Monday, February 28, 2011



When it comes to Government “improvement” means “deterioration”. That is my recollection of Hutber’s Law, a principle formulated by a former City Editor of the Sunday Telegraph.

I do not know if Martha Lane Fox (the Government’s digital champion) is aware of Hutber’s Law. She certainly seems to know how to operate it though!

I received an e-mail before Christmas telling me that Martha and the Minister for Cabinet Office (who seems to prefer to remain anonymous so that Martha can take the flak single-handed) have announced that “HMRC are putting together a package of measures that will make it easier and quicker for businesses to deal with the tax authorities using online services as the norm … From August 2012 the online channel will be the mandatory way to register for VAT, with other channels being closed … And from 2013 it will become mandatory for business customers to tell us online when they start their business activity for the purposes of Self Assessment and Corporation Tax. Employers will also be expected to use the online channel to obtain their PAYE scheme number and to ensure that they can operate PAYE accurately from the first pay day”.

Thanks a lot, Martha! I see from the internet that we only missed out from sharing the same birthday by three days – and of course the 40 years head start I have been given on you. I suspect what you really mean is that if us old fogeys are not prepared to embrace the internet age and ditch our reliance on pen and ink (yes, they really do still produce ink for me to put in my fountain pen) we shouldn’t be allowed to run businesses. We should leave it to the thrustful, entrepreneurial, modern people like you.

I don’t really mind you thinking that. Obviously I also think that you are wrong but that’s by the way. What I resent is your being so patronising. Forcing me to do something that I do not want to do clearly cannot make it either “easier” or “quicker” for me. It can certainly make it both easier and quicker for HMRC if taxpayers can be turned into a homogeneous population whose affairs can be fed onto an HMRC conveyer belt with little or no human intervention. So why don’t you just say that your real interest is computers and that people don’t really count in your book; Bow to the mighty computer or get out of business?

Also how do you expect people to recognise when they “start a business activity”? I have been a practising accountant for more than 40 years and I often can’t identify when that happens. I don’t know what happened when you co-founded It may well be that you and your colleagues all threw in your jobs, sat down together and brainstormed about a possible new business venture. If so Martha, you need to realise that is not how most businesses start. Most start because a hobby gradually becomes a money-making activity, or because people start using the skills from their day job to help friends in their spare time and when they are made redundant offer those skills more generally, or even experiment with something with friends and when they realise it works offer the concept more widely. In all of these situations I do not have the faintest idea when the business starts. In retrospect I can see that it has become a business, but if you ask me to pinpoint the day it started, I have to admit defeat.

I accept, Martha, that I may be exceptionally thick. You may be right in believing that in all of the above situations the taxpayer will have no difficulty in identifying the day the hobby/helpfulness/experiment or whatever drifted into becoming a business. I have no reason to believe that you are an unreasonable person. I am happy to assume that in advising the government to mandate taxpayers (presumably under the pain of a financial penalty if they get it wrong) to tell HMRC online when they start their business activity, your personal experience of setting up was that you and your partners did not experiment with the idea while you had a day job but resigned from your jobs with no idea whether or not the idea might work, and then developed the website and tried to interest your friends in the idea. However that is not how most small businesses start. In most cases it is extremely difficult to pinpoint when the business started. There is also a technical tax uncertainty as to when a business starts. For example I think that started at the earlier of when you or a colleague first began to develop the website and you first tried to interest a theatre in the idea. Others would say the business did not start until your website was up and running.



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