Cynulliad Cenedlaethol Cymru

Kathryn Bishop, chair of the Welsh Revenue Authority.

Dyfed Alsop, chief executive, Welsh Revenue Authority.

The board meets physically monthly and has a fortnightly telephone conference call in-between. At almost every board meeting so far, and certainly for every board meeting between now and April, we review a readiness checklist, which is drawn from the implementation programme and brings together a collection of things that must be in place. Individual non-executive directors on the board, we've agreed a set of objectives, and one of our colleagues has been very involved with the guidance preparation, given his professional background. 

The board saw a demonstration of the software in the last week, and will continue to—. We saw a demonstration of the registration system and of the finance system. So, we are able to see what's being done, as well as reading the supervisory and governance reports of it. 

Are you confident, within the new digital system, that the boundary between England and Wales is now there within your system so that you should have no problem with cross-border land and property, and that, where you have that, it is now being resolved? And are you also confident that it will be dealt with effectively where there are transactions taking place, where several of them might happen to be in England and one happens to be in Wales, and that the Welsh one will be picked up?

I think the first thing to say about that is it's not in our systems that that will be apparent. It is in the systems of the land registry.

Yes, but you're the ones—if land registry gets that wrong, you're the ones who either gain or lose.

I suppose what I'm trying to explain is that, initially, from somebody getting a title and they want to know whether or not it's a cross-border title, that work has been going on with the land registry. In fact, I exchanged e-mails just before Christmas with the person responsible for it and they were assuring me that it will be fully complete before we go live, so that if you get a title, it will be flagged as 'this is a cross-border title.' What the land registry have also said to me is that they can't have a guarantee that if somebody has that title and it's in a paper format, for example, it might not have the border marked on it, but you will be able to know from their systems as it will be flagged as 'this is a cross-border title', and you will also be able to identify from their systems where the border is. So, that's what matters from that perspective. From our system's perspective, that goes on postcode. So, in other words, people will have to provide that to us, and so long as the postcode is in Wales, then it will be flagged as something that we have an interest in. We're expecting, out of 58,000 transactions, that about 30 of them will be cross-border ones and I think the work that the land registry have done is in place to identify which ones they will be.

The other point I was making is that, on related transactions where somebody sells a group of properties and one happens to be in Wales and seven, eight of them in England, the system will actually pick up the Welsh one.

Yes, because they'll have to put in the postcode.

Okay. Nick, on this as well.

Just on the issue of postcodes, because this—[Inaudible.]

Has it? Yes.

There are a number of Newport postcodes across the border in Gloucestershire, which there was never a need to resolve before, so they're simply administered from Newport. So, I'm just flagging that up because when people come to sell houses in Sedbury, they might end up paying Welsh land transaction tax when they're nowhere near Newport.

Yes, okay. And I know that—sorry. I'm happy to come back on this specific issue if it would be useful, but I know that we've also done work in terms of ensuring that that's linked to local authority boundaries as well, which I think are—something tells me—less prone to some of the problems you mentioned.

Because council tax, obviously, is boundary specific.

Yes. 

I imagine you've got safeguards against that—of course, you have contingency plans—but it is important to know. I'm not sure about north Wales, but you might have a similar situation up in the Cheshire area.

I think it goes the other way in north Wales, with English postcodes in Wales.

Where I used to live was a—. Where I grew up was an English postcode in west Wales.

And mid Wales has that as well—just to put it on the record. Thank you for that. We'll obviously keep an eye, and you'll be keeping an eye on those issues. We'll move on, with David Rees.

Before we move on, I have just one point. You talk about planning and beta testing, but then in your response regarding the cross-border, you said, 'Ask the land registry and they will tell you. You believe that they will be ready by the time you would go. In other words, will it be tested before you go? Will they have actually done a frequency of testing?

They have a plan that they're delivering of upgrades to their systems, and I was in conversation with the person who's responsible for delivering that. They were telling me it was on track and it was to be delivered. If you want me to come back with something specific about what the land registry have said, I'm happy to do so.

I would hope that you would actually be testing it before you go live with the situation. So, not just being on track, but, actually, they've done it and you can test it before you go live.

