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International Handbook on Clinical Tax Education: Chapter 19 Moving forwards Tax clinics and business schools

International Handbook on Clinical Tax Education
Chapter 19 Moving forwards Tax clinics and business schools
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table of contents
  1. Title Page
  2. Copyright
  3. Contents
  4. List of figures
  5. List of tables
  6. List of appendices
  7. List of abbreviations
  8. Foreword
  9. 1. Introduction
  10. Part I. The tax clinic
    1. 2. A brief history of tax clinics around the globe
      1. 2.1 Key findings
      2. 2.2 Introduction
      3. 2.3 From humble beginnings
      4. 2.4 From east to west
      5. 2.5 From south to north
      6. 2.6 Conclusion
    2. 3. Project administration: how to set up a tax clinic
      1. 3.1 Key findings
      2. 3.2 Introduction
      3. 3.3 The foundations of a clinic
        1. Institutional and/or organisational support
        2. Costs and wider resources
        3. Supervision
        4. Insurance
        5. Data protection
      4. 3.4 Clinic design
        1. Student and supervisor recruitment
        2. Educational design
        3. Integration into community (client recruitment)
      5. 3.5 Concluding remarks
      6. 3.6 Key reading
    3. 4. Rationale: tax support for low-income individuals
      1. 4.1 Key findings
      2. 4.2 Introduction
      3. 4.3 Historical context
      4. 4.4 The tax charities – what they really do
        1. TaxAid
        2. Tax Help for Older People
        3. Tax clinics
      5. 4.5 The tax charities moving forward
      6. 4.6 Access to the tax charities
      7. 4.7 A rationale for low-income taxpayer support: common tax issues faced by those on a low income
        1. Non-tax issues
        2. Tax complexity
        3. Expansion of self-employment
        4. COVID-19
        5. Late registration and tax returns
        6. Other changes in how people are paid
        7. Incorrect PAYE codes
        8. Pension drawdown
        9. Proliferation of umbrella companies and disguised remuneration schemes
        10. Penalties
        11. Bankruptcy
        12. Digital exemption and assisted digital
        13. Working with HMRC to resolve generic tax issues
      8. 4.8 An international call to action
      9. 4.9 Concluding remarks
    4. 5. Rationale: tax and the poverty interface
      1. 5.1 Key findings
      2. 5.2 Introduction
      3. 5.3 Canvassing the tax and wider social issues addressed by the National Tax Clinic Program
        1. Tax and financial literacy
        2. The unmet need for tax advice in Australia
      4. 5.4 Introducing the UNSW Tax and Business Advisory Clinic
      5. 5.5 Benefit of tax clinics: Australia and internationally
        1. Opportunities for further research
      6. 5.6 Concluding remarks
  11. Part II. Tax clinics and our communities
    1. 6. Engagement in the community
      1. 6.1 Key findings
      2. 6.2 Introduction
      3. 6.3 The external stakeholders in CTE
        1. Supporting your local community
        2. Becoming part of the local community
      4. 6.4 Concluding remarks
    2. 7. Listening to our communities: the Community Tax Law Project as an example of a low-income taxpayer community-focused service provider
      1. 7.1 Key findings
      2. 7.2 Introduction
      3. 7.3 What does a community-focused tax clinic look like?
        1. Mission driven
        2. Community understanding and support
      4. 7.4 What populations are you going to serve?
        1. Demographic scope: how do your clients live, work, pray or play?
        2. Resources and limitations
        3. Learn from failures
      5. 7.4 What do these populations need or want?
      6. 7.5 What specifically does your clinic require to meet these needs and wants?
        1. Community partners: you cannot reach everyone by yourself
        2. Social capital: the who, what and when of building your clinic family
        3. Finances: the lights do not stay on with positive thoughts and well wishes
      7. 7.6 How do I fix the problem at the source? Yelling up the chain: advocacy as part of the clinic’s mission?
        1. Community advocacy
        2. Administrative advocacy
        3. Litigation as a venue for change
        4. Governmental advocacy
      8. 7.7 Conclusion
    3. 8. Public education: the Tax Club UNILAG
      1. 8.1 Key findings
      2. 8.2 The context of the Tax Club UNILAG
      3. 8.3 The creation of Tax Club UNILAG
      4. 8.4 An overview of the club’s activities
      5. 8.5 The importance of tax clubs
      6. 8.6 Some challenges faced by the tax club
      7. 8.7 Support for the use of tax clubs in education
      8. 8.8 Looking to the future
      9. 8.9 Concluding remarks
    4. 9. Public education: engaging with secondary education in schools
      1. 9.1 Key findings
      2. 9.2 Introduction
      3. 9.3 Tax clinics as defenders of taxpayer rights
      4. 9.4 Partnering with secondary education
        1. How the partnership was established
        2. Benefits of the community partnership
      5. 9.5 Conclusion
    5. 10. Taxpayer resolution: improving taxpayer compliance in Indonesia
      1. 10.1 Key findings
      2. 10.2 Introduction
      3. 10.3 Taxation in Indonesia in a nutshell
        1. Registration
        2. Bookkeeping
        3. Payment
        4. Reporting
        5. Audits and penalties
      4. 10.4 Revenue and taxpayer compliance
      5. 10.5 Improving individual taxpayer compliance
        1. The formation of the FoT community
        2. The development of FoT
      6. 10.6 Conclusion
    6. 11. Policy changes: impact on and through the Tax Court
      1. 11.1 Key findings
      2. 11.2 Introduction
      3. 11.3 Government approach
        1. Regulations and other rules
      4. 11.4 Role of tax clinics in shaping the law
        1. Litigation: impact of clinics on the community of low-income taxpayers
        2. Commenting on proposed legislation, regulations, forms and rules
        3. Commenting on systemic problems at the IRS
      5. 11.5 Conclusion
    7. 12. Marginalised voices: tax and the criminal justice system
      1. 12.1 Key findings
      2. 12.2 Introduction
      3. 12.3 Making Tax Digital
      4. 12.4 Digital exclusion
      5. 12.5 Tax issues – people in prison
        1. Digital exclusion – people in prison
        2. People in prison/with previous lived experience of prison as clinic clients
        3. Prison and self-employment
        4. Tax and self-employment
      6. 12.6 Student and university benefits
      7. 12.7 Conclusion
  12. Part III. Tax clinics and our students
    1. 13. Pedagogical theory and clinical tax education
      1. 13.1 Key findings
      2. 13.2 Introduction
      3. 13.3 Fostering the next generation of tax advisers: the importance of pro bono
      4. 13.4 Relevant pedagogical theories
        1. Employability from tax clinics: work-integrated learning (WIL)
        2. Growing student motivation and confidence: self-determination theory (SDT)
      5. 13.5 Concluding remarks
      6. 13.6 Key reading
    2. 14. Enhancing student experience: shadowing, role-plays and reflection
      1. 14.1 Key findings
      2. 14.2 Introduction: pedagogical rationale
      3. 14.3 Initial collaboration
      4. 14.4 Implementation
        1. Student recruitment
        2. EOI, CV and job interview
        3. Participation and presentation
      5. 14.5 From theory to practice
        1. Shadowing
        2. Team-based approach
        3. Role-plays
        4. Reflection and report writing
        5. Career readiness
        6. COVID-19 and the impact on the student experience
      6. 14.6 Conclusion
    3. 15. Introducing tax advocacy to students
      1. 15.1 Key findings
      2. 15.2 Introduction
      3. 15.3 The structure of a clinic course
        1. The seminar component
        2. The client representation component
      4. 15.4 Major design choices within the clinic model
        1. The directive–nondirective continuum
        2. Level of student responsibility for cases
        3. Use of examples and templates
        4. Case supervision
        5. Tension between client service and student educational development
      5. 15.5 Developing a reflective practice
        1. Exercising agency over one’s professional development
        2. Building the habit of reflection
      6. 15.6 Skills and direct advocacy experience
        1. Law firm management
        2. Ethics
        3. Multicultural lawyering
        4. Legal skills
          1. 1. Interviewing
          2. 2. Fact and legal investigation
          3. 3. Client advice and communication
          4. 4. Document drafting
        5. The advocacy mind-set
      7. 15.7 Working with community members
      8. 15.8 Conclusion
    4. 16. Developing employability skills through practice-based learning
      1. 16.1 Key findings
      2. 16.2 Introduction
      3. 16.3 Rationale for the TAC at UEL
        1. To raise awareness and provide free guidance in response to the COVID-19 lockdown
        2. To support employability of our accounting and finance students
      4. 16.4 Relevant literature
        1. Voluntary services: student, faculty and practitioner participation
        2. Pro bono: the participation of experienced practitioners
      5. 16.5 Clinic design
        1. Student volunteers
        2. Practice-led teaching
        3. External impact, collaborations and partnerships
        4. Student experience
        5. The challenges of tax and accounting clinics
      6. 16.6 Data and methodology
      7. 16.7 Results and discussion
        1. Tax and accountancy clinic and employability skills development
        2. The impact of COVID-19 on student TAC experience
        3. The measurement of students’ satisfaction: quality of the TAC training
      8. 16.8 Concluding remarks
    5. 17. Students’ professional identity and a fully online tax clinic
      1. 17.1 Key findings
      2. 17.2 Introduction
      3. 17.3 The Griffith Tax Clinic
        1. Face-to-face
        2. Online
      4. 17.4 Research methodology
        1. Participants
      5. 17.5 Data results
        1. Overall
        2. Nationality
        3. PWE (Professional Work Experience)
        4. Limitations of research and future research
      6. 17.6 Concluding remarks
  13. Part IV. Moving forwards
    1. 18. A research roadmap for tax clinics
      1. 18.1 Key findings
      2. 18.2 Introduction
      3. 18.3 Developing the tax clinic as a research project
      4. 18.4 Mapping the research field
      5. 18.5 Research methods
      6. 18.6 Theoretical perspectives
      7. 18.7 Concluding remarks
    2. 19. Moving forwards: tax clinics and business schools
      1. 19.1 Key findings
      2. 19.2 Introduction: the civic university
      3. 19.3 Widening participation
      4. 19.4 The challenge of professional accreditation
      5. 19.5 Practical experience
      6. 19.6 Some ideas for clinics going forwards
        1. Replacing High Volume Agents (HVAs)
        2. Child Trust Funds
        3. Cryptocurrencies
      7. 19.7 Policy clinics
        1. Desk research for the Office of Tax Simplification
        2. Educating policy makers
        3. Drawing on students’ experiences of the tax system
      8. 22.8 Concluding remarks
    3. 20. Concluding remarks
  14. Index

