Tax Breaks

The Word magazine does. This month’s edition’s “Best and Worst” is kid’s cartoons. They acknowledge he wasn’t really for kids “but he certainly treated you like one”. Given the Revenue’s budget they could have made “Who framed Roger Rabbit, not a sub-Jak doodle”.

The best is judged to be Spongebob Squarepants. More my kids’ era and with honorable mentions are Mr Benn, Top Cat, Willo the Wisp and Ivor the Engine.

Those were the days.

www.wordmagazine.co.uk

This month’s edition of The Oldie (my Grandfather gets it) asks what “a remittance man” was. Nothing to do with the current tax activities of our non-doms but according to the shorter OED “an emigrant who is supported or assisted by remittances from home”.

The Oldie picks up the story of Edward Blake a Victorian dropout whose clerical father also had seven daughters to find dowries for. Edward is shipped off to Australia and is told to appear at the offices of a solicitor every quarter to pick up a modest allowance from pa. “Remittance men could be found in all corners of Empire far enough away to make a return to the bosom of their no-longer loving family all but impossible”.

The 2010 non-dom remittance men are now in all corners of the UK ensuring the payments out of their global coffers are as low as possible. Apparently the Victorian practice disappeared with the youth of World War One. I’m sure nothing drastic is being planned in the 2010 budget for the non-doms in general or Lord Ashcroft in particular.

“The Beatles” was a US animated TV series which ran from 1965 to 1967 and was produced in Australia.  Each “witty” episode set up a visual illustration of a Beatles song played in its entirety.  American actor Paul Frees did the John and George voices with Lance Percival doing Paul and Ringo.  Frees was best known for his work for Walt Disney and Percival’s main claim to fame are several film appearances in “Carry Ons..” and “Up Pompei” plus spin offs.  As you will hear neither actor made any attempt at impersonation.  The song starts at 2.40.

According to his excellent book “Revolution in the Head”, Ian MacDonald says this track was recorded in April and May 1966 at the time George had “just realised how much of the group’s income was being siphoned off by the Treasury.”  For those of you who appreciate the technicalities MacDonald refers to McCartney’s playing of “some remarkable bass, taking advantage of the tone, range, and fluid action of his new Rickenbacker particularly in his agitated secondary riff during the song’s third verse.”   Personally I prefer “Tomorrow Never Knows”.

Back in 1961 DC Comics reported on the findings of an IRS trawl through the files.

THIS IS AMAZING! WE HAVE NO RECORD THAT SUPERMAN HAS EVER PAID TAXES.

After a cursory review agent Brand presents our hero with a demand for $1billion and promises charges from the FBI if he can’t meet the deadline.

After a series of adventures Superman still fails to come up with the cash but Brand’s boss discovers a loophole involving the big man’s dependents. What are the chances of that happening in HMRC in 2008 eh? He’s not so “super” to know that he should have taken some early advice and get all this sorted out without the hassle from Brand.

More details at: comic coverage

Tucked away in the “What’s New” section of the HMRC site earlier this month is the “Technical Consultation on draft legislation for Extra Statutory Concessions”. I didn’t think this sounded too appetising but included in the lengthy list is a note on food, drink and accommodation for the self-employed. It doesn’t happen often but I had stumbled on the answer to an issue that had been at the back of my mind for a couple of weeks. An inspector had been trying to disallow a chunk of the expenses claimed by a local journalist and had taken out all the subsistence as “this isn’t allowable unless there is an overnight stay away.”

That didn’t sound right at all but a quick search on the HMRC website didn’t help much. What a surprise. A few days later I was helping an accountant and Chartered Tax Advisor with a review on whether all possible expenses had been claimed by a self-employed project manager who had been subjected to 3 hours grilling by the taxman. “What about subsistence?” “No…Caillebotte v Quinn.” “I’m not so sure, I’ll get back to you”. I was seeing a recently retired senior inspector for lunch and mentioned this to him, knowing fine well that civil servants get an untaxed day subsistence payment if they are away from the office for over 5 hours. His view was that “the taxman doesn’t get excited about t & s payments as long as they’re not ridiculous.” So now it emerges by way of an oblique reference to an ESC that modest day subsistence is clearly allowable where the business is itinerant or where occasional journeys outside the normal pattern are made.

The list of ESC’s on the website runs to 107 pages; an experienced inspector got it wrong with the journalist and a more experienced inspector wasn’t sure of the position even after reading BIM37660 et seq (which incidentally makes no specific reference to the ESC). My CTA accountant wasn’t aware of the position (although he knew about Caillebotte v Quinn). This may be the leading case but it means the self employed person gets no relief and the employee or director does. Hence the ESC. Even worse, HMRC’s tax return guidance note for the self employed (SEFN 6) says for the travel & subsistence box “..hotel room costs and meals on overnight business trips.”  No mention of other business trips.

So how many legitimate subsistence claims have now been missed over the years through HMRC’s lack of transparency? Perhaps next month we need a note on Error or Mistake Relief………

I’m currently enjoying reading “Quirkology” - the curious science of everyday lives - by Professor Richard Wiseman. Chapter one debunks astrology and asks what your date of birth really says about you. I found a couple of US economics surveys particularly interesting. Their tax system provides benefits for the previous 12 months for a child born on 31 December, nothing for the baby born a day later. Looking at records between 1979 and 1993 for the 14 days around the crucial date they found a consistent and significant peak at the end of the year. A closer look at a small sample showed a significantly greater amount to gain for the families reporting a December birth than the families of babies born in the New Year. At the other end of the spectrum in 2003 a team reviewed 13 changes in death taxes since 1916 where there was a short period before the new laws took effect. The reported deaths significantly increased just before a tax rise. Were the deceased just dying to save tax? Were relatives misreporting the date of death or were they guilty of an offence far more significant than tax evasion…..murder?