Yes. So, that's what—

Perhaps we could have a note from you setting out what you're likely to do in the next two or three months to ensure that this is all co-ordinated and happens together.

Sure. Yes.

Let's assume it all goes well and everything's up and running as of 1 April, so have you considered what impact it may have on the tax-collection process? Devolved taxes are—it's just a change. Is there going to be any impact upon the tax collection process?

Yes, because the legislation is different and the way we will operate it will no doubt be different too. So, the most obvious differences are around the fact that unauthorised sites are subject in the LDT legislation. There will be a difference in terms of how we operate in that regard, and that will no doubt have—and it's intended, of course, to have—impacts on the way that waste is disposed of. You'd expect there to be a consequential impact there, though precisely what that will be, I couldn't tell you at the moment, but, yes, you'd expect there to be a difference in that regard.

We will be operating a system that is fully digital in a way that is not the case at the moment, with how LDT, for example, works as it stands. So, that will be different from a user's perspective. The rates and bands—assuming that the ones that have been announced are fully the ones that go live—will be different. You'd expect that to produce a different consequence in terms of the amount of tax collected. So, there will be differences, yes, but—.

You've said that your guidance is all ready to go—large volumes of it. When will that be going out, and do you think there's going to be sufficient time for people to understand that guidance before it goes live?

The majority has already gone out, that's the point. LTTA guidance—the full extent of it—has been shared with stakeholders. By that, I mean the Law Society, CIOT and stakeholder groups of people who are the big users of that guidance. We have had feedback from them and we're just responding to that feedback. So, actually, it's not a case of when—it's already out there; it's already been shared. It's just that it's not on the website yet and all published. But the people who will actually in practice be using it—. And the same applies to LDT. So, it's a reasonably small number of people, and we have very close contact with them. They've already seen lots of it already.

Okay. The other thing is that the Cabinet Secretary has actually stated quite often the forestalling issue, and he highlighted again, I think last week, that there's an issue. What are you trying to do to—? Well, I suppose it's difficult. What do you see is the impact of forestalling, and have you put any expectations as to how this will impact upon the process in the first year for instance?

I don't think it will, from the WRA's perspective. I'm not commenting on the issue of forestalling overall, but, from the WRA's perspective, if a transaction goes through before we're responsible for it, it's gone through before we're responsible for it.

I just wonder what discussions you're having with solicitors and conveyancers to discuss that particular agenda, because stamp duty, we know, in England at the moment, for first-time buyers has now gone up to £300,000. It will change back on 1 April to the Welsh rates, I just wonder what discussions you're having with them to look at—. You know, we don't really want to be in a situation where—. There could be moneys coming from HMRC or—. Is it easier for you to do it?

In the nicest possible way, I don't think it's appropriate for the WRA get involved in that. How individuals decide to make their transactions—. If it happens before we're responsible for them, it's happened before we're responsible for them. Once we're responsible for them, we're responsible for them.

Okay. Let me put this another way. Have you assessed financially what this may be through the tax collected because of the change following the budget in November?

No. The forecasting of the tax revenues is something that, in the context of Wales, happens from the Welsh Treasury, not from the WRA, so no.

Okay.

I think one of the points that the Cabinet Secretary was making wasn't just about the changes in the tax rates; it was about the fact that there may be forestalling because the system is changing, so people, knowing there will be a new system, will say, 'Let me sort this out now because I know what's happening.' And I think what David Rees was also asking is whether you're thinking about this so that you're getting the information out there to, if you like, almost assure people, 'Well, actually, you can come with us. We will look after you and you don't need to be concerned about the new system.' So I think that's the issue that arose with the Cabinet Secretary last week.

Ah, my apologies. In which case, on that question, absolutely, we are speaking to solicitors and tax advisers to ensure that they know that it will happen. One of the things we are particularly looking to do in that regard—we've not finalised when we will do that—is seeing whether or not we can have our systems available before 1 April. So, you can't press 'file', you can't actually submit the return, but could you get it all ready in place beforehand. So, we're seeing whether that's possible, because that's a way of making sure people know, 'Oh, okay, I know how to do this; I can get it done before, and the transaction goes through on 3 April or whatever. I just have to press "file".' So, we're looking at even trying to bring our systems forward, if you like, to do that. But, absolutely, there are conversations with solicitors and with their representatives around that.

I'll just bring in Jane on this.

I'm aware that you've been chairing the tax forum, where you have obviously an opportunity not only to get the message across but to engage that professional community and business community in preparation. So, do you feel confident that that tax forum—? That's one way in which you can get to this community, which—. I mean, they all know each other, from my recollection, across Wales. It's sort of more hidden to the public, but it's vital that you are having an impact as far as preparation—. 

Judging by the amount of times I get asked and Kathryn gets asked to speak at their events—in fact, one of our tax experts has been asked to appear in one of their videos to explain how it works—I think we are definitely high on their radar and we're making a positive impact. We've had some really good feedback around the way in which we are going to be—so, the charter that we are consulting on and how that works and the intent that sits behind that. We had some really good feedback from the stakeholders about that showing a distinct and, from their perspective, much better way of operating as a tax authority. So, I think that's actually one of the successes. It's been a really positive experience and we work very, very closely with them.

Unfortunately, I don't yet have the results—. We've been running a joint survey with the Law Society on their membership to understand the extent to which they feel they fully understand what they need to do and how they want to be communicated with and what more we can do. The date of this hearing has fallen before I've actually got the results of that. So, we are running things jointly with them in lots and lots of cases.

David, do you have anything else or are you okay?

Okay for now.

Nick Ramsay.

The recent Welsh Government final budget included an additional £2 million in both 2018-19 and 2019-20. I think this is something to do with the cost of the implementation of the higher rate and additional transactions. Can you tell us a bit more about why that money was needed and what discussions you had with the Welsh Government about the need for it?

Yes. So, it's not about the implementation cost; it's about the running cost of the additional rate, mostly. So, when the estimates were made, before I even joined, those estimates were made on a set of assumptions that were no doubt correct at that point in time. Two things have specifically happened since then that have made a difference to what will be our ongoing running costs. The additional rate is a particular one to focus on. That adds additional taxable transactions to the amount of transactions that we would have been expected to have had. So, for example, 58,000 transactions is the estimate, I think, for next year of how many transactions we would have, but of those, 7,000 of them, additionally, it's estimated, would be taxable, because of the additional rate that wouldn't have been there had you not have had an additional rate. So, that provides us with more work, basically—more things to do. Plus, that work is a lot more complicated. Because it's not just about the transactions, but about the circumstances of the individual, and therefore we will require more investigation following that, quite possibly. So, there's just a basic fact that the legislation is different from what it was, and therefore it costs more to administrate. It just produces more work.

But at the same time, there's more money coming in then because of the transactions.

Absolutely. Yes. I think the estimate was about £65 million.

Yes, I've got here 7,500 additional taxable transactions and £65 million—

Yes. So, it's a different tax from the one that the estimates of the running costs were based on, essentially. So, that's one thing. I think the other thing is that we, through the process of developing the WRA and setting it up, have taken a slightly different view, in part, based on some of the feedback we had from here around making sure there's separation of who does what. So, if you look at what, for example, Revenue Scotland does—the actual tasks that they do—we will be doing far more than they do in terms of running our own finance system, for example. There are definitely benefits of—

Do you think that's part of ensuring the independence of the organisation?

There are a number of reasons for it. That's certainly one consequence of it. That's definitely what it does. But it's also from—. I was, in fact, only yesterday speaking to Revenue Scotland's chief executive. The ability to control your own finance system to make sure that it is as well tuned to the filing system as possible, to make sure that you've got reconciliation records, is something that I know that they would really like to be able to do more of. Having your own system of course increases your ability to do that. So, there are positive operational reasons why you'd want to do so. 

Finally from me, just in terms of the amount, you said at the start that this was something that pretty much was done before your appointment, back in the early stages of this. Are you confident that that does cover the costs? Are you happy with the process that the Welsh Government pursued to decide on that amount?

