It's an old joke, but it's still funny:

Because it makes e-mails really hard to understand.

> Why?

>> Top-posting in e-mails!

>>> What annoys you the most?

And it looks like James Murdoch will be adopting the top-posting defence to show that, no, he really didn't have any knowledge about the phone hacking that was taking place at the News of the World:

Emails showing James Murdoch was copied into messages where the potential scope of phone hacking at the News of the World was discussed in June 2008 have been released by MPs.One mentions a "nightmare scenario" arising out of a case brought by PFA footballers' union boss Gordon Taylor.Mr Murdoch has said he only read the most recent email in the chain, requesting a meeting.

In the good old days, it was generally seen as better 'netiquette' to not forward great gobs of e-mail on to people. Instead, you were encouraged to include only enough of the earlier e-mails to make it clear to what you were replying, and to include your response below the text, not above it. Now, had this approach been adopted, someone would have had to take a conscious decision precisely what to inform James Murdoch about.

The top-posting craze, which is largely Microsoft's fault, means that enormous chains get constructed very quickly. A great deal of it consists solely of other people's legal disclaimers, so people tend to simply ignore it altogether. Unless expressly instructed to do so, I certainly never go back through pages and pages of old e-mail just in case there may be some nugget I'm expected to have picked up.

An additional defence which James Murdoch may wish to consider is the "I get lots of e-mail, you know" defence. As a director of a major international business, it's naive to presume that he can read and retain all salient information from every e-mail he has ever received. If prosecutors want his head, they're going to need a gun with rather more smoke coming out of it than they have at the moment.

Filed under: Technology with tags bbc, e-mail, hacking, james murdoch, microsoft, news of the world, top-posting
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Premium bonds are an investment opportunity that the UK government has made available to its citizens. Up to a maximum of £30,000 per person, you can buy bonds that qualify you for entry into a monthly prize draw, with a top prize of £1 million. Prizes are tax free and bonds remain in play until the capital amount is withdrawn.

Premium bonds are paid for by the opportunity cost of holding them. While the overall rate of return is reasonable, if modest, especially when compared against other post-tax rates of return, most bondholders go for years without a win. Due to inflation, the capital value of their investment is eroded. However, they're quite fun and provide a safe way to have a bit of a gamble without losing your stake.

The state pension is another form of investment opportunity that the UK government has made available to its citizens. Until fairly recently, people purchased portions of state pension by making national insurance contributions. For each full year contributed, men purchased 1/44th and women 1/39th of a state pension from the ages of 65 and 60 respectively.

The state pension is paid for out of the taxes paid by current workers. National insurance contributions are commingled with current taxation to reduce the cost to the taxpayer, recognising that the operating cost of the state pension in the early years of its introduction will be lower than its cost in later years.

Premium bonds are only as safe as your belief that government is good to its word. Imagine that a future government decides to cancel premium bonds entirely. It simply stops paying out prizes. It tells bondholders that their bits of paper are now worthless. While you might not think it likely, can you imagine the outrage this would cause?

So I find it hard to understand why people are so relaxed about government breaking its state pension promises. As a man with some 25 full years' worth of NI contributions, I am well over half way towards a full state pension from the age of 65. But government is to tell me that it won't now pay it from 65. In fact it now looks like I'll be lucky to see any state pension at all before I'm 70. We wouldn't allow government to break its premium bond promises. So why are we tolerating such a flagrant breach of promise in respect of the state pension?

It would greatly add to complexity, but a fairer way forward would have been to recognise the years already bought and to honour those promises. So, in my case, government would have honoured my 25/44ths of a pension from 65, while informing me that it would not be able to offer me such generous terms in future. So I might have to accept future accruals in 49ths from age 70.

In many ways, government breaking its promise in respect of pensions is far more egregious because employed people are obliged to pay national insurance whereas people can choose whether to invest in premium bonds. So while government is about to renege on tens of billions of pounds of promises in respect of those who are still working, the big question is - why are we letting them do this?

Filed under: Politics with tags government, national insurance, premium bonds, state pension
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Twitter is getting very upset at this news:

A solicitor at HM Revenue & Customs who turned whistleblower to disclose that senior managers had quietly let off Goldman Sachs from paying millions of pounds in tax penalties is facing disciplinary procedures and possible prosecution for speaking out.

There's an awful lot of nonsense being written about this. So here are a couple of observations:

The Public Interest Disclosure Act

The concept of 'whistleblowing' has its own Act under UK law. It's called the Public Interest Disclosure Act 1998 (PIDA). I'm not a lawyer, but in broad terms the Act protects employees who make a 'protected disclosure' from any recrimination from their employer, after making the disclosure.

