Merry Xmas and Happy New Year!!

I wish all the readers of Accountancy Distilled a Merry Christmas and a Happy New Year. I hope 2008 will be a prosperous one. This year I exchanged the proceeds from
the takeover of Newcastle United to buy into another Geordie success story Northern Rock. I eventually sold after taking a pretty savage hit. I want the bank to survive
as an independent institution, since it is very important for the north-east of England.

Looking back on my blogs led me to do some editing on the footie ones, ie deleting
ones like "Blue Moon", which charted the improbable defeat of Manchester United to their derby rivals Manchester City. I can't believe how well Sven has started.

Postcript: How would I know that Sven would sacked by the Thai owner?

How to account for the virtual economy of Second Life!

The September 2007 edition of accounting & business takes a look at the accounting treatment of Second Life (SL) and the use of its Linden dollars L$, which can be exchanged for hard currency. The article notes the success of Chinese-born Ailin Graef, who is a German resident and who has built up a 60 strong, multi-million dollar business from SL.

The U.S Congress is expected to issue a final report on virtual commerce in early 2008. While the British tax authorities Her Majesty Revenue & Customs (HMRC) says that SL players are free to make profits up to the CGT exemption limit of £9,200 after which they should pay tax.

The top players in Second Life are Americans, Germans, French and Britons. Accountng & busines notes that in the United States it is reported that the Maryland-based firm
Katz, Abosch, Windesheim, Gershman & Freedman has started to offer accounting services to Second Life avatars. KAWG&F is one of the top CPA firms in Maryland and is merging with Siebert Kullman.

To tax plan or not to tax plan that is the question!!

You probably need an accountant if you want to venture in the murky world of tax planning in the United Kingdom today. The recent inheritance tax changes accounced by British Chancellor Alistair Darling in his pre-budget report seem to complicate matters more although they do double the inheritance tax threshold to £600,000 from the previous level of £300,000 according to the November 8th edition of Internationalmoneymarketing.co.uk.

To quote "Given the massive rise in the housing market in recent years that means hundreds of thousands of people will be affected and should review the existing terms of their wills with a tax specialist."

The edition says people should seek professional advice but existing solutions such as discounted gift schemes and loan trusts can be still considered.

I have changed my mind about Peter Hain!!

I have changed my mind about British Works and Pensions minister Peter Hain, who used to make a bit of a buck for his family by employing them on his expenses. It looks like Hain took on UK Prime Minister Gordon Brown over a resolution of the pension debacle involving companies such as Allied Steel & Wire. This is where people thought they were contributing to a guaranteed scheme and found their contribution pension schemes collapsing the same way as their employer.
I thought Gordon Brown supported the working man but he does not seem to. Anyway after that funny on-off signing of the new European Constitution, the public are seeing the true worth of Mr Brown.
Ros Altmann, a former Tresury pensions adviser, was delighted with the £2.7bn turnaround by the UK government. Altmann said the government rescue of Northern Rock was crucial since it showed the money was there. There was no explicit guarantee for
Northern Rock depositors, since the deposit guarantee fund was already
set up.
There are apparently 140,000 victims and one said Ms Altmann was an absolute hero and they would have got nowhere without her. I can't see her being in the New Year's
Honours List.

"U.S non-doms attack unfair tax."

In Saturday#s Times there was the headline "US non-doms in Britain attack 'unfair tax.'

Apparently, the American government is studying the potential impact on its citizens.
The problem arises because Uncle Sam charges tax on the worldwide income of its citizens. The British Treasury says the fault lies with the U.S tax system.
Gordon Brown, God bless him, wants to charge non-domiciled residents some £30,000 each
and this has irked the Yanks.

I would think that the privilege of living in England would cost a lot less. I said England because I don't think there are many U.S non-doms living in the Celtic fringe, although I stand ready to be corrected.

It looks like Northern Rock is facing nationalisation!

It looks like Northern Rock, the failed British mortgage lender, is facing nationalisation and then a quick sale by the UK government. I have the gut feeling that Virgin Money and Olivant will not be able to borrow enough to finance the deal.
A deal has to be finalised by the middle of January.

Bank of England governor Mervyn King has made public his displeasure at the shareholders for making the rescue operation more difficult. Apparently, one
shareholder wants £4.10 a share for Northern Rock, if it goes for nationalisation.
This contrasts with the opposite view that the equity in Northern Rock has already been wiped out and so the realistic share price is zero.

If you have any CGT problems over your holding in Northern Rock, then you might need an accountant and a local one at that.

I wonder if Northern Rock will be nationalised?

I wonder if Northern Rock will be nationalised. In the press the move would be seen as a temporary one to help the sale of the Newcastle-based bank. It would certainly
facilitate the sale of the £100bn plus mortgage book but it would not look good
if the nationalisation was a long-term move. I don't see Alistair Darling as a de facto chairman of an UK mortgage bank.
The British chancellor has better things to do such as fiddling around with capital gains tax (CGT), which still has not been sorted out yet.

Northern Rock shares are trading under a pound.

It is amazing to think that quite recently shares in UK mortgage lender Northern Rock were trading at over £12. Today the price is just under a pound and with a further fall in view with the demotion of the bank stock from the FTSE-100
index.

The Tories are opposed to a nationalisation of Northern Rock. The Lib-Dems want a temporary nationalisation so that the institution can have time to sort out its problems. These involve being proped up by the Bank of England,which must be tearing its hair out, with a £25bn loan.