Chapter 19 Moving forwards Tax clinics and business schools

David Massey*

19.1 Key findings

Student pro bono work has a long tradition within law schools, but not so much within business schools. Many law schools have an established framework of pro bono clinics that tax clinics can slot into but there are no comparable structures within business schools in the UK. Tax enthusiasts within the accounting discipline often face the twin challenges of selling to their colleagues not only the specific benefits of working on projects within the field of taxation but also the general merits of pro bono work and student volunteering.

A Chartered Association of Business Schools (CABS) Taskforce recently examined what business schools in the UK actually do in relation to the public good.1 Unfortunately, tax clinics do not merit a mention. They appear to be off the radar even of those business schools that already have a ‘clearly articulated conception’ of their public good.2 For the moment, the development of tax clinics is in the hands of what the CABS report describes as ‘public good entrepreneurs’ – enthusiastic individuals who drive individual projects within a business school.

This chapter is aimed at those enthusiastic individuals from the accounting and finance disciplines who might wish to set up a tax clinic. It will explore how a clinic can complement and support a school’s existing activities. It will also provide some ideas for small scale clinical tax education projects. The chapter is based on the current UK experience, but the suggestions may provide inspiration to those in other jurisdictions.

19.2 Introduction: the civic university

‘Civic universities’ is the label given to institutions that seek to serve their locality in all its diversity and which align their activity to public wants.3 Tax clinics, which address the wants of low-income individuals or provide public education, can fit neatly within the vision of such civic universities.

