Big 4 accountancy firms landing a date with the Public Accounts Committee, a shortfall in accountants by 2050 and a new £2 coin all made the headlines this week. Steven Perryman rifles through the week’s news
1. Tax avoidance – Big 4 accountancy firms will face Public Accounts Committee
After a quiet start to the New Year, tax avoidance sprang back to the news pages this week faster than a Katie Price engagement.
The faint hope that the festive break may provide ample cover to the Big 4 accountancy firms in having to face the Public Accounts Committee fell away this week, with AccountancyLive reporting that the firms will have to face the grilling on 31 January after all.
The firefighters going into battle will be KPMG’s head of tax, Jane McCormick, Deloitte head of tax policy Bill Dodwell, PwC’s top tax guru, Kevin Nicholson, and John Dixon, tax policy chief at Ernst & Young. Time to start swotting up, guys.
The imminent General Anti-Abuse Rule (GAAR) showed its, er, teeth this week with AccountingWeb reporting that the incoming tax avoidance legislation will be ‘one weapon among many’ available to HMRC to tackle avoidance and, while it could be used to explore stopping multinational tax avoidance, in practice it was unlikely to do so. You can hear the clink of Starbucks mugs from here.
Although the American coffee chain’s brief anonymity in the tax press did end this week with Prime Minister, David Cameron, arguing in a speech at the World Economic Forum in Davos that aggressive tax avoidance leads to fewer resources for public services. ‘Companies need to wake up and smell the coffee, because the customers who buy from them have had enough’, Cameron said in a groan-worthy line from the speech. Perhaps he used up all his good lines in his European speech earlier in the week.
Of course, we have been used to big, successful companies getting hauled over hot coals for their tax avoidance. But now companies in administration are targets too, with The Guardian taking aim at DVD rental chain Blockbuster. It reported this week that the store delivered less than £250,000 in corporation tax over a 15-year spell in which it made sales of more than £3.5bn.
HMRC, meanwhile, has stepped up its tax expertise by appointing John Whiting, the Charted Institute of Taxation (CIOT) tax policy director and head of the bafflingly-titled Office of Tax Simplification. Whiting will take up his new role as chair of the government department’s audit and risk committee. When does Whiting start? On 1 April (April Fool’s Day to you and me). Let’s hope the ‘tax tsar’ makes it through his first day without having to contend with any whoopee cushions or rubber chickens.
2. Personal tax – Italy goes Big Brother with its new Redditometro system
Personal tax has also been making headlines this week. The Crown Prosecution Service (CPS) announced this week that it will join forces with HMRC in a bid to crack down on the promotion of aggressive tax avoidance schemes and the professionals who invest in them. As a result the CPS is set to increase the number of tax evasion cases it takes on to 1,500 by 2015. Time to wind up those shipwreck salvage schemes pronto.
Over in Italy, meanwhile, the authorities have turned Big Brother in attempting to clamp down on tax evasion. This week BBC reported that in addition to holding information on major items of expenditure, like home and car ownership, a new computer system (catchily titled Redditometro) will now help the authorities get a better idea of people’s likely spending habits in other areas of daily life.
The system has divided the entire population into 11 classic household types, including couples, singles and families with children. Then it has built up very detailed models that show how each category is likely to spend its income.
The system aims to predict what income each household will need to get by. If such a family’s tax return suggests its income is substantially lower than that sum the authorities get suspicious. Got it? It’s rightly caused a storm in Italy, with many complaining the system isn’t fool-proof. But what tax system is? You can only wonder if George Osborne is watching that one with a raised eyebrow and a pen and paper in hand.
3. Business – research highlights shortfall in accountants by 2050
Over in business everyone is still getting misty-eyed about the demise of HMV (even though we all use Amazon, right?). The ailing music chain even managed to slip onto the education pages with senior academics warning that some universities could easily go the same way as the chain.
Accountants, meanwhile, could be in short supply with Accountancy Age reporting that the UK will face a shortfall of about 10,200 qualified accountants by 2050.
Boybands of the future better watch out, then, with AccountancyLive reporting that ubiquitous British boyband, One Direction, have appointed Grant Thornton to look after their rising fortune. The move should free up extra funds for more random tattoos and a subscription to the Older Dating Agency.
4. And finally…PQ Magazine is 10 years old
It’s been a week of birthdays. Over at PQ Magazine celebrations have kicked off with a celebration issue, including a cover with a nod to The Beatles’ Sgt. Pepper’s Lonely Hearts Club Band. The ensemble includes AAT’s Jane Scott Paul and Suzie Webb, accompanied by the Queen decked out in an ‘I Love Tax’ t-shirt. Good work.
London Underground, meanwhile, has put the Champagne on ice and is celebrating its 150th birthday with….a new £2 coin. Oh. The new coins – which bear the fabled ‘mind the gap’ slogan – will be issued into general circulation later this year.
You can but wonder if they will actually turn up on time.
Steven Perryman is AAT‘s Editorial Manager
Steven Perryman is AAT Comment's former Content Editor.