One factor is the number of Labour Members of Parliament in the North-East of England, who would be unhappy about any radical surgery to Northern Rock. However, the reality is that the bank is becoming increasingly frail with the loss of retail deposits despite the guarantee of full protection. This just leaves the £100bn mortgage loan book, which is unlikely to be rock solid, given the high loan values Northern Rock was giving to customers.

The preferred bidder is Virgin Money, which is benefitting from its brand name in proposals to turn Northern Rock around. Richard Branson is known as a tough negotiator but it might be better to finalise a deal with him than go for the option of nationalisation.

Tax investigation ?

Reading based accountants Tax-Sorted Ltd highlights the problems of a tax investigation by HMRC.Shaun McGuiness puts into plain speaking and easy to read format for any small to medium business that are uncertain or concerned about this issue.

Donations or donations?

In a surprising move yesterday Work and Pensions minister Peter Hain
remembered that he had not registered donations to his failed campaign
to become Deputy Leader of the British Labour Party. Can you Adam n' Eve
it. The Neath MP blamed an administrative error over the £5,000 not being
registered with the Electoral Commission.
The £5,000 was a personal gift from Jon Mendelsohn, who later became Labour's
Chief Fundraiser.

Daily Telegraph investigates Northern Rock.

The City staff of Daily Telegraph has carried out an investigation into the September collapse of Northern Rock. On September 9th Chancellor Alistair Darling
felt unable to overrule Bank of England governor Mervyn King, who was refusing to
accept the request of £30bn from Lloyds TSB. This was for central bank funding to
to support Lloyds TSB's rescue bid for Northern Rock. The Newcastle-based bank
now has received taxpayer funds £24bn. There have been calls that to protect
these taxpayer funds Northern Rock should be nationalised.

Virgin Money bid for Northern Rock!!

The Virgin Money bid for Northern Rock could see the former building society
pay the Richard Branson enterprise a percentage of annual revenues for the use
of the brand name. As part of a 20 year deal the figure could reach a total of
£200m. Virgin Money is the preferred bidder.
However, RAB Capital, which owns 7 pct of Northern Rock, does not think the
Virgin Money bid offers value and will reject it.
In today's Daily Telegraph Jeff Randall criticises the Richard Branson bid saying
Northern Rock shareholders will be funding their own rescue.

You would not adam n' eve it!!! HMRC.

Well, I have to admit that I am one of the affected by the security breach
at Her Majesty's Revenue & Customs (HMRC)
and I am not happy. Obviously, bashing together the Inland Revenue and the
Customs by then Chancellor Gordon Brown was a bit of a gamble, since it
brought together two organisations with a different ethos. Commentators
warned that the Revenue would become less user-friendly.

UK Chancellor Alistair Darling looked in a terrible state. The Northern Rock
mess is getting messier and Darling is the one, who has to sort it out.
Suddenly, the British taxpayer is on the hook for nearly a thousand pounds
each.

You will never beat Des Walker!!

This is what the Notts Forest fans used to sing when Des Walker was playing
for the club in its glory days. You could say the same applies to the
taxman or Her Majesty Revenue and Customs (HMRC). The Sunday Times reports that the Revenue is continuing its squeeze on
offshore accounts. What is so amazing is the tax recovered and a total of
£500m is expected to come in by the deadline of 26/11/07.

The Sunday Times notes that some 36,000 people will be formally investigated.
I bet they will need an accountant!!

Jeff Randall does great article on Northern Rock!

The Daily Telegraph's Jeff Randall has done a great article on the debacle of Northern Rock, which is being faced by British prime minister Gordon Brown. Randall regards as unlikey that Northern Rock will get any value for their shares.
Randall makes a telling comment "Brown is trying desperately to steer clear
of the crime scene, while maintaining the fiction that taxpayers' interests are protected."

This was from yesterday's Daily Telegraph. In today's the supposed free market Financial Times, there was an editorial call for the nationalisation of
Northern Rock.

In any event I think the Northern Rock shareholders are in a bit of a predicament,
although some clinging to hopes engendered by the interest of Richard Branson's
Virgin Group.

What's in it for us middle classes, Gordon?

In quite a perceptive article by Alice Miles in The Times last Wednesday,
November 7th, the usually right-on, trendy journalist has the title
"What's in it for us middle classes, Gordon?"
Ms Miles notes that she comes over middle class again when her child is going
to enter the educational system. The Times' columnist says

"It's definitely something to do with the slightly righteous tones adopted by
Brownite ministers and their acolytes about our duty to the underprivileged."

Does financial budgeting work in the UK?

Does financial budgeting work in the United Kingdom? In the September issue
of Accounting & Business, Peter Bebb notes the fixed period of the budget
does not allow organisations to change as conditions and priorities change.
In addition, the budget builds or not on the previous year's
budget.

For instance, the budget does not forecast the loss or gain of major contracts.
There should be a gradual increase in sales/revenues. For instance, the budget
at British Airways (BA.Com) must have seen some modification following major
fines over breaking competition laws.

Alice Miles offers support for David Miliband.