A tax clinic is one medium through which we can both establish and meet the wants of our communities. Most directly, this is by way of helping clients resolve their individual tax problems, but it can go wider than that. A tax problem might be the initial prompt that leads the client to the tax clinic. However, in attempting to resolve their tax situation, we can uncover deeper issues, which may not otherwise be detected through the likes of customer surveys or more traditional channels of community engagement. For example, in the North West Tax Clinic we came across signs of modern slavery and identified weaknesses in the support provided for small business. The particular nature of the challenges these clients had would not have been detected outside of the clinical encounter. These sorts of issues may be beyond the scope of the clinic itself to resolve, but they can be usefully shared with colleagues within the rest of the business school to inform decisions about priorities for community engagement or research.

Not all universities will see the serving of local needs as a priority. For these institutions, tax policy clinics may align more closely with their objectives. We will return to tax policy at the end of the chapter. For the moment, we will concentrate on clinics that seek to serve individuals and organisations in the immediate locality of a business school.

19.3 Widening participation

When making the case for a tax clinic, one strategy would be to situate it within the school or university’s ‘widening participation’ agenda – an agenda that is an important focus of UK universities. Widening participation involves institutions taking the initiative to recruit (and retain) students from under-represented groups.4 These include young people who:

•   Live in areas where comparatively few school leavers move on to higher education

•   Would qualify for the Disabled Students’ Allowance (DSA)5

•   Attended state schools (rather than being privately educated).

As a discipline, accounting is already more effective than business schools (and the HE sector overall) at recruiting students from areas with low participation (POLAR 4) and from those places identified as deprived (see Table 19.1).6 We also have a broader ethnic mix than business schools generally, which in turn do better than the HE sector as a whole (Table 19.2).

Where business schools do less well is in the recruitment of students with disabilities (Table 19.3).7 Our recruitment rate is less than half that of the sector as a whole. A tax clinic could be a way of addressing that shortcoming. It provides a setting in which we can address issues of disability. This can show the relevance of business degrees to potential applicants who might not otherwise have considered the discipline as well as providing a more relevant experience to those students who choose accounting or related subjects.

Table 19.1: UK undergraduate acceptances in the 2021 application cycle, percentage of total students accepted onto courses coming from these areas. Quintile 1 = lowest participation rate or most deprived areas.8

Accounting (CAH 17-01-08)9

All business (CAH 17)

Law (CAH 18)

All acceptances

POLAR 4 Quintiles 1 & 2

27%

23%

31%

26%

IMD Quintiles 1 & 2

49%

44%

44%

39%

Table 19.2: Ethnicity: UK undergraduate acceptances in the 2021 application cycle.

Accounting (CAH 17-01-08)

All business (CAH 17)

Law (CAH 18)

All acceptances

Asian

33%

19%

21%

14%

Black

12%

11%

10%

9%

Mixed

4%

5%

6%

5%

Other

3%

4%

4%

2%

Unknown

1%

4%

1%

2%

White

48%

59%

59%

68%

There are issues ripe for public education or helping individual clients, such as the low take-up of Blind Persons’ Allowance’10 or VAT reliefs for disabled people which have to be claimed by the individual.11 There are also less obvious opportunities. As Wood (Chapter 12) discovered in their clinical work with prisoners, the rates of dyslexia among prisoners are very high, possibly up to 50 per cent.12 There is also limited internet access within prisons.

Table 19.3: Percentage of students in receipt of DSA by subject (2020–21). Source: The author.

Business

Law

All subjects

Percentage of students in receipt of DSA

3.6%

5.3%

8.4%

Converting basic, online, tax information into a paper format and designed in a way to take into account the reading challenges facing such an audience is a task that can be undertaken by undergraduates. Of particular value to those entering prison would be guidance and support on, say, transferring the Marriage Allowance to a working spouse or civil partner13 or claiming back PAYE tax deducted before their detention.14 These are comparatively straightforward claims for those with internet access and who face no reading challenges but can be a serious challenge for those within a secure environment. For those leaving prison, accessing the online Government Gateway and registering as self-employed is an area where additional support from a tax clinic might be welcomed.

The benefits to more privileged students of volunteering in a low-income taxpayer clinic have been explored in Part III of this handbook. But there can also be benefits to students from nontraditional backgrounds. Too often academia treats these students as lacking the cultural capital to thrive in higher education and treats their previous experiences as a barrier to learning. In contrast, a tax clinic can be the place where the lived experience of these students has real value. The fact that they have been in care or prison, have a disability, or are from an ethnic minority is not something that a school needs to start making allowances for; instead these are attributes to be valued.

A tax clinic, in contrast to other university learning experiences is an environment in which the students’ nontraditional backgrounds become an asset rather than a liability. A clinic’s clients are not individuals whose lives are outside the students’ own experience but, rather, they are typical of the students’ own lives or those of their peers, friends and neighbours. Our less traditional students can provide valuable insights into the needs of clients and how those might best be met.

Conversely, and perhaps more importantly, a clinic can show the relevance of university to those students who come from the more marginalised communities which the clinic serves. The clinical experience permits them to start to see a bigger picture within which to situate their own lives, and to see the relevance of their learning to their own context in a way that a classroom session on, for example, international transfer pricing or inheritance tax never will.

19.4 The challenge of professional accreditation

The challenges to university-level accounting education posed by the pursuit of accreditation from the professional accountancy bodies has been well documented.15 Professional accreditation requirements are not unique to the UK. However, entry into the accounting profession is an effective route to enhance the social mobility of our students; we should think carefully before abandoning professional accountancy body accreditations in pursuit of more academic course offerings.16

It would not be right to deny our students this sort of learning. For those who want to enter and thrive in the profession we do need to give them the opportunity to develop their cultural, symbolic and social capital.17 This requires introducing them to situations that are well beyond their current experiences, but it does run the risk of making our degrees appear irrelevant to them where they cannot also see a connection with their own experience.

