Schools across the country are waiting to hear their budgets for the financial year starting on 1 April. Cuts to local authority budgets, in some cases falling numbers of pupils, and reductions to central government education grants will mean many schools are worse off.

It's pretty difficult to plan your school's budget when you're both required to spend every penny of this year's budget and you're not told what next year's budget will be until days before that financial year begins.

This isn't a party political point - this was just as bad under Labour. But it's a highly unsatisfactory state of affairs.

Filed under: Current issues, Politics with tags budgeting, guardian, state schools
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The press and Twitter have united in outrage at the news that Big Society-endorsed charity, Timebank, is to have its funding cut.  The cuts, amounting to a quarter of its income, "will mean drastic cuts among its 35 staff, a scaling down of its workload and potentially closure." The charity has responded by encouraging people to write to their MPs about it.

Like so much on the Internet, there's more to this story than meets the eye. In order to fully unpack it, you need to turn to Timebank's accounts for the year ended 31 March 2010. This shows that they had total income of £1.909 million for the year (down from £2.636 million in the previous year). And they spent £1.366 million of that on staff costs (down from £1.425 million in the previous year).

One employee received a salary of "between £60,000 and £60,999 during the year". OK, so it's fair to assume that the chief executive of an organisation ought to receive more than other members of staff. But, even excluding this member of staff, we can calculate that the other 36.9 full time equivalents were paid an average of £31,496 ¹ each. This looks pretty generous, considering that it's an increase of nearly 6% on the previous year ². Had they frozen salaries, as so many private sector employers have, they could have saved nearly £66,000, some 13% of the £500,000 shortfall they are said to be facing as a result of the Office for Civil Society's decision. People often say that they would gladly take a pay cut for the warm glowy feeling they get from working for a charity. Here's a chance to prove that it's not just hollow rhetoric.

The accounts also show that they have already absorbed a £500,000 shortfall in the previous year, which they managed to accommodate. It's sad that they can't do everything that they want to. But if they're unable or unwilling to find the income or make the savings themselves then it's not very Big Society-like to demand that the taxpayer make good the shortfall.

Filed under: Current issues, Exclusives, Politics with tags big society, independent, timebank, twitter, ukuncut
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There's an interesting pair of diagrams in the ICAEW/Robert Half Career Benchmarking Survey 2011. Except, they're not presented as a pair and therefore their interest isn't immediately obvious. However they're repackaged and reunited in the March issue of Accountancy magazine, which makes their value much clearer.

They show what accountants of increasing experience are looking for in jobs:

And what employers are looking for when they recruit accountants of increasing experience:

They're interesting for their differences.  Accountants think that analytical skills are important for senior positions. But after a few years, the importance of analytical skills falls off a cliff for employers - they merely want leaders and influencers.

And look at the poor showing of presentation skills! Given the very high number of excrutiatingly bad presentations I have had to suffer at the hands of senior managers at various institutions, I must strongly disagree with employers here.

Are we really unconcerned that 'risk and decision making skills' isn't higher up the charts?

Filed under: Other blogs with tags accountancy magazine, icaew, robert half
47081 Comment »http%3A%2F%2Fwww.fcablog.org.uk%2F2011%2F03%2Fwhat-accountants-look-for-in-jobs-and-what-jobs-look-for-in-accountants%2FWhat+accountants+look+for+in+jobs+and+what+jobs+look+for+in+accountants2011-03-09+09%3A45%3A31Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D4708

Ritchie on bonuses for RBS staff:

It's, in my opinion, impossible to defend payments to senior RBS staff. Most especially the fact that RBS chief executive Stephen Hester will enjoy a pay deal worth around £7.7bn if he meets his targets.

I agree, a pay deal worth £7.7bn is totally indefensible.

Written on my Android mobile phone. Article may be edited later.