In today's Times the columnist Alice Miles writes an excellent article in support of
David Miliband and his adoption of a second child from the United States. Miles
points to the chaotic adoption system in the United Kingdom. I would think
most bloggers would offer their best wishes to Mr Miliband and his family, they
cannot see how the US adoption can square with the minister's supposed support
of the laws in this country. British legislation does not allow the adoption process
used by his American wife.
Obviously, 99 pct of people here would do what the Milibands have done but they
are not government ministers. I would be more encouraged if David Miliband tried
to get the legislation changed here but he seems more interested in snubbing
Saudi officials.

Public Good v Private Good - David Miliband.

It is a public good that we have a fully operating British Foreign Office Minister.
The public pays for this. So when the Saudis roll up to town David Miliband
should be there to greet them. If not, why not and I agree with blogger Zim Flyer
on this. Mr Miliband gets a pretty hostile reception from the
bloggers for his paternity leave.

Miliband is adopting an American child through a process not open to British
subjects. His absence through paternity leave must seem a joke to his Saudi
counterparts. At least, Her Majesty The Queen is really rolling the red carpet to her Saudi guests,
who bought our military aircraft and kept a whole industry
going. It is not usually possible to withdraw an insult. When the previous Saudi
king died, former Prime Minister Tony Blair made damn sure he was at the funeral.

Say goodbye to 10 pct income tax!!

In the United Kingdom there is going to be more fiddling about with a
starting rate of 10 pct income tax.
Rather than an easy system, which everybody can understand, the Labour regime is
changing changes it already made. So say goodbye to the initial 10 per cent
income tax rate. Did it work? Who cares? It is just another piece of British Prime Minister Gordon Brown's micro-management.

Victor Chu = famous Liverpool supporter!!

To show what a globalised world we live in, Hong Kong financier Victor Chu supports
Liverpool FC, whose supporters are sworn enemies of Manchester United. I suppose
I betray my southern roots by not minding too much about the Scousers. John Barnes
was one of the best players I have ever seen both at Watford and at Liverpool.

As Frankie Howerd would say, I digress. Mr Victor Chu is one of the backers of
a possible bid by Richard Branson's Virgin group for part of the Geordie bank
Northern Rock. One problem about any bid is that the Rock seems to need an
awful lot of funding from the Bank of England. At least Mr Branson thinks there is something worth saving at Northern Rock. Without any bid interest it looks like the Bank of England will have entered
the mortgage business.
I am surprised that Mr Adam Applegarth is still at the helm of the venerable
Northern Rock, since the funding requirements are so large thereby quantifying
the size of mess it is in.
Mr Chu, of First Eastern Investment Group, obtained a law degree from University
College London (UCL), and might stand a chance of understanding the famous
Geordie accent.
It is a shame that there has been no interest for Northern Rock from conventional
bankers Lloyds TSB notwithstanding. If Citigroup or Banco Santander made an offer,
they would be welcomed with open arms.
I am no longer a Northern Rock shareholder.

Red Lines or Red Herrings - Gisela Stuart.

I can never understand all of this European politics stuff but Labour MP
Gisela Stuart thinks that the famous red lines are just red herrings.
With the Lisbon summit preparing to ratify a treaty (rather than a constitution),
most of the Eurocrats are quite happy.


Well, the biggest red line to be frank, is the UK's absence from the Eurozone.
Something we share with Denmark and Sweden. I think Gordon Brown would like
to take us into the Euro mumbling some guff about securing economic
prosperity etc for future generations etc. We just have to wait and
see.

I think the Eurocrats would quite like to welcome Switzerland and Norway into
the Eurozone as well, although they would have to join the EU first. Spain would
love to get hold of Norwegian fishing stocks.

Matthew Parris does not like Gordon Brown (part 2)

Dear Reader, I have said before that Matthew Parris, a former Tory MP and
a current columnist on the Times, really does not like British Prime Minister
Gordon Brown.

In his Saturday column, Parris again compares Brown to the Wizard of Oz. The
journalist says "the chief economic wizard who has succeeded him (Tony Blair)
appears a shrivelled figure as the curtains are pulled back".
Then, later "After the effective disintergration of command at the very top of the Government......"

I suppose this is quite incendiary stuff. Although we all mock John Major, he did
win a general election on his own merits. It seems that Major had more bottle than
Brown, who would have surely won a poll in November, even it was with a reduced
majority.
I am not the only blogger in the UK quoting these Parris articles.
A "mea culpa" for my international readers for going on about Gordon Brown,
who is apparently British, but wants to sell us down the river with the forthcoming
European Summit.

Tax advice: Potential changes to the Annual Investment Allowance (AIA)

Roger Sherwood and Co, a firm of accountants, have highlighted to its customers changes that HMRC are proposing regarding how to write off purchases of plant and equipment for tax purposes.

As ever, here is another example of Gordon Brown hitting (small) businesses. Unless you look at the small print, the change would seem to encourage some firms to spend more on plant and equipment in order to achieve the tax savings - thereby potentially impacting their cashflow!

"Watch this space" is the advice of Roger Sherwood and Co, whilst the proposals go through a consultation period and may appear in next year's Budget.

Is Gordon Brown in the mucky stuff?

In this morning's Times, there is a brilliant cartoon of UK Prime Minister, Mr Gordon Brown. It is basically showing him putting on some brown trousers. The first stage of the cartoon bubble has "A Brown Vision", "For a Brown Future" and "In Brown Trousers".

Matthew Parris seems to be spot on about his criticisms of Gordon.

Education, Education, Education!