Tax clinics can work effectively to complement our current accredited courses. They offer a way of ‘finding time alongside accredited content modules and content within modules to promote generic skills and more liberal or academic aspects of education’.18 These are skills that can be crowded out in a curriculum geared to maximising exemptions, but they can be developed within a clinical environment running alongside the assessed learning.

Clinics may not address directly what are perceived in some quarters as the big issues in accounting education, such as the apparent crisis in auditing. Moreover, clinics may not, by themselves, be able to decolonise the curriculum. However, they can be used to encourage students to start to question and to challenge the canon of knowledge that we are currently offering them.

ACCA’s UK Taxation (TX) syllabus, for example, explicitly excludes:19

•   Simple assessments20

•   Tax-free childcare schemes

•   The trading allowance of £1,000

•   The property allowance of £1,000

•   Savings income paid net of tax21

•   The Blind Person’s Allowance.

These are all features of the UK tax system that are of relevance to those on the margins of liability and on the lowest incomes.

On the other hand, students are obliged to study UK inheritance tax, a tax that only applies to estates worth over £325,000 (and in many cases £1 million) and is paid by fewer than 4 per cent of estates.22

Tax clinics running alongside the taught curriculum offer the opportunity for students to experience elements of tax, which they may more readily relate to – without trying to cram yet more learning into accredited modules. Through a clinic we can expose them to the relevant elements of tax which the profession deems not worthy of examining, without diluting the modules which support the examination exemptions.

As Freudenberg et al. and Vitale and Medlen explain in Chapters 17 and 14 respectively, there are also great benefits to students through their interaction with established professionals. Even though the technical issues in a tax clinic may be far removed from the students’ intended careers, these relationships can go a long way to making up for any deficiencies in the students’ accounting cultural capital.

19.5 Practical experience

Another area where tax clinics can support an accredited degree programme is in the area of work experience. The clinics offer opportunities for students who may not be free to commit to a traditional work placement or internship, because of, for example, caring obligations or financial constraints on travel.

A clinic is unlikely to be able to offer much towards the total three years’ qualifying experience required by ACCA but the variety of work does lend itself towards completing specific performance objectives (POs). A carefully constructed clinical experience would allow a student to have some of ACCA’s POs signed off before they graduate. These Practical Experience Requirements can be a particular challenge to complete where our graduates join smaller firms after leaving us or find themselves in a restricted finance role within a commercial organisation. Having one or two of these POs under their belt may ease their move into employment and early entry into full membership of the professional accountancy bodies.

An ACCA associate must complete five ‘Essential’ POs and four out of the fourteen ‘Technical’ POs before they can advance to membership.23 Of the Technical POs, three relate to tax.24 PO17 ‘Tax Planning and Advice’ would probably be beyond the scope of a low-income taxpayer clinic, but the five elements of PO16 ‘Tax Compliance and Verification’ have been commonplace among our clinics. The only element that has been missing from PO15 ‘Tax Computations and Assessments’ has been item (c) relating to the computation of indirect liabilities. It would require a different model from the one adopted at the North West Tax Clinic or the Scottish Tax Clinic (discussed in Chapter 2) but it is likely that there will be business schools who already work with, for example, Third Sector organisations where it would be possible to find opportunities for students to gain the appropriate experience.

There is one of the Essential POs where a clinic could allow a student to demonstrate the appropriate attributes and skills: PO2 ‘Stakeholder Relationship Management’. Amongst other things, this objective requires students to demonstrate effective communication and listening skills and to display ‘sensitivity, empathy and cultural awareness’. A tax clinic, attracting clients from all communities, each with different challenges, both personal and fiscal, will probably give more opportunity for this than would a standard, professional, office environment. Students also need to show they can work with a range of stakeholders: the tax clinic experience requires its volunteers to communicate not just with clients but also professional mentors and Revenue authorities. A clinic that introduced a public education element would give further opportunities for students to develop their communication skills and demonstrate their abilities to use a range of mediums to do this.

19.6 Some ideas for clinics going forwards

A minimalist tax clinic

There is no need to be overambitious when first setting up a tax clinic. A tax clinic can include student volunteers who have nothing much more to offer than a willingness to help. It need not require any detailed knowledge or experience from either the students or the supervising academics.

Originally, as part of their Making Tax Digital (MTD) programme, from April 2024 HMRC would have required every business with an annual turnover of more than £10,000 to report their income and expenses online.25 With the personal allowance at something over £12,000, this would have required many non-taxpaying individuals to make quarterly returns to HMRC. Even with the delay to MTD and the increase in the initial threshold, there are still concerns around digital exclusion: this will still catch individuals who were able to make annual paper returns in the past but who will struggle with the transition online.

These are not clients who require any tax advice, but they do need help getting online. A university with its rooms full of computers lying idle outside of teaching hours can help here. An ‘Access to Government Services’ clinic need not offer any support beyond guiding clients through the process for registering for online services and showing them the ‘Help’ features within HMRC systems.

The clinic could also offer support in accessing other services, which are now offered online – such as applying for a driving licence or passport or registering to vote. Our students can provide this assistance with minimal training. A clinic like this could run for, say, just one weekend (or weekday) every three months while you get a feel for what the demand might be for more specialist tax support. It can run with minimal outside support, but it would be an opportunity to start working with local professionals from which to recruit mentors.

Replacing High Volume Agents (HVAs)

High volume agents help individuals to claim tax refunds for a fee (that usually comes from the refund). This clinic would require some tax knowledge (although still not a lot). In the UK context, it could assist clients with claims for:

•   Marriage Allowance

•   Flat rate expenses (for uniforms and tools)

•   Professional subscriptions

•   Employee travel expenses.

Travel expenses can be complex, but the other items are comparatively straightforward. However, many taxpayers use claims companies rather than applying direct to HMRC. Even the honest companies may take up to almost 50 per cent of the repayment due,26 while other agents will make inflated claims (with the taxpayer having no redress when HMRC come to investigate) and ask for the excess back; abuse the repayment assignment authorisation to take all future repayments the client may receive; or even appropriate the client’s HMRC record.27

HMRC research has identified four types of HVA users:28

•   Opportunists

•   Time Optimisers

•   Financial/Language barrier customers

•   Uncertain customers.

