Lambert Chapman LLP’s Paul Short looks at the PAYE fiasco

I have been somewhat troubled by the reportage on the coding notice debacle involving so many innocent tax payers.

Some tax payers have, inevitably, leapt onto their high horse about what an injustice this is and that they always pay the tax requested from them and that it is therefore an injustice that they should now have to find an extra amount.  Hold on a minute.  If the Revenue do get their calculations right (and I can see that this is a big ‘if’), people would only be paying the right amount of tax.  Isn’t that how it should be?  The right amount of tax to help fund the defence of the realm, our education and welfare programmes and so on.

Yet we have a Lib Dem Treasury spokesman, Lord Oakshott (I’ve taken Churchill’s advice and spelt the name with great care and deliberation) complaining that HMRC will be spending time chasing innocent tax payers instead of pursuing the tax avoiders.  Excuse me.  Tax avoidance is perfectly legal.  As Lord Clyde put it in one case; ‘no man in this country is under the smallest obligation, morale or otherwise, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores’.  It is tax evasion which is illegal, the sort of thing Ken Dodd and Lester Piggott got up to.  So we have Lord Oakshitt (oh damn!) happy to acquiesce in some tax payers not paying their due yet critical of others who do pay their due.  Does he expect people to try and pay more tax than they need to?  That proposition is a bit rich for anyone in the Westminster village to put forward, given their track record.  How about cleansing the Augean stables first.

Of course, HMRC should show due consideration and understanding for any difficulties they have caused to individual tax payers, which in itself may be a challenge for them.  We should not lose sight of the fact that people are only being asked to pay their due.

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Lambert Chapman LLP’s Paul Short considers Executive Pay

We were recently asked by the UK200Group for our views on Executive Pay and whether the size of packages and bonuses could be justified. Here is what Paul Short thought:

Clearly some FTSE bosses are very much worth their pay package.  A classic example might be Sir Terry Leahy of Tesco plc.  When he announced his intention to retire, Tesco’s shares immediately fell by 2.5%.  Given Tesco’s market value, one might conclude that Sir Terry has certainly been worth his substantial pay package.

On the other hand we are perhaps witnessing the demise of BP and much of the criticism is being blamed on the performance of the Chief Executive, Tony Hayward, although one might argue that his predecessor Lord Browne, has a lot to answer for.

Executive pay for our leading companies has always been an emotive issue for many years and good copy for the Press. 

The truth is that many of the packages negotiated do involve share options, incentives to increase market value, with basic pay at a far more modest level.

I suspect that Mr Bolland’s basic pay is less than John Terry gets at Chelsea.  I have never quite understood why Chief Executives’ pay is stated per annum whilst a footballer’s pay is always stated weekly.  The latter may be a relic from the era when football was firmly a working class sport.  We had the leading footballers on a maximum wage which bore some resemblance to the wages of the working people who paid them by going through the turnstiles.

Perhaps a more apposite comparison between Chief Executive of one of our largest companies is with Admiral Jellicoe, who commanded the grand fleet at the Battle of Jutland.  Churchill reckoned that he was the only man who could lose the war in an afternoon.  That is perhaps what shareholders should want from their Chief Executive.  A safe pair of hands who avoids any haemorrhaging of shareholder value while significant growth is seen as a nice bonus.  That brings us back to the problem of Chief Executives seeking short term growth in shareholders value at the expense of sustained long term growth as witnessed by Lord Browne’s cost cutting at BP.

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Paul Short considers the Conservative and Liberal Democrat Coalition

We may perhaps think of the Conservatives and the Lib Dems as unlikely bedfellows.

We might just reflect that one of the most famous Conservatives of all also served as a Liberal MP.

Winston Churchill (as he then was) had been elected to Parliament as the Conservative member for Oldham in 1900.  He subsequently found himself in disagreement with his party on two main issues, free Trade and also social reform (perhaps that strikes a chord today).  Accordingly he crossed the floor to the Liberals and then won Manchester North West, standing as a Liberal, in 1906.  He then served in the Liberal Government, holding several senior cabinet positions, including Home Secretary.  After the ups and downs of the First World War and its immediate aftermath, he lost his seat in 1922.  He returned to Parliament a couple of years later and then rejoined the Conservative party in 1925.

Let us hope that life is more straight forward for David Cameron and Nick Clegg.