There have been considerable comment that British educational standards have been
falling despite the rise in record results for school exams. There has been the
argument that educational standards were deliberately compromised so as to allow
an increase in the number of university students. This was considered vital in
a knowledge economy.
Is education important? I remember reading a study about the longevity of New York
men and it appeared that ones with a college education lived longer, since they
were more likely to give alcohol and drugs a miss. So at a basic level education
is important.
In the years since 1997 the think-tank Civitas notes that the number of British
A-level passes have changed from 87 pct to 97 pct. The percentage of A grades
have changed from 16 pct to 24 pct. Research in this area has been carried out
by Dr Robert Coe of Durham University.

Are exams too difficult or too easy these days? Are the children doing too few or too many exams?

My views on Tory leader David Cameron!

As an antidote to my wittering on about British Prime Minister Gordon Brown, I thought it was high time to be balanced so I would share
my views with the UK electorate about Mr Brown's opponent, the Tory leader David Cameron. Unfortunately, this will not be an accomplished or accurate view of Mr Cameron, since I have never met him. In addition, my view is built up through the filters of the British media.
A characteristic shared by Mr Brown and by Mr Cameron is that quite a few
people do not like them. It seems several Conservative constituencies are
hoping that Mr Cameron will fall flat on his face at this week's party conference
in Blackpool. It appears that the Tory leader has not spent enough time with the
constituencies or with his MPs in a "hearts and minds" project.
Cameron does not have seemed to engender any loyalty from Lady Margaret Thatcher and Norman Tebbit and to disastrous effect. Tebbit has been especially withering about
the public relations background of Mr Cameron and has described Mr Brown as
the heir to Lady Thatcher.
Obviously, if David Cameron invited me for a drink I would be delighted to
accept. I would tell him that less time in Rwanda and more time chatting to
his MPs would be helpful.

Matthew Parris really does not like Gordon Brown!

Former Tory MP Matthew Parris did not like the Labour Conference speech of British
Prime Minister Gordon Brown. For instance, Parris noted the promise to build a
network of state youth centres and to impose fines on parents of disruptive
children. The former MP wondered if the fines were going to pay for the
youth clubs.
In his article in the Times on Saturday (29/9/07) Parris says the Prime Minister
"is emotionally the opposite of what he pretends" and then later comments
"Pull back the curtains guarding this latter-day Wizard of Oz and you will find
a crafty but unimaginative 20th century Labour Politician: a bully with a big
ego, a yellow streak and nothing to say"
In the same edition of the Times, Janice Turner takes the opposite tack and is
fulsome in her praise of Gordon Brown. Turner says that the Tories will "get
nowhere trying to challenge Gordon Brown's authenticity."
She praises his recent pledge to review 24 hour drinking legislation and to sidline
supercasinos.
What is my view? I suppose it is interesting that a lot of people, who know
or worked with Mr Brown don't like him. He was described as Stalinist by one
civil servant. I like Mr Brown's love of football but it was telling that
the prime minister's office rejected taking part in the debate proposed
by Michel Platini of UEFA about the growing influence of big money in the
game. I suppose Mr Brown is too scared to take on Mr Rupert Murdoch and Sky Sports but you have to wonder when a Thai fugitive can buy Manchester City. Apparently,
coming up on one weekend there will be just one Premier League game at 3pm on Saturday.

"I have been the Wild Rover!!"

Last month Accountancy Age reported that the cost of the investigation into
the 2005 collapse of British car manufacturer Rover has already cost £9.6m.
In 2006 the Public Accounts Committee calculated the British taxpayer was being
hit by a £270m bill for Rover's operations between 2000 and 2005. It is great
to be British but perhaps we could get to the European Union to pay for a bit
of this mess.
Gervase MacGregor of BDO Stoy Hayward was appointed in the summer of
2005 after finishing a three year investigation in another vehicle manufacturer.
MacGregor is working with Guy Newey QC of Maitland Chambers.I am
not too sure how they will treat the Blair/Brown government's objective of
keeping Rover going as long as possible for electoral reasons.

Gordon Brown emphasises British values?

In his Labour Party conference speech yesterday UK prime minister Gordon Brown
emphasised British values. For most people being British is just something on the
passport. The only British institutions seem to be the Royal Family and the Armed Forces. One thing in favour of Scottish independence is that the country is almost
there already with different legal and educational systems. It has been a long
time since Scotland has been referred to as North Britain.
Apparently, the prime minister wants to fight the next election on health. However,
the NHS is not a British institution. In Scotland and Wales there are different
spending levels. If you actually go into a NHS hospital does it feel British? How very
British for the English National Health Service to face claims of £4.5bn for alleged
blunders by doctors and nurses in maternity services. In fact, maternity services
are close to collapse in my part of England because of "reconfiguration" and of
non-British demand.

Northern Rock yet again!!

Sorry to revisit Northern Rock yet again but the weekend press has got me
thinking. It looks like a lot of people are guilty of 20-20 hindsight similar
to the collapse of Polly Peck, where one factor was the probing of the published
accounts by a Swiss German investor. If it was not for the credit crunch,
Northern Rock would still be around. If it was not for the Bank of England refusing
liquidity to help the interbank market, in constrast to the U.S Federal Reserve
and to the European Central Bank (ECB), then again the Newcastle-based institution
would be still with us. It looks like Northern Rock was hit by a perfect
storm.
However, Alistair Blair writes a perceptive piece in the Investors Chronicle, which
questions the famed low costs of Northern Rock and notes that its financial
strength was compromised by its reliance on short term borrowings rather than
customer deposits. Blair says the audit report could have been complemented by
a validation report, which would have pointed out its future financial
problems.
In the blame game nobody comes out very well but I thought Chancellor Alistair
Darling did put his head over the parapet in a media blitz. Some commentators
say Northern Rock depositors ignoring Darling's calls reflected the loss of trust
in politicians. Perhaps more of a factor was scrutiny of the deposit compensation
scheme. This led to a realisation with its lack of protection for relatively
minor sums.