The ‘Time Optimisers’ are those who are confident and capable of applying to HMRC directly but prefer to use the process offered by the HVA. These would not be the clients a clinic would aim to reach.

The other three categories, though, are ones where a student-led clinic could do a lot of worthwhile work.

‘Opportunists’ are those who responded to an HVA advert and thought they had nothing to lose from making a claim through them. A clinic could run public education events to raise awareness of the potential claims and provide guidance on how to claim through HMRC’s own webpages.

Taxpayers with language and literacy barriers, or those in financial difficulties, are those who might best be helped by students on a one-to-one basis.

The ‘Uncertain’ group were those lacking confidence in their ability to apply direct to HMRC. These clients could be helped through the minimalist clinic approach but with some tax technical support alongside assistance with the Government Gateway.

Child Trust Funds

Child Trust Funds (CTFs) were a creation of the New Labour government of the 1990s.29 Children born between 1 September 2002 and 3 January 2011 were given a long-term tax-free savings account.

The government sent a voucher for up to £500 to the parents or guardians of each child. Parents could add up to £9,000 a year to those accounts. Where parents did not use the voucher, HMRC opened an account for the child instead.

When the child reaches sixteen they can manage the account themselves. Once they reach eighteen, they can take out the funds or reinvest them in an Individual Savings Account (ISA). These children started turning sixteen in 2018, and eighteen in 2020.

Many young people do not know they have such an account. Over 700,000 accounts are dormant and up to a million may have the wrong contact details.30 Those most likely to have lost track of their funds are those from the least financially sophisticated families, or with no family at all.

Although the issue is not strictly tax related, HMRC are the organisation that a young person needs to contact to track down their account. They have many of the same challenges as our tax clinic clients. Even getting online to start tracing their fund can be a barrier. Many will not have a driving licence, passport or recent payslip that will allow HMRC to verify their identity. A clinic could just restrict itself to guiding them through this process. But more excitingly, it also provides an opportunity to provide public education in all elements of financial literacy: basics of the tax system, spending now versus saving and investing, and so on. This could be offered just to your own students or taken out into the community.

If young people can start managing their funds from sixteen, then ideally we should be out into schools and other institutions before then. I would suggest that such an outreach project, where a university actually provides something of immediate value to its audience is likely to be more effective at encouraging young people to consider higher education than many other initiatives. There may be opportunities for clinics to access funding under the likes of the UniConnect scheme which targets resources at areas in England with low participation rates – or similar schemes elsewhere.31

The Share Foundation charity works in particular with children leaving care, but they also run a ‘CTF ambassadors’ programme to increase awareness of the funds more generally.32 They are a good source of information as to what projects might already be running locally and can offer advice and materials to support any clinical initiatives.

There is the potential for running a CTF project in collaboration with a law clinic. Where a young person lacks the mental capacity to manage their own finances a parent or guardian must apply to the Court of Protection to manage the funds on the child’s behalf. Although the government has now waived the actual court fees the process of applying to the court can still be a challenging one.33 There are proposals for reform, but these have been slow in coming. Even if the system is improved, it is likely that carers may still need assistance. Specifically, where the cost of paying for professional advice would be significant when viewed in relation to the value of the child trust fund, there is a role for tax clinics.

Cryptocurrencies

Again, this is not strictly a tax issue but it is an area where the tax authorities have taken a lead in considering the implications and an area where young people may inadvertently bring themselves into contact with the tax system.34 The volatility in the price of cryptoassets means that a comparatively small investment may easily take someone over the capital gains tax threshold (which will reduce to £3,000 in April 2024) when the asset is sold or exchanged for another type of cryptoassets. It is also an area that is rife with scams.35

Although research by the Financial Conduct Authority (FCA) suggests that most holders of cryptoassets are aged over thirty-five,36 anecdotal evidence from our students suggests that many younger individuals are also investing or speculating in cryptoassets. The FCA research also showed that the level of understanding of cryptocurrencies is declining.

This is an area where a university clinic could contribute to public financial education. One where accounting and finance students may be particularly valuable. We have found that student appreciation of cryptoassets and nonfungible tokens is running ahead of that of the faculty. More than many other topics, it is one where the learning could be student-led, with genuine opportunities for co-creation.

19.7 Policy clinics

Policy clinics offer an alternative route for student involvement for institutions that do not see their primary focus as serving the local community, or where serving individual clients is impractical.

Freudenberg et al. have set out the benefits of clinical education in allowing students to develop their professional identities in Chapter 17. By way of a contrast, our students’ current lack of a strong professional identity makes them ideal individuals to introduce fresh ideas into the formation of tax policy. We can harness their relative naivety as a means of counteracting the ‘deformation professionelle’ or ‘occupational psychosis’ of tax professionals, whether they be administrators, advisers or academics. On a practical level, students may be better placed than experienced tax professionals to explain tax issues in a way accessible to nonspecialists precisely because they are not yet conditioned to communicate in ‘taxspeak’ and are still conscious of what it is like to know little or nothing about tax.

I describe below the way our students at UCLan have been involved in policy issues over the years. These were ad hoc assessed coursework rather than part of a formal clinic, but they may give some ideas of the sort of problems that can be tackled.

Desk research for the Office of Tax Simplification

In 2011, we contributed to the review of small business taxation by the newly formed Office of Tax Simplification (OTS).37

One of the issues OTS were looking at was the potential of presumptive taxation for the very smallest businesses, where the tax due could be determined without the need to keep detailed records. We were pleased to be acknowledged:

We are grateful to the students at the University of Central Lancashire who carried out a research project for a module on taxation during their 2011 autumn term, guided by their lecturer, David Massey. The project was to identify and research alternative small business tax systems around the world. Although this was only at an initial level and based on desktop research, we were impressed by the quality of work produced by many of the students. Their work helped us identify trends and alternatives for further investigation.38

Although the students did not have the time (or necessarily the skills) to research in great depth, we did have the advantage that, collectively, we could cover a lot of ground. The students produced short reports on some four dozen jurisdictions. It also provided opportunities for our international students to research their own countries and for them to access sources in their first languages, rather than us being restricted to what might be available in English. The student reports allowed OTS to identify those jurisdictions which were worth further exploration. Their limited resources meant that they had to be selective in how many overseas tax authorities they could contact for further information. Even those students who may have found very little in their own research still made a valuable contribution to the project.

