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« August 2007 | Main |October 2007 »
I think that's the phrase you're supposed to use, isn't it? Anyway, Alistair Darling yesterday called for greater openness in international markets, adding that it was important 'to prevent risky investments being held off the balance sheet.'
Truly, truly astonishing. Has the chancellor heard of PFI?
I've not just been thinking about the credit crunch this week. One of the big corporate tax avoidance schemes, cited by Dave Hartnett as an example of the dangers of tax avoidance, is about to hit the headlines again.
It's about 'tax-efficient off-market swaps'. It's worth £1bn, used by mega-corporates, and a test case judgment involving Prudential comes up in the next few days, my colleague Nicholas Neveling has been told.
As far as I can tell, it's all about the structure of foreign exchange deals, and being able to claim the premium for such exchanges in a clever tax efficient way. Perhaps one of you readers, better versed in tax than me, could give a better explanation?
I thought it worth bringing up here because Dave Hartnett, when talking to a Lords committee after the disclosure rules were introduced a few years back, had a bit to say about the schemes. It's worth reading, here.
The story in The Times this morning about the Lib Dems is further proof of just how knee-deep in non-dom money the political parties are.
I suppose in some ways you could look at it and venture to suggest that my repeated suggestion that the reason the parties don't drop the non-dom rules is because of the donors, is actually disproved by the Lib Dems hardline policy on the rules.
After all, if the Lib Dems can want to get rid of the rules and take the money at the same time, then all credit to them for being independent of the influence of the filthy lucre (I remain to be convinced, though - when the Lib Dems come to power, we'll see whether they stick to what they've said. Could be a while.)
There's a broader point which might be worth making. While we're having a debate about political funding at the moment, perhaps one proposal might be for non-doms to be forbidden from giving money to political parties.
Pay tax on your worldwide income, and then you can take part in the UK political process. Is that too much to ask?
Hell will freeze over of course, before the political parties voluntarily turn off the tap that funds them, but confidence in the political process must be being seriously damaged by the ongoing stories about wealthy tax exiles and their influence over government policy. Time to act.
Very off-topic, but the sub-prime crisis is the biggest accounting story around, so I'm not spending much time thinking about tax right now.
Lehman Brothers' numbers yesterday, and Morgan Stanley's today were full of bad news about sub-prime, but not terrible news. So are we out of the woods?
I don't think so, and at least partly for accounting reasons. We have more to say about this in tomorrow's edition, but suffice to say that the models being used to describe the position of US banks are said to be as complex as the derivatives they purport to describe. Until we know precisely how badly the banks are doing, and they know how they are doing, will they be confident enough to lend to each other?
Lehman Brothers announced a $700m write-down on its sub-prime derivatives yesterday. But my sceptical side enjoyed this comment, left by 'London Banker' on FT's excellent Alphaville yesterday,
The real test will be the breakdown of Level 1 (mark to market), Level 2 (mark to model) and Level 3 (mark to make-believe) earnings. Until I see these numbers, I don’t believe anything that’s written about good news. I’ve heard the banks’ CFOs have been meeting all through the past week to agree the methods for flattering their accounts this quarter and a cease fire on sniping at each other to instill confidence. If there’s a big leap in Level 2 and Level 3 but no outcry from the analysts, that will indicate a deal’s been done.
Is that a bit too cynical? Or just common sense?
UPDATE: Here is our news story on the crisis at the US banks
I see that Dave Hartnett and Paul Gray have both done podcasts, answering questions put by 'agents' (tax advisers to you and me).
Most notably, as far as I was concerned, they didn't answer my questions about their interests, as listed in Who's Who. For those who've forgotten, Hartnett, the director general of HMRC, likes Marcus Tullius Cicero, he says, while Paul Gray likes Wensleydale sheep.
If it weren't for the fact that I never formally submitted the questions, I'd say this was another disgusting establishment stitch-up, and that the pair were refusing to answer the hard questions that matter to the tax profession.
Of course, the blog comments box is always open if Dave or Paul ever happen to surf by...
Prem Sikka has posted on his blog on the Guardian website today, with a trenchant critique of the segmental accounting changes being brought in by the IASB. Click here to read it. It's worth it. His last paragraph, with its endorsement of why accounting matters, reflected how I feel about the subject.
Here it is:
To some observers, accounting debates may appear boring, technical and grey, but accounting practices affect taxes, perceptions of risk and the value of people's savings, investments, pensions and access to education and healthcare. Accountancy rules affect public welfare and they should be made by a democratic organisation that is independent of big business and accounting firms.
You wouldn't want to be caught reading that at the IASB today.
(P.S. thanks to Richard Murphy for his link to Prem's blog)
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