Hampshire Rugby Clubs map - updated

I've now updated my Google map of Hampshire Rugby Clubs (link) for the 2012-13 season. It's based on the latest Hampshire RFU handbook and should include all Hampshire RFU member and associate clubs, and schools.

The general rule is that associate clubs with no ground listed are not shown on the map, so this leaves out Rugby-based charities that are associate members of Hampshire RFU. However, you can find out about their activities through these links:

• Rugby For Heroes RFC 
• Wooden Spoon RFC

I've parted company with the handbook over the ground for University of Southampton Solent, which I refereed last season at the Hardmoor Sports Ground, opposite Trojans, rather than at Southampton RFC.

The map also includes Farnham RUFC's new clubhouse and grounds, officially opened by Lord Coe on Sunday 2nd December. It's at Wilkinson Way, Monkton Lane, Farnham GU9 9ND - off the A325, not very far from Sainsburys.

HMRC and Starbucks, Amazon and Google (amongst others)

It seems to me that Her Majesty's Revenue and Customs (HMRC) has allowed companies like Starbucks, Amazon and Google to value inter-group transactions with complete freedom. This feels like public sector complacency, evidence of a cosy relationship where nobody on the collections side felt motivated or able to do much to change the status quo.  George Osborne's announcement of a boost to HMRC's legal teams and computer systems may shake things up.

In the case of Starbucks, their logo and their recipes have been valued as intellectual property bought from the parent group, even though the recipes have very probably been designed in the UK to match UK tastes. Who knows where their logo was designed? Their coffee beans have been reported as bought from a company in the Netherlands and roasted by a company in Switzerland. Has HMRC ensured that the valuations in all of these transactions are valid, or is it possible that Starbucks is unchallenged and can charge its UK operation well over the odds because there's no element of arms-length dealing? And how much cheaper could a cup of coffee be if the raw materials were bought at UK market prices?

Personally, I would find it hard to give up Amazon, if only due to Kindle. It needs to be supplied with new material on a frequent basis, and Amazon is the only source. According to The Times (£) today, which quotes the Public Accounts Committee, the company paid £151 million in 2011 alone for intellectual property, e.g. its brand name. That was enough to reduce its stated profit in the UK to £74 million - in other words, reduce it by over two thirds.  Smells bad for Amazon. 

Google seems to have been paying royalties to its operation in Bermuda. Presumably because Bermuda is the source of its search engine expertise? Again, this smells.

HMRC should examine all intra-group payments for Intellectual Property to make sure they're fairly valued. They should challenge retrospectively and with sanctions where valuations are not fair. And when they've had a good look at these, they should compare the price of coffee beans in open markets and in intra-group markets. And make some examples pour encourager les autres.

Taxation and freelance workers

There's much blather in the news at the moment about BBC workers who are being paid as freelancers rather than as employees. Some of these are high-paid talent with multiple sources of income including personal appearances, books, after dinner speaking, and so on.  Some are much lower paid, working from contract to contract. 

A lot of commentators say that these should all be paid with tax deducted at source and suggest that the BBC is somehow avoiding tax or encouraging tax avoidance. These include not only the press, but also legislators, who maybe ought to be better briefed. 

Let's look at some simple numbers:

If the rate for the job for a salaried employee is a salary £50,000 plus employer's pension contribution of say 10%, the cost to the employer including employer's National Insurance is £50,000 + roughly £5,900 NI + say £5,000 pension.

This excludes all other benefits and costs of employment; some of these will exist for on-site contract workers anyway (such as the cost of office space), and some won't, such as health care, certification, training, and some equipment and services.  That's a total outlay of £60,900.

To be able to pay the same salary, employer's NI and employer's pension contribution, a contractor will need to receive the same amount.  However, employers have long been recommended to insist that contractors work for a personal service company (PSC) or umbrella company to ensure that liability for unpaid Income Tax and NI doesn't fall back on the employer in case that a contractor goes missing. 

So the contractor also has costs of establishment, insurance and administration for a PSC, including employer's and public indemnity insurance, accounting and filing, payroll, and bank charges.  This may amount to a few percent of the total turnover, say £2,000 per annum.

So to have the same net income and pension contribution, a contractor needs to bill say £62,900, possibly with VAT to be added depending on registration limits.  In that case, the outlay to the employer is another £12,580, although some of this may be offset against VATable supplies.

And having received £62,900 plus VAT, it's then the PSC's responsibility to pay salary, Income Tax and employer's and employee's income tax - exactly the same amounts to Her Majesty's Revenue and Customs that the employer would gave paid. The VAT, if charged, also has to be paid - that's additional revenue for the taxman.

The problem in this picture is the contractor that finds a way to evade making the tax and NI payments that would be due. If there is evidence of this abuse, HMRC already has powers to clamp down and should just do it.

