Tax Break

John Fisher, international tax consultant

Archive for the month “September, 2014”

Viva, Barcelona!

Words didn't come easy to him

Words didn’t come easy to him

‘In the beginning was the word’ might have been the take on things in the Gospel according to John, but by my calculation, the oldest profession has never had much use for words (other than when haggling over price), and the second oldest profession (mine) has always relied on numbers; in any event, some years ago we merged.

The first international tax conference I ever attended was in Florida around twenty years ago. It was one of the highlights of my (now) long career. Closeted for three days in a glorious hotel with some of the best tax brains I have ever met, it was an orgy of diagrammatic flip-charts, 1929 Luxembourg Holding Companies, Belgian Coordination Centres, and ridiculously aggressive globe-embracing tax structures. Numbers and boxes. Heaven.

Of course there was a price. Tax advisors were universally viewed as geeks with psychopathic tendencies who should only be allowed to meet clients if accompanied by a responsible, audit practicing adult.

What a difference twenty years can make.

I am writing this post at 35,000 feet, on the way home from the latest conference in a very wet Barcelona. Nowadays, not only are we allowed to consort with clients, we invite them to join us, unaccompanied, at our get-togethers.

And what events they have become . It was a gradual process. Out went the numbers and flip-charts. In came the sharp spot-lights on a background of blue-haze; and words,words, words. I don’t think I saw a single number over the whole two and a half days except the occasional heart- warming statistic. It seems we have joined polite society.

Unfortunately, he couldn't make it this year

Unfortunately, he couldn’t make it this year

Our gurus talked in sound-bytes worthy of a British news anchor, about the rise of ‘compliance’. Compliance! When did the Detroit of the international tax world become sexy? Any color as long as it’s black! Boring! Not anymore. We listened to the Tax Emperor of one of the world’s very largest companies explain that his compensation algorithm no longer includes the effective tax rate, but instead is weighted towards his level of success in meeting all the group’s international reporting requirements. To put it more succinctly – promiscuity is a thing of the past. Today is all about Safe Tax.

An issue that had a lot of traction was BEPS (Base Erosion and Profit Shifting), about which I wrote a few weeks ago. The latest OECD update had been fortuitously issued a few days previously and this was a chance for sound-byting about the 15 constituent topics. After a panel of talking heads had compromised their integrity to impress the super-intelligent moderator (who is also a genuine ITV News Anchor),  it was left, implausibly, to the Chinese participant to remind everyone that BEPS was not going anywhere without the Americans. And the Americans are not going anywhere. Period. Good night, and good luck.

There was a spellbinding lecture on the mushrooming effect of Big (stored digital) Data on our lives, delivered by a remarkably competent stand-up comedian who triples up as a successful author and university professor. He, too – in what was starting to look like a conspiracy – incredibly avoided numbers, other than those that were so big the conference participants were unable to comprehend them ( a place in their heads previously occupied by lawyers’ fees).

Overall, it was a very successful few days – another strip of asphalt in the long road to acceptance by Society.

Happy New Year to anyone celebrating this week

Happy New Year to anyone celebrating this week

When I get home, I shall put my best suit back in mothballs and hang up my silk ties. Like Cinderella after the ball, it will be back to the daily drudge. No spotlights. No blue-haze. No News At Ten anchor. But lots and lots of numbers. Yippee.






Fish without an aye?

saltire1The only thing I am prepared to learn from this Scottish Referendum lark is that, if you give people an overdose of democracy, their brains come flying out of their ears.

By the time some of you read this, the whole farce may well be over – decided one way or the other: the only statistical certainty in the entire, tiresome process. Friday’s  papers will either be starting the countdown to secession, or painfully analyzing why the polls were so wrong (I predict a 60:40 No vote, and assuming I am right, am prepared to explain why the polls were so wrong, using a valuable analytical tool called ‘common sense’. If I am wrong, I will be analyzing why the polls got it so illogically right).

The big problem, it appears, is that, while the No campaigners have explained convincingly why, economically, independence is the stuff of fairy tales, the Yes campaign has hijacked half the ‘nation’ on a psychedelic ‘Lucy in the Sky with Diamonds’ trip.

Worth going to war for

Worth going to war for

If, as has now been promised by Gordon Brown, former Prime Minister and fellow Jock, the Jocks are given devolved powers of taxation and  control over certain spending in the event of a No vote, any remaining hard-hatted economic arguments of that  Fish without an Aye (pronounced ‘I’) Alex Salmond, will evaporate as fast as an open bottle of whisky in a salmon smoker.

Of course, given half a chance, the average  Scotsman in the Glen is bound to take the opportunity to be seen on TV by his mum, declaiming on the future of his nation free of King Edward Longshanks. Scotsman’s mum, meanwhile, sits huddled next to a wood fire in her cottage in the Outer Hebrides which, thanks to successive Conservative and Labour governments, is attached to the National Electric Grid despite the doubtful value to anybody other than her. The lady is only watching the news because she is eagerly waiting for the fresh episode of  Downton Abbey – a series about a bunch of English toffs.

What I really fail to understand is, why the Scots (whoever they are, and however they are described for the purposes of this vote) get to decide alone on the future of the United Kingdom. It is not just about them. Scotland is not a British Colony or Mandate suing for self-determination. It is an integral part of the Three (Two-and-a-half?) Kingdoms and has to take responsibility for the effect on the others. While Ireland really was buggered by the democracy that was two wolves (England and Scotland) and a sheep (Ireland) discussing what to eat for lunch, Scotland has produced a disproportionate number of Prime Ministers, some of whom – notably James Ramsay Macdonald – have made a perfectly  good job of buggering up  the United Kingdom without resorting to independence.

