Tag Archives: Tax

Is government too scared of Google, Amazon and Starbucks?

The tax arrangements of Google, Amazon and Starbucks have been big news recently. Essentially these are big multi-national companies that arrange themselves financially such that they make large amounts of money from British consumers, but pay little or no tax because the profits are transferred out of the country.

Robert Peston, the well known BBC financial journalist published a great post questioning whether our government is scared of these big companies…

If the UK had an industrial strategy over the past 30 years, it could perhaps have been characterised as “foreigners more than welcome”.

To a greater extent than any developed economy, British governments have been almost wholly lacking in concerns when overseas companies set up shop in the UK or bought businesses here – because of the conviction that these overseas companies would bring decent management, useful competition and investment capital to this country.

Against this government policy backdrop, Google, Starbucks and Amazon seem to be examples of huge American companies doing as well or better in the UK than anywhere apart – perhaps – from their home market in the US.

That, at least, would be the case if success is measured in terms of revenues or market share.

Click here to view original web page at www.bbc.co.uk

Not Smiling

I guess it had to happen at some point, nobody is perfect, and despite riding high at the top of numerous customer satisfaction surveys, there had to be some part of the organisation at Smile and the Co-operative Bank that wasn’t quite up to scratch, and unfortunately I’ve managed to find it.

The people in question are the Tax Services group, and their job is to handle all the stuff related to tax, in my case with the Mini Cash ISA that I’m trying to set up in order to take the money I had in an ISA with Icesave. This in actual fact is the crux of the problem.

When I claimed my money via the Financial Services Compensation Scheme it was returned via an electronic transfer into my regular current account. As the money has a tax free status I was then issued with a certificate stating how much money I had, and confirming that it was still tax free. In theory what is supposed to happen is you set up a new ISA with another provider, and then send the certificate to them and they reinstate as with any other transfer. Since the money is sitting in an account with the same provider I thought it would be pretty straightforward – I was wrong.

The general problem seems to be that since handling a transfer via a certificate is out of the ordinary, it is not covered by regular procedures. Some banks, Nat West for example, have now issued a memo to each of it’s branches detailing the process for taking in an Icesave ISA, Smile it seems has not – although after this I hope somebody senior sees fit to issue one, as to be frank the people at Smile seem to need some guidance.

When I initially set up the new ISA, I had already told them where the money was coming from. At that point the advisor put me on hold whilst he consulted with the Tax Services department, who told him that I needed to fill in a special form, and that they would send the form. I went ahead and opened the account, and waited for the form to arrive in the post. A week or so later a letter arrived welcoming me to the account, but with a standard transfer form. I waited a bit longer, and still no form, so I phoned again, and again the advisor said they’d talk to Tax Services to get the form sent. A few days later and still no form.

I phoned again, and once again waited whilst the advisor spoke to Tax Services. The advice this time was that there was no form and that all they needed was the certificate and a covering letter, and the advisor provided me with the address of the Tax Services department. I duly wrote a letter explaining where the money was, including the certificate, and dropped it in the post box.

A couple of days later I had a phone call from Smile querying the fact that I had opened the account, but there was nothing in it, having explained the situation, the advisor then didn’t suggest there would be any problem having sent the letter and the certificate.

That was about a week ago. This morning I logged on to see if they’d made the transfer. With all the bad weather it was quite likely the post had been held up. Looking at the accounts, the money was still sitting where it had been, and there was no acknowledgement that my letter had even been received. There was however a message from Tax Services, apologising for the delay and saying that they had dropped the relevant form – the form Tax Services had told the advisor didn’t exist – in the post and to fill it in.

At this point it is fair to say that I exploded. There is a single copy of the certificate, which they hadn’t even acknowledged receipt of, and they couldn’t seem to make up their mind what they needed. I replied to the secure message, and waited several hours – there was no response so I therefore phoned them again, and spoke to another advisor, who then talked to Tax Services to try and find out what was happening.

The first thing she did was confirm that they had indeed received the certificate, but that they were now insisting on me having returned the signed form. The big frustration here is that as the customer I am not allowed to speak to the Tax Services team, like some other corners of lousy customer service in other organisations they hide behind the not speaking to customers, and essentially leave the front line call centre staff to deal with the inevitable results of their actions. The only suggestion I was offered was to send a secure message – the problem being that I’d sent one of those already and hadn’t got a response, and they hadn’t bothered to send a message asking me to fill in the form and acknowledging receipt of the certificate either. She said that the reason they wanted the form was that they needed my signature – despite the fact that they have that on the letter I sent. Indeed with the certificate and the information in the letter they have everything they need to make the transfer, it just seems to be that they are on a major jobsworth streak wanting me to fill in the form.

The big frustration is that through all of this, the money is languishing in my current account, and I’m losing daily interest all the while Tax Services at Smile mess around giving conflicting advice, and not sending the forms they said they would.

I’m certainly going to raise up a complaint over this, as after years of exemplary service, and at times actively going out of their way to help, this current experience has been a total pain, and the behaviour of Tax Services is letting the whole of the rest of the organisation down.

As a general day-to-day bank, I’d still recommend Smile – through all of this the advisers have always been helpful, indeed the woman this morning seemed just as frustrated by the intransigence of the Tax Services team as me. But seriously, if you have anything out of the ordinary, in particular that involves the Tax Services team, I’d say to go somewhere else.

Good News from the Budget

With my Churchwarden hat on there was a good little bit of news from the Budget today – the news that although the basic rate of income tax will be cut from 22% to 20% on April 6th (which was announced last year), they are now not going to cut the rate at which Gift Aid will be paid out – at least not for the next three years. Financially, the drop in Gift Aid income would have made a small but significant impact on our income as a Church. Just a pity that the government only got round to doing anything about the problem less than a month before the change was due to take place, once Churches and charities have spent time putting together campaigns to highlight the issue to givers – it would have saved people a whole pile of work if this had been announced months ago… Better late than never though.

Government Moving to Tax Personal E-mail?

Craig Murphy highlighted this article from yesterdays Times, which flags up a change in the tax rules brought in by the recent budget. Whilst in computing terms most coverage concentrated on the loss of the Home Computing Initiative that encouraged home computer ownership by offering a tax break on the purchase cost, in some ways this part of the finance bill has the potential to be much more worrying.

Effectively the move seems to be going after companies that give employees a computer as part of their job, which then also gets used for general usage. For example a salesman or consultant that is given a laptop, and then at night uses his laptop at home for personal stuff, maybe checking his hotmail account, or doing a bit of online banking, essentially removing the need for a home computer. Under the new rules, this would be regarded as a benefit, and both the employee and the company taxed accordingly.

The issue to which the article in the Times alludes is that the legislation states that computers are exempt if usage is ‘not significant’, so it entirely depends on where you draw the line, and what you define as personal usage. Certainly with the fairly vague definition given in the legislation it has the potential to be a massive minefield for employers and employees, with the possibility that someone sending personal e-mails from a work computer could land both themselves and their company with a tax bill, depending on the definition of significant usage. Certainly whether it does end up being a tax on e-mail or not, it seems like a great opportunity to grab a nice lot of extra cash for the Treasury, and one that up until now has sneaked under the radar of most commentators.

The amusing thing is that now the government is now backtracking, saying that the chances of having to pay the tax are virtually zero – but if that is the case, as Craig says why bother to bring in the rule at all?