Clive James once said that Navratilova and McEnroe are so erudite play interrupted their analysis. Similarly, Shearer praised Brazil football captain David Luiz after Luiz’s flamboyant goal-line save against Portugal, asking “but do you want an optimist as a centre-half?” As a chartered accountant whose glass is perennially half full, the David Luiz lesson is to temper optimism.
During lockdown my firm was concerned on several levels: impact on colleagues and families; effect on clients; threat of a client extinction event. The UK’s liberal culture that we have abused has proved robust. The state’s financial injections, furlough, self-employment grants, CBILs, BBLs and others have yet to play out, but as a frequent critic of all governments especially this one, from my firm’s micro-perspective, our clients haven’t done too badly. Extending the optimistic centre-half analogy is tortuous, but pumping money into the system might be working.
The Revenue also gets praise. Backing off businesses that were in arrears, maybe delaying the inevitable, with the economy stagnating seemed prudent and humane. Was this additional grey finance or were the PAYE and VAT debts (typically) going bad anyway? If it was the perhaps the Official Receiver and other state insolvency services were mirroring the NHS and controlling the wave.
As tax advisors, we saw a decrease in debilitating nitpicking HMRC enquiries that suck the life out of the country’s essential entrepreneurs. HMRC’s stretched resources struggling with homeworking, or a strategic decision to get off business’ case? Let’s be generous and say a bit of both. While we mocked Boris Johnson for evoking Dunkirk, we do seem to have pulled together. It’s frustrating to see the abuse of state power re-emerging.
In what may be seen as reverse order:
Particularly when processing new cases, the Revenue’s filing is all over the place and they’re using COVID-19 as an excuse. On the other hand I quote from heavy-handed HMRC correspondence:
‘I should advise you that HMRC is not observing a general extension to the 60 day deadline, for COVID-19 or any other reason…”
The odds should be tipped in the state’s favour. Our job is to try and even that up; a bit. The problem is that the rules are stacked heavily against the taxpayer. Lockdown will be remembered with nostalgia as a time when we were all on the same side and worked together.
The classic loading against the taxpayer are the costs on appeal. First-tier tribunal costs will start at £20,000 but will be many times that by the time you’ve ratcheted up counsel’s fees reviewing expert witnesses and their costs by the time you go to appeal. You might think it reasonable that your costs on legitimate business expenses, enquiring into the tax status of a commercial transaction, would be allowable? If you win in the majority of cases you’ll be disappointed. I’ll leave it for you to guess what happens if you lose. The personal element is the salt in the wound. You and I use our own hard-earned tax paid cash while the Revenue officials are suing you with your money. No skin in the game whatsoever but all the arrogance of a Norman overlord.
Another business threat is the banking community. The timing with lockdown may be coincidental. In the nineties, clients would send their advisors into the bank one week to beat the bank down on costs and ask the bank manager for an increased facility the next. It was a mystery how the bank provided the level of service it did. Alarm bells rang in 2005 when HSBC moved one of my larger clients from their private banking division to the Premier service. It may have been the right decision but was clumsily handled. The client was prepared to pay the commercial cost of the more personal service; it was a flag many fellow advisors had been expecting.
We know the turmoil of the credit crunch years but that was more than ten years ago. What we are seeing now is chaos, titanic continental shifts. Financing smaller accounts has always been questionable, with banks relying heavily on added value services and financial product sales. The one that got that right (RBS) in the 2000s got everything else wrong. The banks’ accounting systems have been scrutinized, and the layer of regulation has been stiffened with the anti-money laundering laws. They said it would stop planes flying into buildings but it’s all about controlling us and collecting tax. Shocking how little has come out from the Panama Papers after the initial flurry of Icelandic resignations. Cameron didn’t need his father, as is turned out, to embarrass himself financially.
Now we are seeing challenger banks with stylized niche offerings, promoting themselves as alternatives to the high street banks but with inexplicable sector exclusions. Metro Bank have closed a raft of our clients’ accounts and has refused to provide a reason. Metro Bank at least tried to look like a customer orientated high street bank. Perhaps we have inherited the banking community commensurate with what we were prepared to pay in the nineties. (Free banking?)
The final observation as, hopefully, we emerge from lockdown, is how little things change. As most businesses do, and perhaps inspired by reflection during the health crisis, DSC Metropolitan is redesigning its website and logo with a view to embracing social media. Thanks to KCW London we have a bank of articles, so we’ve got plenty of product whatever you think of the quality. Reviewing articles going back half a dozen years, they are almost all current. Nothing much has changed.
What lockdown has highlighted is that business rates really do have to go. Please have a look at an article written together with Matthew Kirby from Chozen Noodle in 2017:
What is the sense of forcing people onto the payroll with a sledgehammer like IR35; fiddling about damaging emerging entrepreneurs, tinkering while business rates torch the nation’s high streets?
DSC Metropolitan wailing at the state’s injustices levelled on disenfranchised small business.