Yes. Obviously, we had to provide lots of facts and figures, and explaining why, and sort of being able to break down the drivers of our additional costs—what does that mean in terms of numbers of people, what that means in terms of systems you'd have to run. So, actually, the process of having to request that additional money was a good one, from my perspective, of being able to understand in pretty good detail what it is we actually will need for next year. I'm pretty confident that that's about right, yes.

Okay. Thank you.

Mike Hedges.

Sometimes you think you actually understand something, only for you realise you've got it absolutely wrong. I thought the system was fully automated. I assumed, like income tax—I spent six boring months of my life involved in writing an income tax system for a company—that if they've changed the tax rates, moved them around, changed allowances, you just alter a couple of lines of code and everything's fine.

Yes.

This is not fully automated. If a company employs 1,000 people, adds another 9,000 people to its payroll, the marginal costs of increasing by 9,000 are minuscule, whereas you're saying that the more transactions, there's a lot of manual involvement in it.

So, to be clear, the additional rate is not something that you—. I'm trying to find a way of explaining this. So, a system where the parameters have changed—so, the tax rates have changed—you would expect the differences of the cost to do that to be marginal. I absolutely agree. But additional rate is not about changing of parameters. It's about profoundly changing who is liable and who is liable for what. So, it has an impact on the public to start with—more people are liable for more than they would have been and more people are liable at all. So, that, from the perspective of a tax authority dealing with a self-assessed tax—which is very different to, say, what local authorities do—you're having to make sure that you have in place systems to help assure the public that they have paid the right amount and that you're able to follow up on that. So, they are not automated processes. It's—

And repayment, also. 

Yes, absolutely—about £15 million will have to be repaid. So, that requires an entirely different bespoke process to make sure that you can handle that effectively, because paying out money at that amount needs to have appropriate controls and assurances around it. So, it just produces a different—it's not just a tweak to a system, unfortunately; it makes a big difference.

I'll continue that discussion outside of here.

That sounded threatening. [Laughter.] 

It wasn't meant to be threatening. What I meant was that we could have spent half an hour discussing the technicalities of what can be recorded and what can't and how you can do these things, which I don't think many people in here would enjoy. This really needs further correspondence outside of here.

If you'd like a long conversation about the technicalities of it, I'm more than happy to do that.

That's something you can definitely keep to yourselves, so we'll leave that. [Laughter.] I wanted to ask, however, from your responses to Nick Ramsay, just a more general question, and this may be for the chair as much as for the chief executive: going forward, what will your relationship be to the Welsh Government in terms of getting the right resources to do your job properly? I am aware that the Welsh Government has set up officers, like commissioners, in the past and has then cut the budget for commissioners in the past. You're not directly in that relationship with Welsh Government, as a non-departmental public body, so this is something new for us. So, I just wondered: have you established a protocol on funding with Welsh Government? What comes to mind is that the fiscal commission in Scotland has got a two-year funding understanding, for example. That doesn't usually happen in the Welsh context. But you need certainty that you have sufficient resources to deliver on the tax issues in Wales, and with further tax devolution coming down the line as well, which you might be involved in. So, what's your understanding of how that will work out?

I'll let Dyfed say more about the specifics of the funding agreement, but I think it's probably important to note that the relationship with Welsh Government—between the WRA and Welsh Government—has various elements: Welsh Government are a provider to us of some software and hardware to run the organisation. They clearly are a source of the funding. We'll pick up that point in a moment. There's a degree of governance oversight of the implementation programme, which is still running and will continue to run until the early spring, and that's a Welsh Government implementation programme, so we work very closely with them.

The relationship with Welsh Treasury is particularly important in a variety of ways and the nature of that relationship is being established and encapsulated in a framework document. There are plenty of other framework documents in the UK and in Wales too. This one is trying to establish a specific relationship with an organisation like the WRA that has never previously existed in Wales. So, there are multiple ways in which we connect. Indeed, a number of the people working with us at the moment are still Welsh Government staff. The board takes oversight of what they do and how they do it. I think your question specifically, though, was about the funding. So, Dyfed, do you want to say a bit more about that?

