Accountants – The Scourge of Business

Since setting up a limited company a few years ago, I have discovered the full horror of accounts. I would be the first to acknowledge that keeping accurate accounts is important. I would also admit that my own record-keeping has left something to be desired. However, the complex business of submitting accounts for a limited company to Companies House and HMRC is so time-consuming and expensive that it is surprising there are so many SMEs (small and medium-sized enterprises) around. If the Chancellor wishes to bolster the economy, he would be well-advised to simplify this area.

In theory, small companies can submit simplified forms to both Companies house and HMRC (Her Majesty’s Revenue & Customs). Unfortunately, the rules exclude the use of the short tax return for companies with foreign earnings. In effect this means that there is an enormous disincentive for British companies to export goods or services.

That, in itself, would be bad enough, but HMRC doesn’t provide any mechanism for creating the full accounts in the required iXBRL. Instead, the company has to find a way of converting its statutory accounts to this format – not an easy matter. You can then attach the iXBRL version of the accounts to HMRC’s online form. The problems really start when you need to attach a form containing information on loans to participators. As far as I can see, there is no way to do this unless you fill in the short accounts, which you shouldn’t do if you’re attaching full accounts.

There are ways around this. I’m converting my accounts to iXBRL using a template from TaxCalc and I’m going to submit the tax return, with the converted accounts attached, using CallCredit Ftax. However, all this is taking up weeks of my time in which I cannot be earning money, either for myself or the the Exchequer.

The answer must be to employ an accountant, surely? Not if my experience is anything to go by. I am having to submit two returns this year, one correcting all the mistakes that my accountant made last year. I am still to angry to go into details of all the problems but here are some of the highlights:

  1. She told me the accounts had been submitted when they had not.
  2. She failed to reduce the tax bill by using capital allowances
  3. She included the wrong figures for cash in the bank. I should have noticed this but she had all the paperwork at the time.
  4. She failed to inform me that 25% tax was levied on loans to participators.

That is why I have decided to do the whole thing myself. I am not really comfortable doing this but I’ll certainly do a much better job than she did.

Many people who have used solicitors to handle probate will probably have a sense of déjà vu reading about the relative merits of employing a professional. In my experience, it is far quicker and easier to handle probate yourself than to pay a solicitor to do it. The few thousand pounds you pay for such services are really beneath their contempt, so the work is handed to some over-worked dullard (of which there seems to be a plentiful supply in solicitors’ offices). You end up paying the solicitor to do in years what would have taken you a few months.

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Hot Cross Buns and British Decline

HotCrossBuns

Are hot cross buns emblematic of the decline of British Society? When I was young hot cross buns were only available on Good Friday and possibly the day before. In Waitrose, they appeared just after Christmas. It is rather like the extended celebration of Guy Fawkes Night which is both tedious and unnecessary.

What I really lament, though, is the passing of the Baker’s Dozen which ensured that one received thirteen buns for the price of twelve. Even more generous was the baker’s half-dozen – seven for the price of six. No accountant would stand for that! Accountancy, although an important tool, has taken over every facet of our lives. It is not a productive industry; it sucks out what little profit British companies make and creates no wealth itself.

I made my own buns this year. They may not look very pretty but they do taste good. However, even they will be seen as a sign of decline by devout Christians and the pedants of all faiths and none. They don’t have crosses because, as an agnostic, I couldn’t be bothered. They are hot buns rather than hot cross buns and soon they will have cooled and be just buns.

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Funding Political Parties

Every time there is any suggestion of scandal relating to fundraising by political parties, commentators suggest that the answer is for the parties to be funded by the taxpayer. There are at least four good arguments against this:
  1. Politicians are a bunch of well-paid, self-serving egomaniacs. If they think their party is short of money they should stump up the cash themselves.
  2. Spending large sums of money on election campaigns does nothing to inform the public better. It is simply a form of advertising. The party with the best advertising campaign wins and the quality of the advertising campaign has little to do with how expensive it was or how good the party’s policies are.
  3. Where do you draw the line? The British National Party has, probably, the fifth largest share of the vote but it would surely be extremely obnoxious for the taxpayer to be obliged to fund its extremist campaigns.
  4. There is always a glimmer of hope that someone will create a new, more intelligent and more honest party. If this party, with no previous share of the vote, did not receive state funding, it would be at even more of a disadvantage than a new party would have been in the past.

