The View from No 50
K P Bonney & Co
Chartered Accountants and
Chartered Tax Advisers
Ilkley LS29 6JA
Tel: 01943 870933
Fax: 01943 870925
Philip and Philippa are employed. They each have provisions in their contracts under which they are entitled to payments of £30,000 in the event of their employment being terminated.
Philip and Philippa each lose their jobs. Each receives a £30,000 termination payment.
Philippa suffers income tax on her termination payment. This is right. Termination payments are taxable if they are contractual.
Philip does not suffer income tax on his termination payment. Why? Because he a member of parliament.
Yes, our MP’s have decided that if they lose their jobs they should be entitled to a termination payment, the first £30,000 of which is exempt from tax.
Losing your job is traumatic, so wouldn’t it be nice to think a termination payment of up to £30,000 would be tax free in any circumstances? Alas, our MP’s have decided only their trauma is sufficiently serious to warrant a contractual tax free payment. After all, in most cases they only get 5 years’ notice!
What a disgrace.
It appears the only thing they have learned from the expenses scandal is to enshrine their privileges in law.
WHY WON’T BOLT RUN IN THE UK?
After winning his third gold medal at London 2012 Usain Bolt commented that he would love to run in the UK more often but the tax laws here serve as a strong disincentive.
A visiting sports person or entertainer has to pay UK tax on their UK appearance and prize money. Fair enough. But they also have to pay UK tax on a proportion of their other income such as product endorsement. Typically, this income has no connection with the UK at all. Consequently, as Andre Agassi found in 2006, a star’s UK tax bill can work out to be more that his UK income!
As a condition of winning the bid to host the games the International Olympic Committee made the UK promise that the earnings of visiting athletes would not be taxed. The UK passed the necessary relieving legislation in 2006.
Our government is not averse to ‘moving the goal posts’ to suit its own purposes either. In order to attract the final of the European Champions League to Wembley in 2013 it has provided in the 2012 Finance Act that the earnings of visiting players will not be taxed in the UK.
Evidently the government thinks the holding of the final here will serve as a stimulus to the economy and the sacrifice of the tax on the players’ earnings is a price worth paying.
And if it makes sense to stop taxing the earnings of visiting footballers for one event perhaps it makes sense to scrap the policy altogether. The UK public would love to see more performances from overseas based athletes and entertainers.
The only obvious winners from the current arrangement are the tax lawyers and accountants.
In my last newsletter I had a good old rant about the delays ‘customers’ experience when ringing HMRC.
Evidently many others have suffered the same fate and feel suitably aggrieved. Sensing an opportunity, the politicians have given HMRC a good kicking.
HMRC announced recently it would be recruiting 1,000 new operators to answer the phones.
Now be careful how you read this. Lin Homer, the new chief executive at HMRC commented “the extra staff would help the Revenue to achieve a target of answering 90% of all calls, two years earlier than planned.”
HOW FAR WOULD YOU GO?
There has been much coverage in the media in recent months about tax evasion and tax avoidance and what is and what is not acceptable behaviour.
The editor of Taxation magazine thought it would be interesting to find out just what we, as individuals, would and would not do in order to save tax.
Here is the link. Test your conscience!
If you answered No to question 10 I might be able to fix you up with another accountant.
KEEPING THE BOOKS
Unlike many others I believe it is the job of the accountant to adapt to the needs of the client and not the job of the client to adapt to the needs of the accountant. So when a new client sets up a business I always discuss record keeping systems ranging from manual at one extreme, through spreadsheets to accounting software at the other.
At the software end of the scale there have been significant developments in recent years.
For many newcomers the accounting solution of choice is cloud accounting. With cloud accounting your data is held on your accounting software supplier’s server. This means you can access your data from any computer or internet connected device anywhere in the world. It also means you don’t have the hassle of making regular back-ups of your data.
The software also has time saving features such as electronic invoicing and bill payment.
There are a number of providers out there but my preferred system is one offered by Kashflow.
The key features are
No installation – just sign in and start to use.
Intuitive, simple to use, designed for non-accountants.
Free introductory training.
60 day free trial. If it’s not for you just walk away.
£16.99 plus VAT per month after the free trial. For which you get unlimited telephone support, maintenance and upgrades.
Our advice: If you would like to assess whether this software can make a difference to your business please get in touch and I shall set up an account for you and arrange your free introductory training.
PROFESSIONAL FEE PROTECTION
We have noticed an increase in the number of HMRC enquiries into self-assessment tax returns in recent months.
Whilst such enquiries are never welcome those of our clients who have joined our professional fee protection scheme have the comfort of knowing their professional costs are covered.
One of the perks of the scheme for business clients is the ability to access the CCH Business Support Helpline. Here you can get free help with a range of subjects including employment and personnel, health and safety and commercial legal issues such as landlord and tenancy, company law and copyright and patent.
If you are not already in our scheme and would like more information please get in touch.
Vinnie. Retired footballer, aspiring gentleman-farmer and a few sandwiches short of a picnic.
Vinnie’s old rooster isn’t making it with the hens anymore so he decides it is time to buy a new one.
Recognising the threat to his supremacy the old rooster issues a challenge to the new guy. “I will race you three times round the henhouse for the right to the hens. But in view of my age I think it is only fair you give me half a lap start.”
The young rooster thinks, “This is a piece of cake. I can easily beat this old timer.”
They start running. The hens cluck and flap.
At the beginning of the third lap the young pretender has just about caught up with his older rival. Then, BLAM! The young rooster explodes. Feathers fly everywhere.
Vinnie, smoking shotgun in hand, curses to himself, “Damn! Third queer rooster this week!”
Copyright: K P Bonney & Co LLP 2012. All rights reserved. No part of this publication may be produced, stored in a retrieval system, or transmitted in any form or by any means, electronic mechanical, photocopying, recording or otherwise without prior written permission of the publishers. Disclaimer: The publishers have taken all due care in the preparation of this publication. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or the publisher.
Back to the home page