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Monthly Archives: March 2011

HMRC Dictionary Dodgers

Dictionary indents.

From the current issue of “Working Together” (pdf, page 9), part of the ongoing liaison process between HMRC and accountants :

HMRC recommends you advise your clients that from 6 April 2011, customers avoiding tax by hiding money in offshore accounts could face new penalties of up to 200 per cent of any tax they may evade.(emphasis mine).

It really doesn’t instill much faith in the rule of law if even HMRC don’t know the difference between evasion and avoidance, does it?

(And that’s putting aside for a moment the point that any accountant who is aware that a client is deliberately hiding funds in order to evade tax should advise them to come clean, or refuse to act if they don’t, and is under a legal obligation then to report them in such latter cases.)

The End of the Road for the Protest March

So. Another march, another riot, and the usual arguments about who was responsible for it all kicking off.

There are two things that can be guaranteed these days following a march. One, if it’s a left-wing cause, is that we right-wingers will be treated to the ever entertaining spectacle of the comrades at each others’ throats. The other outcome of a protest march is … nothing.

Photograph of a the protest against the war in...

The Anti-War March, 2003 - Remind me how that turned out again?

Sure, it feels to those taking part that they’ve actually done something – a caller to LBC radio this week was asked why he thought Saturday’s march had been a success; “there were lots of people there” was a summary of his reply. So what?

Consider the recent big protests. The Countryside Alliance didn’t stop the hunting bill, the anti-Iraq march made not a jot of difference, and neither will the “March for the Credible Alternative”.

In a few days the new fiscal year begins. The budgets are set, redundancy notices have been issued, the better run councils and departments will be deleting the posts that were held vacant for a year in anticipation of the cuts.

The one so-called “u-turn” carried out by the Coalition so far – the aborting of the Forestry Commission sell-off – was not prompted by any mass march. It was a more sophisticated combination of media management, recruitment of the right people to the cause and the right words in the right ears.

The time it takes to organise a big march inevitably means that time is wasted. Then the reality of modern media – from the mainstream to internet social networks – means that nowadays where there is violent trouble and criminal damage it will be reported, regardless of how unrepresentative it may be of the majority of the protesters.

The tactic of moving thousands of chanting activists through city streets carries too great a downside for virtually no prospect of real success. It is an incredibly inefficient use of resources. The days of the protest march are over.

The Fairest Solution to the #UKUncut/Black Bloc Confusion: Get Out the Tar Brush

There has been much annoyance among the TUC / UKUncut fraternity about them being associated with the “anarchists” who kicked off around Central London on Saturday. This I can understand.

They blame the right wing media, natch (including the BBC?!?!) for “allowing” the violence to overshadow the main march and the apparently completely peaceful vandalism intimidation sit-ins at Fortnum’s and elsewhere.

I’m not going to get bogged down in an essay about the inevitable overlap in the groups, and the odd distinction drawn by the protesters between violence against people (bad) and violence against property (whatever) – covered already by Dizzy for example.

Nor will I bore you too long with the selective statistics used by the groups; that the 0.05% who ran riot are unrepresentative of the whole protest, whereas the 0.05% that the entire protest represented of the UK population is apparently some sort of majority.

In a similarly brief vein, I’ll say that I think we can assume the use of the term “anarchist” is both a lazy – though common – journalistic reference to agitators for chaos in general, and demonstrates (geddit?) a clear lack of understanding on the part of the yobs themselves on the true meaning of anarchy in a political sense (i.e. no government, meaning 100% cuts in state spending).

However, back to the main point: I think the fairest way to deal with the issue of determining who is responsible for what would be to refer to all of them simply as ‘anti-cuts protesters’ – from the peaceful marchers to the violent mobs.

Yes, that does mean putting them all into a single category that encompasses both blatant premeditated criminals with those keeping diligently within the law. Yet in so doing I am simply applying the same standards as the protesters do when conflating tax avoidance with tax evasion by use of the pejorative “tax dodgers”.

Seems perfectly fair to me, then.

Bankers’ Bonuses: I Don’t Like To Say I Told You So …

… nah,  who am I kidding?

Well, although a few may be playing the residency system, most will have paid tax on those bonuses…. They would have paid tax at typically 51% (ignoring the effects of pension and personal allowance restrictions). Now, those bonuses, if not paid and retained by the bank, will be taxed with the banks profits at 28%. if circumventing the rules involves converting the bonus into capital, then we’re looking at just 18% tax.

And lo:

Bankers’ pay cuts lead to £5bn tax loss

The Treasury will lose up to £5bn of tax revenue in the next five years because of a reduction in bonuses to UK bankers following a crackdown on pay packages.

An analysis by the Office for Budget Responsibility reveals that the UK’s bankers will receive about £10bn less in bonuses over the next six years than had previously been expected.

The OBR has cut its forecasts for tax receipts from “financial sector bonuses” by £1bn a year between 2010 and 2015. At the effective 60pc tax rate the OBR uses – from 13pc national insurance and a weighted average of 47pc income tax – the annual cut in bonus payments is £1.6bn.

That is all.

#UKUncut Scores an Own Goal and Takes Inspiration from the Kray Twins

Well, didn’t UKUncut do well? Intimidating low laid shop staff into closing their stores, criminal damage, and a magnificent own goal when they occupied a shop owned by a charity. Barring the injuries which clearly no-one – except the protesters – would be pleased about, it was a good day for the government.

Fortnum & Mason, Piccadilly, London, England

What do we want? Nice chocolates! Who do we want to pay for it? Someone else!

The Fortnum & Mason attack was supposed to be the highlight of the UKUncut/TUC/[insert leftist cause of choice]’s day, yet within minutes of the ‘secret target’ being revealed and the unwashed hordes descending on the evil purveyor of the devil’s tea and rather nice chocolates, those who actually know something about business pointed out that the owners of F&M are a charitable trust that has donated millions to good causes.

So much for the march “bringing to Big Society to London”.

Ah, say UKUncut, but the owners also have 54% in Associated British Foods, who are alleged to have “dodged” £40m in tax. Now you can be sure that the ‘dodging’ is legal tax avoidance, but let’s go with it for now.

The logic here is that you are going to beat up a vicar because his half-brother didn’t pay more than was asked by the protection racketeers last week. Actually, I think tweeter @cassiustweets summed up the general strategy rather well:

#ukuncut ARE peaceful. Like the Kray brothers, they only smash up shops that don’t pay up.

That might work for the plot of a Mafia or Gangster movie, but the F&M action confirms that the UKUncut/tax ‘justice’ movement lacks access to quality tax and business expertise. Then again, we’re taking about a movement which only refers to accountants as a pejorative term, when explaining how the evil rich don’t voluntarily pay more than either the letter or the spirit (back to the Westminster doctrine) asks them to. It really wouldn’t be very ‘right on’ to consort with us*, the foot soldiers of the devil’s regiment of bean-counters now, would it?

* P.S. Just to be clear, UKUncut, don’t bother calling me.

Debt, Theft and Job Losses: The #UKUncut Manifesto

Suppose you were chronically financially inept and you regularly spend more than you earn. Now for a few years things work out OK; you figure out that you can get over the income shortfall firstly by selling the family silver gold, then by extending your mortgage every year – the bank’s happy to do it and interest rates are relatively low.

Then the banking crisis hits. Interest rates, driven by a sudden spike in oil prices, burst the bubble and suddenly the bank clams up. You also have to take a pay cut. What to do?

You could aim to cut back on your spending so that you’re living within your means. Yet there is an alternative: you’ve gotten by for years with a big mortgage without any issues, so why should it be a problem now? All these tiresome know-it-alls who say otherwise are just lying.

Sure, so some of your neighbours have had the bank repossess their places, but that won’t happen to you will it? Anyway, you know that the bloke in the big house round the corner is worth a few bob, and so, egged on by your dodgy backstreet accountant, you go round there, break in and nick some of his stuff – that’ll keep your head above water for a bit. After all, it’s not as though he’s your employer who might just up sticks and move to the next town is it? Although now you come to think of it, he did look sort of familiar….

Well, no guessing which is UKUncut’s preferred option.

So, let’s examine the world according to UKUncut.

Read more of this post

The Strivers’ 76% Tax Rate – Aren’t #UkUncut Happy Yet?