Thank God it's Friday!! Mourinho and Northern Rock

I suppose the ramifications of Jose Mourinho leaving Chelsea and of Northern Rock
closing down will go on for a while yet.
If Chelsea are serious about winning the European Champions League then it would
have made sense to retain Mourinho this season, since he has the expertise and experience.
However, I got a sense that Chelsea's tactics were falling short and
other teams were getting better at facing them. A loss to Aston Villa and
a nil-nil draw to Blackburn Rovers contrast with performances in the previous title winning seasons.

I know that Northern Rock is still open to business as stated by its CEO
Adam Applegarth but the possible solutions do not look very palatable.
A competitor could make a low-ball bid but I am sure that the European Commission
is itching to get involved in investigating any possible solution.
In the blame game Bank of England and FSA board member Sir John Gieve is getting
a bit of a kicking. He had the temerity apparently not to read the Northern Rock
interim statement in July and to go on holiday to France when he knew about
the crisis.

Roger Wood and Co latest newsletter!!

I have received the September newsletter of the English accountancy firm
Roger Wood and Co. It says if you receive a dividend from running a small limited
company, you need to have the right paperwork in place otherwise the HMRC could decide it is part of your pay and charge national insurance on it.
The HM Revenue and Customs might view the dividend payment as a loan payment
and charge 25 pct tax on it. The accountants firm Roger Wood, which is based in
Dorchester,Dorset, says you need the appropriate minutes approving the
dividend payment. In addition, there should be a tax voucher proving the amount
of the dividend and that tax is deducted at source.

This view is not in the September newsletter of Roger Wood but I believe
the Gordon Brown government uses small companies as instruments of its
social policies. The role of small companies does not seem to be to
generate employment but to pay as much as tax as possible. The HMRC is
very attentive on dividend payments.

Changing the subject, in Dorchester, there is a very nice museum with a
diverse collection. I would really recommend a visit. The Dorset County Museum
is trying to raise a quarter of million pounds to save three paintings for
Dorset by George Romney.

Banking regulation has failed in UK!

It looks like banking regulation has failed in the UK with Northern Rock (NRK.L)
hitting the rocks. It looks like Bank of England governor Mervyn King has not
played his hand very well. He is looking isolated but he had problems with the
tripartite regulation of the Treasury, the FSA (which monitors banks) and the
Bank of England, which spends its time spouting on about inflation (CPI or RPI
anyone). Gordon Brown was responsible both for the tripartite regulation framework
and the adoption of the CPI, which excludes interesting things like mortgage
costs.
I think Mervyn is an Aston Villa fan, which makes him a romantic. In an imaginary
world one could make the case for letting banks fail to punish them for
irresponsible lending but practising the theory does not make a lot of sense.
The Europeans and Yanks must be laughing their heads off. They can't wait
for Gordon's next lecture on economic stability.

Northern Rock part two.

The appeals for calm have gone unheeded by Northern Rock savers, who today
(Monday) have queued up outside branches to get their money out. It has been
estimated that £2bn has already been withdrawn. The blame game is now being
played out with Bank of England governor Mervyn King apparently one of the
culprits.

Northern Rock?

It is a crying shame that Northern Rock has run into difficulties given its
commitment to the North-East with its foundation. I bought a few shares as a
high-risk punt and it was very high risk. I suppose I should just have to
sit and wait.
It is a very sad sight if you see queues of people scrambling for their
deposits. I remember a small building society called Southdown in East Sussex,
which was subject to a few rumours in August 1991 and that was that. There was
a scramble by depositors to get their money out and Southdown had to be rescued by
another building society. I would urge Northern Rock customers to be calm
and hopefully the weekend will give the bank much needed time.
Lloyds TSB has been viewed as a possible bidder but any predator might prefer
to buy the assets in a future distress sale. It depends on what the Bank of England
comes up with. What is clear is that the board and top management of Northern Rock
are looking at alternative career options.

VAT registration delays!!

I suppose VAT registration delays are the the price to pay for HMRC's increased
vigilance against missing-trader fraud and carousel fraud. However, it is hitting
the cashflow of new companies with the inability to invoice properly.

http://www.contractoruk.com/news/003334.html
"HMRC has said there is a temporary worsening of the VAT backlog due to 20,000 applications received from newly-incorporated companies, as a result of the managed service companies rules in the Finance Bill 2007."

I wish I was a non-dom!!

I wish I was a non-domiciled resident of the United Kingdom. Think of all the tax I could not pay!! UK Financial secretary Jane Kennedy has not really stepped on the gas in
terms of revealing details of the review on the tax rules for non-domiciled
people.
Let's hope the former NUPE union area organiser shows a bit of backbone about the
fat cats. If it means a few less Russian oligarchs in London, then we won't have
to worry about their security problems when they fall out with Putin.

