"I confronted our bureaucratic tax system — and lost"

A true tale of woe from yesterday's City AM:

I am very much a spreadsheet girl. I keep meticulous records of income and expenses, and treat deadlines as sacrosanct. Yet every year, some disaster strikes, and I am left crying on my living room floor, surrounded by invoices and receipts.

This year, I filled out the return (thank you spreadsheet), only to be confronted with the shock of a tax bill that was 50 per cent higher than I had planned — and budgeted — for. 

Why? Because of HMRC's "payment on account" system. On 31 January, those filing returns are required not only to pay any tax due on the previous tax year (in this case, 2018–19), but half their projected tax bill for the current year (2019–20).

HMRC essentially looks at your total tax bill, assumes next year's will be broadly similar, and demands half of it upfront before the tax year is even over.

1. That rule has been in place since Self-Assessment started for the 1996-97 tax year. It is not a new rule.

2. If you get your return a bit earlier and the liability is less than £3,000, HMRC will collect last year's tax liability via your PAYE code for the next year and by definition there are no payments on account. Which is a pretty sweet deal - you pay the tax for the year ended 5 April 2019 in twelve instalments between April 2020 and March 2021.

You have to pay approx. half the income tax "before the tax year is even over"? So what?

3. As the writer herself says "I can, the HMRC website tells me, reduce my payment on account. But if I get it wrong and underestimate what I am likely to owe, I will be charged interest — at 3.25 per cent. (If I overestimate, HMRC will eventually return the additional tax, without interest.)"

4. Employess will have paid 10/12 of their total liability by this stage in the tax year, so the self-employed are at an advantage, not a disadvantage.

In six weeks, the spread of the coronoavirus will stop.

From the BBC:

20 January - 291 cases
30 January - 7,711 cases

That's a compound growth rate of 39% per day.

7,711 cases x (1.39 ^ 42) = over 7 billion, or pretty much the entire world population. 42 days = six weeks.

Death rates are currently at about 2% (assuming the Chinese government is telling the truth, lolz). These diseases tend to become less and less fatal as they spread. SARS was much more deadly at first, but then fizzled out and disappeared and/or just merged into flu generally, so the final death rates from coronavirus will be not much worse than the death rates from the colds and flu that go round every year anyway. And the rest of us will be immune.

US court passes comedy sentence

From City AM:

British trader Navinder Sarao who was responsible for the so-called flash crash in 2010 has been sentenced to one year home incarceration. Sarao was arrested in 2015 and pleaded guilty to illegally manipulating the stock markets.

The sentence, which was handed down by a Chicago court yesterday, was thrown into doubt after lawyers said it would be unenforceable (1) outside the US, according to The Guardian.

Following recess, Judge Virginia Kendall of the northern district of Illinois, was satisfied Sarao would only be allowed to leave the house in a handful of circumstances (2). 

1. Of course it is not enforceable if Mr S is outside the UK.

2. I got the impression that Mr S is a computer geek who is perfectly happy staying at his parents' house 24/7, he now has a good excuse when his Mum tells me to go outside and get some fresh air or meet a nice girl. He probably punched the air and shouted "Yes!". Unless Judge Kendall ruled that his Mum can decide what those circumstances are?

3. Mr S was entirely innocent anyway, so this is a neat way of letting him off the hook.

This would have sounded more plausible if they'd mentioned it five or ten years ago...

From Midlands Connect:

* Revealed for the first time, 73 stations on the existing rail network stand to benefit from improved passenger services as a direct result of the capacity released by HS2, including 54 stations with no direct HS2 services;
* Evidence submitted to the Oakervee HS2 Review by Midlands Connect;
* High speed line will take long-distance rail journeys off the existing network, providing capacity for new routes, as well as faster and more frequent local and inter-regional services;

And so on and so forth (they seem to be repeating the same basic argument over and over).

Quite clearly, HS2 was never about improving the London-Birmingham connection, which was absolutely fine. Trains every 20 or 30 minutes, sub-2 hour journey time and a reasonable ticket price (compared to some routes on English railways).

Somebody calculated that even at the original £20 - £30 billion estimate (ha!), it would be cheaper to demolish Birmigham and just rebuild it half an hour closer to London on the existing line.

Hooray for local public transport and local passenger trains, of course. If they had advanced this as their original reason for building HS2, people might have bought it, but to suddenly "reveal for the first time" at this late stage in the game seems a bit desperate.

This all reminds me of the reasons trotted out for introducing ID-cards, every few months they'd think up a new one to see if any of them stuck. None did, and the scheme was quietly shelved.

