TaxPersonal TaxLetters – 9 April

Letters - 9 April

Stop milking, let’s get ethical

Congratulations to DS Tallon (26 March, ‘Letters’) on an excellent expose of the recruitment of ex-Inland Revenue and Customs & Excise staff by Big Six firms.

The promulgation of whizzo tax-avoidance schemes by these people has only benefited their own career progression within their firms. The down side has been a significant erosion of the respect with which the Inland Revenue formerly held the accountancy profession.

A further factor has been the untold damage caused to our own client relationships by the incessant stream of mailshots which drop through clients’ letterboxes on a regular basis, with news of the latest scheme to milk the Treasury.

We have a number of clients who have been enticed into dubious schemes despite our advice to the contrary. Clients are not governed by ethical considerations but only the bottom line, and taxation is only another a business cost.

Perhaps it is time the Big Six returned to the days when, in terms of ethics, they led by example. A general anti-avoidance provision could provide the turning point.

Stephen C Willey, Leeds

Exercise the SORP option

As treasurer of a membership-based charity society, I agree with Mr Worboys’ criticisms of the unsuitability of the charities SORP accounts format when applied to this particular kind of organisation (26 March, ‘Letters’).

I have persuaded my co-trustees to exercise the option under SORP rules to publish our accounts as a summarised financial statement.

The format we have chosen for this purpose is based on the style that we have used for years, and which has been comprehensible and acceptable to our members.

By doing this we have also avoided doubling our printing costs, which would have been the inevitable consequence of taking the SORP-format route.

Desmond Goch FCCA, Harpenden, Herts

If it’s OK for fishermen …

Having read with interest ‘Accountants can get a life too’ (19 March, ‘Opinion’), I thought I should report that on a recent occasion while I was travelling to the health club for a relaxing lunchtime work-out(!) I heard some interesting comments on the radio.

To my surprise, Austin Mitchell was avidly defending the principle of self-regulation of the global fishing industry against those interfering bureaucrats (and, I dare say, politicians) who were arguing that because of over-fishing and lack of ‘professional discipline’, the control of the fish quota should be managed by an independent regulator, not the fishermen themselves.

Oh, to hear those wonderful expressions of enlightened self-interest that Austin expressed, that ‘fishermen have a vested interest in responsibly regulating their own market’, and that ‘they are best placed to ensure they protect their “resource”‘. Obviously, ‘fishermen are aware they need to work together to ensure that they don’t destroy their own livelihood!’

Perhaps Accountancy Age should consider some further investigation of Mr Mitchell’s views on the benefits of self-regulation, and do some fishing for further information on how it is the right thing for the fishing industry, but that we self-interested accountants can’t be trusted to look after our own market.

DR Watkinson, Blackpool Just one FD is no bellwether

Should Gordon Brown be worried by your article ‘Budget spells bad news for business say two-thirds of FDs’ (26 March).

On the face of it perhaps he should, but in the event that he reads the detail I would suggest that he will draw comfort from the fact that the only disgruntled financial director to be quoted is in fact the FD of a small car rental company – hardly a bellwether of UK industry.

And should Gordon Brown consider this individual’s complaint in more detail (increased NI costs causing him to consider reducing headcount) then he should be even less worried given that the FD should find the proposals will not make a significant difference to his overall staff costs. This, of course, assumes that the company in question has a pay structure in line with its industry sector.

Finally, should the chancellor make it all the way to the end of your article and note that there is no praise for, or even mention of, the further reduction in corporation taxes, then he might be forgiven for wondering if the 208 FDs surveyed all worked for loss-making companies.

MK Pearce FCA, Twyford, Berks

Assessing the true average

Have any of your readers had partnership self-assessment returns and tax payments dealt with correctly?

We have only around 50 partnerships dealt with by this office, so the fact that I have yet to see one correctly processed partnership (with the tax payments reconciled) may be misrepresentative of the true national average.

Mark Jacobs ACA, partner, Scodie Deyong, London

NIC system needs reform

Anita Monteith’s article on NICs (2 April, ‘Opinion’) rightly draws attention to the costs to employers of tax collection. But it does not address the fact that the chancellor has done nothing to right the basic injustice of the NIC system in that, unlike income tax, NIC is not cumulative over the year.

This means an earned income of less than #100 a year attracts NIC if the #100 was earned in one week. An annual income below the income tax personal allowance may also require employee NIC unless the earnings were spread throughout the year.

In his Budget speech, the chancellor referred to NIC as a ‘tax’, but until this is recognised by a radical reform of the system his aim to encourage the jobless to take employment will continue to be damaged by the fact that the marginal rate of tax on #200 a week is not 23% but nearer 31%, and a starting income tax rate of 10% would be closer to 17.5% by the addition of NIC.

In reality, the concept of a NI fund was abandoned long ago and the sooner this is recognised by the abolition of employee NIC with an increased income tax rate, coupled with a decent personal allowance transferable between spouses, the better.

BH Worboys FCA, Broomfield, Essex CA’s needless dividend fear

The local office of the Contributions Agency has generated a questionnaire for employers featuring the following question: ‘Do you operate any scheme designed to minimise the payment of NIC? Eg dividends.’

If CA staff are sufficiently paranoid and lacking in commercial understanding to imagine that the only purpose of dividends is to take money away from them, then perhaps we should not mourn their passing.

Ian McKechnie, Ipswich, Suffolk

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