Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Let's shoot all the bankers by Simon Sweetman

by
22nd Mar 2009
Save content
Have you found this content useful? Use the button above to save it to your profile.

Simon is seething at the behaviour of the banks. Can they continue to take taxpayer's money with one hand and run abusive tax avoidance schemes with the other? And how should we stop them?

Let us begin here by quoting from a recent survey of over 6,000 members of the FSB, conducted by the FSB’s Professor of Small Business Alistair Anderson. 18 per cent said they had seen an increase in bank fees : 33 per cent said their banks were imposing a change in their financial arrangements which made them less well off – such as setting new lending conditions with increased charges and rates, reducing overdraft facilities and requesting more security for loans.

A third of small firms said their bank was less helpful now than it had been before the credit crunch began. Fairly typical that, everybody wants to lend you money except when you need it. And I recently had a credit card offer with an interest rate of 32.5%.

Don’t we all love the banks ?

First they stole our money with their tax schemes and the 30% interest rates on their credit cards, then they frittered it all away. Then we had to pour more money in to bail them out, and that has disappeared too.

A few years ago a client of mine from Zimbabwe expressed astonishment to me that the UK economy seemed to be doing so well when there was nothing underpinning it : but then we came to the conclusion that it’s like fairies, and as long as you believe in it it will continue to thrive. And then along came the sub prime mortgage crisis and we didn’t believe any more.

Yes, we were all complicit : we took our consumer goods and our foreign holidays on tick. And very much yes, the government believed in fairies with the rest of us and left it up to the self styled masters of the universe to run the economy. So there’s been aiding and abetting, but that should not distract us from where to point the finger.

Vince Cable, who seems to be the only politician with any grasp of the situation, says British taxpayers are being asked to underwrite Barclays' loans. I believe full disclosure of these documents, showing how Barclays use tax havens for tax avoidance, would be in the public interest. Banks use the finest legal brains money can buy to avoid tax, but HM Revenue & Customs is underpaid and overstretched, so it is far from a level playing field.

The message may be getting through to some. Royal Bank of Scotland says it has disbanded its department responsible for creating tax avoidance schemes. "The idea that we could take support from the Treasury with one hand and somehow pick their pocket with the other would be wrong on every level," said an RBS source.

I think what we need as a new anti-avoidance device is some kind of corporate tax ASBO to stop the banks from going to places where they might get into trouble. And we need a publicly owned bank to do straightforward things – probably a Post Office Bank (though watch out because my Post Office credit card is operated by the Bank of Ireland, which has some form itself in these matters). Ideas as to how we might design this would be welcome.

Tags:

Replies (21)

Please login or register to join the discussion.

avatar
By baseline
29th Mar 2009 17:19

Scrutiny
PriceWaterhouseCoopers and the Chartered Institute of Public Finance and Accountancy funded a project by the Hansard Society in 2001 called ‘Inside the Counting House’ because they were aware of inconsistencies in how Parliament authorises and scrutinises public finances. This should now be an urgent concern given that the taxpayer is now the lender of last resort.

Both Simon and Rebecca have a conflict of interest in that they must support the legal view on tax evasion but in doing so they help create and encourage the complexity that keeps them in business. Just because something is the law does not mean it is right. The law often finds itself undergoing change because it is no longer suitable for the purpose it was first intended.

Thanks (0)
avatar
By David160
28th Mar 2009 16:24

Why greed is good
Some greed is neccessary as it encourges people to produce more. This in turn means higher taxes, and more money to help the needy. If no one wanted to increase their income, we would still be living as we did hundreds of years ago. All the modern products and knowledge would not exist. Some people do seem to have an excessive amount of greed though.

Thanks (0)
avatar
By P J BROWNE
27th Mar 2009 16:49

Only the bankers?
Not just the bankers, but also the (then) Chancellor; the auditors; the non-exec directors; and the pension fund managers. All are culpable.
The catastrophic effects that the actions or inactions of all of the above is having on the whole world is greater than the fall-out of many wars or acts of terrorism. Never mind thinking of ways of cutting bonuses or cutting obscene pension arrangements. We should, in all seriousness, be considering the equivalent of a war crimes tribunal. We are not looking for death sentences (well perhaps some are) but we have to ensure that all those responsible are punished financially: that they are never allowed to work in any aspect of finance again; never allowed to hold public office or be directors of companies. Clear warnings have to go out to their successors that the world will not tolerate similar behaviour and that there will be no hiding places.

