Tax experts battle for reform

No one with a passing interest could fail to have missed Peter Wyman, tax partner with PricewaterhouseCoopers, and his very public spat with the Treasury and Gordon Brown on measures announced in the Budget to reform double tax relief.

The government wanted to stop multinational firms from using so-called Dutch mixers to pool income from overseas subsidiaries to take advantage of relief on tax paid abroad.

Wyman claimed the changes would cost UK companies £8bn to £10bn a year. The government responded by pointing out the PwC man had once advised the Tories. Tory opposition MPs then came to his rescue to point out he had, in fact, advised the Department of Trade and Industry.
Eventually the government was forced into a climb-down, and no one was able to demonstrate Wyman had been wrong.

In another battle, Ernst & Young tax partner Anne Redston pitched herself against the Inland Revenue and its efforts to bring in IR35, the much-hated crackdown on the arrangements for personal service companies.

Thousands of freelance computer consultants across the country were horrified by the measure which the government insists was only intended to make sure they pay a fair amount tax in relation to ’employed’ colleagues doing the same job.
But contractors cried foul and claimed they would end up paying thousands in extra tax.

Redston and others carried their campaign to the Revenue battling away to demonstrate where the measure was unfair and would not work.
Redston’s work in the area, including a book on the subject, won her the Accountancy Age Personality of the Year Award. So vociferous was opposition to IR35 that bouncers were hired to watch over Revenue officials at an English ICA Tax Faculty event.

The Professional Contractors Group, the body representing many of the consultants subject to IR35, decided it could not take things lying down and launched a campaign to build a fighting fund to appeal against IR35 in the High Court.

In October their efforts seemed to be paying off when a High Court judge granted permission for a judicial review. Contractors and Revenue officials will have to wait until next year to see whether IR35 will survive.

Former chancellor Geoffrey Howe also entered the limelight with his plea to government to do something to simplify the tax system.
Lord Howe is chairman of the steering committee which overseas the work of the Revenue’s Tax Law Rewrite and made his comments amid growing fears that the tax system is in crisis and near to breakdown because of its overwhelming complexity.

Though he had dropped hints earlier in the year, Lord Howe finally took to a public stage in November to make his call for action.

In a speech at the English ICA, he called for measures to curb the chancellor’s ability to create unlimited tax law and a new body to oversee the simplification of the tax system.

But he pointedly remarked that building political will to make the change would be the real test.
‘Mobilising the resources to make these changes happen – and above all the political will to achieve them – is going to the hardest task of all,’ he said.


Tax wars: Storm over double tax relief ‘echoes IR35’

Awards recognise accounting success

Prime minister urged to repeal IR35

English ICA Tax Faculty

Chartered Institute of Taxation

Public sector readies for accounting revolution – By Gavin Hinks
This was the year in which Professor Andrew Likierman, the man brought in by the Treasury to oversee the introduction of resource accounting, could finally breath a sigh of relief.

In August, after months of wrangling, the Government Resources and Accounts Act was finally given the all clear. It will introduce a more commercial accounting system to Whitehall departments The House of Lords passed the Bill on the slimmest of majorities. The new accounting system goes live from April of next year after a long a struggle by some departments to produce adequate ‘shadow’ accounts using the new rules.

But extended powers for the National Audit Office were not introduced.

When the Bill was first introduced the Commons Public Accounts Committee, with the backing of the Tories in opposition, tabled amendments to have the NAO’s powers extended as part of the new legislation.

The PAC maintained its argument that the NAO should have an automatic right of access to the accounts of all government bodies and departments. Something like £3bn worth of government expenditure goes ahead without the NAO having a right to look at the books.
But the government refused point blank to entertain the idea.

The lobbying continued and when the Bill moved to the upper house, their Lordships demonstrated they were spoiling for a fight on what remained a fairly innocuous piece of legislation.

This forced a government compromise and the Bill was passed only after a promise to launch a review of accountability under the leadership of Lord Sharman, former senior partner at KPMG.


Merger mania hits IT world – By Alex Miller
The millennium bug may well have passed but the knock-on effect sent the sales figures and revenue streams of many software vendors spiralling downwards this year.

As a result of generally poor results, it came as no surprise to find a raft of mergers, acquisitions and the scaling down of product offerings in the arena during 2000.

In January, software giant Sage continued its acquisition programme by snapping up Bristol-based final accounts production software manufacturer Hartley International in a £2.55m deal. It followed up in April by taking over subsidiary CSM, in a cash deal worth £9m, in what was described as ‘the final piece of the jigsaw’.

In May, accounting and e-commerce software provider took over the Systems Union Group for £32m. In July it confirmed it would change its name to Systems Union.

Sage once again set tongues wagging in August after it revealed it would be discontinuing or updating eight products from its product range, including the five it had inherited from CSM.

During the same month IT giant Invensys took control of Dutch software company Baan after shareholders said they would tender their shares.

November saw Transaction Technology sell a 65% stake to Lloyds TSB Development Capital for £20m – and revealed plans to float within five years and plans to expand.

Merger mania came to the fore last month when Danish-based vendors Navision and Damgaard agreed to join forces and produce a company called NavisionDamgaard.

So although 2000 has seen plenty of activity, many believe this is just the tip of the iceberg.


Software companies emerge from Y2K turmoil

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