Article: Pre-packs boosted by High Court decision
Source: AccountancyAge

http://www.accountancyage.com/accountancyage/analysis/2199746/pre-packs-boosted-\court-3501406


The story illustrates the general commercial stupidity of HMRC in its
business of collecting taxes.

A firm of solicitors owed HMRC some £1.7m. HMRC took the firm to
court to wind the company up.

However, the administrators noted that this would not deliver the cash
to HMRC. A better solution for the firm and HMRC was that the
business continues to trade. So, the administrators instead sold the
business (as it turns out, they had a buyer already, giving the sale a
"pre-packaged" title).

Stupidly, HMRC attempted to block the sale of company.

In other words, HMRC chose to i) sacrifice any chance of collecting
tax owed to it; and, more importantly, ii) screw the interests of the
firm's clients.

Fortunately, the court saw the light and blocked HMRC's idiotic
whitterings. Both the taxpayer and the firm's clients gained as a
result of this decision.

But the taxpayer will need to suffer the on-going lunancy of HMRC.
After all, it is highly unlikely that a bureaucracy without any
commercial awareness whatsoever will learn from a single case.
-- 

mjt

A supporter of http://www.taxpayersalliance.com/, fighting to stop the
government ripping off the taxpayer.

Tax cuts v public services?  No!  Tax cuts *for* better public services.

>
> Tax cuts v public services?  No!  Tax cuts *for* better public services.


interestingly this does not appear to be the choice. during the last
ten or twentry years the railways, water boards, the post office, the
busses, the telecom network and goodness knows what else have been
sold to private industry, dentists and prescriptions must now be paid
for, student grants have been scrapped, council houses sold and our
unemployment insurance (the dole) is pretty well worthless. Yet taxes
have risen during this period.

so please explain your percieved corelation between tax cuts and
public services.

You are comparing apples with oranges and trying to find a causation 
relating to raspberries.

The correct analysis is to measure the effectiveness of the investment 
of railways, water boards, post offices, buses, telecoms and others 
pre-privatisation (say 1960s/1970s) and post privatisation 
(1990s/2000s).  The cost of change during the 1980s makes analysis 
difficult, especially for British Rail, because it cost a lot to prepare 
for privatisation.

For example:

Water boards get a lot of bad press for water leaks.  But the leaks 
didn't appear on the day of privatisation.  They'd been going on years; 
the public sector did nothing about them.  So when the companies repair 
the leaks, morons whinge about it.  No dead hand of municipal economic 
illiteracy here, save for the price caps that the regulator always wants 
to impose, thus undermining the basis for funding capital expenditure.

Railways now offer superb food on trains, the windows are cleaned at 
least once every 24 hours, the service frequency is much higher than it 
was in the 1970s (especially inter-city routes), the punctuality rates 
approach 95% (which is challenging when the main routes are now much 
busier), the risk assessments are now much more responsible (but 
long-term crash rates are not yet comparable: initial signs are that 
they are no worse).  And St Pancras International happened.  And the 
Tunnel.  And the links between them.  And Liverpool Street got 
refurbished.  All privately (or jointly) funded.  No dead hand of 
municipal economic illiteracy here, save for the price caps that the 
regulator always wants to impose, thus undermining the basis for funding 
capital expenditure.

Social housing stocks have increased significantly over the past 15 
years because the capital element is no longer a monopoly of the state. 
  Most Councils in Hertfordshire still operate a housing service, but 
government has wisely stopped them from turning into builders.  In those 
boroughs which have divested their portfolio to housing assocations, the 
cost of management and the cost of capital have dropped like a stone. 
No dead hand of municipal economic illiteracy here, but housing 
associations need to balance the cost of their investment with the 
rental returns given that the state will pay only part of the rents. 
That said, the state can offer capital relief (and does), so some 
"social housing" stock of housing associations can be a better spec than 
  pure private stock even on the same development!


So why have taxes risen?

Because the cost of the state has risen.

How?

i) bureaucracy.  The government has employed masses of people over the 
past 8 years at normal, commercial market wages.  As with all government 
jobs, none of them contribute to national growth.  At best, they 
facilitate the private sector to do so, but overall, they are "internal" 
services, e.g. HMRC, or the NHS, or the education sector.

ii) pension schemes.  Most government staff enjoy a fully-funded defined 
benefit pension scheme.  Over the past few years, the fall in the 
annuity rate has combined with underperformance in most funds. 
Consequently, the cost of pension contributions has soared through the roof.