There are some very clear measures that can be taken which would help kick start a revival (I can only refer to the UK)..The single most important priority is to retain and create jobs. People will undertake spending commitments when they have confidence that they can pay for their purchases. The government needs to make it easier for vcompanies to employ people by taking some unnecessary costs and regulations out of the system.

Abolish business rates and reduce levels of employers NI contributions
Fund the above from an increase in VAT to 25% (a real increase in prices of 6.38% - well below discounts permanently on offer)
Resultant increases in employment would increase tax take and reduce benefits claims
Pubic purchase of the major house builders at today's stock market prices would cost about 50% of the totally wasted 2.5% VAT giveaway. It would generate approx. 1 million direct and indirect jobs. It would also accelerate the government's housing programme and allow greater control of land banks and housing costs.
Abolish the wasteful, costly and inhibitive HIPS regulations, which neither the profession nor the public want
There are probably a raft of extremely realistic and achievable ideas out there which haven't been considered by government. Brown and his Cabinet have proven that they lack imagination; that they lack that ability to think outside conventional streams of action. Why should accept their solutions as the right ones just because they are the ones in power? They, after all, are deeply complicit in this economic disaster. It is time that we all shout- very loudly -

"THE KING IS IN HIS ALTOGETHER"

Phil Browne

Thanks (0)
avatar
By J Lessels
26th Mar 2009 15:55

Welcome back Gordon Gecko
Anyone remember the film "Wall Street"? Michael Douglas at his best!

Greed Is Good, Hey? But are we in the business of saying if you can get away with it, it is OK? If not, where do we draw the line? Maybe those accountants who don't want to sex up their practice with jiggerypokery should advertise this. Of course their clients might all go. On the other hand, maybe most of them would stay. Let's face it, most small businesses in this country can't afford the uber-clever stuff. But at least, HMRC would know where to mount their dawn raids!

I know John is concerned that benefit calaimants will get all his money. However, no benefit claimant has ever gone cap in hand to the state for quite as much as the banks. It seems that the practitioners of tax avoidance are desperate for everyone else to pay lots of tax to support their banks, their bonuses and their lavish pensions.

Is there any chance that the board of dirctors of RBS can all be sacked for their generosity to their mate, Goodwin? Sacked and asked to repay the money thay have given away. They have shown themselves not be fit and proper persons to be directors so presumably lifelong disqualification should be on the cards. However I guess their mates in the government and legal profession will look after them...

Thanks (0)
avatar
By baseline
26th Mar 2009 12:21

I don't believe it!
Karen Whitehead; I agree with everything you say but nobody says lets have less at election time because that party would not get elected. Are we in danger of creating a fools paradise where a stupid act has no consequence? The state will always pay and pick up the pieces irrespective of the cost. Is this what we have come to?

Richard Murphy; "An accountant who promotes greed does us all a disservice". Then no wonder the country has lost its business mojo, everybody is content and nobody has the hunger that drives a business to grow. Drive is the American euphemism for greed.

Rebecca Benneyworth: "I never tell my clients how to avoid tax. I do explain what the law requires of them, and also highlight areas where certain decisions have key tax implications." Worms! The Treasury wants it all and it wants tax professional to snitch on their clients, treachery and greed.

When the Treasury through a Finance act makes those with a sole PAYE income responsible for their own taxes I call it greed on the back of paranoia. But this is what the employee electorate want, carats on a stick to entice them to vote so that they can have soft landings, be dependant on the state, and never pursue some degree of self-sufficiency.


Thanks (0)
avatar
By karen.morriscook
26th Mar 2009 11:11

Tax avoidance
aggressive tax planning vehicles are simply unaffordable for most of the clients that I deal with and the small amounts that they save by taking dividends as opposed to salary etc etc are a pittance compared with the amounts that these large institutions are fleecing from the treasury. Large companies, Institutions and high paid individuals eg footballers can afford to pay for schemes whereby they pay very little or no tax, and yet the Revenue seem to concentrate all their efforts on attacking the small business man who is simply trying to reduce his tax by legitimate means often simply to be able to keep money in the bank account in order to keep his company going. The majority of my clients are not living lavish lifestyles and some even pay their employees more than they take themselves.

We do need to inject some morality into the system. If everyone paid their fair share then maybe the tax that we pay would not be so high.