I’ve blogged before about the case for merging income tax and National Insurance, and it seems that it might be getting some traction in the Treasury. Just for fun though, let’s look at the draft rates for next year (2011/12) to see what the typical employee is paying in tax and NI:


So there you are, an employee with your modest 25k salary, say, happily thinking you are only paying tax at 20%. Yes, you’re not that silly, you know your actually paying 32% next year, don’t you, because you sensibly recognise that NI is just another income tax. So let’s merge them and be done with the pointless deception. yes, there are exceptions such as pensioners who don’t pay NI, but that’s a detail which can be sorted with a different rate or higher allowance. Focus, people!

However, as Tim pointed out a couple of days ago, you’re still wrong. Your employer has to pay the taxman 13.8% of your salary for the estimable privilege of employing you – you know, that “tax on jobs” we heard about in the last election, before the increase from 12.8% was scrapped. So the cost to him is not £25,000 but £28,450, of which you only see £19,362. So your graft is producing £9,087.64 – an overall tax rate of, coincidentally, about 32%.

Earn another £10 though, and how much will you get? Using the same rates, you will get £6.80 in your pocket, but generate £4.58 in tax and NI – a marginal rate of 40.2%. And yet you’ll open the ‘papers and they’ll talk about the 20% basic rate. Humph. Head north of those figures and, including Employer’s NI, the maximum combined marginal rate of all direct taxes is not the (rightly) much derided 50%, but 66.6%.

Yet it gets worse: what really puts the feline among the feathered rats of course is tax credits. With a clawback rate of up to 41p in the pound, someone earning a shade over the NI primary threshold (say £140 per week) would be paying a combined marginal rate of tax of 76.3%. The effective rates of tax that such clawbacks amount to is an inevitable consequences of tapering any benefit over a given income range. Not that I’m about to write an exposition of alternatives, such as negative income tax…

… at least not for now. It’s nearly time for PMQs, then the fun really starts.

(Usual caveat: you’re probably not a paying client, so be aware that all the figures above could be fundamentally flawed by my rushed arithmetic and need to be doing a proper job in the meantime….)

Why Shouldn't We Admit That The #Libya Intervention Has Something To Do With Oil?

So as the bombs fall on Gadaffi, we hear the familiar cry: “it’s all about oil”, often delivered with an Agatha Christie-esque everyone-in-the-drawing-room air of conclusive revelation.

Well, obviously oil has a fair amount to do with it, but what’s the big deal with that? Oil isn’t just about driving your car, it’s about the very infrastructure of every civilised nation, the supply lines and products, from basic foodstuffs to sophisticated medical equipment, and not forgetting the materials for which oil is the raw ingredient. When it is said that it’s about our way of life, it’s not just the fortnights in Tuscany but the very essentials – like it or not – of everyday existence. Not such a trivial reason for action after all really, is it?

More to the point, it’s certainly a justifiable reason for taking a potentially unhealthy interest in those regions of the planet where the wretched stuff comes out of the ground.

It’s not just about consumption either. The Left will generally tug at the heartstrings by ranting about “oil company profits”, profit being nothing but a dirty word of course, made filthier when married with the evil o-word. Back in the real world, profit means economic activity, tax revenues, job security and, in macroeconomic terms, international trade meaning the benefits accrue on both sides of the deal. (In any case, if oil company profits are the problem, presumably the anti-war lobby would be happy if the oil companies had been nationalised before the various middle east adventures began?)

Nuclear power plant in Cattenom, France

Nuclear power: Make fission not war

Given all this, is it unreasonable to consider it undesirable that such power should be in the hands of people who would use such power against us? Just ask Ukraine how it feels when you can’t do anything about the nutcase who controls the tap on your prime energy supplies. Oil has more than a little to do with it, and we shouldn’t be ashamed to admit it.

It surely is no more ignoble an aim than regime change; that other silent objective whose admission could have made, for Tony Blair, the Iraq War simpler to justify (if still not successfully) than the contortions necessitated by the distracting claims of WMD.

In the case of Libya, these considerable and justifiable interests coincide with factors of urgent humanitarian need practicality and timing.

All this doesn’t mean the whole business isn’t ugly and deadly and would be better avoided if possible. Given that a substantial part of our dependence on oil relates to our energy needs, and that however well advanced green technology gets over the next few decades, there is an inescapable solution that will bring about the disengagement from the oil-driven adventures in the middle east that we all – Greens included – desire: nuclear power.

And there’s a thought: against all the wildly inflated figures of how many people die from nuclear accidents, how many lives could be saved by the wars for oil that need not be fought?

Why A 30% Cut To The Arts Council Isn't Enough

Ed Vaizey MP

Ed Vaizey: Fighting the Good Fight

In today’s Telegraph, Rupert Christiansen argues that …

courage and quality should be rewarded

… when it comes to funding the arts. Ah, so clearly he opposes state arts funding and allowing audiences themselves to decide what’s worth supporting.

Oh…

Within Jeremy Hunt’s Department of Culture, Media and Sport, Ed Vaizey is the junior minister with special responsibility for the arts.

I can tell that he is not a happy bunny.

I have never seen anyone who looks as bored, truculent and uneasy as he does. I guess he hates the job and that either he has lost all interest in the arts themselves and is sick of their acolytes shouting abuse at him, or else he doesn’t really believe in the regime of cuts he has been charged to execute.

As a father of two small children who can do their fair bit of whining and moaning, I would have every sympathy with Ed Vaizey if he’s tiring of the shroud waving and teeth-gnashing of the arts establishment.

As it happens, I don’t entirely support the “regime of cuts” … because they don’t go far enough.

Should this man have the power to decide which arts organisations receive grants from government?

No, because no arts organisation should receive grants from government simply to support their management or productions.

an Arts Council that keeps government at arm’s length from matters of artistic discrimination, remains the least bad option. I raise two cheers for its survival.

But the Arts Council, like it or not IS government, regardless of the niceties of the “arm’s length” arrangements. It is a pointless body.

The ACE will publish its judgements at the end of March. The process of culling must be agonising, and I don’t suppose there will be positively good news for many. But I hope that success will be rewarded without fear or favour

The money must be fairly spread across centres of population, to ensure that everyone has reasonable annual access to some opera, ballet, theatre, classical music and contemporary art.

Firstly, we’re not talking about A&E services here; ensuring access across geographical areas is not essential.  Secondly, why do “we” think people must have access to “contemporary art” or ballet? The apparent altruistic tones of the arts establishment often belies a snobbery that they alone are the best judges of what is required for the cultural nourishment of the great unwashed.

Size of audiences is not a criterion: it’s assessment of quality that should be paramount, subjective though this may be.

Bingo; there is the fundamental problem. Morally you should seek to maximise the audience, because they have all (by and large) been coerced into paying for said productions. Any official judgement of what is quality can only ever be a poor attempt to reflect the wisdom of the audience as a whole, so let’s leave it to them; if it’s good enough, they’ll pay to see it, if it isn’t then it certainly doesn’t warrant state funding.

Through education and outreach programmes, the arts can do their bit to offer uplifting opportunities to disturbed youths, deprived housing estates and the sick and elderly.

True, but then it’s not really arts funding; its funding for services for youth, the deprived (of what?) the sick and elderly and should be judged on those outcomes alongside other non-arts based policies and programmes – and that won’t involve an Arts Council nationally or locally.

But the arts do not have value only as extensions of the welfare state. They do not merit our attention or a tiny tithe of our taxes because they make us good citizens or even because they cheer us up. They must be supported simply because they are the supreme expression of our humanity.
Imagine a world without art, imagine a nation without plays, orchestras or paintings. Imagine a people who did not sing or write poetry or have any concept of beauty. You cannot.

No I cannot imagine such a world. Arts are a natural by-product of human civilisation. In other words, they would happen – and have happened for millennia – without public subsidy, be it from a tiny tithe or otherwise.

To be fair, though, there is quite  a bit in the article that I agree with, such as the use of Arts Lottery money (which at worst I am agnostic about, since the money was given voluntarily), and the piece ends on a question whose sentiment I can very much agree with….

And, remind me, what exactly does a Minister for the Arts do anyway?

… not least because for “arts” one can substitute a plethora of government functions.

Quote Of The Week

LBC News 1152

Image via Wikipedia

“Can’t wait to hear the speeches. Don’t suppose you’ll be able to get a word in edgeways”.

The inimitable Nick Ferrari on LBC radio this morning, after Millie Tant (for that should have been her name) rings in for a rant, and then takes her opportunity to plug a feminist march happening on Saturday week.