Life is tough on the front line of accountancy. For more than five years, our intrepid correspondent has been bringing us news and views from a typical West Country practice.
The Budget - what clients really want
Reading today's headlines about Stamp Duty avoidance by foreign multi-millionaires using offshore companies has made me lose what little confidence I had in the Chancellor.
If George Osborne had visited any recent tax conference run by the leading accountancy groups such as 2020 or AVN/Tax Club - or, I imagine, anything similar promoted to tax lawyers - he would have seen any number of Stamp Duty schemes targeted not at the foreign super rich but at normal, UK-resident housebuyers. Stamp Duty legislation looks like a sieve full of holes! So unless the headline conceals a more general tightening up of SDLT legislation generally, this will all amount to very little except some grand headlines. What we really need is a modest increase in the nil rate band to take out smaller houses, and a watertight set of rules to catch the rest. Perhaps George could consider the principle considered recently by Nick Clegg - better a lower rate of tax that everyone pays, than a higher rate that people can avoid altogether?
All of which makes me suspect that this week's Budget will be all headlines and hot air, and very little substance to help my clients.
What do the clients of a West Country general practitioner want? Frankly, I don't think they want a lot, the recession has made them accustomed to running their businesses without much Government or bank support, and most are doing OK thank you very much. What they don't want is any further reduction in capital allowances, in fact an increase in the AIA and WDA rates would be very helpful. And they don't want to lose any more tax relief on their pension contributions - we all know the Government needs us to save more towards our retirement, so don't take away the incentives please!
But what they really want is a fair and predictable tax system. (Now I realise that for a minority, a "fair" tax system is where everyone else pays but they don't - but leaving that aside ...) They want to see everyone, rich or less well off, being taxed on the same basis; a system that applies the law consistently, not at the whim of local inspectors or appeal tribunals.
The snag is that HM Government, and those advising it, clearly does not understand how the tax system works on the ground. For how long have so many people put forward sensible alternatives to IR35 on this website and in many other journals and articles? All fallen on deaf ears! Did the Government at the time ever acknowledge that a lot of what IR35 was trying to target could have been achieved by simply applying the settlements and other legislation that had been on the statute book for years - or did no-one know it was there?
When I qualified in 1981 I had the good old Yellow Tax Handbook (I didn't do much VAT then), a single volume. The latest tax legislation books now run to half a dozen volumes. No wonder no-one really knows what's in them! Least of all George Osborne and the Treasury.
This week I'm expecting:
- A lot of political posturing
- A load of great sounding and largely meaning less headlines
- New policies to solve problems that are already dealt with quite adequately by existing legislation
- Oh yes, and a few giveaways that won't take effect for at least a couple more years!
AccountingWEB Budget 2012 resources - sponsored by Sage: