The Big 4 accountancy firms finally appearing in front of the Public Accounts Committee (PAC), HMRC in the dock over its 0845 phone lines and Agent Provocateur in trouble two weeks before Valentine’s Day all made the headlines this week. Steven Perryman delves into this week’s news
1. Big 4 accountancy firms have their day at the Public Accounts Committee (PAC)
Margaret Hodge – the PAC’s unofficial Mounty – finally got her man (well, three men and a woman) this week when the tax boffins from the Big 4 accountancy firms finally appeared before the PAC.
Things got off to a shaky start, with all four having to divulge their firms global and UK turnovers in turn. Initial exchanges proved frosty as all four gave the obligatory ‘no comment’ response when pressed about how much of that was profit.
What followed was two and half hours of, as Hodge herself conceded near the end of the session, ‘going round the houses’. What was abundantly clear was that the Big 4 had picked well and not sent along any Andrew Cecil’s (the Amazon executive torn to shreds by the PAC late last year). These were bright and well-rehearsed individuals.
Perhaps the real fascination was in seeing four competitors sat together batting for the same team. Eyebrows were certainly raised when Hodge unnecessarily asked each to divulge whether their salaries were six or seven figures:
Jane McCormick of KPMG: ‘Six’
Kevin Nicholson of PwC: ‘Six’
Bill Dodwell of Deloitte: ‘Six’
John Dixon of Ernst & Young: ‘Er, seven’
How Dixon must’ve loved that. And how the HR departments of the other three firm’s hearts must’ve sunk. Especially those at Deloitte, with Dodwell coming out as the undoubted star of the whole session.
He offered unfailing confidence in his subject, along with a jocular response when needed. It was a bravura performance and the PAC quite rightly steered well clear of him whenever possible. A seven figure salary awaits for his star turn, you would imagine.
Away from the constant pressing were some more, slightly less pertinent, conundrums:
- Why does Hodge always wear the same suit?
- Where did Austin Mitchell MP get his stars and stripes braces from?
- Were said braces a subliminal message about the tax arrangements of Starbucks, Amazon and Google (Derren Brown eat your heart out).
- Do all MPs wear novelty ties?
- Where did Stewart Jackson MP disappear to near the end? The Commons buffet?
Never one to miss an opportunity, internet giant Google (whose ears must’ve been burning) decided to use the Big 4 as a cover with some good PR this week. It went for the PR jugular: helping children with their education.
The company will supply thousands of children in the UK with free Raspberry Pi (no, not the Ang Lee film) computers to encourage them to develop programming skills.
Great stuff, although the elephant in the room hasn’t quite made a dart for the door, with BBC News using the launch to ask its chairman, Eric Schmidt, the inevitable tax avoidance question.
Away from the PAC The Times reported that wealthy donors used the Cup Trust to avoid £46m in tax in an extensive abuse of Gift Aid incentives designed to encourage charitable donations. Hodge, it would seem, has a new rabbit to chase now.
2. HMRC in the dock over 0845 phone lines
Ever phoned a company and had to listen to the metronomic din of an automated voice informing you ‘your call is important to us’? I think we we’ve all been there and played that particular game of ‘hang up chicken’.
Margaret Hodge obviously has. Not content with taking the Big 4 to task this week, she has also been having words with HMRC for its ‘low ambitions’ after it revealed it expects 20% of the 80m calls to hotlines – many of which are 0845 numbers – to take longer than five minutes to answer.
HMRC’s chief executive, Lin Homer, was the man on hand. During the cross-examination he also revealed that HMRC’s 0845 network provider receives close to £1m profit from the calls. While it doesn’t make a cash profit from the calls, he did concede that it does receive ‘extra services’ from the service provider in exchange for its custom. Phone lines? Extra services? The mind boggles at what that might entail.
So, you hang on the phone, get through and, finally, the tax rebate is agreed. Yay. Oh, hang on – it will take eight months to get the cash back? Really? Well, that’s what we can expect, according to Cheapaccounting.org founder and blogger Elaine Clark, who argued that HMRC’s decision to withhold significant tax refunds without good cause or reason was frustrating and ‘morally repugnant’ in a blog this week.
Still, we can always be confident that HMRC’s systems are at the forefront of technology, can’t we? Er, no actually, with AccountingWEB reporting that the government department has been trying to resolve a logjam that is likely to occur when Real Time Information (RTI) filing gets underway in earnest in early April. Uh oh.
As we kiss goodbye to January we can now officially say that the Budget is next month. Frightening, isn’t it? Inevitably the predictions have started. More often than not, it’s the ‘rabbit out of the hat’ that tends to make or break the Chancellor’s annual speech.
Last year we had the pasty tax. This year? Well, AccountancyLive reported this week that more than 60 medical groups are calling on George Osborne to introduce a fizzy drinks tax, in an effort to curb growing childhood obesity problems. That Diet Coke break could get more expensive come April.
3. Twitter’s Vine app branches into salacious territory
Over in social media, Twitter has launched its video application, Vine – an addition to the social network that allows users to embed videos within their tweets. Great idea. Although internet and video is a mix that inevitably leads to an obvious danger: porn. With only six seconds allowed for each clip, perhaps the social network thought it was safe from harm?
Unfortunately not. This week the social network reported that a ‘human error’ had allowed hardcore pornography to be shown on the apps homepage. Oh dear. Although job hunters should take note, with the BBC this week warning about harming career prospects on social media.
Not that employees at struggling high street chain, HMV, should worry. This week disgruntled employees of the company briefly took over its official Twitter account to vent their dissatisfaction at being sacked. You couldn’t help but cheer such guerilla tactics, with one tweet reporting the marketing director having a flap and wanting to ‘close down Twitter’. Perhaps the employees should have given Vine a bash too whilst they were at it?
Also on the high street, lingerie retailer Agent Provocateur owner 3i has put shareholders on alert with reports that turnaround-specialist, Sherborne Investors, has been buying shares in the company. Don’t they know it’s Valentine’s Day in just two weeks? Perhaps news this week that the cost of a child tops £200,000 has dampened some of the flames of passion on the high street?
Or perhaps we all need to follow Christian Slater’s example and give up booze to feel sexier? Er, Christian, it’s 1 February today and everyone is falling off the wagon this weekend after completing their ‘dryathlons‘.
Agent Provocateur, it would appear, really is doomed.
Steven Perryman is AAT Comment's former Content Editor.