Yes. So, we've agreed what the funding envelope should be for this year and next, and my understanding of how Welsh Government funding is done is that it's on an annual basis in terms of agreeing a final budget. So, that is what it is. I think, from my perspective, that it's as much about the quality of the relationship that we have and being transparent. So, I think that the question that we had previously around whether we're providing full information about why it costs us what to do what it is we're doing—that's actually, I would suggest, one of the big advantages of having an organisation in Wales that does this: from the Welsh Government's perspective, they're able to get a really clear understanding of what it would cost to do things as much as we are able to do. So, I'm very pleased with the quality of that conversation that's ongoing, and the very transparent open relationship, and so long as that's in place, I think, from my perspective, I can be confident that we have what we need to make things happen.

Okay. Jane Hutt, then.

That moves us nicely on to the whole issue about recruitment and ensuring you've got the skills needed because, clearly, there will be an understanding of your funding needs, as there has been in terms of our budget agreements, but, of course, the actual delivery is what's going to be the testing point for the public and also just in terms of accountability and transparency. So, do you want to give us an update on the recruitment of operational staff for WRA and the target—how you are in terms of reaching targets—in terms of operational staff? Have you got the right skills in place? You've already mentioned, Dyfed, you've got the experience necessary, but these are new and high-risk areas. And also, you've got a lot of secondments, including, as Kathryn has said, from the Welsh Government. So, can we have a bit of an overview about where you feel you are on recruitment and skills?

Of course. Perhaps breaking it down into numbers of people and relevant skills, and then the issue around how we retain the knowledge and the ability and the capability to do what we need to just do. In terms of numbers, we are today almost precisely at—. Fifty per cent of the the full eventual complement of the WRA has been recruited and is in post. So, that's where we're at at the moment. In terms of before 'go live' on 1 April, we're about two thirds of the way through that. So, not everybody needs to be in place by 1 April. We can stagger some of the recruitment beyond that.

Can you just confirm what your full complement will be? 

The full complement will be 73, I think.

Sorry, Jane—. Quite different figures, that's why I just wanted confirmation.

Yes. I think we've been asked to give some sort of breakdown. I'm very happy to give you a breakdown of this.

Does that include the secondees?

Yes.

Right. So, they're presumably on short or longer term contracts.

That's right. So, in terms of that issue—. From my perspective, what I think is really important to ensure the success of the WRA, obviously, is to make sure we have the right skills and the capability to do what we need to be able to do. We are, relatively, a very small organisation, and therefore, we have to have an approach to how we retain the skills and knowledge that we need, and I think what we have set our stall out to say is that's not about necessarily retaining all the people that we have for 20 or 30 years. It's about making sure that we can retain a flow of people who come in and out of the organisation. It's above all else about ensuring that we are an attractive place to work, and that we're able to attract people.

So we have, in terms of the approach to loans, we—. Sorry, I should say: it's loans, not secondments. So, it's a simple way of getting people from other Government departments. It's a swift way of doing it. Quite a lot of those are from Welsh Government. Some of them are also from HMRC, the Department for Work and Pensions—other places, in fact. We have benefited hugely from where we're located in south-east Wales, actually, because we've been able to recruit people from different organisations that are in that area. And I think, as part of that saying that we expect people to leave, not all of those loans finish on the same dates. So, there's not a cliff edge when everyone suddenly disappears. We're trying to stagger it over several years, so that you get a regular flow of people out and back into the organisation. Some of those people will decide to stay. It's not an uncommon pattern in Wales that people come on loan and then they decide they're going to stay. And then, I think that—. Above all else, the key thing is: are you and can you remain being an exciting and positive place to work, so people will want to go and work there? 

Point 2 in that regard is there's a civil service-wide survey of engagement, and there are 102 civil service organisations that do exactly the same thing, and if you took the WRA's results, which would include people who are working on the implementation as well as people who are in the WRA, for last November when the results came out, we were second out of 102. So, I think we're doing a pretty good job of making ourselves a place that people want to work in and enjoy working in. I think that's absolutely key to us being able to continue to attract people and to pass that knowledge on.

