We are all corresponding as agents or working accountants with full access to up to date systems, etc., which we can fully expense. We also know roughly what we are talking about and are fully experienced with computer systems.
I still remember a new client who had got himself in a complete mess using an HMRC system, and he had to pay us to sort it all out with HMRC. This was someone in business who should have known what they were doing ...
What about those who do not have computers, printers, or smartphones (assuming they roughly know their tax)? What about these people? To pay for our services will cost them. Why should they have to pay someone else to do their tax return? HMRC needs to think about the little person, just as the Post Office should have done ...
and CGI. The real problem with some bodies is to work out what the syllabus was when the individuals took their professional examinations, and the standard to which they were examined. I have been quite entertained over the years by people who have qualified with various professional bodies but have serious gaps in their knowledge which would have been examined at some point. And what to do re those who took ATII in the distant past and failed one module, or those to got an FTII by just submitting a dissertation?
These problems seem to have proliferated since the Companies' Act 2006 changes - did anyone listen to the professional feedback when it was drafted? I suspect not. Just the same as MTD. Why have consultations when no-one wants to hear the outcome?
The system was not designed with the sub-postmasters who were supposed to run it, and they did not have any administration rights over their own part of the system to run checks properly. So when the computer said "no", that was it. This is the fault of the Post Office.
The sub-postmasters' contract was onerous and made not provision for mediation, the provision of evidence, or other discussion. This is the fault of the Post Office.
The external auditors would not be able to find out much unless they had the full co-operation of the Post Office management. I am sure appropriate questions would have been asked. Any problems in this regard are the fault of the Post Office.
That the the sub-postmasters work for the Post Office would have been deemed immaterial for audit purposes is another matter. I believe this is a problem for auditors everywhere as the audit should include materiality for each subsidiary company in a group - which is effectively what the sub-postmasters were.
There are echos of this in the implementation of systems everywhere. This should be a learning curve for all government departments, in case they end up in the dock as well.
Supercalc was not till 1980 (lovely program), Visicalc was its predecessor (1979 on Apple), before that it was analysis paper ..... so 1965 is a bit premature. I was fortunate to have been in charge of accounts at in a software house and had an Apple on my desk when it all started. We even had Hewlett Packard touchscreens ... but not the same technology as now.
And another older accountant, starting c 1964 in temp roles (young ladies did not have careers then). I also cringe at all the software firms' TV marketing, and remember in horror the idiotic charts of accounts software and "management accounts" consultants had put in, the mistakes in large firm's bespoke software, small businesses which had completely messed up Sage (that takes some doing), etc. I also recall the painstaking work unscrambling the garbage, and explaining to the finance directors/auditors/board what had gone wrong and what had to be done to get it right, and the likely cost to rectify. Because the corrections cost even more money, people are less happy about coughing up than paying for the software and hype in the first place. I'm out.
Thank you to Jeremy Barker for the insight around the hypothecation of National Insurance. This means UK plc pays extra salaries, pensions, estates, software and other costs for some reason lost in the mists of time. The more recent 2003 amendment looks like a Labout job creation programme.
National Insurance is a tax. We should not hypothecate taxes as this is extra administration, and therfore extra cost. Certainly, we should analyse tax receipts, etc., through management accounting processes, but this does not mean that we need to tuck some money away in a separate account and report separately! It reminds me of the pre-war advice to householders to put cash by each week in separate pots (teapots, jam jars, or whatever) to pay larger bills when they became due.
When are we going to get into the 20th Century, yet alone the 21st?
My colleague and I had a meeting with John Whiting in 2010 recommending that NI be incorporated into income tax and his response was that the OTS had been to tasked to look at IR35 in the first instance. We suggested that this would solve the problem, but nothing came of it. As Nebs says, a simple percentage of payroll contribution (? separate payroll tax/employers' social security contribution?) could then be paid by the employer to cover the monthly cash flow gap to the Treasury.
Abolishing NI as a separate tax would reduce HMRC's staffing levels, salary and pension costs, estate costs, etc., so it would provide a further overall saving to HMG.
Different rates of tax for different income streams were always a nonsense, why continue this?
Forget complications like the hypothecation of taxes - that makes everything unnecessarily complicared again, and we will end up needing even more civil servants.
The real barriers to change are (1) the politicians do not want to be perceived to be increasing taxes, (2) professional bodies whose members make money out of tax work, (3) civil servants who continue their specialist employment, etc. Both (2) and (3) advise group (1) hence no progress.
One of the things I should like to see is the disaggregation of materiality so each company is treated separately. I recall finding a £250K "anomally" in a small subsidiary which the audit partner dismissed as not material within the context of the group. I am sure others have come across similar.
Unfortunately audit work has to be done to a strict timetable for PLC reporting and, if there is insufficient interim work undertaken to validate systems, etc., then the audit work is curtailed to fit the deadines. We all know this is wrong ...
