C’mon Deloitte, time to pay up
April 29, 2008
A Counting School has the full details of three out of the Big Four finally poneying up for overtime they’ve illegally witheld from non-CA staff in Canada - those outside of skinflint Quebec that is. The only firm conspicuous by its absence is Deloitte? Why? You can’t tell me that they’ve been paying up all along and have nothing to do. Krupo’s incredibly unscientific summary of reactions to date:
- Well that sucks, because I’m a CA so I get nothing, and will continue to get nothing extra
- I’m from Quebec and I’m not a CA - my provinces rules mean that I’m not getting anything anyway. Oh nuts.
- I’m happy for my non-CA friends - good for them!
- Well the firms are just doing what they’re supposed to do, no big deal - they should’ve known about it already and done this sooner.
- The firms are doing what they’re supposed to do, but they’re doing it well - addressing the problem as soon as they learned about instead of wondering if it would go away.
I’d add a final one: The firms are doing it before the bad publicity gets out of hand and the legal fees top the payouts.
Finally - congrats to our intrepid correspondent who is now officially a CA. As we say in tech circles: w00t!
The Janus faces of taxation
April 28, 2008
In Roman mythology Janus is the god of doorways and gates. I see him as the epitome of how some people like to argue the ethics of taxation and specifically the non-dom issue. Richard Murphy takes Simon McKie to task over his convoluted logic in applying an ethical dimension to the debate:
The significance of their charitable involvement in the provision of artworks for public display, for example, became obvious when lobbyists alerted the Government to the threat posed by its original proposals to heritage charities, which resulted in one of the Chancellor’s many u-turns.
How many times have I heard that taxation isn’t an ethical issue when it comes to fighting dubious schemes? Especially when it comes from those who defend such actions. How many ways do people want to argue these things before it sinks in that you can’t pick and choose your arguments to suit a position? Either tax is an ethical issue or it is not. I prefer to think it is, based on the notion that taxation serves an ethical purpose in civil society.
Mark Lee’s story
April 14, 2008
I love it when unintended consequences make for a better story than the original. When I wrote about the ‘puppet‘ Mark Lee told his story about how he’s operating a new business using modern technology and principles. Rather than leave the story languishing in comments, I’ve taken the liberty of re-publishing:
I spent a number of years running the tax support for professional operations at a large tax consultancy. Most of the clients were small firms of accountants who recognised that they couldn’t risk advising on issues outside of their comfort zone. However they didn’t like paying the sort of fees charged by the large consultancy or the fact that they were often allocated someone with limited experience or to whom they could not relate.
The other options were either:
a) to go to an accountancy firm with the requisite tax expertise - but this tended to be just as bad as the tax consultancies with the added risk of delegation to relatively inexperienced people and a perceived risk that they might poach the client; or
b) to find a credible independent tax specialist with the right degree of expertise to provide the support required.
I’ve noted an increasing number of tax specialists who prefer the flexibility of working from home or their own office. These days they don’t need the support of a large firm other than to provide a regular salary and stream of work. So they need help to to market their services beyond their immediate local area and to be part of a like minded community.
All of which factors contributed to the formation of the The Tax Advice Network last year.
This is a unique facility enabling accountants to go direct and choose appropriate specialist tax expertise to resolve clients’ challenging tax questions and problems.
We’ve been described as a tax dating agency for accountants. In fact we are a 21st century solution to a growing need as tax law becomes ever more complex.
The Network incorporates a number of modern developments:
- Ratings and feedback (inspired by Ebay, Amazon and Ecademy)
- Online networking amongst the tax adviser members (inspired by Ecademy, Facebook, Linkedin and other online networks)
- Outsourcing (saving on the employment costs and related employment law obligations)
- Virtual teams (whereby the accountants and tax advisers can work together without being in the same city, let alone the same building)
Will this model (or whatever it evolves into) disrupt the existing business models of the larger firms trying to provide tax support to smaller practices and their clients? I hope so. I also anticipate that we will, in time, become an attractive ‘home’ for those senior tax specialists whose only fear of leaving employment at the moment is whether they could generate enough business themselves.
In the meantime (and through a simple coincidence of timing) the tax consultancy I had been with, Chiltern plc, was acquired by BDO Stoy Hayward. So it’s now part of a top ten accountancy firm and the person responsible for the tax support for professionals team is a BDO partner. Anecdotal evidence suggests that this will reduce the flow of new work (and possibly the erosion of existing flows too).
More recently I’ve noted 2 or 3 tax consultancies being acquired by larger firms. Is this a sign that the market place is splitting into the big boys and the independents? If so, a facility such as the Tax Advice Network should be ideally placed to actively support the independents and enable them to focus on doing what they do best without the shackles of a large firm.
John Kavanagh in pugnacious form
April 13, 2008
I see John Kavanagh is in pugnacious form over the Tesco/Guardian libel match:
It seems that we have reached a stage where the rhetoric of journalists, fuelled by their constant pursuit of scandal and inspired by the tendentious writings of self-appointed experts like Richard Murphy, Prem Sikka and their like, has been so successful in persuading the public that tax avoidance is immoral and unethical that merely to state that someone is a tax avoider is seen as libellous if untrue.
The fact of the matter is that Richard is an expert in his field - he doesn’t need to be self appointed. Check the organizations that support and sponsor his research. Strike 1. If John read what Richard and others say, he would find it isn’t about avoidance per se but the use of what Tesco already admits is a highly complex structure that has allowed it to provisionally avoid (at the very least) stamp duty. Ostensibly, that goes against HMRC’s general position of substance over form in the creation of tax planning arrangements. Strike 2. John goes on to say:
I rather like Tesco’s approach to this case. If the Guardian argues successfully that their article is not defamatory, then Tesco loses their case but regains the moral high ground. If the article is defamatory if untrue, the Guardian will have to show that it got its facts right in order to win, and only Tesco can know whether they have.
John has got this the wrong way around. Anyone remember the MacDonald’s case? As Alex Hawkes correctly points out:
Richard Northedge has a similar view: that Tesco could be entering into a MacLibel situation.
This battle has the appearance of a Goliath versus David fight – and remember who won that. Tesco should look at the MacLibel case: after years of dispute, the hamburger giant won but it was the protestors that gained the sympathy and McDonalds is still regarded as a representative of big bad business.
Alex then goes on to argue that justice is blind and therefore the courts will not take the moral/ethical issue into consideration. I’d prefer that it does because if you think about the basis for common law, it is built on an unwritten but well understood code of ethics. Even if the courts rules in Tesco’s favour (assuming it ever gets that far), then Tesco is in a no-win position.
If, as I suspect, Tesco is forced to reveal what it has done, then the MacLibel issue takes on greater poignancy.
I see a growing concern for issues that have an ethical flavour and which go to the heart of issues around sustainability, risk, compliance and social responsibility. It seems to me that you can hardly fly the flag of supporting issues around say Fair Trade while at the same time engaging in tax avoidance on the scale that Tesco already admits. That makes you a hypocrite. Strike 3.
Endnote: You wouldn’t expect John to agree with the position taken by Alex Hawkes, Richard Murphy, Prem Sikka and myself. His bio says: “I am Director of Private Clients in the London office of Shaws, Chartered Tax Advisers. I advise on all aspects of tax affecting private clients, with an emphasis on non-domiciliaries and offshore strategies.”
