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16th Jan 2009
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We're now into January and it's a January like no other. I can't work out why but I can only conclude that the current recession psychologically seems more scary since it comes after 15 years or so of growth - growth caused in part by a rise in consumer debt and the almost unlimited availability of money.

I've been through other recessions in 1974/5 (3 day week), 1980/1 (strong pound) and 1991 (high inflation & ERM fiasco) but didn't experience the level of uncertainty that pervades us today. This one feels like Armageddon. We've been treated to a daily dose of depression from the BBC graphics department in the form of a wiggly arrow that always points in a downward direction, thus making even the most uninitiated understand that things aren't good.

We've got a Government that have taken knee jerking to a whole new level. Having had no real choice but to bail out the banks, they are insisting that they both repair their balance sheets and lend more at the same time! What planet are these people on?

It has now been proven that there was a gross over-capacity of consumer goods and services in the U.K. and it will likely be a long time before these historical levels are restored, if ever. A slimmed down version of the high street will surely supply our every need, won't it?

Unemployment will likely peak at an official level of 3 million. It will actually be higher but Government schemes to redefine large swathes of the unemployed, for example University graduates with worthless degrees in useless subjects, will depress this figure.

A new word will enter the vocabulary of the 20 to 45 year olds - sacrifice. This word was in common use and practice during the 1960s and 1970s when we embarked upon adulthood in our first house with our first mortgage, armed with second-hand furniture and not a takeaway in sight. This word will be accompanied by another - budget. Again this is another practice not seen for a generation and a half.

I invite others to put forward their solution to the problem.

My suggestion is as follows. It's extreme but might avoid a 1970's style IMF bail out. The people in work are the only ones that can repair the U.K. balance sheet which is now a busted flush. From someone who positions himself to the right of Lady Thatcher, this is the mother of all U-turns.

I believe that all taxes must rise considerably. VAT should be set at 25% as I don't believe in the long term spending alone will be the cure for the disease. Likewise income tax must be increased at the basic rate. Both the Government and the Liberals must stop seeing 41% taxpayers as pariahs that must be penalised.

Interest rates should be increased to strengthen the pound. There's no evidence that exporters have been flooded with orders recently anyway. A strong pound somehow gives us respect (and means that I can afford a holiday in the U.S. more easily!) It's remotely possible that U.K. banks might benefit from an influx of funds.

The alternative is to saddle our adolescent children with repaying our debts, a rather unfair burden to a generation that didn't cause the problem in the first place.

Tom Egerton

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By ashmm
16th Jan 2009 23:09

POA overpayment
Hi, This is my first post so your reply is highly appreciated. My client has made an overpayment in relation to payments on account. The 1st payment on account due is less than the overpaid balance. My software provider has told me that I will not be able to offset the overpaid balance if the Overpayment is more than the first payment on account due. I could not find anything on the HMRC website. Would any of you know if that is true?

2nd scenario:
For example 1st payment on account due is £2000
2nd Payment on account due is £2000

Paid in January £5,000

How this should show on the tax computation?

Thanks (0)