Slaying the Jersey cow
Just when is Ernst & Young going to pack its bags, bucket and spade and move to Jersey (28 May,)?
It seems the firm has invested a fair few pounds into helping the island’s legislature create its limited liability partnership law. It is all very well talking about it, but is it not now time to put its mouth and body where its money is and leave London for an offshore base?
After all, the firm has been saying it wants to go for over a year and what has it got to lose – apart from a few clients who might not take too kindly to a Big Six firm setting up in the Channel Isles.
Cynics might argue that E&Y only got involved in Jersey in a bid to make the UK government act on LLPs.
It will be a great achievement if the firm’s actions do bring about a change to the ridiculously archaic law of professional liability. But if the government fails to follow through on its manifesto pledge, E&Y must prove how serious it is about moving to Jersey.
Name and address supplied
ACA’s ‘menu’ lacks backing
Matthew de Lange (14 May) refers to ‘predictable voices’ raised against the English ICA exam syllabus green paper which proposes to require ACA candidates to choose from a menu of specialist papers prior to qualification.
He is quite right – such opposition is indeed predictable because 14,821 out of 21,491 members (that is, over two-thirds) voted at the 1996 special meeting in favour of my resolution that the English ICA should desist from the implementation of optional final exam papers.
Members should be appreciative of efforts to keep the ACA qualification relevant and up to date. There is much in the green paper I commend and support but, by the same token, the English ICA should realise that the continuous re-iteration of soundly defeated proposals for pre-qualification exam streaming does not legitimise them.
If the 1996 special meeting vote is to be reversed on this fundamental issue, a compensating swing from a similar number of members away from the ‘predictable voices’ is required. It is, of course, up to members to decide but my perception of the consultation process to date is that such a swing is conspicuous in its absence.
John KH Cook, Cooks chartered accountants, Wirral
Don’t tell me it was a ‘one-off’
I refer to the article ‘Partners face tax troubles’ (14 May).
I can sympathise with the partner at Leonard Curtis, as I and my partners are surprised at the Inland Revenue spokeswoman’s assertion that the matter must be a ‘one off’ as they are not aware that there have been problems in the 1996/1997 partnership assessments, particularly for existing partnerships.
It is this firm’s experience that more problems have been noted with such existing partnerships than any other single matter. Brief discussions with other practitioners in Liverpool suggests that this firm’s experience is far from unique.
RL Hasler, FCA, Liverpool
Making sense of Eurospeak
So Michael Aujean, head of EU VAT, clings to the notion that VAT is a tax on value added (30 April). Any UK accountant will readily inform him that it is not.
Worse, it stands the English language on its head. The ‘taxpayers’ – that is, registered traders – have become the only people who do not incur VAT as a cost. While those ‘exempt’ (everybody else) do pay VAT. Perhaps in Eurospeak this makes sense.
And talking of sense, how about this statement. ‘If a Belgian company is billed in Luxembourg, it should be able to claim the tax back from the Belgian government, which could then get the tax back from the Luxembourg government. This would ease the burden on companies.’
Following the concept outlined above, we can predict it would achieve the exact opposite. Present arrangements zero-rate the bill. So ‘nothing’ is paid and so ‘nothing’ has to be reclaimed by anyone, let alone involving two governments, with separate rules on collections and refunds.
Applying Aujean’s system would mean that some reclaims were paid out before being paid to the collecting government. This could force some smaller countries into breaching the constraining rules of the euro!
Naturally they would be reluctant to assist businesses by paying their debts on time while suffering stringent penalties. New rules would appear to ‘protect the Inland Revenue’. Selected European businesses would face severe cashflow implications.
Worse, the dominant economy in Europe must naturally collect the most amount of tax at its rates.
So Germany taxes Holland, France, and so on, but especially the UK. Alternatively, every business charges tax at the rate applicable and under the rules of the destination company.
Yet not a single extra euro would be raised in revenue and much, much more would be open to fraud. In Europe alas, it seems axiomatic that the more complex the rules the greater the fraud, an example being the CAP.
TF Caldwell, ‘europhile’, Ash Vale, Surrey
Don’t rule out UK and EMU
I enjoyed Malcolm Howard’s bullish letter regarding the possibility of the UK joining EMU (‘Letters’, 7 May).
He suggests that, because a single currency works in the US (despite the economic gulf between North and South), it will also work in ‘Euroland’; he also takes the ‘backwoodsmen’ (his words) to task for ruling out the UK’s participation in EMU. His letter is worthy of a couple of comments.
It is true that the geographical variations in the US are as great as those in Europe: Alaska to Florida compares (as a geographical journey) with Finland to Tenerife. But there the similarity ends.
All independent studies suggest the unemployed, say, Arizonian is far more likely to travel a thousand miles to find a new job than is, say, an unemployed Portuguese.
And in the event that the Arizonian is not prepared to travel to look for work, the federal tax system in the US allows for fiscal transfers from rich states to poor ones. There are no plans for Euroland to provide for fiscal transfers on the US federal scale.
But Mr Howard is right to castigate the backwoodsmen who rule out the UK joining Euroland for ever and a day. In reality, the UK will apply to join the EMU if, and only if, EMU works, it is in our economic interest to do so, and if the UK public will it.
That is the de jure policy of the government, and it is (probably) the de facto long-term policy of the official opposition. My firm is happy to publicly support this approach.
So, Mr Howard, don’t regard it as inevitable the UK will join the euro; but please, backwoodsmen everywhere, don’t try and keep us out for ever and a day if we can clearly profit by joining.
John Roberts, managing partner, Chantrey Vellacott, London WC1B
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