Horse feathers

I'm delighted by the way that the social media and the newspapers have been full of gags about the horse meat scandal.  Tesco's bologneighs, My Lidl pony and Findus Deep Fill Horse Lasagne are already well known on the comedy circuit.

Two things bother me: one is that I don't get the scientific thing about a lasagne being 100% horse meat - what about the pasta, bechamel sauce and all the other ingredients? Does it mean that all of the meat came from horses or that all of the meat tested positive for a trace of horse DNA?  One is substitution, the other contamination - not the same thing. 

The other and bigger concern is that all this furore about cheap meat is obscuring the big scandal of the year so far - the disastrous story of Mid-Staffordshire NHS.  This has been driven off the front pages by hysteria about meat which admittedly should not be where it was found, but is not diseased and so far is not shown to have contained bute, a treatment for horse ailments that is harmful to humans. Without wanting to rush off to Belgium for a mouth-watering steak at a traiteur chevaline, I do think we've lost sight of the priorities.  We should be calling for heads to roll in the NHS management instead.

Good job

The New Year's Honours List is always a topic for controversy, and the 2013 edition was just the same. Some people argued that Paralympians weren't honoured to the same degree as Olympians, some people who should have had honours didn't. I wish Danny Boyle had accepted a knighthood as the nation's thanks for a fantastic opening to London 2012 - it was richly deserved.

Nearer to home, it was great to see the front page of the Haslemere Herald report three local honours.

	Colin Wagstaff founded the King's World Trust for Children, an educational charity that's doing fantastic work in India, and receives an OBE.
	Hamish Donaldson is chairman of the Haslemere Festival, and receives an MBE.
	Carl Tantum has given years of service to local charities including Bordon Liphook Haslemere Charity which runs the Care charity shops.  He also receives an MBE.

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.