No-one's suggesting that all contract staff are tax evaders.  It's not necessary to take away the flexibility both for employers and for staff that prefer to work on contract by insisting that everyone must become a PAYE employee. 

God bless HMRC

HMRC Online Services proved to have a sense of humour today.  I visited one of their Help pages to find out exactly what was meant by the 'Establisher'  of a registered pension scheme.  Here's a screen shot and the text including the link:

Section 154 Finance Act 2004 lists those who may establish a registered pension scheme

For further guidance on the establishment of schemes select the Registered Pensions Schemes Manual link in the left hand bar and refer to RPSM02300060.

It's delightful: the link takes you to a page that lists UK Public General Acts, supplied by the National Archives.  Just what you need as help for a technical question and to make sure you fill out the pension scheme registration form accurately. 

Border Force targets

According to The Independent today (3rd May):

Under its targets, the Border Force must get non-EU passport holders through immigration at Heathrow in less than 45 minutes for 95% of the time.
Its target for EU passport holders at Heathrow is less than 25 minutes for 95% of the time.

When you've travelled from, say, Paris, the time in the air is likely to be little more than the target time quoted above for non-EU passport holders. Who thinks such loose targets are acceptable? In many hundreds of business flights, it was almost always my experience as a returning UK citizen that border formalities would take minimal time. That's how it should be. In my view, 95% targets of ten minutes for UK/EU citizens and 30 minutes for non-EU citizens would seem to offer reasonable service. That would give median waiting times nearer 5 and 15 minutes respectively.

There's no reason at all why the Border Force can't know at any time of any day exactly what volume of passengers is due to enter the country at any time in the next two hours, and to a high degree of accuracy also in the next day, week and month. Once passengers are on their inbound plane and the plane is in the air, the border staff should be rostered to meet them. It's not rocket science.

Charity tax debacle - update

The Spectator has a lot more information than my simple opinion piece, blogged yesterday, in its Coffee House blog: How Mitt Romney inspired the British charity tax debacle. Fascinating insight, and certainly confirming that the Departmental ministers for Business and for Culture, Media and Sport were cut out of the policy-making loop.
The Times gave five cases where HM Treasury say that charitable donations are abused. These all look pretty tenuous and could be handled under existing rules if the Charities Commission and HMRC do their jobs properly. To summarise the abuses and the charities' response:

	Treasury case	Charity response
1	Shares donated to charity found to be worth less than claimed	Relief is based on fair market value
2	Business gives money and claims relief. Money is then lent back.	Government has already cracked down on 'tainted donations'
3	Relief claimed for donation to a dubious charity that doesn't do much charitable work	This is for the Charities Commission to police
4	Tax relief claimed for donation to a dubious foreign charity	It's not allowed to claim relief on donations to charities outside the EU
5	Tax relief given on donation to UK charity which passes the cash to a dubious charity abroad	UK charity has to satisfy HMRC that the foreign charity would qualify

In a final dagger thrust to the Government's credibility, it also vented rumours that Oliver Letwin is to be asked to sort out the political mess. For heaven's sake!

Charities tax breaks - impact analysis?

The UK government has decided to limit the tax breaks that are available for charity donations because there are some cases where people use their donations to reduce their effective tax rates to very low levels. The feeling seems to be that money donated to charities is unjustifiably lost tax. The policy appears to have been introduced without proper planning or impact analysis. Other Government departments seemed not to have been consulted.

David Gauke MP, the Treasury Minister responsible for defending the policy on BBC2 Newsnight programme tonight (12th April) mentioned charities that don't distribute much money to real causes, but refused to name them. Apparently some charities lend money back to companies controlled by their 'donor'. To me this is a sign that the Charities Commission isn't doing its job properly, not a reason to cut off significant flows of major donations to key charities that support (to pick a few from many) health, social causes, sports, and the arts.

Whether he was completely out of his depth, or just defending the indefensible, is hard to say. But to me, without names and evidence, this just looked like bullshit being raked together to defend a poorly thought-through policy announcement.

Mansion tax - jobs for the boys (and girls)?

We're in the run-up to the Budget, and the temperature is rising.

Today there's been the spectacle of the Business Secretary trying to dictate the details of the Chancellor's proposals, in a way that would be slapped down very quickly in a single party Government, but which is apparently acceptable in a coalition.

Time and again, under the last Government and under this one, proposals are made and then become policy without the support of a proper impact analysis.

The 50p Income Tax rate was brought in as a political headline grabber without a decent analysis of its likely impact. There's always been concern that by driving away potential high earners, by making the UK appear less business-friendly, and by giving people a greater incentive to optimise their tax arrangements, this has actually had a negative effect on the total tax take. At least it's easy to collect, through the normal income tax system of PAYE and self-assessment returns, and payments are made direct to HMRC.

