Leaked conversation between Rachel Reeves and Jim Harra

Ahead of the 2024 General Election, The then Shadow Chancellor, Rachel Reeves met with the Head of HMRC, Jim Harra.

"You will understand" said Rachel "that we are under pressure to simply our complex tax system. What can we do?’ 

"I can help you there" said Jim. "I recommend you legislate one simple new tax law".

"It should make clear that from now on everyone, especially the bankers, accountants, lawyers and tax avoiders must stop focusing on the precise wording of tax laws". 

"Instead  they should act in accordance with the Government's intentions when making those laws. No one need bother about the written laws ever again! We could call this concept 'the spirit of the law'."

Rachel smiled. "That sounds good, except for one point that's not obvious to me. How do I know what my intentions were?" ‘I just pass on the laws you give me." 

That's easy" replied Jim. "I shall be more than happy to tell you what your Government’s intentions were, should the need ever arise". 

How to reduce a client's tax bill

Conversation with a client...

Me: "You've made a taxable profit for the year of £25,000. This means a corporation tax liability of £4,750."

Client: "Is there any way to eliminate the tax bill completely? My mate down the pub said his accountant sorted it so he didn't have to pay any tax."

Me: 🤔 "Well, you could agree to pay me £25,000 in accountancy fees, then your taxable profit will be NIL. NIL profit = NIL tax 

Disclaimer: Whilst this is factually correct, it is not how I do business (duh! 🤣)

BTW The client knew I was joking!

As told by Accountant Nicola J Sorrell on Linkedin

Why people engage an accountant...

 Why people engage an accountant....

HMRC: You owe us money. It's called taxes.

YOU: How much do I owe?

HMRC: You have to figure that out.

YOU: I can just pay what I want?

HMRC: Oh, no. We can guess how much you owe. But you need to guess it first. Or work it out properly - which we prefer.

YOU: What if I get it wrong?

HMRC: We'll fine you or send you to prison!

YOU: I need help!!

Hamish McTax's chilling tax rhyme

Sarah Saunders is clearly a fan of Macbeth. She was credited by Taxation magazine with finding (or imagining) a new parchment used by Shakespeare as a source for his play, Macbeth. 

It's a witty piece that could be said to examine the play through the lens of modern day taxation. 

The document itself appears to have been written by Hamish McTax, Royal Counsellor, Tax Adviser to Royalty. 

Apparently "scribbled on the back of the document was this chilling rhyme:

"Double, double, VAT is trouble, ATED burn and FATCA bubble. 

Number of a DOTAS scheme, Echo of a non-dom's scream. partner's notice, APN, Payment with a stroke of pen. 

Film investment, foreign trust, years of planning, turned to dust. For a charm of taxing trouble, Like a hell-broth, boil and bubble". 

 Nice one, Sarah

Flags and taxes

A British guy was chatting with his American friend and offered a fun explanation about the red, white and blue in our National flag. "Our flag symbolises our taxes," he said. "We get red when we talk about them, white when we get our tax bill, and blue after we pay them."

"That's the same with us," the American said, "only we see stars, too."

What does TAX mean?

 Here are some of the answers I received online when I asked that question:

TAX...
... is what someone from Yorkshire uses to chop twood.
... means to add something to a taxonomy.
... is annoying little nails that keep the carpet down.
... means 'Many thanks' in Danish.
... is the verb for using a taxi.
... means Taken Abroad EXclusively: the new way to get the Capital of England to the Cayman Islands
... is something to be avoided at all costs.

And, finally, my absolute favourite:
TAX can be shown to be a cheeky government joke: 'Tax' is made up of the word 'Ta', followed by a little kiss. "Thanks for yer money, suckers"

Tips for new managing partners

 A new managing partner was about to be appointed at a large accountancy firm.

His predecessor met with him privately and presented him with three large numbered envelopes. “Keep these in your desk drawer and open them in order as and when you run up against a problem you don’t think you can solve,” he said.

Things went along pretty smoothly, but after six months, a number of key partners resigned and the new managing partner started to take some flak. At his wits end, he remembered the envelopes. He went to the drawer and took out the first envelope.

The message read, “Blame your predecessor.” The new managing partner called a Partners meeting and tactfully laid the blame at the feet of the previous managing partner.

About a year later, the firm's profits had dipped and partner drawings had to be reigned back.  Having learned from his previous experience, the managing partner quickly opened the second envelope. The message read, “Blame your management committee.” This he did and a couple of members of the committee duly stood down and were replaced.

The firm’s fortunes quickly started to improve again. After a while however the firm was once again experiencing problems as a couple of their largest clients moved to a competitor firm.