Incidentally, another daft idea favoured by some is compelling people to vote. In some countries (including, I believe, Australia), any eligible voter who fails to vote is fined. If someone chooses not to vote it is because (i) they are unable to (through ill health, pressure of business or what-have-you), (ii) they don’t care, or (iii) they think there is nothing to choose between the candidates. Fining people for their inability to vote is clearly wrong. If voters don’t care or cannot choose between the candidates, forcing them to vote will force them to vote for someone they don’t want to vote for. It is entirely possible that they will choose someone because, say, he or she is the first name on the list. Such a vote will distort the electoral process and is therefore anti-democratic. The only reason for such legislation is to save politicians the embarrassment of a low turn-out.
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Bring Back Britannia (2)

I have previously commented on the absurdity of banning Britannia. Well, there is good news! The Liberal Democrat MP, John Hemming, is campaigning to bring back Britannia and has started a petition at http://campaigns.libdems.org.uk/Britannia – hoorah!
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Back to LSD

The Euro has, to a large extent, been a failed experiment. Perhaps it is now time to reconsider our own currency blunder. Talking of the old pennies made me regret the passing of LSD - pounds (£ or L), shillings (s) and pence (d) – in 1971. Sadly, the most wonderful thing about the old coinage has gone for ever. I can remember the great feeling of history encompassed by every handful of coins. Not only were many of the pennies, halfpennies, farthings and florins (2 shilling coins) Victorian (I can’t remember seeing a Victorian half-crown in circulation), many of them were old enough to bear the portrait of Victoria as a young woman. Such pennies were called ‘bun pennies’ because she wore her hair in a bun.

Decimalisation was introduced for the convenience of modern computerised systems. The irony is that, if the politicians had foreseen the rapid increase cheap computing power, they would have seen no need for the move. Modern tills, computers, etc. would convert LSD to dollars, Yen, or what have you in the blink of an eye. The retention of the old currency would have helped to retain at least a pretence of mental arithmetic amongst the population. Now that is gone – students are even allowed to take calculators into exams these days.

The main objection to a return to LSD is that the original conversion stimulated a lot of inflation as shopkeepers rounded prices up. This would still be a danger moving in the other direction, but a lesser one, since one would be converting each p into 2.4 d, allowing the less greedy merchants to round down as easily as round up.

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Bring Back Britannia

britannia.1910Antoninus_Pius_Æ_Sestertius_RIC_0742

When Gordon Brown was Chancellor of the Exchequer he banished Britannia from our coinage. His reason was apparently that he felt that she was a symbol of Britain’s former colonial power. Nothing could be further from the truth. The first coins with Britannia on them were issued by the Romans when they were the colonial power in Britain. If we choose to sing Rule Britannia! we should remember that the proud boast that ‘Britons never, never shall be slaves’ is rather ironic – when Britannia appeared, her people were enslaved. Incidentally, the is an alternative version: ‘Britons never, never, never shall be marri-ed to a merma-ed at the bottom of the deep blue sea.’

I do not wish to make light of the question of slavery. Along with the opium wars, it is one of the great blots on or country’s history. However, Britannia does not embody our colonial history but everything, good or bad, in our history. It is time to recall her to her proper place on coins of the realm.

I have a particular interest in Britannia’s fate. My father contracted polio when I was about four and was thereafter confined to a wheelchair. When I looked at Britannia on the reverse of pennies, I mistook the her shield for the wheel of a wheelchair and the union flag with which it was emblazoned for the spokes. Clearly, she, like my father, could not walk. Even at the age of five or six I could see that the perspective wasn’t right but who was I to argue with the Master of the Royal Mint?

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One Rule for Most of Us...

Years ago, it was very common for well-paid senior managers to set up limited companies. The company which previously employed them then contracted for their services through the new company. This arrangement saved the individuals quite a lot of income tax. To put it another way, it deprived the government of revenue which meant that all the other income tax payers had to pay more to make up for it. For obvious reasons, the tax authorities clamped down on this.

It now appears (see the Guardian report) that many senior civil servants (but they are not officially civil servants) have been doing this for years. Why has HMRC not been investigating these arrangements? I would be very surprised if they were all legal and above board.

There seems to be one law for the rich (i.e. senior civil servants – whatever they choose to call themselves) and another for the poor mugs who actually pay their wages.

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Not Worth Discussing

I won’t deign to discuss in detail the ridiculous spat between France and Britain over the credit ratings on government debt. French politicians actually managed to damage the market’s perception of France’s credit-worthiness by their foolish outbursts. They are right that many of the fundamentals are worse in the UK than in France. However, when they point to lower growth in the UK they ignore the fact that this is largely due to the UK’s deficit reduction strategy – at least we have one! Also, we have conducted proper stress tests on our banks, something which neither France nor Germany has done, with the result that the market can be fairly certain that the UK government will not be faced with bailing out banks again, something which cannot be said for France.
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Britain is Not the Only Country with Reservations

Just in case anyone thought that Britain alone had reservations about the new Euro pact, Le Figaro reports that France’s Socialist Party contender for the presidency, François Holland, has stated that he will renegotiate the agreement if he wins the election. Unfortunately, while talking about the efficiency of the markets, he also emphasises the use of Eurobonds. These will not be acceptable to Germany, partly because they will discourage market efficiency, partly because Germany would end up shouldering most of the cost and partly because they simply won’t work.
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Now We Really Need to Worry

Le Figaro tells us (see here) that there will be a ‘Golden Rule’ to ensure that Euro Zone deficits are reduced. Who do we know who was famous for his Golden Rule? Why, Gordon Brown, of course, who did so much to destroy the British economy. He spoke of prudence while displaying great financial recklessness. Let us hope that this rule is more reliable than his.
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No-One Wants the Euro to Fail

With the possible exception of a few very stupid, very ill-informed or very mad people, no-one in Britain wants the Euro to fail. Any fleeting Schadenfreude at the collapse of this ill-conceived and ill-executed project would be quickly obliterated by the terrible impact on our own economy. I like to think, also, that we would feel rather more compassion for the Euro Zone countries than they have ever shown towards us.

Sadly, it seems almost inevitable that it will fail and we shall all be much the worse for it.
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Why Cameron Had to Say No

I am not a great fan of David Cameron. Just as Tony Blair modelled himself on Margaret Thatcher, Cameron seems to have modelled himself on Blair – glib, populist but not perhaps as egotistical as Blair.

Cameron has been vilified by the French press and much of the British press too for his refusal to sign up to the new pact which is intended to save the Euro, but he had little choice. If you are cynical, you could say that it would have been electoral suicide for him to have signed it (and I haven’t seen Sarkozy doing what he thought was right rather than what he thought would be popular). However, Cameron need not have worried about electoral suicide, as signing would probably have ensured that he would have been ousted by his backbenchers long before the next election. For all I know, hanging on to his job may have been a motivating factor for Cameron but it is unfair to assume that.

Ed Miliband (the Labour Party’s own Mr Bean) predictably attacked Cameron for his stance on this matter but if you read what he has said he doesn’t suggest that he would have signed up for this absurd pact. Of course he doesn’t, because Ed Miliband must know that it would be just as unpopular in the Labour Party as it is in the Conservative Party. He also knows that, however attractive the idea of taking some money away from those in financial services is, the proposed tax of financial transactions would be a financial catastrophe, not only for the UK but for the EU in general.

The EU’s own figures indicate that a financial transaction tax would cost the UK £25.5 billion and would have a detrimental impact on the EU’s GDP:

The model used to analyse the macroeconomic impacts suggests that at 0.1%, a transaction tax on securities could, without the application of mitigating effects, reduce future GDP growth in the long run by 1.76% of GDP and of 0.17% at a rate of 0.01%.

Now, these figures are little more than guess work, but they assume that between 70 and 90% of these transactions would move outside the EU. Since London is by far the most important financial centre in the EU, most of this loss of trade would be felt in the UK. And for what? To reduce the EU’s GDP.

