Wednesday 07 January 2009

DGM HQ A relatively sleepless



A relatively sleepless night, waking before four & remaining awake for a couple of hours. Tony Jones’ funeral has prompted much reflection & consideration across many areas of my life. Tino, Uncle Charlie & Tony were all key players of my first 21 years; touchstones, living history & people I could go to for information & opinion.

Landlordly accents of the butcherly kind, in telephonic conversation, came through the wall at 08.47.

David arrived ahead of Alex in the kitchen…


The cold water supply is not, presumably frozen on this, once again, fre-wosty morn. Yesterday when Alex arrived the temperature was -8.5 C. The arriving Mr. Stormy reports that today is only -1.5 C…


Kitchen discussions around the DGM Christmas tree for 2007, sent by Amy of DGM US, with its Schizoid Face decorations…


Discussions cover several topics, including remixing the KC catalogue for varying formats, skyping & The Vicar’s continual demands…


David & Alex are now in DGM SoundWorld I at The Vicar’s behest.

13.12  David has received letters from Downing Street & the House of Commons in reply to David’s own letter of 24 November 2008…

Dear Mr Darling,

A few thought-provoking figures. In the last ten years, the legal obligation for our small business to file accounts with Companies House has cost us exactly £213,763.62 in bookkeeping and accountancy fees. And yet, having paid all that money preparing accounts for the taxman, how much tax have we actually paid during that same ten year period? Exactly £670. Those figures bear repeating. £213,763.62 on the completely pointless and non-productive task of preparing figures, in order to pay a tax bill of just £670.

Had this country gone out to design a system that inflicted maximum time-wasting and loss on small businesses while raising minimal amounts of tax – we might have arrived at the current, absurd system.

Like many small family businesses, our company is not designed to make a profit for shareholders. The shareholders, directors and employees are much the same people. We have a turnover of around £500,000, and, as we are a management company operating on a 25% commission, that leaves around £120,000 to pay our staff and operating costs.  If there were more money available, we would raise the salaries. The company is, in effect, never likely to make a profit And yet we are being forced to spend as much as 20% of our disposable income on filing accounts to be assessed on this non-existent “profit”.

We have all lived with the system for so long that we no longer see how mad it is. Perhaps rather than tinkering at the fringes, which inevitably leads to more rules and complexities, we need to return to first principles. Why do we have to file accounts at all? If it is to raise tax, then, as I have shown, it is an almost criminally inefficient system. Why not have the option of a flat fee based on turnover? Perhaps businesses with a turnover of say, £400,000 to £500,000 have the option of paying a flat tax fee - maybe as much as £10,000. No accounts necessary.  No questions asked. We are forced to pay a flat fee anyway. It’s simply called an accountant’s bill. Our business would be more profitable and, over the last ten years, the government would have raised, wait for it, an eye-watering 15,000% more money in tax – a tax rise worth considering!

We all know small businesses or self employed people who rightly moan that their accountancy bills are as large as their tax bills. While I have nothing but goodwill towards our long suffering book-keeper and accountants, who have represented us well for many years, would it not be better that more of this money went to the treasury for all of our benefits.

There is a golden opportunity to raise more tax and dramatically lower the cost on small business.

And the benefits would not end just with the increased tax revenue, and improved productivity. We would no longer have attics filled with boxes keeping a paper trail of every transaction we have made during the last ten years. HM Customs and Revenue would no longer have to employ people to conduct tax audits analysing each small transaction to see if each one has been correctly analysed. I know recently of a tax audit meeting, where three people, two of them tax inspectors, met and discussed whether a certain trade magazine was a legitimate business expense.  Other than the astonishing fact that they decided that it was not – the total expense in salaries and travel expenses for that meeting must have been in excess of £500. And yet the tax liability being discussed was probably less than £50. And it will not end there. The person in question is, not surprisingly, planning to appeal and is also consulting their trade organization – wasting more time and money, both theirs and the government’s.

Are we a nation that wishes to spend its entire life arguing about minutiae, or would we rather find a simple and effective way of raising tax, and allow our businesses to get on with their business? Sadly, that is not the rhetorical question it appears to be. It is very possible that the reason we spend so much time and money supplying facts and figures for the government has nothing to do with tax assessment, and everything to do with the desire to control and micro-manage. 

I write this letter more in hope than expectation.  It requires a huge effort of will to change the status quo, particularly when there are powerful industries benefiting from the current madness. Many accountants might, one suspects, argue cogently against such a change. Many people within the tax department might also be against the idea, if only because there might be a loss of work – although any change would only apply to a small minority of businesses, where the shareholders do not need professionally audited accounts. But, imagine a world without excessive paperwork and form-filling. No formal accounts. I can almost hear small business people everywhere sighing in relief.

As the government itself is telling us, these our extraordinary times. Our newspapers are filled with two items – the need to support small businesses, and the woeful state of the government finances. Here is an opportunity to help both, if only someone has the courage to grasp it.

Yours sincerely,

David Singleton.

cc.  Rt Hon Gordon Brown MP

Rt Hon David Cameron MP

Rt Hon Nick Clegg MP

George Osborne MP

Robert Key MP

Editors The Times, Telegraph, Mail, Financial Times, Guardian

14.05  Off to Bournemouth to visit Don Hardyman, en route to Bredonborough to collect the Minx & on to London.