We're not going to be, like HMRC or DWP, thousands and thousands of people strong, where you have huge chains of succession planning where you're able to backfill. That's not going to be the way we're going to work. It's about being able to share knowledge and being in one place is very helpful for us in doing that—certainly the vast majority of our people. And being associated with and close to other organisations that do not dissimilar things is a good way of making sure that we can continue to keep people. 

Can I add a couple of points? The board is particularly cognisant of the importance of this issue and has already had some discussions with the human resources lead about these matters. One of the two permanent committees that the board will establish—we haven't established it yet—is likely to be what used to be called a remuneration committee, but more properly would probably be called an organisation and staffing committee, so that there is board-level focus on these very important aspects.

I wonder if you would just allow me very briefly to make one other comment. I am not a civil servant; I am non-executive, but you will recall that I spent more than five years as a civil service commissioner involved in the recruitment of civil servants. I have to say that I've been involved in a number of the recruitment processes directly and have been overseeing what's been happening and when. And I have to say to you that I am very impressed with the quality of people that we have been able to recruit. The energy and expertise that they bring is visible in the papers they give to the board, in what they say to the board, in their interactions outside board meetings and in the quality of what's done. I simply state that as my opinion.

Well, that's obviously very promising and also we hope it is going to be an exciting new body for Wales—

As exciting as tax can be. [Laughter.]

It is exciting. It's very interesting. [Laughter.]

Obviously, you're small enough in a sense, then, to have a plan to retain those particular skills and the knowledge that has been loaned to you. Also, can you just comment on the diversity of your recruitment outcomes?

I can to a degree. The only thing that limits me is that, in some cases, because we're so small and we've not recruited very many, I can't comment on every characteristic, because otherwise I end up commenting on one person or two people, so I can't do that. I can broadly give you the sense that the diversity statistics, I would suggest, are probably very, very good indeed. The ones I can talk about—so, gender, for example: if you looked at our top three tiers of the organisation, so the chief executive, those who report to the chief executive and those who report to the people who report to the chief executive—[Laughter.]—you'll find that slightly more than 50 per cent of those are women and slightly more than 50 per cent of the whole organisation is women. That's quite unusual, actually, because what that shows you is that the gender split of the organisation flows right the way through—excluding me—the organisation. My senior team has a majority of women, for example. So, in that case, there's that. In terms of fluent Welsh language speakers, if you include me, then about a third of the people who we've recruited so far are fluent Welsh language speakers.

Thank you.

Okay. Nick Ramsay will pick up on this.

Two quick questions. First of all, Neil Hamilton just reminded me that we think that the Cabinet Secretary, when asked about the staffing requirement, said it was in the region of 40. So, I'm just wondering why there's a difference between your figure and his. I think it's explainable somehow, but I'm just wondering why.

And, secondly, in terms of the building, your building is going to be based in Treforest, am I right in saying? And where are we with that at the moment? I think you're refitting—. Are you refitting an existing building?

Done.

We're in.

Oh, you're in already, okay. There you are, I'm behind the times. So, how's all that gone? It must have gone smoothly because we've not heard of any problems. [Laughter.]

Good. I can't really comment on why the Cabinet Secretary said whatever it was. I suspect it's a historical number—

Yes. Could it be the difference between your number on 1 April and your long-term complement? 

You'll have to ask him that.

That could possibly be the difference.

We knew it was a small number, but we were a bit surprised it was that small, but clearly it's not.

Yes, so, certainly, the Cabinet Secretary and I have spoken about the numbers of people and how it all fits together and all that. So, it's not as if it's a surprise to him. So, I don't know.

How has the move gone? Fine, yes. We are located in a separated space, but on Welsh Government estate. So, yes, that's worked very well. Unusually, there's nothing to report. It's been okay.

I like the 'separated space'.

Well, it's important that—

You're not in an annexe in the garden, are you, so that you're at arm's length?

Which is important.

It's really important that there is a separated space for the operational tasks that we do—not for everything we do, but for the operational tasks. It's really important that taxpayers' data and conversations with taxpayers—obviously, there'll be lots on the phone—are not not held in a place where officials from other parts of the Welsh Government can be party to that. That's not appropriate.