Thanks (0)
avatar
By baseline
27th Mar 2009 11:06

You just don't get it?
James Lessels; "I know John is concerned that benefit calaimants will get all his money." No I don't! The welfare system is there to provide essential support for those in need. I entirely support this and in no way am I opposed to it. However, because the likes of yourself are willing to pay for a fools paradise then it does not matter whether the need is genuine or not.

Richard Murphy; "The Treasury collects taxes in pursuit of the democratic mandate given to the government by the people of the UK" Duh! Well this is stating the obvious!

"How on earth can you describe that as greed" Think of the nation as a business it has costs and it generates revenues to pay for those costs. The people are the shareholders and the politicians are its board of directors. The people demand better this and more of that from the directors. Like any good business the directors respond to their shareholders needs. However, the business has moved from a position where profits come from doing things right to one of sod doing things right lets just have the profits.

As the board is elected democratically nobody gets elected on a platform of cost cutting within the business, and this is where the analogy departs from a real world business, the shareholders are incapable of seeing that if they cut the cost base of the business they will see increased profits. I call this electoral greed.


Thanks (0)
Richard Murphy
By Richard Murphy
26th Mar 2009 11:06

The pursuit of taxes
John

The Treasury collects taxes in pursuit of the democratic mandate given to the government by the people of the UK

How on earth can you describe that as greed?

Richard

Thanks (0)
avatar
By baseline
25th Mar 2009 21:32

Agree to disagree?
Rebecca Benneyworth: "I never tell my clients how to avoid tax. I do explain what the law requires of them, and also highlight areas where certain decisions have key tax implications." Quite so! But you are imposing a morality on clients to conform this is what the law asks of you.

When I made the remark it was not aimed at the profession but as advice that 'all' accountants invariably give to new start-ups outside of accountancy. We simply need more start up businesses! How do you motivate them?

Its no good setting off with the altruism of an established business as many of the comments here seem to do. You need to be greedy, ambitious, determined and most of all you need to satisfy the bank that you can meet your plan targets.

These businesses are going to get "screwed" by all manner of things the most likely being non-payment of invoices within the agreed period. If the turnover is big enough HMRC will want its taxes before customers have paid your invoices.

"I disagree entirely on your point re greed. There is no need for greed to succeed in business." So when you say this, fine! But then how do you regard the Treasuries pursuit of taxes for UK plc? This is not greed? Sorry, its the ambition of a society that wants more than it can really afford?

I withdraw the remark: "Greed means [***] everybody and the Treasury is high on the list." Tax evasion is a crime under UK and European law.

Thanks (0)
Richard Murphy
By Richard Murphy
25th Mar 2009 17:09

Well said Rebecca
And absolutely true

Where is the ethics in greed?

And aren't professions defined by their ethics?

An accountant who promotes greed does us all a disservice

Richard
www.taxresearch.org.uk/blog

Thanks (0)
avatar
By keith.rye
25th Mar 2009 15:30

Good luck GB
Tax avoidance or tax mitigation? Any advice that uses a vehicle that is commercially related to the business, fine. Anything that is artificial should be classified as evasion. Perhaps tax avoidance should now fall alongside evasion and tax mitigation be the norm - follows the letter of the law AND the spirit.

Re the bankers - I can recall a number of banker friends taking early retirement because they just did not agree with the "new school" thought of sales and profit targets. Every time I now ring my banking service I am told - "please wait, we may have some offers for you". For me the answer is simple - "no thanks, I live overseas". As most of what they want to offer me involves my needing to be UK resident, easy.

What I find amusing is the guy that set the scene in relaxing the rules has changed jobs and is now trying to plug the huge cracks he created. Good luck, GB.

PS - another thought. As Arthur Daley was to car dealers, Goodwin is to bankers. Would you take a loan from this man?

Thousands of honest, hard working bank workers on the high street have been totally let down by the Goodwins of the banking world.

Thanks (0)
avatar
By User deleted
25th Mar 2009 14:35

Is your headline stirring up a mob mentality?
We are already in fear of losing our jobs. Should we now fear our personal safety too?

Thanks (0)
avatar
By User deleted
25th Mar 2009 14:33

looks like someone beat you to it!!
http://edinburghnews.scotsman.com/topstories/Thugs-vandalise-Sir-Fred-Goodwin39s.5105936.jp

if they are found to be accountants and read Simon's article!! Simon you are in choppy waters!!!