I've spotted another alarmist propaganda fail on Skeptical Science

From Skeptical Science:

They say that the following is a 'Climate Myth':

Earth's current atmospheric CO2 concentration is almost 390 parts per million (ppm). Adding another 300 ppm of CO2 to the air has been shown by literally thousands of experiments to greatly increase the growth or biomass production of nearly all plants. 

OK, why?

1. CO2 enhanced plants will need extra water both to maintain their larger growth as well as to compensate for greater moisture evaporation as the heat increases. Where will it come from? In many places rainwater is not sufficient for current agriculture and the aquifers they rely on are running dry throughout the Earth.

That's their lead argument?

It's not actually true. Plants lose water and absorb CO2 through stomata in their leaves, which open or close to optimise the trade off between losing water and absorbing CO2. All things being equal, with higher CO2 concentrations, stomata don't need to be as big, meaning plant loses less water for a given CO2 intake; or absorb more CO2 for a given amount of water loss.

That's the theory, at least, backed up by what happens in a controlled environment (pumping CO2 into greenhouses). What happens in the real world?

From The Conversation (the rest of the article goes along with the 'consensus'):

Land plants are absorbing 17% more carbon dioxide from the atmosphere now than 30 years ago, our research published today shows. Equally extraordinarily, our study also shows that the vegetation is hardly using any extra water to do it, suggesting that global change is causing the world’s plants to grow in a more water-efficient way.

Skeptical Science's arguments 2 to 6 might be true, untrue or unproven, but 1 is a bad place to start!

Weird proportions

My £3,456.96 Honda CRX III "Del Sol" ca. 1996

Basic car £1,050, plus another £2,406.96 on various bits and pieces and labour:

MOT fail type stuff
ABS sensors (salvage) - £100.00
Rear trailing arm rubber bushes - £66.00
Rear trailing arm (new) - £64.38
Rear trailing arms (salvage incl. shipping from USA, ordered in haste/anger and not actually needed) - £76.10
Catalytic converter - £33.95
New clutch kit - £102
Fitting the above stuff incl. brake pads/discs and tracking - £1,119.39
Replacement number plate (original one fell off on the motorway) - £21.00

Not so essential but nice to have
Wiper blades - £24.00
Interior light cover (salvage) - £10.00
New floor mats - £32.90
Leather steering wheel cover - £15.00
New stereo - £105.00
Clip-on cup holders - £20.00
4 x Uniroyal Rainsport 3 tyres* and balancing - £219.22
MOT and new front windscreen** - £397.98



All I need now is a working aerial mechanism, as it doesn't retract properly, which is not cool. And a bit of welding on the rear arches. Maybe replacement rear panels and a respray..?

* It came with two 'budget' front tyres and two OK rear tyres, one of which was irreparably punctured last month. With the new tyres, the steering and handling has gone from 'pretty awful' to 'pretty good actually'.

** The windscreen wasn't badly damaged, but with a million tiny scratches, it looked nearly opaque when the sun was shining on it at a certain angle. Which was disconcerting to say the least.

Fender was guilty of what, exactly?

From The Guardian:

The guitar maker Fender has been fined £4.5m for price fixing by the UK's competition watchdog as part of its clampdown on the musical instrument industry.

The Competition and Markets Authority imposed the penalty on Fender Europe for breaking competition law by preventing online discounting for its guitars. It is the biggest fine issued in Britain for this type of price fixing, which is known as resale price maintenance.

The funny thing is that there used to be a Resale Price Maintenance Act. Under that Act, the Courts would have intervened on behalf of Fender against the discounters, precisely the opposite of what they are doing now.. 

UK supermarkets clubbed together and had this Act overturned back in 2001, and rightly so IMHO. DBC Reed would hotly disagree.

If a company has a monopoly, especially a government protected one or a monopoly over "essentials", then I can see an argument for government intervention, like price caps for mains water.

But Fender don't have a monopoly on electric guitars and electric guitars are hardly "essentials". They don't even have a monopoly on the iconic Telecaster and Stratocaster shapes - other manufacturers have been making copies for decades, some of which are qualitatively better than Fenders for a lower price.

And if Fender don't want to sell their guitars to somebody - for whatever reason - then under the general "freedom of contract" concept, I don't see why they should be punished.

The state/private divide

Anecdote: I was with the Ukippers at Westminster several years ago, lobbying our MPs. When it was finished, we discussed what we were doing next and I told them I was off up to St Pauls to give the Occupy people a bit of support. Those who expressed an opinion said I was bonkers, either you're right wing or you're left wing.

I didn't see a contradiction. The elements of the EU I don't like is the corporatism and the general meddling in people's lives; I agree with the Occupy people that The One Per Cent are taking the piss. Many incorrectly assume they were 'anti-capitalist" and some were, but if you think about it, the Occupy movement was anti-corporatist (mainly anti-banks).