Why would Merkozy propose such a suicidal tax? There are, I think, four possible explanations:

  1. Both France and Germany have long been jealous of Britain’s dominant position in the financial markets and they hope that by destroying the City of London they will benefit. It is hard to see how. Perhaps they would just leave the tax in place for long enough to destroy London’s dominance and then remove it.
  2. They are very, very stupid. Given their inability to sort out the problems of the Euro Zone this is a distinct possibility.
  3. It is a deliberate attempt to sideline Britain by proposing something which they knew could not be accepted by any British Prime Minister. This seems a distinct possibility. After all, the last thing that Merkel and Sarkozy need at the moment is anyone listening to British politicians, politicians who have dared to suggest that the Euro cannot survive. Although such a Machiavellian plot is not in any way uncharacteristic of the prevailing philosophy in Berlin and Paris, I can’t help wondering if the useless dimwits who have presided over the destruction of the Euro would be capable of anything so clever.
  4. A variation on 3 above. Merkozy think the Euro will fail and they want someone else to blame.
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French Lunacy

In a fine example of why the attempts to save the Euro are sure to fail... Read More...
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A Cunning Plan or a Modest Proposal?

I have what Baldrick would call a Cunning Plan... Read More...
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Housing – What is the answer?

It is easy to criticise the Government for its new housing policies but much harder to suggest solutions… Read More...
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Housing Policy Madness

The British Government is set to announce a new initiative to stimulate the housing market... Read More...
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Two Monopolies – Google and Amazon

I have no axe to grind with either Google or Amazon... Read More...
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Scams

The internet is awash with scams. Every batch of emails brings new spam, phishing scams, etc. I don’t very often read them these days because my external spam filters exclude most of them and my internal spam filters catch most of the rest.

Scam 1:

I only noticed one purporting to come from Her Majesty’s Revenue and Customs, the British equivalent of the US’s Internal Revenue Service, because (although it went straight into my spam folder) it happened to flash up on the screen - my spam filter uses Growl notification. It was a typically unsophisticated effort, although I won’t go into all the give-aways as I don’t want to help them improve their scam! The text of the message said: ‘You have 1 new ALERT message. Please login to your Online Account and go to Messages section in order to read the message. To Login, please click the link below: Online Account Login’. I was pretty sure it was a scam but an examination of the link showed that it took you to http://bordnet.net/www.hmrc.gov.uk/index.html. I have reported this to HMRC and the ISP which hosts the dodgy site.

Scam 2:

This one wasn’t picked up by my spam filters, but it will be next time! It purported to be from Drago Store Pty in Australia. Again, I won’t discuss the many clues which indicated that it was fraudulent, although I will say that I treat all emails from gmail addresses as suspect. As far as I can see, Google don’t have any proper abuse-reporting procedure. Gmail is certainly every fraudster’s favourite email service. The message read: ‘Greetings from Drago Store Pty. My name is Douglas Patti the CEO of the company. i will like to place order on some products in your company,but i would like to know if you ship to Australia and also do you accept Visa or Master card as method of payment? Please do not forget to include your web page in your replying back to my message and get back to me as fast as possible so that i can let you know the product i would like to order. Please email me back with the current price list on the products if you website is not updated. Thank you.... Yours Sincerely, Douglas Patti.’

I googled one or two items in the message and immediately found this site reporting a scam related to a similar email.




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It's Not easy being a publisher (4)

Before Christmas, I sent out quite a few books to Bertram Books. I was slightly concerned that they might be caught up with the demise of Woolworth, but I wasn’t going to refuse to supply them. My trust was rewarded and they paid me promptly as they always have before and since. In fact, they and the other big UK book wholesaler, Gardner’s, are a pleasure to deal with. On the other hand, I supplied a bookshop in one of London’s swankiest neighbourhoods with books on 2 and 9 December and they still have not sent me a cheque. Grrr! I wonder if I should name and shame them.

By contrast, again, I invoiced Heffer’s, the famous Cambridge bookshop, for some books on 6 March and they’ve already sent me a cheque. Well done!
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Right Said Fred

I have underestimated Sir Fred Goodwin again. His pension is now apparently £703,000 per annum. Moreover, it appears that about half the amount was discretionary. So why did they pay it? The decision was apparently made in the early hours of the morning and the Government were not informed. The Chairman and the Remuneration Committee certainly have some explaining to do, and it would seem quite in order for the British Government, as the largest shareholder, to sue them. It won’t get the money back but it may serve to encourager les autres.