This vote should have included the entire UK electorate. David Cameron must have been having a bad day when he agreed to the current format – one presumes he assumed the No vote would be a formality.

The American who could lead the Scots to vote 'Yes'

The American who could lead the Scots to vote ‘Yes’

And, even if it was right to restrict the vote to the Scots (which it was patently not), what about the Scottish diaspora? On a decision of this magnitude that will affect all future generations of Scots, why was the vote not offered to Scots and their descendants? As the son of a Scot, I should have a say in the long-term future of the country I have visited once in my lifetime. In fact, I feel passionately about Scotland. If  I were interviewed by the BBC, why would I go for the boring ‘No, I like it like it is’ (that I actually believe in), when I could give an emotional speech about the glory-days of Braveheart that might get me onto the evening News? It wouldn’t have to affect how I actually voted in the secret ballot. But let’s wait and see if the polls were right.

The Good Old Days?

These two would have sorted out Islamic State

These two would have sorted out Islamic State

By the time you get to my age (I, just about, remember what I was doing when I heard JFK had been shot), there are not many childhood ambitions you have either not fulfilled or not given up on. I made it to the Volvo, but not President of the United States (an early disappointment reading a DC Comic – if being born on Krypton ruined it for Superman, Stoke Newington wasn’t going to do much for my chances).

Well, last Saturday night I finally fulfilled an ambition that first entered my head one Spring day in 1970. I remember walking into the school library, the most junior of juniors, and asking the duty prefect to order a copy of John Galsworthy’s “The Forsyte Saga”.  I had been gobsmacked  by the 26 hour BBC adaptation that had been showing in 1968/69 and I thought I would have a go at the original. Either because the prefect knew that the book was about something resembling incest (inbreeding), or because he was an illiterate moron,  instead of encouraging my literary pretensions, he threatened me with detention. Illiterate moron. Definitely.

Last Saturday night, having logged out from normal life  for four complete Saturdays in a row, I finally finished the trilogy that is the Forsyte Saga. It did not disappoint.

It possesses  one of those story lines that would not disgrace ‘The Bold and the Beautiful’ (which I saw for the first time on Friday – somebody told me a number of the characters were thinking of taking up acting; I hope not). I will try a short synopsis (if you are under 18, despite the word ‘incest’, this is a family  site, so I suggest you clear off). Names are a bit of a bind: there is Jolyon and Jo and Jolly and Jon – not to mention, June. So I shall use letters.

Spot the one with two heads

Spot the one with two heads

Back in the 1880s, Mr A and Mr B are first cousins who don’t like each other very much. Mr A marries first but later runs off and marries his daughter’s governess, abandoning his daughter (A minor)  to her mother and his father (Mr Old A – the wives’ names are not important). Mr B marries Mrs  B (her name is very, very important) but she cannot stick him. Mrs B steals A minor’s fiance, who proceeds to top himself . Mrs B walks out on Mr B. Mrs B falls in love with widower Mr A, and Mr B names them both in a divorce suit. Mr A marries Mrs B, while Mr B marries a French woman who is not important. Mr A and Mrs B have a son (AB minor), while Mr B has a daughter (B minor). AB minor and B minor fall in love and want to get married. This cheeses off just about everybody. Just to add to the fun, Mr A has two children from the governess, one of whom dies in the Boer War, while the other marries Mr B’s nephew (this is a daughter – which would have been stating the  obvious in the 19th century), her second cousin. She is the only really sensible one in the whole book, deciding not to have children because – thanks to the family connection – they might be born with two heads.

There is, however, something that was, to the best of my juvenile memory, completely missing from the BBC series. The trilogy is about unabashed capitalism – Soames Forsyte (Mr B), the books’ main protagonist, along with almost all the Forsytes, is obsessed with property and the individual’s right to own as much of it, in all its forms,  as possible. That fits well with late Victorian England, but there is a great leap to the last book from 1901 to 1920, which Nobel Laureate Galsworthy was writing in real-time (published 1921).

This was immediately after the Great War, when the aristocracy and middle classes were living in real fear of what might happen to the country. Income Tax had already been hiked before and during the War. But, while Soames and various Forsytes bewail the inroads the income tax and super-tax are making into their fortunes, they live with a far greater fear which, given the timing of the book, is almost palpable. Three years earlier, King George’s doppelgänger cousin, together with his family,  had been murdered by the Bolsheviks. In Britain, with universal suffrage (that is ‘the vote’ for any under-18s who did not heed my advice above), the Labour Party was rising rapidly and there was a real concern of either outright revolution or wanton nationalization.  As it turned out Labour foamed and fizzled, it requiring another World War to deliver them a sustainable parliamentary majority. Meanwhile, ignorant of what the future held, Soames (and Galsworthy) hid their Top Hats and flashy cars in the hope of not being noticed.

Spot the one with a brain

Spot the one with a brain

A hundred years on, and it is interesting to note that the Social Protests as well as the writings of the likes of that Frenchman Thomas Piketty have not led the nouveau-riche to hide their  wealth. Quite the opposite – they appear to flaunt it.  It will be interesting to see how this one pans out. Whatever happens, I will not be around for the BBC series in 2068 (although, I imagine ‘The Bold and The Beautiful’ will still be going strong).



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