing the costs that small firms incur when dealing with the tax system. The consultation received a good response, and closed on 30th June and HMRC are now analysing the responses.
- The Paymaster General has given a commitment to the Treasury Select Committee that the UK tax authorities would in future undertake post implementation reviews of the compliance costs in published Regulatory Impact Assessments (known as RIAs). HMRC hired consultants to develop a process for doing systematic reviews of all RIAs published by the Inland Revenue since April 2001 and by Customs and Excise since April 2003.
Linkages
Although separate pieces of work HMRC point out that all of these programmes have a similar theme - that of simplifying the law and of making it easier for businesses to interact with government.
Simplification has been tried before, both in the UK and abroad, but the Dutch experience was that simplification was next to impossible unless one had an idea of the regime that one was trying to simplify. Also, as measuring the true costs of compliance is an art rather than a science, it was next to impossible to quantify the difference that isolated simplifications made without a way to relate them to the larger picture. To solve this the Dutch developed a way of arriving at a representative figure for the administrative burden and a way of measuring the total burden by mapping all of a country’s regulations imposing those costs. This is what the administrative burdens exercise will produce for the UK.
Once the map and the burden have been established, the Government will then set a target for reducing that burden. This is where the view of business and advisory professions gleaned from the SME & Employers Unit’s Summer 2005 consultation will be fed in. The intention is to use the views of the users of HMRC’s services to turn the organisation round to one which is organised on the basis of business and customer needs, and an essential part of that is making it easier and less burdensome for business to fulfil the obligations that are part and parcel of doing business in the UK.
HMRC also note that the ongoing simplification programme cannot operate in an ivory tower – it needs suggestions from people who are in business as to the pinch points in the system that might benefit from simplification. This is why the Cabinet Office are developing a number of ways in which business can feed ideas into government. At BRCC they presented one such idea which is a formalised suggestion system that will be run by Cabinet Office to feed evidence based ideas into Departments together with a structured way of handling them and of producing responses. More detail on this project can be viewed at: www.hm-treasury.gov.uk/newsroom_and_speeches/press/2005/press_50_05.cfm
It is intended that any changes to the legislative framework and thus to the overall admininstrative burden will be tracked through the RIA system. Before the inception of the post implementation review programme HMRC had no way of checking the compliance costs appearing in completed RIAs. Once up and running the PIR programme will provide continuous feedback on the accuracy or otherwise of compliance cost figures in RIAs. The learning that HMRC derives from this will be fed back into the processes for assessing those compliance costs and formulating policy – and used to improve them.
Liz Lathwood
Technical Officer - Personal Taxes
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Technical Department
Tel: 020 7235 9381