HMRC crack down on Second Life.

The United Kingdom's HM Revenue and Customs is getting tough on
money made from virtual trading on
Second Life. Apparently, it is
benefitting from a super computer.
Patrick O'Brien, a spokesman for HMRC said individuals were free to make profits from trading through games such as Second Life, but would have to pay tax on gains which were greater than their annual capital gains allowance of £9,200.

European Referendum?

Are we going to get one? Probably not. Does it matter? It depends on your
acceptance of the European project of a common foreign policy, Euro army
etc. The Europeans would probably prefer a federal structure for the UK
and are nearly there with the various administrations in Scotland, Wales
and Northern Ireland. Brown/Blair are always tight-lipped on what they
get up to at this Euro summits, although there is much talk about red
lines.
One problem is the UK's lack of membership of the Euro zone. There is also the possible departure of the Club Med countries. People say this can't happen but in Italy the politicians have been talking about the possibility of such a
move. If Italy had the lira, which they could devalue, then this would be
some protection against German exports.

UK public pay row and economic stability.

With the surprise walk-out of UK prison officers, Prime Minister Gordon Brown says
he won't put economic stability at risk!! The prison officers don't want another year of below-inflation rises. Their 2.5 pct award was staged in two instalments,
which does not sound like a lot of fun.
Apparently, the nurses are also up in arms. Hopefully, it will not be a year of
discontent. However, giving low pay rises to people, who are on below average
earnings, does not seem fair. It seems not to happen to judges.

Poor old Martin Jol!!

I was surprised at the Bank holiday weekend to read that Martin Jol was not in full charge of Spurs' transfer purchases. The North London club buys players like confetti
and they seem to have four of everything. The club has been unlucky with injuries but
they appear to lack creativity in midfield while the defence seems to sink goals.
I feel sorry for UK Chancellor Alistair Darling, who apparently will have a lower
tax take due to lower-than-expected City bonuses. We will have to wait for his
first budget to see if he has the capacity to surprise.

Postscript: We have since said goodbye to Martin Jol and now have Juan de Ramos buying players like confetti. Last night's (15/9/08) match against Aston Villa was a disappointment going down 2-1 at White Hart Lane.

Credit crunch?

In the UK the banks have been racking up bad debts on credit card lending. Easy credit was extended because it was so profitable. The banks have called for borrowers to
be responsible and actually pay the money back. It is surprising how difficult this
has been given the levels of record employment in the UK economy. For instance,
HSBC lifted its British unsecured bad debt charge by 5 pct to £380m
for its 2007 interim results. Obviously, future growth in the British economy will be
affected if the banks cut down their lending in this area.

Increased taxation means more work for accountants?

Does an increase in UK business taxes means more work for accountants? I suppose that
they hope so. The Institute of Directors is a bit concerned about the introduction of supplementary business rates and IoD secretary general Miles Templeman is worried that a small increase in normal business rates could lead to the closure of viable enterprises. This
follows the recent Lyons report on the issue. There is the feeling in political circles that
the burden on council tax payers has reached its maximum and now in is the time to
tax business enterprises.
Natalie Evans of the British Chambers of Commerce said business could be hit by an extra
tax of £1.5bn.
Changing the subject it is sad that ICI is being acquired by the Dutch group Akzo Nobel. It
reminds me of the title "Selling England by the Pound". The UK is up for sale and BAA has shown some of the pitfalls of foreign owners with 2006 investment being reduced so as
to pay off the borrowings. And letting foreign state owned enterprises buy up British
companies is insane. I know we let French state controlled group EDP buy up London Electricity
but letting Middle East and Chinese state agencies do the same is fraught with problems.
P&O provided significant support during the Falklands War but would it do the same
in future with its Dubai owners. I suppose the British government could nationalise its
way out of trouble.

Accountancy Institute criticises HMRC.

The accountancy body Institute of Chartered Accountants in England and Wales (ICAEW) has criticised UK state revenues collection agency HMRC over the delays in VAT registrations.
These are running at around three months and new companies find it difficult to trade without
one. The ICAEW wants the HMRC to pay compensation and I suppose pigs will fly before that
happens. I get the impression that HMRC just wants to rake the money in.
The VAT delays are due to more checks against fraud. HMRC says these are essential
but promises there will be a plan to improve the situation.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/13/cnvat113.xml
The missing trader fraud (carousel) even distorted UK trade statistics with mobile phones. for instance being bought VAT free in Europe and then eventually being sold back to
the continent. Apparently, it was costing the Treasury £5bn a year. Nice one Gordon Brown!!
http://politics.guardian.co.uk/eu/story/0,,2049661,00.html

Friday afternoon - Carlos Tevez seems to be wrapped up

Dear Readers, it looks like Carlos Tevez, who seemed to have played for but not owned by
West Ham, is on his way to Theatre of Dreams. I don't know how he will fit in with the
other stars in the forward line while the midfield and defence seem a bit shakey. I have made
a sporting bet that Man Utd will not win the Champions League. I know this is not very loyal
but I suppose reflects recent experience.

Blogs: I have been looking at the competition

I suppose this blog is a bit monochrome without the use of a blizzard of nifty graphics.
I have been reading the US one TPM Muckraker and apparently it brings in quite a
bit of moolah through advertising. Ranting about Gordon Brown, Manchester United
and accountants is probably not much of an advertising proposition, so this blog is
adopting a kind of public service remit for the moment.
In his mission statement Gordon Brown says:

"Every child should have the best start in life, that everybody should have the chance of a job, that nobody should be brought up suffering in poverty. I would call them the beliefs that you associate with civilisation and dignity."
Youth unemployment is higher now in Britain than it was in 1997 despite Mr Brown's New Deal
programme. As for a good start in life don't go to some schools round here.

Gordon Brown's ENRON economics

Dear Readers, I point you to a brilliant article by economist Liam Halligan in last week's
Sunday Telegraph, which describes the ENRON economics of Gordon Brown, our esteemed
former Chancellor and now Prime Minister of the divided United Kingdom. ENRON was
the Texas-based energy company, whose collapse led to a major tightening of US accounting
standards in America. Gordon Brown went on a deferred spending spree using PFI projects
such as building hospitals, schools and prisons (!) but letting other generations pay for them.

Just come back from summer hols

Dear Readers, I have just come back from summer hols to find quite a bit of the nice parts of
England affected by floods. It did not look like we were very well-prepared and I read that
Hull is still suffering in the aftermath. Gordon B. has made the money promises he used to
squash when they were made by his big mate TonyB.
http://www.searchaccountant.co.uk/
Alistair Darling's big idea (which has been recycled a few times) is 30 year mortgages, which
even in States don't actually last 30 years, because they are rescheduled. One idea for a more
stable market in UK residential property was higher stamp duty, which was suppose to
have cooled prices. Nice one Gordon Brown, who has now suggested concreting over the
South East, so that there is more supply. However, demand is distorted what with buy-to-let,
people accumulating 20 properties and with foreign buying. If Madonna buys up half a street
for her kids and servants, then there are less swanky houses for the rest of us.
To be fair it is not just the UK, which has outrageous property prices. Capital cities throughout
Europe have seen sharp rises, while some parts of the US, such as New York have also
experienced major appreciation. In the US there can be some really nifty tax breaks for
buying residential property.

Tevez, who owns him?

I am trying to understand the murky Carlos Tevez affair. Who does own him? West Ham, Man Utd or Media Sports Investment? Despite the influx of new players I think Man Utd will still be
hard-pressed to win the Champions League this season. In recent years they have come up
against Real Madrid and AC Milan twice and have been found wanting. Just hope that
Man Utd will not go out too early!!
If you are interested in Manchester accountants then there are a few. I suppose I don't begrudge the amount of money the players make since it is a relatively short working life,
although the second career won't be running a pub like in the old days. Frannie Lee and
Mick Channon have been equally successful following their footballing days in their new
careers but they are rare exceptions.

Don't forget the new tax charge for the Man with the Van!

Don't forget that the Man with the Van will be liable to a £3,000 benefit in kind charge for private use, which is a shame. Does he have to buy two vans!! That does not sound environmentally friendly. The Weymouth accountants Roger Wood & Co notes that the
smoking ban applies to commercial vans from July 1st.
Roger Wood also goes through the new regulations, which affect the transfer of cash
by travellers to or from the European Union to non-EU countries. This is to help fight
money laundering and counter tax evasion. Sums of 10,000 euros or more have to be
declared.

Tax errors by the HMRC

In the UK, the National Audit Office has found that £157m was overpaid to the HMRC in tax
for the 2006/07 tax year. Apparently, pensioners are more likely to be affected by tax
mistakes. The HMRC also wants the power to dip into bank and building society accounts
to get unpaid tax rather than go through the bother of a legal process.
The tax system has become too complicated and this leads to the mistakes and to the lack of
trust on both sides. Apparently, the ancient Egyptians had a sophisticated tax revenue
system linked to the performance of the Nile. I am not suggesting that the UK one should
be linked to rivers, which would be in poor taste given the flood damage in England, but
there should be an easier way of paying tax. If you have trouble, go and see an accountant!!

accountants in Bath

Dear Readers, have you ever been to Bath, famous for its Roman features, in the west of England? If you have, you know it pays to book accommodation ahead. We just turned
up and eventually ended in "Basil Fawlty" territory. The B and B owner gave us the smallest British cooked breakfast ever with one chipolata representing the usual two sausages. The bread and breakfast place was very nice in being a newly redecorated house in the country outside Bath except for the "Basil Fawlty" moments.
Bath is very picturesque although there is the problem of tourist prices. If the sun is shining and you close your eyes you think you could be somewhere in Italy (pricewise). This is because of the rip-off tourist prices.

If you ever need an accountant in the don't worry!! There are plenty on the searchaccountant site. www.searchaccountant.co.uk.

Stocks and shares

Dear Readers,
don't you hate the UK tax treatment of shares!! There is the stamp duty when you originally
buy, so no wonder people are spread betting and trading in contracts of difference to
avoid the tax. Then, if you are lucky enough to make a profit, you have to do pesky
calculations for taper relief. Or if your tax affairs are complex, you can get accountants
to do the calculations.
On the other hand the tax affairs of most people are simple but it just needs a bit of a
share portfolio, a second home or a buy-to-let property to make tax affairs complicated.
I suppose there could be a tax onslaught on second homes both in the UK and abroad.
Houses and flats are not very mobile and so are easy to tax. Stamp duty could rise to
continental levels. I suppose there could be conflicts between individual national
tax administrations trying to raise as much tax revenue as possible from
residential property. In Spain, different rates of capital gains tax are levied on property
sales depending on whether you are resident and non-resident and I am sure countries
will try and raise the tax take from foreigners (Brits).
If you do self-assessment, don't forget the July 31st deadline from HMRC if the 2005-06
tax return has not been sent in by January 31st. There will be a second automatic penalty
of £100.

Accountancy matters

Dear Readers, a survey of Robert Waters notes that there is a shortage of accounants.
Accountancy is seen as a general way into business so that banks and commercial companies
are having to take non-qualified staff for internal accounts. Small companies can use
the services of accountancy practices. For instance, in Kingswood, Bristol you could see what
Evans & Partners has to offer in terms of tax, accounts and payroll. It aims to take the
strain over red tape.
Bristol is also famous for its nightlife and was once considered the cultural capital of Wales
before the renaissance of Cardiff. The city is famous for the friendly rivalry between its
two clubs although a Gashead once told me that the main problem with Bristol was that there
were too many City fans on the council. Bristol Rovers will have to play a few games
in Cheltenham next season following their amazing promotion.

Gordon's reshuffle

Dear readers, I thought I would share with you my thoughts, albeit limited, on the reshuffle


of Gordon Brown's cabinet, which mainly has responsibility for English affairs given the


devolved administrations in Wales and Scotland and given the increasing role in foreign affairs


of the European Affairs. I know this is a bit off the accounting brief but it is Friday afternoon


and you are probably in need of light relief.


Is the 41 year old David Miliband looking forward as Foreign Secretary to be squashed by the Americans, bored by the Germans and terrified by the Russians? David has worked tirelessly on the Green agenda and thought that nuclear power was not the whole answer to our future energy needs. Perhaps we will be able to buy in the nuclear power from France and go without the fag of building the actual stations. Apparently, David saved quite a bit of inheritance tax with a nifty deed of variation in the past.
Ruth Kelly has had more ministerial posts than hot dinners. Recently she got mauled in the
House of Commons over HIPS and she got a real duffing-up at Education. I suppose Transport
is a nice cosy billet and making decisions over airport expansion or Crossrail will be a piece of
cake for someone of Ms Kelly's talents.
The new Chancellor is the old one Gordon Brown, who keeps on intimating that he went to
a local comprehensive, when it was a selective school. He has put in his Edinburgh mucker
Alistair Darling as Chancellor. Darling's masterly inaction at Transport shows how it can be done for Ms Kelly. Gordon's challenge will be to prevent the boring bits of sucking up to foreigners
as Prime Minister and to further his first love of further expanding Tolley's Guide.
Gordon has been the accountant's best friend with the constant changes and increased taxation. For instance, if you need an accountant in Birmingham, this will help you out. Although Gordon has probably turned your pension into mush, he is a formidable politician since he actually believes in what he is doing. Usually, the Tories are unable to lay on a glove on him since they don't understand what he saying, since it can be a mass of incomprehensible detail. Don't mention the UK's productivity growth or the current account deficit, Gordon will only get annoyed and put in new taxes. Congestion charges on cars will probably come after the next election.
Obviously, I am probably doing these ministers a great disservice. They probably have amazing ability to get where they have. I was impressed once seeing Alistair Darling talking to
Vauxhall workers at Ellesmere Port in a very difficult situation. He was quite brave. Sorry,
I have'nt mentioned other ministers but I don't envy their lot. Tony Blair's main ability
was not to get worried about disasters such as Iraq, cash-for-honours and Ecclestone. The
new administration will miss this ability.

St Albans Continued

Another good pub in St Albans is the Goat Inn. Pubs in St Albans and everywhere else in England will be smoke free from July 1st 2007. It is thought that pubs will be able to compensate with food sales. The legislation will affect all businesses not just pubs.
For instance, there will be a fixed penalty of £200 for employers covering failure to display a no-smoking sign.
Perhaps I will be able to go to the boozer for a sneaky pint without being incriminated by the
smell on the clothes. Or will I miss out on possible romantic opportunities by not smoking?
Apparently, smokers are getting to know each other outside pubs in the Emerald Isle.

Taxation on small companies - thanks Gordon

I have just been reading a newletter from Gilberts Chartered Accountants (based in St Albans), which notes that in the infinite wisdom of Gordon (Brown, clearly), small companies will pay higher tax rates than bigger companies.

What a bummer for the small business! Gilberts highlights the possibility that it could be beneficial for many small limited companies to go back to their original status as a sole trader. They are suggesting that at higher profit levels, incorporation generally remains worthwhile. However, for those businesses trading as a limited company showing a profit of £50,000, a saving of nearly £4000 could be made - and more if some of the profits are left in the company.

Gilberts do point out that there are other benefits to be gained from trading through a company, not just in terms of tax, so it is worth talking to your accountant about you particular circumstances.

Following this public service announcement, I would like to note that St Albans is a very interesting city with the oldest pub in England, which is called The Fighting Cocks.

Welcome to my blog

Hi all,

Just a quick post to welcome you all to my new blog in which I hope to be able to highlight important issues relating to your money, and accounting in particular.

As we all know, taxes change, legislation changes and advice changes from one day to the next. I will try to highlight issues that are important to me, in the hope that they will be of some importance or interest to you. If you don't like accountancy and don't like accountants, then perhaps this blog is not for you(!) but if you do then please read on!

Bye for now,

The Fletch