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
5997No Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2012%2F02%2Fin-which-i-wonder-about-that-bbc-article-on-the-benefit-cap%2FIn+which+I+wonder+about+that+BBC+article+on+the+benefit+cap2012-02-01+21%3A41%3A14Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5997

It didn't take them long to start trotting out all sorts of nonsense about the proposed cap on benefits.

The worst hit, of course, are large families in the south-east, where rents are higher. Even in Tolworth, described by the Evening Standard as the "scrag end of Kingston borough", a four bedroom house will give you little change from £400 a week. Cutting housing benefit to £100 a week – which is broadly what the cap means if you have four children – makes life impossible. After rent, council tax and utilities, a family with four children would have 62p per person per day to live on. That is physically impossible.

Do you see what they've done there?

They've worked out the total benefits package that a family of four would get. Then they've made up some numbers for what this family would have to live on. Then they've complained that this would leave the family with only 62p per person per day.

Of course, this family doesn't have such a paltry amount. They've actually got £11.87 [(£26,000 / 6) / 365] per person per day to live on. And every single penny of that £11.87 comes from the good grace of working taxpayers.

Now it's true that rents are expensive. And that utilities are expensive, so a great deal of that £11.87 needs to be spent on those items. But they're also expensive for those who work. A family of four would need to earn a great deal more than £26,000 in order to actually bring home £26,000 because they have to pay tax on their income. And they would still face the same pressures of expensive housing and expensive utilities. It's an appalling insult to those who work to pretend that the real poverty is faced by those who are propped up to the tune of £11.87 every single day for each of their six non-working members.

And pretending that it's not £11.87, but is really only 62p, makes that insult a thousand times worse. Shame on you, Tim Leunig.

Filed under: Economics, Other blogs with tags guardian, housing benefit, idiots, poverty, tim leunig, welfare benefits
59452 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2012%2F01%2Fwhy-tell-lies-about-the-benefit-cap%2FWhy+tell+lies+about+the+benefit+cap%3F2012-01-22+21%3A10%3A47Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5945

If you listen carefully today, you might be able to hear some wailing. That's Ian Fraser, Frannie and Ritchie crying because the naivety of their eagerness to blame the auditors for everything has been exposed.

AUDITORS KPMG and Ernst & Young have been cleared of any responsibility for the accounting black hole discovered at Olympus.

A report by Olympus' lawyers absolved the Japanese firms of blame, but claimed that current and former individual accountants - providing oversight within the business - were responsible for 8.3bn Yen (£70.4m) in damages, reported Reuters.

I called this one some time ago.

This would be a good time for the audit-bashers to admit they got this one wrong, and to be less hasty to blame auditors in the future.

Filed under: Auditing, Other blogs, Regulation with tags accountancy age, francine mckenna, ian fraser, idiots, olympus, pwned, richard murphy
5932No Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2012%2F01%2Fbad-news-for-the-audit-bashers%2FBad+news+for+the+audit-bashers2012-01-19+09%3A13%3A09Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5932

Here's Eoin eulogising about his beloved Labour party:

Our leaders are down to earn and are accessible to all.

It's just so Freudian!

Filed under: Other blogs, Politics with tags eoin clarke, fucknut, labour, quote of the day
5898No Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2012%2F01%2Fmisquote-of-the-day-eoin-on-the-labour-party%2F%28Mis%29quote+of+the+day%3A+Eoin+on+the+Labour+party2012-01-16+19%3A05%3A37Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5898

They had run an article on how accountants had been overlooked in the New Year's Honours. Until I pointed out that Gerry Acher, former senior partner at KPMG, had received a knighthood.

Filed under: Entertainment, Other blogs with tags accounting web, knighthood, kpmg, meta, new year's honours, pwned, shameless self-promotion, sir gerry acher
5808No Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2012%2F01%2Fin-which-i-get-a-story-in-accountingweb-rewritten%2FIn+which+I+get+a+story+in+AccountingWeb+rewritten2012-01-04+20%3A29%3A42Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5808

Earlier this year, chief executive Bob Diamond was forced to reveal that the bank operated nearly 300 subsidiaries in tax havens and had paid just £113m of corporation tax in the UK in 2009 – a year in which it handed out £3.4bn in bonuses.

Well, duh. You may as well compare the amount of tax paid to the amount spent on cut flowers or heating. Bonuses are a business expense. Companies deduct bonuses in arriving at their taxable profit. Barclays could, if it wished, pay all of its profits out in bonuses, reducing its taxable profit to nil.

By comparison, corporation tax is the charge payable in the UK on the taxable profits earned in the UK.

Really, only a total moron would even attempt to compare these two figures. Just what is Philip Aldrick trying to achieve?

Filed under: Other blogs, Taxation with tags barclays, bonuses, daily telegraph, idiots, philip aldrick
58012 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2012%2F01%2Ftax-lesson-for-the-daily-telegraph%2FTax+lesson+for+the+Daily+Telegraph2012-01-02+09%3A54%3A15Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5801

The Coalition government raised the VAT rate to 20 per cent in January. However there is an exemption for food, children’s clothes, tap water, passenger travel, books, newspapers and some other products.

No there isn't. These items are all subject to VAT, but at a rate of 0%. Some other goods and services are classified as 'VAT exempt', which means that VAT isn't charged on them at all.

This might look like meaningless sophistry to some, but it really does matter. Because a business that sells zero-rated goods and services can claim back its input VAT from HMRC. A business that sells exempt goods and services cannot, meaning that it must reclaim the VAT on its input costs via higher prices instead. It's for this reason that Ritchie made an idiot of himself last year when he claimed, wrongly, that banks get a tax break because of their VAT exempt status. They don't, because they suffer VAT on all their inputs.

So what the EU is actually proposing is that various country provisions for differential rates should be removed, which is a totally different proposition. Is it really too much to ask that a national newspaper get this sort of thing right?

Filed under: Other blogs, Taxation with tags daily mail, european union, idiots, richard murphy, vat
57963 Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2012%2F01%2Fthe-daily-mail-and-misinformation-about-vat%2FThe+Daily+Mail+and+misinformation+about+VAT2012-01-02+09%3A45%3A11Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5796

His new programme, The Written World, tells the international story of writing and its effect on human development. "Writing started in about 3500BC," said Bragg. "And what I find amusing is that it was probably started by a clerk who was tabulating goods going in and out of a market. In other words, we owe all literature to an accountant."

Not a lot of people know that.

Filed under: Accounting, Other blogs with tags guardian, history, melvyn bragg, quote of the day, writing
5792No Comments »http%3A%2F%2Fwww.fcablog.org.uk%2F2012%2F01%2Fquote-of-the-day-melvyn-bragg-on-the-origins-of-writing%2FQuote+of+the+day%3A+Melvyn+Bragg+on+the+origins+of+writing2012-01-01+13%3A50%3A04Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5792

The huge profits amassed by Vodafone should have been viewed as a problem by Labour. We should have been concerned. But of course a New Labour principle was that we were 'okay with the filthy rich'. This principle led to a policy of Low Taxation. Tories reading will more readily recognize these as Tory principles in operation, not Labour ones. There was most clearly a detachment from core Labour values in pursuing this principle.

For the love of God, will someone please nail the facts to a baseball bat and then use it to bludgeon Eoin about the head until he accepts some basic facts about Vodafone.

Vodafone doesn't earn all of its "huge profits" in the UK.

Therefore it's totally right and proper that it doesn't pay tax on all of its "huge profits" in the UK.

Got me so far?

The dispute between HMRC and Vodafone hinged on whether certain profits earned outside the UK should be taxed as if they had been earned in the UK under the UK's controlled foreign companies legislation. That legislation sails pretty close to the wind with respect to EC law and has needed clarification as to its scope. You can't realisitically expect Vodafone to pay UK tax on its overseas profits without also foregoing UK tax on profits earned here by foreign companies.

But this isn't about some concerted campaign to reduce tax on the "filthy rich". It's about taxing in the UK only those profits that are earned in the UK.

Let's hope that Eoin has made a New Year's Resolution to think before he blogs.

Filed under: Other blogs, Taxation with tags controlled foreign companies, eoin clarke, eoinomics, hmrc, idiots, tax avoidance, vodafone
57771 Comment »http%3A%2F%2Fwww.fcablog.org.uk%2F2011%2F12%2Feoinomics-still-bleating-on-about-vodafone%2FEoinomics%3A+still+bleating+on+about+Vodafone2011-12-30+20%3A32%3A33Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5777

The over crowding of our classrooms also emphasise how silly it is to give academy headmasters salaries of £240,000 which are more that 100% bigger than starter teacher salaries.

Here. You can be pretty sure that teachers don't earn £120,000 in their first year. In fact, a first year teacher in London earns £27,000, so that academy headmaster earns 789% more than a starter teacher. Of course, I don't really have a view ex ante as to what an appropriate multiple of a junior teacher's salary would be appropriate for the headmaster. If you went out and hired 7 teachers instead of that headmaster, would the school really run better? No, of course it wouldn't.

The rest of the article is idiotic too. Without knowing more about the way schools are run in other countries, the pupil-teacher ratio may not tell you very much. Here, schools now employ teaching assistants to help support teachers. I know for a fact - because Mrs Malry used to teach there - that French classrooms often don't have teaching assistants at all. I don't know what the position is in other countries. But when I was at school, classroom teaching was one adult per room only. Obsessing about pupil-teacher ratios, without taking into account the other improvements in staffing and pedagogy is unlikely to yield helpful results.

Update:

He has modified his calculation to say "more than 1000% bigger" than the out-of-London starter salary of £21,558. Good to see I'm having an impact.

Filed under: Other blogs, Politics with tags eoin clarke, france, idiots, mathematics, teachers
56681 Comment »http%3A%2F%2Fwww.fcablog.org.uk%2F2011%2F12%2Fmaths-lesson-for-eoin%2FMaths+lesson+for+Eoin2011-12-01+21%3A27%3A21Christie+Malryhttp%3A%2F%2Fwww.fcablog.org.uk%2F%3Fp%3D5668