OTS spent half the day with our students and the other half at meetings we hosted with local accountants. These meetings made some small contribution to mitigating the potential London bias which often informs potential tax reforms (or at least may be perceived to).

Educating policy makers

In 2012, Reuters published its report into the tax affairs of Starbucks, the coffee chain.39 Later that year the House of Commons Public Accounts committee (PAC) began investigating Starbucks’ tax arrangements.40 The Reuters report revealed some basic misunderstanding of both accounting and tax fundamentals and the chair of the PAC, Margaret Hodge, seemed to take pride in her ignorance of both subjects.

As part of their coursework our third-year students were asked to explain international transfer pricing so that even Margaret Hodge could understand it. One of the students, Parris, designed a very impressive poster that I shared with the editor of Taxation magazine for possible use in their ‘Adopt-an-MP’ campaign where tax advisers would offer to spend time with politicians to give neutral explanations of the workings of the tax system. The poster wasn’t perfect (it would be asking too much of our undergraduates to expect that) but it was an excellent starting point for others to refine.

As the editor reported:

We hope to provide more resources in future to help our adopters to explain tax to MPs.

In particular I’m hoping to provide a modified and checked version of a detailed poster produced by a student who has just finished her Accountancy and Finance degree at the University of Central Lancashire. Parris Innis-McKenzie produced it as part of the coursework for a taxation module of her degree […]. The poster analyses and summarises all the issues surrounding the Starbucks controversy, drawing on the Reuters report and other publicly available material. We need to be able to explain the complex issues behind these stories in a way which people can understand, but without dumbing the story down. Parris’s poster does exactly that.41

The campaign didn’t make as much progress as we had hoped. A decade on, the time may be right to try again, but with tax students, rather than tax professionals, offering to ‘adopt’ their local MP. Students are likely to be perceived as more neutral than tax professionals and more effective at using language and techniques appropriate to busy people without the time to get to study tax in any depth.

Drawing on students’ experiences of the tax system

Another project saw students conducting a review of the taxation of employee expenses and benefits, providing a balance to the representations made by FTSE 100 companies and similar. The OTS acknowledge the students’ work in one of their reports:

In framing our recommendations we have responded to the evidence we have found in another wide ranging set of meetings and workshops and the many comments and submissions received (for all of which we are very grateful): We found that we have had views from almost all of the FTSE 100 companies, directly or indirectly; at the other end of the scale the ideas we had from a third year group of students at the University of Central Lancashire, developed during their degree course, were creative and valuable.42

One of the contributions the students made was in articulating what made tax complicated for them: a particularly important issue to understand in the context of tax simplification. This meant that even the students who were not particularly strong could make a valuable contribution. Even if they couldn’t develop a creative reform for the topic they were struggling to research, they could still inform the review by working out what it was they were having difficulty with.

The students were given a free choice of which aspects of the subject to work on but were encouraged to pick those where they could draw on personal experience or which would complement their career plans. They presented their findings at a poster exhibition which meant they received feedback not only from OTS and the tax lecturer but also from fellow students; local accountants (who we had again invited to meet with OTS separately); lecturers from other disciplines and passing members of the public.

A number of students also took the opportunity to invite their parents to the event. For some, this was the first time that their relatives seemed to have taken an interest in their studies. Especially for first generation students from nonprofessional families, the likes of Financial Reporting and Audit may be very far removed from their home life, but tax can be accessible to everyone.

The event had not meant to be competitive, but OTS asked if they could award prizes to the best presentations. The two winners were very different. One pair had prepared a very detailed scheme on how to replace the accommodation benefit calculation with a simpler one based on council tax bands.

The second pair looked at expense allowances for those working in care homes. Henna and her colleague contrasted that with the much more generous treatment given to unionised workers in the NHS. Their poster graphically illustrated the state of Henna’s uniforms at the end of the shift and the perils of travel going to and from the care home with no tax relief for taxis (unlike Treasury officials in London working late on the Budget), and the precarious nature of the engagements where dismissal was common at the point when they would have been there long enough to acquire employment rights so length of commute was not really a matter of choice for the employee: this was in contrast to the situation of the barrister in Ricketts v Colquhoun and the current legislation’s assumptions about travel patterns and temporary workplaces.43

The prize included a tour of the Treasury and a short meeting with one of the Treasury ministers. We often have to advise students in traditional coursework to take care to avoid anecdotes but, in this instance, it was entirely appropriate for Henna, when speaking with the minister, to explain the inequity in the system and directly draw on her own experience. She may not have got anything changed but it does illustrate the valuable, alternative, perspective that our students can bring to the debate about tax reforms.

22.8 Concluding remarks

It is hard to identify the most appropriate projects for students to be involved with. Formal consultations by the UK Treasury are traditionally launched in July and responses required well before the students come back from vacation. A policy clinic would have to rely on lecturers getting a feel for what is in the air or developing formal relationships with other institutions.

It is unlikely that a clinic would be able to influence changes to major parts of the tax structure, but there may be opportunities on small features within it. Areas where everyone agrees something should be done but it is too far down the list of priorities for anyone in government to be able to spare the resources to address the issue.

A recent example of reform is the change in the capital gains tax rules when married couples separate.44 This has been an area where it has been clear for decades that the current rules could produce great unfairness, but it has clearly taken a long time for someone either to gather the detailed evidence or to come up with a workable reform. Similar potential improvements remain.

It would be worth talking to the professional bodies, third sector organisations, tax authorities and others to establish what is on their wish list for research or reform, but where the issue is always pushed down in priority by more urgent or important projects. If we can find such challenges then it will be a great achievement if our students manage to make an impact, but equally we need not be disheartened if we run into difficulties. What we will have done will always be better than the nothing that was the alternative.