My own analysis of Hertfordshire's district councils infers that the 
pension scheme deficit is the largest out-of-control cost that councils 
are likely to face in their budgeting.  But I have yet to get to the 
bottom of this one.

iii) crowding-out.  Because the government has consumed so many people 
into zero-growth jobs (or non-jobs, as I call them), the profitability 
of the private sector has fallen.  Thus, there is less investment and 
less employment in the private sector. Thus, there are less tax receipts 
from corporation tax and personal income tax.  Government staff also pay 
tax, but it's a zero-sum game.  Since 2002, the government has been 
trying to widen the tax base on the private sector without pissing off 
the tax rates payable by the public sector.  Meanwhile, the economy has 
bounced on a consumer boom fuelled by cheap credit.  Now the credit is 
getting expensive, there will be a shortage of cash in private hands. 
Prepare for a large drop in living standards over the next two years.

iv) targets.  Since 2001, the government has assigned targets to local 
authorities and other public bodies to perform the whims of central 
government.  Of course, local authorities collect their own tax: the 
Council Tax.  So, by dumping its former duties to local authorities, the 
government can promise the earth and bury the cost into many different 
boroughs, to hide the audit trail and thus hope to remain undetected.

v) the NHS.  The government has devolved significant targets to local 
authorites and hospital trusts.  Large deficits were the inevitable 
result.  Rule changes suddenly turned deficits into surpluses.  Happy 
smiles in Parliament... but that's just spin.  What's the real truth?

vi) white elephants.  BAA is the best example here.  BAA wanted to make 
more profit from its existing operations so that it could fund more debt 
to re-furbish terminals 1, 2 and 4 at London Heathrow.  But, last month, 
the CAA said no.  The CAA didn't say where the funds for re-furbishment 
should come from.  Economic illiteracy in motion.  Meanwhile, the same 
government proposes to spend taxpayers' money on building terminal 6 and 
runway 3.  Why does the taxpayer need to fund this, when a private 
company already had an economically sound plan in place to do so?  And 
given the shit service that the UK state normally delivers, why should 
the consumer-taxpayer spend more than double the cash on a medoicre 
service that a private sector provider could provide for less than a 
quarter of the investment?  It's a monopolistic, municipal rip-off.


In the UK, services have historically improved when people take 
ownership of them (i.e. privately funded and privately provided).  And 
taxes rise because of municipal, process-driven, lazy, uncommercial, 
non-entrepreneurial, non-thinking ("disjointed incrementalism", or 
"amateurs' night out")

If we simplifed our tax policy, we could offer a negative tax up to 
£8,000pa (max 6 months in every 24), with a personal allowance up to 
£16,000 and tax at 20% on all income above £16,000.  These figures are 
my hunch based upon what I've read elsewhere.

We would also scrap capital taxes (capital gains and death taxes).  We 
would also make the standard rate of VAT 1% (currently 17.5%) and make 
all transactions standard rated - no exemptions, no zero-rates, no 
differentiations at all.  Both scrappings would render contradictory 
case law obsolete.  In addition, it would remove forever any future, 
legal, expensive stupidities like the question about whether a jaffa 
cake is a cake or a biscuit.

The whole benefit system - its byzantine complexity of segregating 
benefits, costing billions of administration on only relative pennies of 
transfer payments - can thus also go: the negative tax would not need to 
know the basis of your impoverished income.

At a stroke, this would remove about 80% of HMRC, 60% of the private 
sector tax advisers, 60% of staff from all of the government benefit 
agencies and just about all poverty traps that low-income people find 
themselves in because of complex tax & benefits.  The overhead burden on 
the economy would suddenly release.  After 12 months of high 
unemployment, the investment that's been queueing for funds for the past 
4 years will find resources to make it happen and re-employment will 
happen quickly (over a 2 year period).  Technically, the "cost of 
capital" will drop like a stone.  A short "recession" of 6 months would 
precede very rapid, large-scale re-investment in the private sector for 
years (some say up to 10) before receding to "normal" levels.

It would also increase government's tax revenues.  This is because 
shaving smaller amounts off more taxpayers generally yields more revenue 
than punishing a small number of taxpayers.  And because government 
would be spending less, it would need to tax less.

Thus, for those services that the government continues to provide, the 
financial foundations would be much more stable.  There would be much 
more private sector than public sector.  And as the private sector funds 
both public sector and national growth, society ends up better off.

There is also a strong probability that the remaining government might 
realise that politics is the main reason for waste.  So the smaller 
goverment is more likely to want to private the remaining public 
services - like the NHS - and revert to being a specialist buyer on 
behalf of taxpayers.  This would dramatically reduce the government's 
nede for cash relating to the NHS, so further tax cuts are possible. 
And because the government is acting only as a buyer (hopefully via 
private-sector insurers), the poor get their medical assistance as they 
need it, rather than being thrown onto a trolley in A&E for a few days.

With more money in private hands, there is also a far greater 
probability of investment in green technologies.  At present, there is 
no incentive to do so.  All government needs to do is to create a 
market; but most governments simply want to monopolise (as all mafia do).

And this is why tax cuts lead to better public services.


orangatang1@googlemail.com wrote:
>> Tax cuts v public services?  No!  Tax cuts *for* better public services.
> 
> 
> interestingly this does not appear to be the choice. during the last
> ten or twentry years the railways, water boards, the post office, the
> busses, the telecom network and goodness knows what else have been
> sold to private industry, dentists and prescriptions must now be paid
> for, student grants have been scrapped, council houses sold and our
> unemployment insurance (the dole) is pretty well worthless. Yet taxes
> have risen during this period.
> 
> so please explain your percieved corelation between tax cuts and
> public services.
> 

-- 

mjt

A supporter of http://www.taxpayersalliance.com/, fighting to stop the 
government ripping off the taxpayer.

Tax cuts v public services?  No!  Tax cuts *for* better public services.