The managing partner went to his desk and removed the third envelope. The message inside read, “Prepare three envelopes.”

Spare a thought for your accountant (poem)

Spare a thought for your accountant

He’s trying to do his best

To earn a decent living

Just like all the rest

Doing all that double entry’s

Not as easy as it looks

It takes years and years of practice

To cook a set of books

But when the debits and the credits

Don’t add up quite as they should

Staring at the door or window

Doesn’t do a lot of good

It’s said two things are sure in life

Death and taxes are the pair

But one more fact is certain

Your accountant’s thinning hair!

The tax rules alter constantly

He struggles to keep pace

Tax, NI and VAT

Etch deep lines in his face

And even when the job is done

The client may not pay

So your accountant’ll keep a’counting

Until retirement day

Written by David Marston

How valuable is an accountant's experience?

In 2017 I wrote an article for AccountingWeb about how to thrive in your 50s.  I was responding to a letter sent by ICAS to members and which appeared to suggest that the over 50s are over the hill!

One commentator on my article posed the following question by way of analogy:

If you were ever in the unfortunate position of needing brain surgery would you prefer:
A) the whizz kid age 27 who knows computers like the back of his hand? or
B) the 62 year old with many years experience in the game?

This drew the inevitable response from a frustrated small practitioner:

My experience suggests most will opt for: 

C) the cheapest butcher. 

I am sure this will resonate with many accountants in practice.

GAAP - Are you sure you know what it means?

 Strictly speaking GAAP stands for Generally Accepted Accounting Principles but I prefer the suggestion that GAAP is the difference between accounting theory and accounting practice.

Or could it stand for one of the following?

Greatly Anticipated Auditing Performance
or
Grossly Aggressive Accountant's Punches
or
Gently Activating Accountant's Pencil
or
Generally Accidental Accounting Practices

Can you suggest any others?

If Santa was an accountant.....

 If Santa was an accountant...

• ...he would report true and fair (naughty and nice)
• ...he would collect receipts for subsistence from the secret 'other' Santas who service other countries
• ...all of the kids clothes would be from "Baby GAAP"
• ...his helpers would work in a small room cranking out toys during 'present season' which gets longer every year.
• ...letters to Santa would be carried forward from prior year
• ...he'd probably moan about all the red tape he has to deal with
• ...his family still wouldn't have a clue what he does at work
• ...he would think about the mileage deduction for his reindeer drawn sleigh
• ...you'd only have to be 'materially' good to get 'substantially all' of your gifts
• ...most of the insignificant things on your wish list would be disregarded and "noted for next year"
• ...he would give you review comments on your christmas list
• ...he wouldn't get paid overtime but his elves would
• ...it wouldn't be called a gift list, it would be a request list and listed in order of importance.
• ...he'd have to follow those Hobby Loss Rules. Not much profit in the Santa business :-)
• ...he'd divide the world's children into assets and liabilities
• ... there would be 4 big Santas

This is a selection of the suggestions volunteered by users of twitter in response to an invitation to use the hashtag: #ifsantawasanaccountant

Santa's tax satus

 A few year's back. Taxation magazine published this enquiry from a reader:

On a visit to the UK last year I picked up a copy of your magazine and wonder if readers can advise me. I am non-domiciled and non-resident (I think) in the UK – no permanent home here – but each year I work temporarily in the UK for a short period.

The work is unpaid, but I do receive benefits in kind; glasses of port, mince pies and the like. I am rather concerned that I have not declared these to HMRC in the past. Should I have done so and is there an annual tax liability to be paid on these gifts or benefits? And if there is, how is the tax calculated under self assessment?

The chosen pseudonym is "S. Claus".   

I wonder what advice one would give him for 2023?

The 12 days of Christmas or Taxmas (a reworked xmas carol)

 First line: On the first day of Taxmas the taxman sent to me:

- A rejection of my time to pay plea

The second verse:

On the second day of Taxmas, the taxman sent to me
- Two demand notes and
- A rejection of my time to pay plea

...and so on.
The last verse is:

On the twelfth day of Taxmas, the taxman sent to me
Twelve months to pay my debt
Eleven penalty charges
Ten confusing statements of account
Nine booklets on 'How to complain'
Eight explanatory leaflets
Seven website links
Six excuses for the delay
Five more queries
Four VAT returns to file
Three blank tax returns
Two demand notes and

One reluctant acceptance of my time to pay plea.

When I had the idea for this I checked online and found there was an old US version of the 12 days of Taxmas. Mine was developed independently.

10 song titles reworked for accountants

1. 2 4 6 8 what do we depreciate?
2. Debit to the left of you, credit to the right, stuck in the balance-sheet with you 
3. We can work it out 
4. Let's get digital 
5. The windfall taxes of my mind 
6. I would do anything for love but I won't do VAT 
7. I can't get no Corps Taxation 
8. Living by numbers 
9. Spreadsheet a little happiness 
10.  Anything by Johnny Cash Basis

The accountant's survival kit

You can buy these online - containing a mix of any or all of the following:

1. Boiled sweets - to crunch and give you energy to crunch the numbers
2. Piece of string - to help you tie up loose ends
3. Ace of Spades - so you can make the most of any hand you are dealt
4. Tea bag - for when you get into hot water
5. Safety pin - to help you pin point problems areas
6. Paper clip - to help you hold it all together
7. Marbles - to replace the ones you will lose
8. Rubber band - to remind you to be flexible about things
9. Mint - so you will always have a fresh outlook
10. Candle - for when you're burning the midnight oil
11. Matches - for the candle
12. Googly eyes - to help you spot any mistakes
13. Balloon - to remind you to always reach for the sky
14. Button - for those times you may need to button your lip
15. Needle and thread - for the button
16. Hair grip - for when you need to get a grip
17. Soft drink in a can - to have a drink on me at the end of a long day

10 new theatre shows for accountants

1. There's a SUM thing About Mary - A jolly new musical about the financial realities of raising an infant in biblical times. 
2. Seven loopholes for seven brother accountants 
3. Planes, trains and auditors 
4. A Tax Inspector Calls 
5. Much ado about xero 
6. The Sums of Navarrone 
7. Tax Fiddler on the Roof 
8. 42nd spreadsheet
9. The bookkeeper of Mormon
10. The Loneliness of the Long Distance Auditor

Are these the 5 worst things that happen to auditors?

1. Getting in early only to find the manager who's got all the answers is not in today
2. Being asked to process a whole shed-load of material adjustments 1 hour before the audit is supposed to finish
3. Realising that the 'we-could-finish-a-week-early-and-have-a-jolly' budget has disappeared into thin air
4. Being shoved into a cold, pokey, little room in the basement with no windows, mobile phone reception, printer or copier, miles away from where all the people you need to speak to work and 12 floors from the nearest decent snacks vending machine
5. Finding out that your favourite prestigious audit client has gone bust and your audit partner has gone missing.

Tax evasion at the movies

Film titles adapted to suggest tax evasion related topics:

• Fatal Deduction
• Force Ten Grand from Navarone
• Returns of the Pink Panther 
• Ocean's P11D 
• Shawshank Tax Redemption 
• The Accountant of Monte Cristo 
• The Italian (cash in hand) job 
• Von Ryan's Expenses 
• A Tax Inspector Calls 
• Evasion of the Bodysnatchers 
• Everything You Always Wanted to Know About Tax Evasion But Were Afraid to Ask 
• Friends with Benefits-in-Kind 
• Fiddler on the Roof (ok this one didn't need adapting!)

Any more?

Simplistic approach to clearing debts. Does the accounting stack up?

It is the month of August, on the shores of the Mediterranean Sea it is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.

Suddenly, a rich tourist comes to town.

He enters the only hotel, lays a 100 Euro note on the reception counter as a deposit, and goes to inspect the rooms upstairs in order to choose one.

The hotel proprietor takes the 100 Euro note and runs to pay his debt to the butcher.

The butcher takes the 100 Euro note, and runs to pay his debt to the pig grower.

The pig grower takes the 100 Euro note, and runs to pay his debt to the supplier of his feed and fuel.

The supplier of feed and fuel takes the 100 Euro note and runs to pay his debt to the town's prostitute who in these hard times, gave her "services" on credit.

The hooker runs to the hotel, and pays off her debt with the 100 Euro note to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.

The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything.

At that moment, the tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.

No one earned anything. No one produced anything. However, the whole town is now without debt, and looks to the future with a lot of optimism.....

First seen in HM Williams newsletter 'Account' in 2009

An accountant is a person who....

A range of views revealing how some people see an accountant as a person who :

• displays deviant behaviour when it comes to numbers
• can do tricky sums
• experiences an inner peace in the knowledge that debits should always equal credits
• knows the inner thrill of viewing a well structured Chart of Accounts
• gasps at the majestic splendour of a Trial Balance
• marvels at non-accounting colleagues who guiltlessly work from home or leave early on a Friday
• rarely misses a trick when it comes to claiming expenses or receiving above-inflation pay rises
• has made a lifetime vow never to take a holiday at month end
• spends more evenings with the office cleaner than with their partner
• sorts out all the mess