Yes, because we all know how organisations work, and, actually, the conversations you sometimes pick up while you're not directly speaking to someone are just as important as otherwise.

Yes, and the data requirements on people who work for the WRA, and what they have to sign up to and agree to, are significantly more stringent than will be the case for an ordinary civil service post. So, it's really important that that's separated. It's been done; fine.

I look forward to a finance visit to Treforest, Chair.

Well, I'm sure that that would be appropriate.

You'd be more than welcome.

I assure you that one of the reasons why I want to Chair this committee is because I do find tax devolution very exciting.

So, we'll move on with Mike Hedges.

For the record. [Laughter.]

How effective has the strategy been in promoting awareness of the Welsh Revenue Authority and its functions, especially to solicitors in border areas who may be dealing with what would be effectively English and Welsh land transactions?

I would suggest very. We've done lots of work with solicitors on both sides of the border. So, for example, we were doing something in Manchester. I'm not sure that it was this week, but it's happened, or about to happen. We've also spent quite a lot of time, not just—. Interestingly, we've spent quite a lot of time in London because, actually, quite a lot of the big solicitors supporting people about making the transactions are based in London. So, my team have been out, speaking to forums there. I think I'm going to appear in some rather unpleasant photograph in the Tax Journal, which is an England and Wales publication. So, I think we've done an awful lot of work in making sure that that's available.

I think you've just answered my second question, so I'll end up on my last question. Next year is going to be much more complicated because when you're dealing with a very small number of people who will be administrating land transaction tax, and even fewer people doing landfill disposals tax, when you get to income tax it's going to affect about 1 million people in Wales or so, who will be paying some of their income tax to Wales. What will you be doing to let people know that it's you that's collecting part of their income tax?

We won't because it won't be.

You won't be.

No, HMRC collects.

It's HMRC, and you won't be involved in income tax whatsoever. So, HMRC will just be reallocating it.

Correct.

Okay. That's fine.

Okay. Neil Hamilton, then.

You touched—when Mike Hedges earlier on asked about cross-border properties—on your co-operation with the Land Registry. You will have to co-operate with other agencies as well for the different taxes for which you're responsible. Can you give us some more detail on the data-sharing arrangements that you either already have completed or are developing with HMRC, Revenue Scotland, the Valuation Office Agency and the Land Registry?

Yes, I can.

You're just about to complete a memorandum of understanding with HMRC, I gather. Is that right?

That's right, yes. So, the legal gateways are in place for us to do what we need to do to share information. We have an MOU, as you rightly said, nearly there for HMRC. I was only talking yesterday to Revenue Scotland's chief executive, making sure that we've got what we need to have in place—we will do—to be able to make that work as well, because there will be need for us to share data with them. So, the MOUs and the information-sharing agreements that need to be in place before April will all be in place by April. There's no doubt about that. What is at least as important as having the sort of formal potential to do that is the quality of the relationships that you have with those organisations to ensure that you're getting a free flow of data and that you're able to fix issues, if you're not getting what you need. So, we focused quite a lot of attention on making sure that the new recruited operational team within the WRA are meeting regularly. So, the person who leads that is ex-HMRC, so has very, very good contacts with people in HMRC already—so making sure that we have really good contacts to make sure that the data is available and that intelligence is available as well, because obviously that's as important in terms of compliance work.

So, it's all on track. The quality of relationships is very good. I'm not sure what else I might be able to say on that. I suppose the other thing to say, particularly around HMRC, is that, in terms of cross-border transactions and making sure that people understand that it is one, once we've established that it is one, what they have to pay, then we've also been having already conversations with HMRC to make sure that, as swiftly as possible, in the event of there being—and this will be a very, very rare occasion—a disagreement between ourselves and HMRC about the appropriate apportionment of that tax, we'll be using the Valuation Office Agency, as an independent party, to sort of opine on what that split should be. We've been in quite detailed conversations about precisely what that process will be to make sure that even that very rare circumstance will be very swift as well. So, I'm pretty pleased with how that's gone, to be honest.