My answers
We are all corresponding as agents or working accountants with full access to up to date systems, etc., which we can fully expense. We also know roughly what we are talking about and are fully experienced with computer systems.
I still remember a new client who had got himself in a complete mess using an HMRC system, and he had to pay us to sort it all out with HMRC. This was someone in business who should have known what they were doing ...
What about those who do not have computers, printers, or smartphones (assuming they roughly know their tax)? What about these people? To pay for our services will cost them. Why should they have to pay someone else to do their tax return? HMRC needs to think about the little person, just as the Post Office should have done ...
and CGI. The real problem with some bodies is to work out what the syllabus was when the individuals took their professional examinations, and the standard to which they were examined. I have been quite entertained over the years by people who have qualified with various professional bodies but have serious gaps in their knowledge which would have been examined at some point. And what to do re those who took ATII in the distant past and failed one module, or those to got an FTII by just submitting a dissertation?
These problems seem to have proliferated since the Companies' Act 2006 changes - did anyone listen to the professional feedback when it was drafted? I suspect not. Just the same as MTD. Why have consultations when no-one wants to hear the outcome?
The system was not designed with the sub-postmasters who were supposed to run it, and they did not have any administration rights over their own part of the system to run checks properly. So when the computer said "no", that was it. This is the fault of the Post Office.
The sub-postmasters' contract was onerous and made not provision for mediation, the provision of evidence, or other discussion. This is the fault of the Post Office.
The external auditors would not be able to find out much unless they had the full co-operation of the Post Office management. I am sure appropriate questions would have been asked. Any problems in this regard are the fault of the Post Office.
That the the sub-postmasters work for the Post Office would have been deemed immaterial for audit purposes is another matter. I believe this is a problem for auditors everywhere as the audit should include materiality for each subsidiary company in a group - which is effectively what the sub-postmasters were.
There are echos of this in the implementation of systems everywhere. This should be a learning curve for all government departments, in case they end up in the dock as well.
Supercalc was not till 1980 (lovely program), Visicalc was its predecessor (1979 on Apple), before that it was analysis paper ..... so 1965 is a bit premature. I was fortunate to have been in charge of accounts at in a software house and had an Apple on my desk when it all started. We even had Hewlett Packard touchscreens ... but not the same technology as now.
And another older accountant, starting c 1964 in temp roles (young ladies did not have careers then). I also cringe at all the software firms' TV marketing, and remember in horror the idiotic charts of accounts software and "management accounts" consultants had put in, the mistakes in large firm's bespoke software, small businesses which had completely messed up Sage (that takes some doing), etc. I also recall the painstaking work unscrambling the garbage, and explaining to the finance directors/auditors/board what had gone wrong and what had to be done to get it right, and the likely cost to rectify. Because the corrections cost even more money, people are less happy about coughing up than paying for the software and hype in the first place. I'm out.
Thank you to Jeremy Barker for the insight around the hypothecation of National Insurance. This means UK plc pays extra salaries, pensions, estates, software and other costs for some reason lost in the mists of time. The more recent 2003 amendment looks like a Labout job creation programme.
National Insurance is a tax. We should not hypothecate taxes as this is extra administration, and therfore extra cost. Certainly, we should analyse tax receipts, etc., through management accounting processes, but this does not mean that we need to tuck some money away in a separate account and report separately! It reminds me of the pre-war advice to householders to put cash by each week in separate pots (teapots, jam jars, or whatever) to pay larger bills when they became due.
When are we going to get into the 20th Century, yet alone the 21st?
My colleague and I had a meeting with John Whiting in 2010 recommending that NI be incorporated into income tax and his response was that the OTS had been to tasked to look at IR35 in the first instance. We suggested that this would solve the problem, but nothing came of it. As Nebs says, a simple percentage of payroll contribution (? separate payroll tax/employers' social security contribution?) could then be paid by the employer to cover the monthly cash flow gap to the Treasury.
Abolishing NI as a separate tax would reduce HMRC's staffing levels, salary and pension costs, estate costs, etc., so it would provide a further overall saving to HMG.
Different rates of tax for different income streams were always a nonsense, why continue this?
Forget complications like the hypothecation of taxes - that makes everything unnecessarily complicared again, and we will end up needing even more civil servants.
The real barriers to change are (1) the politicians do not want to be perceived to be increasing taxes, (2) professional bodies whose members make money out of tax work, (3) civil servants who continue their specialist employment, etc. Both (2) and (3) advise group (1) hence no progress.
One of the things I should like to see is the disaggregation of materiality so each company is treated separately. I recall finding a £250K "anomally" in a small subsidiary which the audit partner dismissed as not material within the context of the group. I am sure others have come across similar.
Unfortunately audit work has to be done to a strict timetable for PLC reporting and, if there is insufficient interim work undertaken to validate systems, etc., then the audit work is curtailed to fit the deadines. We all know this is wrong ...