Now Dr Cable is trying to hit the rich through a so-called 'mansion tax', in exchange for which apparently his party would be happy to see the 50p rate abolished. Someone said on the BBC this morning that a 1% per annum tax on the value of properties above a £2 million threshhold could for some given set of assumptions bring in £1.7 billion, which is an improvement on the most optimistic guesses for the 50p rate. By the way, that's at least £10,000 that the owners of a £3 million property will have to cough up. Each year, and whether they have any free income or not.

Issue	Impact
No mechanism in this country for annual charges by central government on the owners of property - it only gets involved at sale or inheritance	Would the Government ask local authorities to collect the tax and hand it over? Would they pay local authorities a proportion of the collected amount for this service? And would they ask them to identify the target properties or would a whole new register, inspectorate and system of appeals be needed?
Tax would be assessed on unrealised gains	Either taxes have to be paid by liquidating some other asset or they have to be put on account and collected when the asset in question is sold or transferred. And that could be a very long wait.
Valuations can go up and down	It's fair to charge tax against capital gains when the gain is realised, but it must also be possible to reclaim or offset tax if a loss is made

I don't have a mansion or even an average-priced London house, but I fear that yet again, the UK is in danger of introducing a whole new piece of complexity to the taxation system. This will create jobs for the boys and girls - lawyers, tax collectors, surveyors and other hangers-on. However, it's quite likely that there will be little real positive benefit (after these costs) for the public purse, and an increasing level of misery for those affected.

It would be much better to direct the lawmaking effort aggressively at the Stamp Duty system, bringing all property in the UK under its scope, regardless of ownership, and then only giving relief against it under carefully-assessed criteria.

Kiva - an invitation

I just realised that Kiva wasn't among my blog tags. It should be. It's a US-based organisation that allows you to contribute to small loans made by microcredit institutions across the world. It allows people who don't normally have access to credit to develop businesses or personal opportunities that can change their lives.

Some people are worried by microcredit because the institutions that arrange loans and collect the repayments make a profit from doing so. To me, so long as the lending terms are fair and not usurious, I have no problem with that at all. It's all part of the development of an entrepreneurial business culture, and I think it should be applauded.

The process is fairly simple. The lending screens enable you to see the headlines of (usually) the thousand or so loans that are currently fund-raising, and filter them or order them by country, duration, purpose, male/female, individual or group, and so on. Then click through to see full details and make a loan. You can fund your account through PayPal which in turn can be funded from a debit or credit card, or a bank account.  The minimum loan amount is USD 25.00, about GBP 15.77 at current rates, less than a few beers at my local pub.

When you make a loan, the process allows you to make a donation to Kiva's running costs. This is deductible in some way that I don't understand for US taxpayers, but there's no Gift Aid deduction for UK taxpayers and so I decline the opportunity. When I eventually stop doing this, I'll simply donate my whole balance instead.

My experience has been pretty good. Two loans out of 79 so far have ended with a loss, one of USD8.70 when the borrower defaulted, and the other a currency exchange loss of USD0.10. Two more are delinquent, very late with payments but both have paid back more than 80% of their loans.

 I don't know of any equivalent that's Gift Aid-efficient in the UK, but I'd recommend this as a relatively low cost way to make a real difference to people that are doing their best to improve their lives and the prospects for their families. Here's a personal invitation link.

RBS - stop rocking the boat

I love the BBC Radio 4 Today programme, and listen to it every weekday.  But this morning's (23rd February) episode had me shouting at the radio.  Michael Fallon, MP, member of the Treasury Select Committee, and James Barty, of the Policy Exchange, were interviewed by Evan Davis following the Royal Bank of Scotland results announcement - a £700 million loss in 2011 compared with about half of that in 2010.  In the context, that's not actually too bad a set of results.

Evan Davis asked Michael Fallon questions with the drift that we need to change track - sell, hold, or do something else:
(a) the Government should dispose of its RBS shares now and 'cut its losses'
(b) "why do we need to get our money back, we know we've lost the money"
(c) if not then clearly investing in banks is good, and we should buy a couple more
(d) if share price is going to go up why don't we buy more shares
(e) or maybe we should break RBS up into smaller businesses or mutualise

James Barty thought it would be a good idea to give away the shares but with a clawback for the Government when selling.  This would remove the Government overhang of 83% of the shares, and reduce political interference in the bank's management, but it's never been tried in this country.  [Given the known track record of public sector information systems, it could even be a struggle to identify eligible reciipients in a reliable way].

Here's a link to BBC iPlayer - the segment starts at 07:52 (1hr 52mins 15sec into the recording). 

Harm is already being done to the financial sector in this country, with the media fanning the flames of an anti-business culture. The Government is damaging the valuations of banks by imposing stricter banking regulations far faster than competing countries.

The drift of the interview was disappointing, and the questions badly thought out.   It's really unhelpful to the aim of recouping the full public stake in RBS, for the BBC to probe for ways to destroy the value of assets that we're seeking to sell. Stephen Hester has charted a course - stop rocking the boat.