Deconstructing the House of Commons briefing paper on VATMOSS

Important VATMOSS update
In December 2017 the European Commission approved a package of reforms to the VATMOSS system. Please visit the VATMOSS resource page for more information. The below post, which is now outdated, will remain here as an archive.

Last week there was an interesting paper released by the House of Commons Library research service for the benefit of MPs who are fielding questions from constituents about VATMOSS. The paper, like all of the research service’s work, is an impartial briefing designed to help MPs get to grips with the critical facts on the issue.

Download the briefing paper (.pdf, 532kb)

“Impartial” as it was, there was much in the paper to trouble a partial observer. Because the briefing recounts the facts which turned VATMOSS into a VATMESS without commentary or analysis, it glosses over the failure of the right honourable members of the House to subject the reform to an adequate level of scrutiny.

In other words, being impartial has further distorted the truth.

For example, on page 7 the paper includes David Gauke MP’s entire statement on VATMOSS from a June 2014 Finance Committee hearing (original .pdf transcript here), including this excerpt:

We estimate that 34,000 businesses will be affected and the total additional costs of complying with the change will be £2.2 million a year, taking into account the benefits of the mini one-stop shop…

You do not have to be familiar with the details of the VATMESS to know that those two numbers are simply ridiculous. There are members of that Committee who have 34,000 businesses in their constituencies. Those who do not are surely familiar with basic economic statistics about business startups and self-employment. That Committee meeting would have been a critical opportunity for someone to point out that the correct number of affected businesses and traders was easily over half a million, not 34,000. As for the figure of £2.2 million in compliance costs, in a nation where it cost a billion quid to put in one tram line, it is simply laughable.

Yet at the time, no one questioned it and no one said a thing.

David Gauke then continued

It is worth pointing out that businesses have been invited to contribute to the design and implementation of practicalities arising from the legislative change. The IT system has been designed with help from interested parties in the business community.

Wendy Bradley has done some fantastic work tearing this apart. “Businesses have been invited to contribute to the design and implementation of practicalities” turned out to mean three small publishing businesses, two online gaming businesses, four small digital services businesses, and three representatives from “other. Their work has never been made public. Nine businesses, and three “others” whose identities Wendy had to FOI, do not constitute a thorough public contribution.

Yet at the time, no one questioned it and no one said a thing.

The briefing continues

A Tax Information and Impact Note was published on 10 December 2013 which included an assessment of the impact on small and micro businesses

That refers to this document (.pdf, 300kb), which is pro-forma legalese. The first four pages, which constitute the impact assessment, were the ones which had many of us falling off of our chairs when they first came to light last autumn.

Yet at the time, no one questioned it and no one said a thing.

David Gauke then said:

HMRC has published its own guidance and is engaged with stakeholder groups, and with industry and its representatives.

HMRC’s massive failure here has already been exhaustively chronicled. They chose the wrong stakeholder group and only engaged with larger traders already in the VAT system. “Consulting with industry” meant working with a compliance software developer who took the lead on the national communications strategy. That is known as the tail wagging the dog. It is supposed to be the other way around.

Yet at the time, no one questioned it and no one said a thing.

The rest of the paper merely regurgitates HMRC information.

Some might say that we have to move past recriminations. I disagree. It is critical to identify all of the decision points where asking questions from an informed adversarial position could have stopped the VATMESS in its tracks. Instead, we got very polite and pre-formed discussions in committees, supplemented by lots of PDFs. The House of Commons briefing paper simply chronicles all of those exchanges.

A responsible analysis would have pointed out everything that went wrong in the original processes, impact assessments, and committee hearings. It would not have used the old “well, we’re just implementing an EU law” chestnut as an excuse. It would have been a reminder to our right honourable friends that their job is to listen, challenge, and question the laws that impact our lives, and not to merely nod their heads at the information they are given.

Instead, it’s a whitewash.

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