Accountants Journal : UK Accountancy News & Views

I was a little surprised to see this news piece on Reuters over the weekend.

The CBI are reporting that "Jobs, profits and trade at British accountancy, law and recruitment firms declined at record rates in the last three months and are expected to fall faster in the next three as economic woes worsen...".

While we at Just Accountants have seen a slowdown in the volume of companies looking for accountants over the last couple of months, the trend is seasonal and matches what we saw at the same time last year.

However, October - which falls into the quarter being talked about in the piece - was a record month for us.

What it shows, I think, is that there is still business out there for accountants who are prepared to go out and grab it.

I actually spoke about this very issue with a couple of our more established accountancy clients in the last month or so and both suggested that things aren't anywhere near as bad as they seem. Neither firm had really lost clients or experienced a significant slowdown in potential new business.

Again, this makes the CBI report all the more surprising. I'd be very interested in hearing the views of accountants on this, because we're just not seeing the types of things they are suggesting are happening.

We've been having great fun at the office over the last couple of days, what with issuing invoices and the new VAT rate and all.

The thing is - you would have thought it would be quite simple. Create an invoice, calculate VAT at 15%, send the invoice out to the clients.

Unluckily for Just Accountants, the ruling isn't that simple.

So for everyone that has queried their invoice this month and for anyone else who might be reading this and doesn't know, here is the actual rule for invoices this month.

Where goods or services have been provided BEFORE December 1st but have been invoiced on or after December 1st you must:

a) Charge VAT at 17.5% for goods and services provided on or before November 17th.

b) Charge VAT at 15% for goods and services provided after November 17th.

Quite who comes up with these crazy ideas, I don't know and, frankly, don't want to.

One of the main tenets of 80s Thatcherism and its big brother Reaganomics was that it is 'the market that decides'.

Free market capitalism has been the predominant thread in political and economic life ever since. Even thereotically left wing governments like Clinton's in the USA and New Labour in the UK have subscribed to it.

Thing is: it appears that government are not, in the final analysis, prepared to let the market decide. Hence the nationalisation of Northern Rock and Bradford and Bingley. Hence the - albeit currently thwarted - $700billion Wall Street bailout.

It appears to me that free market capitalism is all very well when it works, but as soon as the market starts to eat itself, all of a sudden government intervention is needed.

Personally, I have no moral, ethical or political objection to the nationalisation of the banks or to the Wall Street bailout scheme. But lets' just stop pretending that free market economics is a workable system, shall we?

A move by the Treasury to withdraw tax concessions for temporary workers in the City of London has been met with predictable and, it must be said, quite justified, howls of outrage.

The Treasury are intending to charge VAT on the wages of temporary staff, which inevitably will cause problems with those businesses that cannot reclaim VAT.

Banking, healthcare, finance and education are among those businesses who would be worst affected.

Inevitably, if businesses are paying out an extra 17.5% they can't reclaim, they will reduce staffing levels. The Treasury doesn't seem particularly concerned by this and the proposed move will become law in April 2009.

I suspect that it will result in redundancies, particularly in the currently-wobbly finance and banking sectors.

As spin goes, this article in Property Wire does a good job of suggesting that, as the property prices fall, the increased demand for rental property is 'good news' for landlords.

The problem is : while the demand is there; as the energy prices increase and the credit crunch bites, people are actually less and less able to pay their rent.

In fairness, they do actually acknowledge the reality of the situation right at the tail end of the piece, when AXA Loans MD, Mike Keating says "...if you consider that many of those renting may be struggling to make ends meet it's certainly not all good news for buy-to-let owners..."

The combination of increased demand to rent with decreased ability to pay is going to cause serious problems for the new class of reluctant landlords who are only renting because they are unable to sell.

These are people that need to get really good business and accountancy advice as early as they can in their 'careers' as landlords.

Despite economic forecasts looking fairly bleak and strong arguments for both raising or lowering interest rates, The Bank of England has chosen to ...do nothing.