Filed under: Other blogs with tags banks, bonuses, idiots, richard murphy, royal bank of scotland
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From the recently published Oxford report on UK Corporation Tax, Ritchie draws the following:

Within each sector there is evidence that, as a proportion of trading profit, the tax liabilities of the largest 100 companies are generally lower than for other companies.

He then concludes the following:

In other words - there is compelling evidence of systematic tax avoidance, because large companies should be paying tax at 28% and are actually paying it at less than the 21% due by small companies but we must not, Oxford says (returning to its normal apologist style) draw any conclusions from this - a point on which I fundamentally disagree with Mike Devereux, as ever.

This is, dare I say it, in fact nothing of the sort. It's compelling evidence, if anything, of comprehensive, undiluted Ritchiebollocks. Companies pay tax based on their taxable profits, not their financial reporting profits. While the former is derived from the latter, there's simply no reason for the country's largest companies to have similar sorts of adjustments to smaller ones.

Of course, accounting sort of takes care of this via a concept known as 'deferred tax'. Where the way an item is treated for tax and accounting is the same, but the periods in which it is recognised are different, 'deferred tax' is recognised to make the overall tax charge mimic the accounting entries, even though the actual payments may take place in different periods. The Oxford report doesn't really make it clear which 'tax charge' they are using, but I'm presuming they've taken current + deferred tax.

But there's another big problem with Ritchie's claim.  The Effective Tax Rate in the Oxford report is based on EBIT ¹, earnings before interest and tax. However, interest is an allowable deduction for corporation tax. So to the extent that companies have net interest payable, it will depress their effective tax rate, because the interest won't have been deducted in EBIT but will be an allowable deduction for tax purposes. The report explains ² why these data must be approached with caution. Of course, Ritchie doesn't think that these warnings apply to him, or he thinks that any discrepancies are ex ante evidence of tax avoidance.

This is pretty criminal stuff from Ritchie. Virtually every time he gets the chance, he tells us that Mike Devereux is a totally discredited academic. Yet here, because Devereux has provided some information with which he agrees, Ritchie has cherry-picked it to serve his own devices. Unfortunately, he's then chosen to compare apples (taxable profit) with pears (accounting profit), resulting in a nonsense analysis.

Filed under: Other blogs, Taxation with tags centre for business taxation, deferred tax, idiots, interest, michael devereux, oxford university, richard murphy
47004 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2011%2F03%2Fan-interesting-observation-about-ritchies-latest-attack-on-corporate-tax-avoidance%2FAn+interesting+observation+about+Ritchie%27s+latest+attack+on+corporate+tax+avoidance2011-03-02+21%3A55%3A07Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D4700

The Oxford University Centre for Business Taxation has issued a report on the UK corporation tax, entitled Corporation Tax in the United Kingdom. It's written by our old friend, and Ritchie's nemesis, Michael Devereux.

The report has some interesting findings. In 2010, the UK had the 7th lowest corporation tax rate in the G20 and the lowest in the G7. Despite, or more likely because of, this UK corporation tax revenue has generally been above the G7 average.

And, of particular interest to UKuncut, the top 1% of corporate taxpayers pay 81% of all corporation tax. Indeed, they note that the concentration might be even greater, because their data are based on unconsolidated company information. So, while the chance of any particular taxpayer leaving the UK might be small, the impact on our tax revenues could be disastrous if they do.

They note that a significant (13 – 15%) proportion of companies with a positive accounting profit do not show a positive tax charge. This will no doubt be used by the Ritchies of this world as evidence of gross tax avoidance. In fact it shows nothing of the sort. Tax and accounting profits are different for a number of good reasons. You can't immediately infer things about one from the other. If anything, this demonstrates the limitations of country by country reporting and why those who resist it have good reasons for doing so.

Overall, this is a vital contribution to the UK tax literature.

Written on my Android mobile phone. Article may be edited later.

Filed under: Taxation with tags centre for business taxation, concentration, corporation tax, country by country reporting, michael devereux, oxford university, richard murphy, ukuncut
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