  1. *   Former Lecturer in Taxation, University of Central Lancashire, co-founder North West Tax Clinic.

  2. 1   Chartered Association of Business Schools, ‘Business Schools and the Public Good: A Chartered ABS Taskforce Report’ (2021), <https://charteredabs.org/wp-content/uploads/2021/06/Chartered-ABS-Business-Schools-and-the-Public-Good-Final-1.pdf> accessed 3 August 2022.

  3. 2   Ibid., 3.

  4. 3   UPP Foundation, ‘Truly Civic: Strengthening the Connection between Universities and Their Places’ (2021), <https://upp-foundation.org/wp-content/uploads/2019/02/Civic-University-Commission-Final-Report.pdf> accessed 3 August 2022, 8.

  5. 4   Higher Education Statistics Authority (HESA), ‘Widening Participation Summary: UK Performance Indicators’ (2022), <www.hesa.ac.uk/data-and-analysis/performance-indicators/widening-participation-summary> accessed 25 July 2022.

  6. 5   GOV.UK, ‘Help If You’re a Student with a Learning Difficulty, Health Problem or Disability – Disabled Students’ Allowance’ (2022), <www.gov.uk/disabled-students-allowance-dsa> accessed 25 July 2022.

  7. 6   POLAR 4 = Participation of Local Areas (version 4). It is based on how many eighteen-year-olds from an area started an HE course between 2009–10 and 2013–14. Additional funding is provided by the Office for Students (OfS) for students from areas in quintiles one and two who are statistically at risk of dropping out; IMD = Index of Multiple Deprivation. The UK is divided into over 40,000 local areas. The index is based on a basket of measures including income, (un)employment, education, health, crime and barriers to housing and local services. More information about England is available here: <www.gov.uk/government/statistics/english-indices-of-deprivation-2019> accessed 3 August 2022; Scotland, <www.gov.scot/collections/scottish-index-of-multiple-deprivation-2020/> accessed 3 August 2022; Wales, <https://gov.wales/sites/default/files/statistics-and-research/2020-06/welsh-index-multiple-deprivation-2019-results-report.pdf> accessed 3 August 2022; Northern Ireland, <www.gov.uk/government/statistics/northern-ireland-multiple-deprivation-measures-2017> accessed 3 August 2022.

  8. 7   HESA, ‘Table WP10 – Percentage of Students in Receipt of Disabled Students’ Allowance (DSA) by Subject and Entry Qualifications’ (2022), <www.hesa.ac.uk/data-and-analysis/performance-indicators/widening-participation> accessed 3 August 2022.

  9. 8   CAH = Common Aggregation Hierarchy. The CAH is part of the Higher Education Classification of Subjects (HECoS) system which has been used from 2020–21 to map and code disciplines: <www.hesa.ac.uk/support/documentation/hecos> accessed 3 August 2022.

  10. 9   Authors’ own calculations based on data released by UCAS (University and College Admissions Service) available here: <www.ucas.com/data-and-analysis/undergraduate-statistics-and-reports/ucas-undergraduate-sector-level-end-cycle-data-resources-2021> accessed 3 August 2022.

  11. 10   John Whiting, ‘OTS Review of Tax Reliefs’, Tax Journal 1069 (2011) <www.taxjournal.com/articles/ots-review-tax-reliefs> accessed 3 August 2022.

  12. 11   HMRC, ‘Reliefs from VAT for Disabled and Older People (VAT Notice 701/7)’ (2020), <www.gov.uk/guidance/reliefs-from-vat-for-disabled-and-older-people-notice-7017> accessed 3 August 2022.

  13. 12   The Centre for Social Justice, ‘Dyslexia in the Education and Criminal Justice Systems: Roundtable Report’ (2021), <www.centreforsocialjustice.org.uk/wp-content/uploads/2021/12/CSJ-Dyslexia_Roundtable_Report.pdf> accessed 3 August 2022, 4.

  14. 13   GOV.UK, ‘Marriage Allowance’ (2022), <www.gov.uk/marriage-allowance> accessed 3 August 2022.

  15. 14   GOV.UK, ‘Claim Income Tax Back When You’ve Stopped Work’ (2020), <www.gov.uk/government/publications/income-tax-claiming-tax-back-when-you-have-stopped-working-p50> accessed 3 August 2022.

  16. 15   See most recently, Stephen Daly and Amy Lawton, ‘Another Check of the Temperature of Tax Teaching in the UK’ (2022) 2 British Tax Review 202.

  17. 16   ICAEW (2021) <www.icaew.com/insights/viewpoints-on-the-news/2021/sep-2021/accounting-firms-target-socio-economic-pay-gaps>; and ICAEW, ‘Accounting Firms Recognised for Social Mobility Work’ (ICAEW, 25 November 2021), <www.icaew.com/insights/viewpoints-on-the-news/2021/nov-2021/accounting-firms-recognised-for-social-mobility-work> accessed 4 August 2022.

  18. 17   Social Mobility and Child Poverty Commission, ‘Non-Educational Barriers to the Elite Professions’ (2015), <https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/434791/A_qualitative_evaluation_of_non-educational_barriers_to_the_elite_professions.pdf> accessed 4 August 2022.

  19. 18   Peter Ellington and Amanda Williams, ‘Accounting Academics Perceptions of the Effect of Accreditation on UK Accounting Degrees’, Accounting Education 26 (2017): 501, 519.

  20. 19   ACCA is a Professional Accounting Body in the UK. ACCA ‘Taxation – United Kingdom (TX-UK) Syllabus and Study Guide, June 2022–March 2023’, <www.accaglobal.com/ie/en/student/exam-support-resources/fundamentals-exams-study-resources/f6/syllabus-study-guide/f6-syllabus-study-guide-united-kingdom-uk.html#> accessed 4 August 2022.

  21. 20   Issued by HMRC to taxpayers who are not within self-assessment. They are not as ‘simple’ as HMRC would like to make out.