A protected disclosure is defined in section 43B of the Act; it is one which shows (a) a criminal offence has been, is being, or is likely to be committed; (b) a person is failing to comply with a legal obligation; (c) a miscarriage of justice has occurred, is occurring, or is likely to occur; (d) health and safety of an individual is endangered; (e) the environment has been, is being, or is likely to be damaged; or (f) information has been concealed in respect of any of (a) through (e). Where an employer takes recriminatory action against an employee who has made a protected disclosure, they may be liable for damages and PIDA made these damages potentially unlimited.

There's a load more information about PIDA over at the excellent Public Concern at Work website.

Mba's legal position

It all therefore hinges on whether Mba's disclosure is a 'protected disclosure'. This is a matter of law, and it looks like 43B(b) is his most likely defence. If it's deemed that Hartnett was failing to comply with a legal obligation, Mba is in the clear. If it's not, then he may struggle. But if he has made a protected disclosure, then HMRC making his time a misery will come back to haunt them. Or, rather, it will come back to haunt us, because ultimately taxpayers will foot the bill for any compensation that HMRC may have to pay.

Unfortunately PIDA doesn't protect employees from the negative actions that may be taken by future employers. So if Mba looks to get another job, there's not much he can do to stop employers from blacklisting him.  Although other employers may be impressed by such a public display of integrity.

Filed under: Current issues, Taxation with tags dave hartnett, hmrc, osita mba, public concern at work, public interest disclosure act, whistleblowing
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Today's prime Ritchiebollocks:

Erm, Ritchie,this isn't the way business works. We don't make individual employees liable for the losses of their employer, even in cases where you believe you are able to apportion liability to an individual. That's because it's frankly a totally stupid idea. Are we really to say that we should find the employee who - say - failed to tighten a bolt properly on Deepwater Horizon and send them a bill for tens of billions of dollars?

Equally, we aren't commencing a witch-hunt to identify precisely which miserable sod in the London 2012 organisation can be blamed for the tripling of the Olympic budget. Nor are we singling out a Department of Health civil servant to land them with an invoice for the NHS supercomputer overruns. Instead we establish lines of control and responsibility within organisations in order to reduce the risk that an employee goes off on a frolic on his own. In Hartnett's case, this includes lines of political accountability.

The very idea that we should seek to make individual employees liable for the economic outcomes of their business decisions is an extraordinarily right-wing - one could even say 'neoliberal' - point of view. I simply don't know why Ritchie espouses such a view. Other than, in the case of Hartnett, it fits his political narrative to say it. I don't think for one second he actually believes it.

Filed under: Economics, Taxation with tags bp, dave hartnett, hmrc, idiots, nhs supercomputer, olympics, richard murphy
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British Airways has said it will take on fewer people next year as a result of the government's planned 8% rise in Air Passenger Duty.

BA can't pass this tax on to customers, because they'll just fly via Paris or Amsterdam instead. It doesn't want to take the cost to the bottom line. So the only other option is to cut jobs.
This is pretty bad news for people who argue that the incidence of taxes on companies is on the companies themselves rather than on workers, isn't it?

Filed under: Economics, Taxation with tags air passenger duty, british airways, tax incidence
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So, the new ICAEW magazine is to be called Economia.

The name is taken from Economia, the lady who acts as the physical manifestation of the ICAEW. And look at the elegant way they've stuck the old bird herself into the logo. The logo is all funkily lower-case too.

Of course, 'economia' is also the Spanish word for 'economy' so should play well internationally too. Although it will also make it much more difficult to find a sensible URL for the new magazine.

The first issue of Economia will be sent to all members in early February.

(OK, so I was beaten to the story by over a week by my old buddy Graham Hambly)

Filed under: Institutes with tags accountancy magazine, economia, graham hambly, icaew, spanish
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Eoin isn't happy.

According to the OBR (table T4.7 29/11/11) George Osborne is planning to raise more than £300,000,000,000 in extra taxes this parliament over and above what Labour were taxing people in 2010-11. That in itself will shock many Conservatives but since I'd prefer that taxes were raised as opposed to cuts, I will not take him to task for that. My issue is how George Osborne plans to raise those taxes. If you are going to raise more than £300bn in new taxes it is important that the burden falls on the broadest shoulders right? Well, not according to Osborne no.

According to the OBR, Osborne is planning to raise an extra £96bn in Income Taxes, and extra £92.8bn in VAT and an extra £72bn in National Insurance. You remember National Insurance at the last election was referred to as a 'Jobs Tax' by the Chancellor? He then promised that he would cut this so-called 'jobs tax'. You trust a Tory at your own peril. But, to top it all off, George Osborne has opted to only raise £4.5bn in taxes from profit. Yes, that's right, he'll tax consumers and workers to the hilt but profits escape the hit. Osborne is happy for the profiteers to go on raking in large profits and for ordinary people to foot the bill through taxes.

Like so much with Eoin's work, the precise calculations are hard to verify. I found Table 4.7 but no matter how I jigged and poked the numbers, I couldn't get them to add up to £300m, which is, after all, only £60m per year. Put another way, the growth in taxes from2010/11 to 2015/16 is only compound growth of 4.6% per year, or approximately inflation. So portraying this as a giant smash and grab on the working poor is rather over-egging the cake.

Then we can take issue with his hypothesis that taxes on income hit 'ordinary people' whereas taxes on corporate profits don't. This is an idiotic viewpoint.  Remember our favourite HMRC table, which shows who actually pays income tax. The 1%, much hated by #occupylsx, actually pay 27.7% of all income tax collected in 2011/12. And the richest 25% pay almost a full three-quarters of all income tax. Income tax is very much a tax whose weight falls on the broadest shoulders. Given the 1% rate of NICs on higher incomes, you would expect the distribution of NICs to be less progressive. But VAT, as we've shown before, is progressive on expenditure. Given that it's a consumption tax, it's silly to try to measure it against incomes.

Similarly, the issue of who bears corporation tax is hotly debated, as Tim Worstall often reminds us. But who are these fat cat owners of UK companies? By and large, it's ordinary working people through their pensions and insurance assets. Even if you believe the incidence of corporation tax is the company's owner, taxing companies more would only hurt ordinary people.

And then there's the logical flaw. Eoin assumes that all increases in tax over the base year of 2010/11 must be due to deliberate tax increases. But there are a raft of reasons why the tax take will increase without such deliberate action, including growth and fiscal drag. Or indeed, any successful attempts to reduce tax avoidance and evasion would also increase the tax take.

Isn't it wonderfully ironic that a possible explanation could be that George Osborne has finally cracked the problem of tax evasion, and left-wing commentators criticise him for it? 

HT: Jonathan M

Filed under: Economics, Taxation with tags eoin clarke, eoinomics, hmrc, idiots, income tax, tax avoidance, tax evasion, tim worstall
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Some bad news for final salary pension schemes in the private sector:

Falling stock markets and corporate bond yields saw deficits - the shortfall between a scheme's assets and liabilities - hit £80billion on 30 November, having stood at £60billion at the end of October, according to consultancy firm Mercer.

This is the perfect storm for pension plans. Soggy stockmarket prices mean that the value of plan assets are low. And low corporate bond yields mean that you discount future liabilities by less, resulting in a higher liability. So the net liability (plan assets less plan liabilities) just gets bigger and bigger.

Ultimately, scheme sponsors may conclude that this problem may never reverse and that they should simply cut their losses and stop all future accruals. Unless, of course, the scheme sponsor is the taxpayer.

Filed under: Accounting, Economics with tags defined benefit, liabilities, mercer, pensions
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Let's put a lie to rest, shall we? Encapsulated by this tweet I saw today, but often repeated:

Happily, in among the news stories from five years ago, Accountancy magazine has a table of CEO remuneration last year, so we can have some fun with sums.

Let's take Frank Chapman, CEO of BG Group. He earned £7,451,398 last year. So could he have entertained a "tiny bit of redistribution"? BG Group has 6,172 staff, most of whom work outside the UK. So, even if Frank had decided to work for nothing, the maximum each member of staff could have received would be £1,200 more. And do BG Group employees feel hard done by? One can only presume that they would seek employment elsewhere if they did. The accounts show that total remuneration for employees was $1,126,000,000 which works out at $182,000 per employee. Is that not considered a reasonable salary?

Or, for a more extreme example, look at Justin King at Sainsbury's. He earned £2,601,449 in 2010. Had his pay packet been shared among Sainsbury's 146,900 employees, each could have enjoyed an additional £17.71.

The idea that bosses should earn less so that their employees can earn more  is driven by a combination of envy, idiocy and economic naivety. While bosses do earn a lot, they are responsible for the livelihoods of many thousands of employees. Even if you wanted to redistribute, it would generate such a negligible difference to staff, it would be meaningless.

Filed under: Economics with tags accountancy magazine, bg group, directors, j sainsbury, justin king, remuneration, twitter
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There's an amusing story in this month's Accountancy magazine.

Congratulations to Anton! Only, erm, he's been chief executive at ICAS since June 2006, so quite why it's taken Accountancy until now to notice this is anyone's guess. I suppose it's possible they intended to report on his appointment as chair of the Global Accounting Alliance and just got confused.

Whatever the reason, this is a humiliating blunder and a huge setback for Accountancy magazine as it seeks to prove itself as relevant to accountants in its penultimate issue as the ICAEW member magazine.

Filed under: Entertainment, Institutes with tags accountancy live, accountancy magazine, anton colella, gaa, icas, idiots
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