Tag Archive | "St Vince of Cable"

Budget 2012 – the new utopia of a modern Britain


One of the few advantages of resting between contracts is that you can go off on holiday without that nagging feeling that you’re throwing away lots of earnings to do so. And yes, I know my rate is annualised to cover such things, but it always niggles. Still, no time like the present so She Who Must Be Obeyed and I are off to far-flung places for a few weeks. Well, some friends are getting married over in Napier and it would be rude not to attend, wouldn’t it?

I will miss a few things though (no, not daytime television). I’m here long enough to see Wales grind England in the mud at Twickenham but I’ll miss the triumphant finale over France (hey, I’m Welsh, we’re natural optimists). I’ll miss the start of the Formula 1 season. And, most importantly, I’ll miss the Budget.

Now the Budget might not seem to be high on most people’s list of desirable things to witness first hand, but this one might actually do something for small business like mine; certainly the last two haven’t so it must be our turn.

It will be interesting to see if the Office of Tax Simplification – remember them? – comes up with anything. More importantly, will the IR35 Forum actually deliver something substantive? Looking at the minutes of recent meetings they seem to be in classic Sir Humphrey mode, failing to take any suggestion forward to a workable proposal. Since they have to report in time for the Budget, I’m guessing that they may have actually had to produce something this time round. They might even manage to work out how to distinguish between a business and an employee, something that is as obvious as the difference between a walrus and a walnut to most of us, but this is a body staffed by people who work in the civil Service so they can’t be expected to understand non-employees.

There is also a faint chance that Cameron and Osborne can agree what they want to do to support UK businesses. Or even that they together will decide that St Vince of Cable is wrong (he is, of course, but it’s worrying they haven’t spotted it yet).

Still, I’ll have my smartphone with me, so I’ll be able to keep up with things from the other side of the globe. Providing I’m not spotted doing so by the management; for some reason she is of the opinion that you don’t do work stuff when you’re on holiday. Most odd…

Ah yes, smartphones. Someone in HMRC has reached the 21st Century at last, and they have realised that a smartphone is not a PDA (remember PDAs – like smartphones that couldn’t make phone calls). As a result they have decided that having a business-owned smartphone can be taxed the same way as a business-owned mobile phone. It’s a small step, but we ought to encourage them; one day they might think of something really worthwhile.

Anyway, you will be spared my ramblings for the next few weeks. When I return it will be to the new utopia of a modern Britain with a growing economy, which recognises freelance contractors as the heroes they are and which has put St Vince back in his box.

Or perhaps not…

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Lets Make A Dream by J0GA

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GAAR – It is a tale told by an idiot, full of sound and fury, signifying nothing


Don’t know about you but I usually have that optimistic hope at this time of the year that things are going to get better. Possibly fuelled by an excess of several Christmas spirits, but mainly on the basis that they couldn’t get much worse. But even I might struggle to feel optimistic about 2012, even if Mother Nature keeps out of it and doesn’t produce any more tsunamis and earthquakes. The economy isn’t what you would call robust; although ours is looking healthier than many thought it would, it’s still not that good and badly threatened by our continental friends and their strange ideas on fiscal unity.

But there are always glimmers of hope from which to take comfort.

The fragrant Ms Primarolo is standing down at the first opportunity. St Vince of Cable sounds like he’s been put back in his box. Hartnett is retiring. Moribund and Balls seem to be losing everyone’s respect, even their own supporters’. And the Deputy PM has come out against tax avoidance.

Actually that last one is quite amusing if you think about it. It’s come about because HMRC have been caught out rather badly; cutting deals with companies with no obvious justification and thereby not collecting some £25bn in taxes owed. You may recall me writing about Goldman Sachs and their interesting approach to penalties, a position supported against all reason by a certain Mr Hartnett. Or even my much earlier railing against the shopkeeper Mr Green, paying a personal dividend some £500 million in excess of his net profits and, just to rub salt into the wound, paying no tax at all since it wasn’t actually his dividend, it was the Monegasque Mrs Green’s.

So eventually the slumbering giant awoke and took notice. Which is nice…

However you have to say that, as usual, said slumbering giant has once again failed to understand one of the basic drivers of commerce: if there is a small pinhole by which you can save even a little money, someone will engineer a coach and horses to drive through it.