And, as regards LDT, you'll have to work with Natural Resources Wales as well. So, how far have you got in developing similar arrangements with them to those you've just described?

Yes, the same sort of place. Actually, I signed a memorandum of understanding just before Christmas with Kevin Ingram, who's the interim chief executive of NRW. So, we have that in place and we're now just working on the finer details of the information-sharing agreement, making sure that that's in place appropriately.

We've spent quite a lot of time working with NRW to make sure that exactly how this works is understood. So, there are a number of different ways in which that might have been constructed, but we have spent the time going through the detail and understanding exactly how we want the relationship between WRA and NRW to operate. So, we will be delegating powers to the NRW to act on WRA's behalf. But, just to be clear, that's not anybody in the NRW, it is a specific, very small group of people who will have WRA kit, will be working for the WRA, using only WRA powers, so that there's no confusion about which powers they are operating under, and that process is well advanced and has been going well. But it's been difficult to just go through the sheer level of detail to get that right to make sure that it's safe for both parties.

In answer to David Rees earlier on, you said that you weren't able to provide any information on the potential forestalling of the tax; you didn't have the data or means of collecting it. But, going forward, of course, the Welsh Government will be relying upon information and data from you in order to formulate tax policy. So, I wonder if you can give us an idea of what sort of data you'll collect that will enable the Welsh Government to make as good a forecast as it can of the likely behavioural changes, or otherwise, that will flow from any decisions that Ministers might make, both as to the reach of a tax and an alteration of rates, et cetera.

So, the simplest thing to say is that, in terms of the data that we will collect and we will hold at an individual level, we will be seeking to hold data by transaction and by individual so that we will have as clear a picture as possible of the circumstances pertaining to the transaction—the circumstances of the individual—and be able to link those things. That will be at an individual transaction, an individual basis. So, we will then be able to provide that in an aggregated form with the personal characteristics taken out. So, for example, you can remove date of birth and put month of birth or something. There are different ways in which you can do that to provide information for policy makers. So, I don't know what questions will be arising, but the key to getting this right, and what I've worked on in the past, is making sure that your data is as disaggregated as possible and that you can dice and slice it as much as possible, and that you have an analytical environment to do that, not the environment that you're using for the transactions themselves. So, we are quite well advanced in doing that as well.166

So, we're collecting the characteristics of the individual and the characteristics of the transactions involved, and we will be creating from that the best analysis we possibly can that protects, of course, the confidentiality of taxpayers.

Yes, because the problem at the moment is that the Treasury and HMRC collect information, but it can't be disaggregated very easily into statistics that will apply just to the geographical area of Wales. And so I don't know whether there is any read-through at a UK level to the systems you need to employ and the information that HMRC collects, which you would then have to collect in this discrete context of Wales. 

We will also be able to report on data by local authority area. So, we will be able to do that as well. And, obviously, because we will be collecting data from Wales, we will have a better handle on what's the nature of the tax base in Wales, and the behaviour of individuals, et cetera. So, we will hold those data in a way that perhaps HMRC are not quite able to disaggregate for understandable reasons, yes.

Right. Well, thank you very much.

Could I just ask—? The Welsh Government, of course, is considering new and innovative taxes in Wales and has said it wants to test the system with a tax to be announced very shortly. That would need approval and need a process—they're talking about a year for that to happen. But is it clear in your mind that, if that were to happen, you would then be the body charged with levying and administrating that tax, whatever it might be, in Wales? And have you had any discussions yet with Welsh Government about what implications that might have?

So, the first question, I think the answer is that that's a decision for Welsh Government, and it depends on what the tax is, I guess, doesn't it? There will be a cost-benefit analysis of what makes most sense. Have we had some sort of initial conversations? Yes, but not in any detail at all, because it's a bit previous to do that. But, you know, we will be a possible avenue, but it depends, doesn't it?

Well, we'll keep an eye on that, obviously. I'm personally interested in a plastics tax, and you're already dealing with a landfill disposal tax. It would strike me that you're very well placed to do a plastics tax in Wales, but that's probably a discussion for another place and another time.

That concludes the evidence, I think.