Reuters is reporting that a meeting of the Monetary Policy Committee chose not to raise or cut interest rates, despite increasing inflation levels and sluggish growth.

Some kind of leadership - one way or another - from The Bank of England at the moment would send out a strong signal of intent. After all, it's this kind of thing that defines them. To do nothing at all, is not as the old quote suggests, the most difficult thing of all. It is cowardice.

Fascinating post over at Newsnight journalist Paul Mason's BBC blog regarding the possibility that a major high street bank will go under in "the next year".

While Paul is only quoting a conversation between a couple of people involved in hedge funds, this is pretty much the kind of scaremongering we don't really need at this point.

The thing is that: despite serious problems faced by HBOS and a number of other big players, we know that the British government will never allow a major bank to fail.

Northern Rock has already proven that. (It's interesting that the British government is effectively sponsoring Newcastle Utd football club...that will please that famous Magpies fan Tony Blair, I'm sure).

So, Mr Mason's post is of 'the sky is falling' form of journalism.

However, if we really truly were a 'free market' economy, he would, of course, be pretty much spot on.

But, the ultimate irony of 'free market' economics is that - ever since Thatcher, The Adam Smith Institute and Reaganomics - it only applies to companies outside of the establishment.

It shocks and depresses me that mis-managed institutions like the banks are allowed to continue where any other company would be out of business.

Last year, one of the main complaints among new businesses contacting Just Accountants was that their VAT registration applications seemed to have been stuck in the ether for weeks, even months at a time.

The rumour, largely perpetuated by HMRC chief David Harnett, was that one firm of accountants had single handedly caused a massive bottleneck in the process by submitting 20,000 VAT applications in only one month.

However, it appears that this wasn't the reason for the delays at all.

In fact, the real reason was that "The VAT registration computer systems could not provide reliable information on the level of work unhand as the data was not robust. Also, staff shortages meant that some applications were not entered promptly on to the registration computer systems."

While the firm of accountants alleged to have submitted so many applications in a single month was never named, I don't see them receiving an apology from Mr Harnett.

Is this because there was no such firm? Who knows.

It appears that the suggestion by Lord Howe (yes, he is still alive!) to investigate government business tax proposals has met with a favourable response.

A number of well-known companies, including Shire and United Business Media, have recently moved out of UK tax jurisdiction because they view the UK tax system as both unfair and unreasonably complex.

Members of the Association of Chartered Certified Accountants were polled and felt that the United Kingdom was at the bottom of the pile when it came to transparency and fairness.

You know when your tax system is too complicated and bogged down in bureaucracy when even the accountants themselves - who, after all, are paid to understand this stuff - feel things needs to be clarified.

If they feel that way, what hope the rest of us?

Why is it that the biggest companies in every industry think that, by virtue of their size, they somehow occupy the moral high ground.

Witness KPMG, who have just issued a code of conduct for their suppliers, which 'requests' that suppliers adhere to certain environment policies in order to retain their relationship with the accountancy giants.

While it is admirable that KPMG are concerned about renewable energy, carbon footprints, the Brazilian rainforests and the continuing existence of the Guatemalan tree vole, the arrogance of such a move does astound me.

Companies of this size should really make sure they put their own house in order before dictating what anyone else should do.

www.weblogcartoons.com" />

Cartoon by Dave Walker. Find more cartoons you can freely re-use on your blog at We Blog Cartoons.

I think they've basically copied my actual desk for this cartoon.

I don't know how one goes about showing someone around this type of thing, but apparently the lease on the Island of Herm (in Guernsey, but, of course, you knew that)is up for sale.

Herm is a tax haven, so there would be no CGT or death duty and only 20% income tax. A bargain. If you've got the £15million they want for it, that is.

One downside : the buyer's neighbours will include such charmers as the Barclay brothers but you do get a manor house, 13th century chapel and 80 acres of farmland as part of the deal.