However, compared with the vast sums which the Government itself has squandered, and continues to squander, Sir Fred’s pension is unimportant. Having devised a scheme, the Public Finance Initiative, to rob the taxpayer blind while cooking the Government’s books, the Government is now going to bail out the very companies which made so much money from the scheme in the first place.

If it is right that Sir Fred should be hounded into returning at least some of his pension, it is surely even more appropriate that senior ministers and mandarins be expected to forego at least half their pensions.
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My recipe for surviving the recession

In truth, I’m the last person to be giving financial advice. Tiger of the Stripe has never made me enough money to live on. Nonetheless, my income has increased substantially in the last twelve months. This is partly due to hard work and partly due to the pound’s declining exchange rate against the dollar. A year ago, every dollar I earned was worth about £0.50 to me. Now it is worth about £0.70 - that’s a 40% increase!

I’m not by nature mean, but my low income has forced me to be quite frugal. Most of my spending has been on council tax, utility bills and food. I can’t do much about council tax except vote against the incumbent Liberal Democrats whose arrogance, ineptitude and profligacy have been quite astounding. I can do little about the utility bills, except to use energy more efficiently.

That leaves food. I hear that sales of baked beans have soared in recent months. This is understandable, because they are quick, cheap and nutritious. However, it is even cheaper to make your own meals from scratch, and it is more rewarding too. I made a red lentil soup on Saturday and it was so delicious that I can’t wait to make it again. An onion, a carrot and a large handful of lentils (plus some water, of course) is all you need to feed two people at, say £0.15 ($0.23) per head, plus the cost of gas or electricity. I add some chilli powder and ground coriander seeds at negligible extra cost. They make it a very warming, cheerful soup for a winter’s day. A piece of home-made bread completes the meal. It’s absolutely delicious, and there are so many possible variations - you could use yellow split peas or Puy lentils (although both need longer to cook); you could drop the onion and/or the carrot and add, cabbage, tomatoes, potatoes, or just about anything else.
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That's OK, then

For one awful moment I thought that the natural order of things, that is to say market forces, had become distorted. However, it turns out that Sir Fred Goodwin (I keep almost saying Ron Goodwin - he wrote 633 Squadron) is receiving a pension of £693,000 p.a. That’s alright, then.

Talking of market forces, one of the main arguments for the obscene salaries, bonuses and pensions received by many in the higher echelons of British industry is that they are needed to attract and retain the ‘best people’. This is fallacious on several grounds.

First, we clearly have NOT attracted the best people. Our banks have been run by a bunch of egotistical idiots, as has most of British industry. Senior management in, say, Germany, are paid less well than in the UK. Can we say, in general, that British industry has been better managed than German industry? Certainly not in the manufacturing sector.

Secondly, the idea that everything should be left to market forces (that ancient Thatcherite mantra) is absurd. We do not leave the consumption of heroin to market forces. If our government really believed in market forces, it would, for instance, permit secondary picketing. I am not suggesting that either heroin or picketing should be deregulated, simply that one cannot rely entirely upon market forces. Even if we accepted the idea that a theoretical perfect market would regulate prices and pay perfectly, we do not have anything like a perfect market in executive pay. The company is theoretically answerable to shareholders for all their policies, including remuneration. However, although we all own these companies (through pension schemes, and now, in the case of the banks, as shareholders), we do not have the chance to vote at AGMs. The votes are largely cast by the pension funds. The people who run the pension funds and the people on remuneration committees are, for the main part, other over-paid executives.
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Rewards for failure

Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland, is apparently receiving a pension of £650,000 per annum at the age of 50. The underlying principle is clearly that pensions should be in inverse proportion to the wealth that the pensioner has generated. As my newsagent pointed out, it is probably a price worth paying to keep such a destroyer of wealth out of the job market.

Sadly, this does not bode well for me as I can’t hope to compete with Sir Fred. While Tiger of the Stripe did not make much money last year, it did not lose billions of pounds, or even hundreds. I am clearly an abject failure in the world of high commerce and will be punished accordingly.

You might think that this would leave our revered Prime Minister Gordon Brown in poll position to receive a bumper pension. His policies, such as the tripartite system of regulation, allowed RBS and others to squander billions of pounds. Unfortunately, the PM blotted his copy-book by saving the world on 10 December 2008 (see here). This must surely more than compensate for wrecking the British economy.
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