Thanks (0)
avatar
By jimeth
25th Mar 2009 14:01

Good Business is NOT Greedy
I am with you, Rebecca - a good business is not fuelled by greed. I am pleased to work for a company that believes in creating a "business of value with values". The business is profitable and delivers value to shareholders - but employees and the wider community are also seen as valuable. Having good moral values has not stopped the business becoming a market leader. That does not mean that we are anything like perfect - but not being fundamentally fuelled by greed does make a difference.

If one person or group of people avoids paying their fair taxes then that just increases the burden on everyone else. I do not want to pay more than my fair share of the tax burden - but I recognise that it is unfair on others for me to pay less than my fair share.

Thanks (0)
avatar
By J Lessels
25th Mar 2009 13:52

Biting The hand...
John

I wonder how far you would go to "screw everybody"? I think you need to clarify this. Otherwise, people might interpret your words to mean that breaking the law was OK if you can get away with it. I know we are talking about avoidance here but the implication of your comments goes a lot further.

In addition, do you "screw" your clients? It seems you are in business on your own account so this would also be a natural implication.

Tax avoidance sounds quite nice and bourgeois. However, once we start talking about avoiding the law wherever we can, it starts to sound at least antisocial. And it is of course, society which is protecting the bankers from being strung from the nearest lamppost by the angry mob.

The law of the jungle is all very well, but are you really hard enough to cope without society and should you be biting the hand that feeds you?

Thanks (0)
Rebecca Benneyworth profile image
By Rebecca Benneyworth
24th Mar 2009 19:54

@ John
I disagree entirely on your point re greed. There is no need for greed to succeed in business. Business might be providing a good service for a fair return - that would also be successful. Succeeding is not necessarily making the maximum amount of money possible - that is only one measure of success. Another might be a thriving business providing employment and security to lots of people, and a fair return to the investors. Where we are now is all about greed, and nobody would describe here as "success".

I never tell my clients how to avoid tax. I do explain what the law requires of them, and also highlight areas where certain decisions have key tax implications. I believe that this is fundamentally different to engaging in certain transactions and structures purely to avoid paying tax. However, I also accept that this is a free choice that some advisers and businesses are free to make. If my clients want more aggressive tax advice they can go somewhere else. And that doesn't make me a failure - many of my clients wouldn't engage in what they see as aggressive avoidance.

You seem to refer to "The Treasury" as if it has any money - it doesn't. As taxpayers we all have to pay for the services that we have elected a Government to provide for us. If you don't like it, vote for someone else next time. Every time someone engages in aggressive avoidance we all have to shoulder the extra burden, or to use your phrase "get screwed". Can this be right? Only if you're greedy I guess. I am saddened that anyone thinks that this might be a widely held view by accountants. I hope not.

Thanks (0)
Richard Murphy
By Richard Murphy
24th Mar 2009 10:49

Let's have the 60 years in the meantime
I accept we will have another financial crisis in the future

But why not have 60 years of relative stability until then?

Isn't that worth while?

And wouldn't it be great to be a member of the profession where you can hold your head up high rather than be embarrassed day in and day out by the activities of our biggest firms?

Thanks (0)
avatar
By User deleted
23rd Mar 2009 18:15

Is civilisation a good thing?
A few hundred years ago it would have been the bankers who were liquidated. They can be very glad that they live in times of so-called civilisation.

Thanks (0)
avatar
By David160
23rd Mar 2009 18:11

What goes around, comes around
A similar situation arose in the late 1920's, people purchased stock market shares on tick, and when the market collapsed, the stockbrokers and banks were left with large bad debts. A number of banks went bust then.

Today people have purchased houses on tick, and now we have the sub prime loan crisis.

Regulation of stockbrokers, banks and lending was relaxed years ago, which helped to create todays problems.

Todays government will probably tighten up the regulation of banks and lending; but I think that in another 80 years, there will be another similar financial crisis, following another round of deregulation in about 60 years time. It seems that each generation has to learn the same lessons of financial prudency the hard way.

Thanks (0)
avatar
By baseline
23rd Mar 2009 13:53

Why have Tax Professionals?
If a bank has thrown in the towel on tax avoidance then it is a political gesture no more. Tax Professionals like yourself do not give advice on tax avoidance do you? You just point out to clients where they should be paying more tax in order to be helpful to the Treasury.

Any accountant worth their salt will tell you you that you need to be greedy to succeed in business. Greed means [***] everybody and the Treasury is high on the list. Perhaps your genre exists to provide some morality to greed?

Just remind us again how it works!

Thanks (0)