Bloggers have been having lots of fun today picking apart a BBC article on the benefits cap, in which she distraught family said they would need to choose between "heating and eating" if the cap were introduced. But of course, their spending on cigarettes, alcohol and Sky TV budgets would remain.

Now, given my constant criticism of UKuncut and other idiotic tax campaigners, I have a reputation for being right wing. This isn't fair. I'm swayed not by dogma but by evidence. It just happens that, at this point in my life, I find that the evidence tends to support so-called right wing positions and tends to refute so-called left wing positions. But I remain open-minded as to what the evidence tells me.

So, here's the challenge. I cannot contemplate how anyone could expect strangers to support them through the tax system in excess of the cap. Clearly, this article fails to convince. So, can anyone justify, perhaps from their own budget, why the cap would be unworkable for them?

Because I can't envisage the situation where more than £26,000 is required, my view is that prima facie, the cap is a good thing. Only hard evidence from a real budget could convince me. So, where is it?

But that brings us to a serious concern about the original BBC article. Suppose there really is no evidence of the cruelty of the benefit cap. That would mean the BBC would have not been able to find a sympathetic family to review. In that case, one wonders why did the BBC commission the article in the first place. Just to point and laugh?

And if there is good evidence, why pick this family instead of an actual family in need? Either way, I'm pretty underwhelmed by the article, which smacks of profoundly lazy journalism. I'd like to believe in the kindness of the human spirit, but there's not much of it to be found in the way this article has been published.

Filed under: Current issues, Other blogs with tags bbc, budgeting, evidence, smoking, ukuncut, welfare benefits
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OK, it's very uncool to take press releases and reproduce them verbatim. But I'm going to do it anyway, because this is an important topic. Stress is something that can affect us all, even your humble blogger, so anything that can help accountants out must be good. Best of all, this course is free.

New stress prevention course for accountant managers launched by CABA

Managers working in accountancy are the targets of a new, free stress prevention course launched by Chartered Accountants' Benevolent Association.

Called Mind Matters: Tackling Stress at Work, it is designed to help them identify stress problems in colleagues, minimise stress in the workplace, and also cope with any issues related to stress that they may be encountering themselves.

Lasting one day, the course has been created in response to specific requests from managers working in the profession who have already attended CABA's existing Stress Management and Wellbeing course, which has been attended by more than 3,200 accountants across the country since it was launched in 2008.

Wendy Saunders, Head of Strategy and Development, said: "Research undertaken by CABA continually points to the fact that accountants believe that stress is the biggest issue that they face in their daily lives and popularity of our existing stress management course reflects this.

"The new course for managers is very much something that we have produced as a result of demand from professionals working in the accountancy sector. Managers at all levels who have spoken to us increasingly recognise the negative effects that stress can have on them, their colleagues and the work that they do. They are looking for ways to avoid stress and to cope when it arises. The new course is designed to tackle these issues in a practical way."

Locations and dates for the Mind Matters course during 2012 are:

• 8 February Northampton
• 23 February London
• 7 March London
• 24 April Milton Keynes
• 16 May Birmingham
• 17 May Newcastle
• 23 May Bristol
• 20 June Leeds
• 10 July Maidstone
• 17 July Oxford
• 18 September Leicester
• 19 September Cambridge
• 25 September London
• 3 October St Albans
• 10 October Cardiff
• 16 October Preston
• 13 November Birmingham
• 14 November London
• 21 November Nottingham
• 27 November Leeds

You can book yourself onto a course at CABA's website.

Filed under: Current issues with tags caba, course, depression, free, stress, training
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Twitter has got itself very excited today over #realmenoftheyear and #realwomenoftheyear. This all kicked off due to those rather silly articles on rather silly websites which list their men and women of the year because they haven't got any real news to report.

I'm sorry, but I have no patience for any of this bullshit. The criteria used to draw up both lists reflect the distorted priorities of those who would sell us news, not what's actually important to our daily lives. If we drew up a better set of criteria, based on what really makes a difference to people's lives, and applied it to the entire world, rather than just those few individuals (mostly men) which the media consider interesting, then we wouldn't need two lists. And we would probably find that it would be men struggling to get on the 'proper' list.

Filed under: Current issues with tags bbc, criteria, men, polemic, realmenoftheyear, realwomenoftheyear, twitter, women
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Oh my days. A lot of complete crud has been written in the last 24 hours about how appalling it is that senior staff at HMRC would even contemplate cutting deals with the companies it is supposed to be enforcing the existing tax law against. Especially in austere times, HMRC should be doggedly pursuing every legal challenge to ensure that it maximises the country's tax take.

This is, I'm afraid, a load of naive hogwash. There's a simple formula to determine whether it's worth proceeding with a tax case:

If L x s - (1-L) x S > C then it's worth proceeding with the case.

Where L is the likelihood of the case succeeding, s is the amount at stake, S is the amount of similar cases in other companies that will succeed or fall with this test case and C is the cost of bringing the case to court.

Of course, all of L, s, S and C are estimates. It requires enormous amounts of judgement to estimate suitable values for these variables.

The big risk is that, in bringing and losing the case, you open up the watershed to lots of other companies who had previously accepted HMRC's tax treatment but now find themselves in for a free tax refund courtesy of the brave company that brought the test case. For example, in the case of Vodafone, it rather suits HMRC to let Vodafone 'get away with it', even for a supposedly sizeable sum because, if HMRC loses, the entire edifice of CFC taxation might come crashing down, and with it many billions of pounds of tax revenues might need to be refunded. Given that the word on the street is that the UK's CFC legislation is on fairly shaky legal grounds, it's hardly a risk worth taking.

It's worth remembering the formula when you read the gibbering analyses of left-wing commentators. Because their hatred of big companies makes them oblivious to a very important fact about business: that the future is uncertain. Dave Hartnett may well have been doing dodgy deals. But anyone in his position would have needed to have taken a view about the likelihood of success, the amount at stake in the specific case, the amounts at stake in wider cases and the cost of legal action. Therefore, necessarily, there would always be a point at which it would be better to cut a deal than to stand and fight. The mere fact that the Goldmans and Vodafone deals were done cannot be used as ex ante evidence that Hartnett was bent.

Filed under: Current issues, Taxation with tags controlled foreign companies, dave hartnett, goldman sachs, hmrc, tax avoidance, vodafone
57544 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2011%2F12%2Fdeal-or-no-deal%2FDeal+or+no+deal%3F2011-12-20+21%3A45%3A32Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5754

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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It is a truth universally acknowledged, that corporate blogs are boring, tedious affairs that are best given a wide berth. So it's with some considerable pleasure that I can reveal the exception that proves the rule - Oliver Tant's blog over at the otherwise tiresome KPMG UK blogs.

Today's post is a corker, in which Tant uses the issue of the auditor's responsibility to report weaknesses in internal control to those charged with governance (ISA (UK and Ireland) 265) to highlight possibly unforeseen consequences of forcing the Big 4 to separate their audit practices from their non-audit practices. He argues, convincingly, that such a move will force up costs and may cause internal control problems to be overlooked, if the firm that's responsible for advising on fixing them is different to the firm that first identified them (ie the auditor).

Unfortunately, as ingenious and intelligent as this argument is, I doubt whether it will make much of an impression on Michel Barnier and his team in the Internal Market and Services Directorate General. Specifically:

• Barnier will argue that the increased costs identified are a 'price worth paying' to ensure better audit independence. 
• Barnier will argue that the fixing of internal controls, as opposed to the identification of deficiencies in internal controls as a by-product to doing an audit, are indeed a peripheral, non-audit service. And he will be able to claim that allowing other businesses to muscle in on work that previously was dominated by the company's auditors will encourage new firms to innovate and produce even better value-added services for companies. They might even be able to do much more than auditors can over internal controls, other than internal controls over financial reporting. Who can prove him wrong?

There's also a general point, which cuts across almost all of the arguments made by the big firms. They have largely sought to rebut Barnier's leaked proposals by beseeching him to think of the impact on audit quality. But Barnier demands substantial change, in order to address what he perceives as profound structural problems in the audit market. Rather than try and identify specific fixes that might generate marginal improvements, Barnier has decided to rip up the entire audit market and start again. Plaintive appeals to "protect audit quality" are meaningless when Barnier has clearly already bought into the simplistic notion that this market has no quality.

Another line of attack, beyond audit quality, is needed. And fast.

Filed under: Auditing, Current issues with tags audit quality, european commission, internal control, international standards on auditing, kpmg, michel barnier, oliver tant
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Because I'm much too lazy to review the EC audit reform proposals myself, other than to express shock and surprise that Barnier could even conceive of a six-year maximum audit tenure, here are some thoughts from other people.

ICAEW doesn't agree with all of what the EC proposes. But it does find some areas of common ground, which it highlights. ICAS finds even more grounds for disagreement, in particular the burdens it will place on business. ACCA use their release to give an outing for their new-technical-director-on-the-block, Sue Almond. She, like ICAEW, is careful not to bash Barnier too heavily, and looks to find some points of agreement, such as the emphasis on the importance of audit committees, while fretting about the potential costs of mandatory rotation. Chartered Accountants Ireland have the smoothest response; while welcoming the proposals, they reserve the right to put the boot in once they've examined them in more detail and consulted with stakeholders ¹.

The firms have also been active. KPMG argue in terms of audit quality to put up a stern defence of multi-disciplinary firms, which would be prohibited by the proposals. pwc is even harsher; while also arguing for greater audit quality, they complain that the EC has missed an opportunity to really learn the lessons of the crisis. Deloitte avoids the audit quality argument altogether, instead preferring to highlight how the EC's proposals won't deliver its stated objectives ².

There are comments in some of the newspapers too: The Guardian says that Barnier is "taking on" the Big 4. The Telegraph echoes this, saying that he wants to break them up. It also notes that the proposals will seriously weaken the powers of national regulators, which presumably includes institutes as well as the FRC.

Accountancy Age snorts at the "watered down" proposals, which have dropped the notion of mandatory joint audits that was included in the earlier leaked drafts.

Filed under: Auditing, Current issues, Institutes with tags acca, accountancy age, big 4, cai, deloitte, ec green paper, european commission, guardian, icaew, icas, kpmg, meta, pricewaterhousecoopers, telegraph
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cjcjc over at Worstall's:

With the Corporation so powerful it is no surprise that all the hedge funds set up in…Mayfair, while a whole load of banks set off for Canary Wharf

Filed under: Current issues with tags banks, canary wharf, cjcjc, corporation of london, hedge funds, quote of the day, tim worstall
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While certain pundits have celebrated the "We are the 99%" slogan as brilliant, it is beset by problems:

1. While it's mathematically true that the vast majority of the population, including me and most probably you, are indeed in the 99%, that doesn't automatically give legitimacy to what a small portion of that 99% does in the name of the rest of their brethren. The people who are defiling London's public spaces and poncing off the free wifi at Starbucks don't act in my name. While public opinion is hard to gauge, the comments on this article on the Guardian suggest that, even in a friendly newspaper, there are many - far more than 1% - that totally disapprove of the protests.
2. There is no consistency over what constitutes the "1%". The term is bandied about to refer to banks, politicians, rich people or any corporation. Given that companies can't vote, it's silly to lump them into the 1%. Particularly as the companies are actually largely owned by us, through our pension funds.
3. Even though they deny it was down to them, it was a major mistake to stand off against St Paul's, an action that has led to the cathedral's closure. St Paul's is the city's and the country's treasure. It's the landmark that controls so much of London's building development because its sightlines must be protected.  Recently it was refurbished at a cost of some £40 million, to restore it to its past beauty. The protestors would be foolish to presume that the majority in London will tolerate this defilement of such a national institution for that long.
4. The top 1% contributes a phenomenal amount to our nation's coffers. Looking at direct taxes alone, the richest 1% pays over 25% of all income tax. The current protests against the rich looks very much like an extreme case of sour grapes.
5. The protestors don't know what they want, other than something "different". They won't be able to get beyond tiny amounts of support until they can define more clearly what they stand for. Their current ideas are totally incoherent and, frankly, bonkers. If they don't decide fast, they will lose all the momentum they have gained. At the moment they look like they may yet end up more inscrutable, more indecisive and more unaccountable than the politicians they want to replace.
6. The basis of democracy is that it represents everyone. Democracy insists that minorities are protected, even those that did not vote for the ruling party. It's unethical to allow the majority, even an overwhelming majority, to gang up on a minority. And this remains true, even when talking about a minority for which many in the majority may have little sympathy (the super rich). In blaming all our society's woes on "the rich", there are ugly echoes of the hounding of Jews throughout history.

Filed under: Current issues, Politics with tags democracy, godwin's law, hmrc, mob rule, occupy, occupylsx, parliament, pensions, rich, st paul's cathedral, starbucks
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What do we want? Pensions Justice! 

Public sector pensions are under attack.

Oh noes!

The government wants to make people pay more and work longer for a lot less. Despite hours of talks, ministers have yet to seriously negotiate.

Pensions Justice is a site run by the Trades Union Congress for public sector workers. Presumably it's hard luck if you're a unionised worker in the private sector, but yippee if you're an ununionised worker in the public sector.

By 'pensions justice' they appear to mean preserving the future accrual rights and contribution levels of current public sector workers, with the taxpayer funding any shortfall. And that means private sector workers, many of whom have defined contribution pensions, will end up having to pay extra tax just to keep public sector workers in the pension schemes to which they have become accustomed.

As we've mentioned here before, defined contribution pension schemes are under significant strain as a result of Gordon Brown's 1997 pension raid, increasing longevity, soggy equity markets and low interest rates. The upshot of these four pressures are that private sector workers are having to pay more and work longer for a lot less.

So where exactly is the justice in calling for public sector workers to be mollycoddled while private sector workers must fund the increased cost of their pensions as well as funding the increased cost of their own pensions? Where were the unions in 1997? Why didn't they complain then? Because it didn't affect their members? It makes their calls for 'justice' now look depressingly hollow.

Filed under: Current issues, Politics with tags defined benefit, defined contribution, fairness, gordon brown, pensions, public sector, tuc
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