My view on all this is quite simple and coherent, there is:

a) "the state" or "society" (that which belongs to everybody and/or nobody), and

b) the private sector (private businesses and what people get up in their own homes or their own business premises).

All developed states/societies do fairly similar things and have similar values, we just have to accept that. Czechoslovakia split into two and each half continued doing pretty much what the predecessor country had been doing.

In a perfect world, states only do things where the benefit exceeds the cost/burden (provide public and merit goods, welfare/pensions, regulate or break up monopolies etc). There are plenty of examples. And there are plenty of counter-examples: HS2, tobacco control officers, foreign aid payments, Help To Buy etc.

To the extent that the state does things, they should benefit (or burden) everybody as equally as possible. That is the only way to maximise the value that a state can add (which they clearly can, as the alternative is anarchy or warfare); and the only way to maximise people's personal or economic liberty. The freedom of people not to be slaves is more valuable than the freedom of a minority to own slaves.

As far as possible state should not do things which only benefit a particular group of people (like immigrants getting favourable treatment under New Labour) or things which only burden a particular group of people (like immigrants being treated like crap by the Tories). Or give favourable treatment to those hereditary welfare claimants, the Royal Family. You can't favour one group without there being an equal and opposite (though often invisible) burden on everybody outside the group.

The state shouldn't really do things that only benefit owners of a particular type of asset (like land or IP) or a particular type of business (mainly FIRE sector). But where practicalities say it has to (private land ownership/occupation; protect IP under the Treaty of Rome; banking), then it should claw back those benefits in tax payments (aka Land Value Tax, taxes on IP income or a Bank Asset Tax).

In a perfect world, every state school would be "excellent" but the situation is inherently unstable. Some schools will always be better than others (vicious and virtuous circles) so people don't all get the same benefit, depending where they live. The good schools increase local land values, so again, LVT will level this playing field.

Most businesses do not get any special treatment, so they should be paying a lot less tax. The tax system should not be biased against employees and productive businesses, who have extra taxes imposed on them (NIC and VAT respectively).
------------------------------
The basic logic applies to everything.

Democracy is good ("a terrible system, but much better than any of the alternatives"), but with First Past The Post, most people live in safe seats so their votes are nigh worthless. So I support some form of PR (such as multi-member constituencies), that way everybody's vote has a similar weight.

A welfare state is part of parcel of what states do. Some people take the piss (see endless stories about people on disability benefits posting photos of themselves in the gym on Facebook) and some are denied welfare (see endless stories about people being persecuted under Universal Credit rules). So I support Universal Basic Income for all.

In the private sector, parties are not always of equal bargaining power and do not have access to the same information. So we need some level of statutory rights for employees to level the playing field between employee/employer and between good employers/bad employers.

But you have to be careful about going too far - that results in bad employees taking the piss; or act as barriers to entry - in relative terms, things like maternity leave (or a bad employee taking the piss) are absolutely no problem for large employers but can be make or break for small employers. If you go too far, the playing field becomes less level again.

Same goes for consumer protection, by and large it works, but as Lola has posted often enough, in some sectors (financial services) it is form filling for the sake of form filling to keep bureaucrats in work. It's a huge burden for small businesses and not such a burden for larger ones (once you've got FSA authorisation, other businesses pay you to use your registration) and of course, no barrier at all to the real fraudsters who don't bother with the forms, or just lie on the forms. The costs of this far outweigh any possible benefits and it's a kind of barrier to entry (unlevels the playing field).

I'm perfectly happy with same-sex marriage, but also I don't see the problem with that cake decorator in Northern Ireland refusing to do the cake for a gay wedding. Marriage is a "state" thing, and there's no reason for gays to be treated as second class citizens; a private business is a private business and they can turn down any customers they like, even for petty and small minded reasons. And the gay couple can shop elsewhere.

As to personal liberty, if something isn't actually or potentially harming a third party, it should be allowed. Taking drugs in your own home or business premises is fine - but not driving under the influence of drugs. Breast feeding in public is fine, as is wearing a burka. Some people (including me) find one or the other (or all) of these things objectionable or offensive. Tough, it's none of our business, we have to live and let live.

And so on and so forth.

Here endeth today's lesson.

"One in five UK businesses ‘financially stressed’, says KPMG"

From Accountancy Today:

One in five UK businesses are "financially stressed", according to new research from KPMG's restructuring practice.

The practice analysed the filings of all UK businesses with revenues over £10m in the five year period to the end of 2018. Trading performance, profitability, cashflow, liquidity and debt leverage were all analysed to produce a score to identify financial stress and distress among these businesses.

What KPMG fail to mention is that their rapacious audit fees (monopoly rent) are a major contributor towards their clients' financial stress, taking one or two per cent of turnover on average.