Nevertheless, Corporal Clegg has started making serious noises about attacking unacceptable avoidance. He wants to see a general anti-avoidance rule to prevent corporations employing armies of lawyers to find ways to avoid paying taxes.

So near and yet so far.

The problem is not people avoiding taxes. The problem is that there are so many complications and exemptions and offsets in tax law that finding loopholes is actually quite simple. The problem is that most of HMRC don’t actually understand the laws they are trying to enforce and when they do, their own management decides not to bother enforcing them. The problem is that any such rule will have to be so loosely framed that it will more than likely impact a whole raft of people that it was never meant to; people who don’t have armies of lawyers on tap and who therefore will end up paying taxes they probably don’t owe while the real culprits take no notice.

When will it dawn on our political masters that more and more rules are not the answer? We need fewer rules, with clearer definitions of how they apply. We need an enforcement body that knows what it’s doing and how to do it. And we need politicians who understand that avoidance is legal and if you want to stop it you make it illegal so it can be correctly described as evasion. The problem is a lack of clarity of purpose. The problem with a general anti-avoidance rule was in fact neatly summarised by Macbeth, “It is a tale told by an idiot, full of sound and fury, signifying nothing.”

Anyway, have a Happy New Year. Fingers crossed…

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: ST027: Figure 12.1 by Rosenfeld Media

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Modern Britain in a nutshell


I’ve been having a funny old week at work. For once I’ve got up to date on my deliverables and am waiting on assorted worthies to review and respond to the results. Meanwhile the technical team next door are working all hours God sent to keep up, while my in tray is almost empty. Well, it makes for a quiet, if rather boring life.

So I find myself taking a look around the world of contracting to fill in the time. And it seems there are some odd things going on out there in Reality.

My old mucker St Vince of Cable is at it again. So busy earning money he failed to notice he was over the VAT threshold. Luckily his accountants did notice – months late, but hey – and he sorted it out, paid the tax and the (very) small fine, job done. Silly mistake by someone with his vast experience of real business (two whole years as an Economics Advisor, wasn’t it?) and no real harm done. But on that subject, could I ignore a hard and fast taxation rule, forget to declare some taxable income for a few months, then discover my mistake and pay it back with a tiny penalty and a smack on the wrist? Don’t think so, somehow.

HMRC are apparently cheering about improving their take from IR35. Say what? It seems they are getting more money back from the pitifully few cases they manage to pursue to completion. What is more, this has been seized on by some who should know better as an example of the deterrent effect of IR35. Their argument is that people are paying taxes via umbrella companies rather than risk an IR35 investigation. So that’s OK then. After all, what could possibly be wrong about scaring people into paying taxes they don’t actually owe by threatening them with a piece of legislation so badly drafted it needs a three year investigation and court case to determine if it actually applies to this single set of circumstances?

AWR is continuing to cause hilarity among those who understand it. Not only are some agencies sending out letters asking contractors to declare themselves outside its scope – something you can’t actually do in any meaningful sense, of course – but they are persuading assorted Human Remains teams that using agencies protects them from the AWR. Say what (again)? Take someone on directly with no intermediate agency and the AWR is dead and buried. Using an agency increases the risk, not reduces it. Doublethink at its best, and a good illustration of why contractors don’t want anything to do with HR if they can possibly avoid them. Or agencies, come to that.

And finally, credit rating agencies. Not the big ones who are randomly downgrading assorted banks and even whole countries, although they’re bad enough, but the ones being used to credit check job applicants in line with FSA regulations and failing them, often on some pretty flimsy histories. Which means no job offer. Fair enough?

Well no, really. For one thing the FSA rule being quoted applies to people in a limited number of roles within financial services; directors and those who advise customers on fiscal matters, for example. It’s not actually meant to apply to the third DBA from the left in the support team. But hey, it’s an income stream for someone, so who cares that it’s both utterly irrelevant and genuinely damaging; I know someone who regularly has to turn down good people because of this nonsense.

Modern Britain in a nutshell. Never mind the outcomes, follow the rules no matter how idiotic and irrelevant those rules are. Truly we are a nation of jobsworths; after all, there’s no money in being a shopkeeper any more.

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Ethan Nichtern Banner Illustration by bainesmcg

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