  22. 21   Of particular concern to those receiving compensation from Payment Protection Insurance (PPI) mis-selling. See David Massey and Amy Lawton, ‘Simple Interest’, Taxation 186, no. 4766 (2020): 12.

  23. 22   HMRC, ‘Inheritance Tax Statistics: Commentary’ (2021), <www.gov.uk/government/statistics/inheritance-tax-statistics-commentary/inheritance-tax-statistics-commentary—regional-breakdown> accessed 17 April 2022.

  24. 23   ACCA, ‘Performance Objectives’ (2022), <www.accaglobal.com/uk/en/student/practical-experience-per/performance-objectives.html> accessed 17 April 2022.

  25. 24   ACCA, ‘Achieve Performance Objectives’ (2021), <www.accaglobal.com/content/dam/ACCA_Global/Students/per/PER-Performance-objectives-achieve.pdf> accessed 4 August 2022.

  26. 25   For more on digitalisation and digital exclusion, see Wood (Chapter 12).

  27. 26   GOV.UK, ‘HMRC Launches Consultation to Address Concerns about Repayment Agents’ (2022), <www.gov.uk/government/news/hmrc-launches-consultation-to-address-concerns-about-repayment-agents> accessed 4 August 2022.

  28. 27   David Byers, ‘Oil Workers Sunk by £30k Tax Bills’ (The Times, 15 January 2022), <www.thetimes.co.uk/article/oil-workers-sunk-by-30k-tax-bills-wtkhftb3f> accessed 4 August 2022.

  29. 28   HMRC, ‘The Use of High Volume Agents to Claim Tax Rebates: Qualitative Research to Better Understand the Motivations and Experiences of Customers of High Volume Agents’, HMRC Research Report: 631, <https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1029797/The_use_of_High_Volume_Agents_to_claim_tax_rebates_research.pdf> accessed 4 August 2022.

  30. 29   GOV.UK, ‘Child Trust Fund’, <www.gov.uk/child-trust-funds> accessed 4 August 2022.

  31. 30   OneFamily, ‘How to Trace a Lost Child Trust Fund’, <www.onefamily.com/child-trust-fund/how-to-trace-a-lost-child-trust-fund/> accessed 4 August 2022.

  32. 31   Office for Students, ‘UniConnect’, <www.officeforstudents.org.uk/advice-and-guidance/promoting-equal-opportunities/uni-connect/> accessed 18 April 2022.

  33. 32   <www.sharefound.org/> accessed 4 August 2022.

  34. 33   Ministry of Justice, ‘Child Trust Fund Court Fees Waived for Parents’ (2020), <www.gov.uk/government/news/child-trust-fund-court-fees-waived-for-parents> accessed 4 August 2022; Society of Trust and Estates Practitioners, ‘Access to Child Trust Funds May Be Granted without England and Wales CoP Order’ (2021), <www.step.org/industry-news/access-child-trust-funds-may-be-granted-without-england-and-wales-cop-order> accessed 4 August 2022.

  35. 34   HM Treasury, ‘Cryptoassets Taskforce Final Report’ (2018), <www.gov.uk/government/publications/cryptoassets-taskforce> accessed 4 August 2022. HMRC (2022) Cryptoassets Manual <www.gov.uk/hmrc-internal-manuals/cryptoassets-manual>.

  36. 35   Federal Trade Commission, ‘What to Know about Cryptocurrency and Scams’ (2022), <https://consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams> accessed 4 August 2022; Gye Hugo, ‘Crypto and NFTs Could Face UK Regulation Crackdown in 2022 Due to Fears Young People Risk Losing Money’ (iNews, 4 January 2022), <https://inews.co.uk/news/politics/cryptocurrency-and-nfts-could-face-uk-regulation-crackdown-in-2022-amid-fears-young-people-risk-losing-money-1370008?ico=in-line_link> accessed 4 August 2022; Grace Gausden, ‘ “Pig Butchering”: New Crypto Scam Targets Victims through Online Dating Apps’ (iNews, 14 March 2022), <https://inews.co.uk/inews-lifestyle/money/pig-butchering-new-crypto-scam-victims-online-dating-apps-1515345> accessed 18 April 2022.

  37. 36   Financial Conduct Authority, ‘Research Note: Cryptoasset Consumer Research 2021’ (2021), <www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021> accessed 4 August 2022.

  38. 37   Office of Tax Simplification, ‘Small Business Tax Review: Final Report’ (2012), <https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/199180/02_ots_small_business_tax_review_simpler_income_tax_280212.pdf> accessed 4 August 2022.

  39. 38   Ibid., 47 (see footnote 87 in the report).

  40. 39   Tom Bergin, ‘Special Report: How Starbucks Avoids UK Taxes’ (Reuters, 15 October 2012), <www.reuters.com/article/us-britain-starbucks-tax-idUSBRE89E0EX20121015> accessed 4 August 2022.

  41. 40   Public Accounts Committee: Minutes of Evidence (HC 716, Session 2012–13, 12 November 2012), <https://publications.parliament.uk/pa/cm201213/cmselect/cmpubacc/716/121112.htm> accessed 4 August 2022.

  42. 41   Mike Truman, ‘Adoption Papers’, Taxation 4404 (2013): 8.

  43. 42   Office of Tax Simplification, ‘Review of Employee Benefits and Expenses: Second Report (2014), 4, <www.gov.uk/government/publications/review-of-employee-benefits-and-expenses-second-report> accessed 4 August 2022.

  44. 43   HMRC Employment Income Manual, ‘EIM31641 – The General Rule for Employees: Expenses: Each and Every Holder: Ricketts v Colquhoun’, <www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim31641> accessed 4 August 2022; UK: Income Tax Earnings and Pensions Act 2003, Part 5, Ch. 2.

  45. 44   Association of Taxation Technicians, ‘ATT Welcomes Easing of Tax Rules for Divorcing Couples’ (2022), <www.att.org.uk/technical/news/att-welcomes-easing-tax-rules-divorcing-couples> accessed 4 August 2022.

Annotate

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