One of the general duties of company directors is to exercise reasonable skill, care and diligence.
Three directors by the name of Robin Reichelt, Stephen Nathan and John Gibbs were clearly not exercising any of these attributes though.
Whilst on the face of it their plan to reclaim VAT on the purchase of a hotel sounded ok, in reality there were a number of things which didn’t quite work or to put it more bluntly, a couple of things which were completely illegal.
The background to the situation was that one of their group companies sold a lease to a central London hotel to another of their group companies.
The company that “sold” the hotel went into liquidation after selling it and the company that bought the hotel then submitted a claim for a refund of over £200,000 of related VAT.
The whole thing was completely illegal however as not only did they not pay the VAT in the first place (so had nothing to claim back) but the hotel didn’t even belong to the group company that had claimed it had sold it!
So, in summary they claimed to have sold a hotel that they didn’t even own to another group company and claimed back VAT that had never been paid. What could possibly go wrong??
Well, they will have several years in jail to contemplate what went wrong and to plan their next great money making idea…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2012-10-29 15:28:132012-10-29 15:28:13Selling a hotel that you don't own - what could possibly go wrong?
Such is the spread of large accounting companies around the world that there are very few countries left where you can’t find an office of one of the Big 4 or mid tier companies.
Myanmar in Asia was until recently one of the few countries that hadn’t had the pleasure of international accounting companies being present.
Things are changing though and the people of Myanmar (also known as Burma) will shortly be seeing the KPMG logo on offices as KPMG has just announced that they will be the first Big 4 company to open up offices in Myanmar.
According to KPMG, Myanmar is widely seen as the “next economic frontier” in Asia and recent easing of international sanctions against the country has “sparked a great deal of interest from investors globally”.
Kaisri Nuengsigkapian, CEO of KPMG in Thailand has led the initiative to extend operations to Myanmar and says that “Myanmar is the second largest country in Southeast Asia, and literally at the center of opportunity in the region. Investors are flocking to the country and are excited about the possibilities they are finding.”
Initially the company will be offering Tax and Advisory services with the plan being that Audit services will follow later (presumably not to audit the tax advice given by their colleagues though…)
So, congratulations to KPMG for being the first and how long will it be before the others join them?
By the way, the photo above shows Taung Kalat in Myanmar and is not a photo of KPMG’s new offices.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2012-10-26 15:04:462012-10-26 15:04:46Guess who's going to Myanmar?
Ok, so he jumped from a height of 39 km (24 miles) and he’s travelled faster than the speed of sound but surely Red Bull was taking more of a risk than Felix Baumgartner.
If you were like me and were one of the millions around the world who last night watched the inspirational (or some would say mad) Austrian break world records by parachuting from the edge of space then I think the risk was surely with Felix.
As I watched it I was so impressed. Not only by the bravery of Felix but also the technology that allowed people around the world to watch live footage from the edge of space.
If you look at some business concepts around the event though there are a couple that spring to mind.
First of all, whilst it turned out to be a huge success for the sponsors Red Bull, if there had been some problems for poor Felix and he didn’t make it back to earth in one piece the negative publicity would have been pretty bad (admittedly not as bad a feeling for Red Bull compared to what Felix would have felt but still pretty bad none the less).
The business risk of undertaking such a stunt by Red Bull would no doubt have been reviewed in detail and numerous precautions put in place. One simple precaution was that the live footage was in fact with a 20 second delay so that in the unfortunate event of something going dramatically wrong, the live feed could be cut before millions around the world saw Felix explode into thousands of small pieces live on TV.
Red Bull is an energy drink that has a brand image of “speed and adventure” and have sponsored numerous events such as aerobatic flying and extreme mountain biking. This was their most ambitious event yet though and its success has been reported as being equivalent to £100 million of advertising spend.
In other words, the publicity that Red Bull got from the event was equivalent to them spending £100 million on advertising.
The second business issue that occurred to me was that I saw the event live on YouTube and I wasn’t the only one. A record number of 8 million viewers saw the event live on YouTube.
Is this going to be the way forward for viewing live events?
Will more and more events be shown live on YouTube and will more and more people watch things on YouTube?
If you’re working in the strategy department of a TV company for example then you should definitely be reviewing the rise of importance of sites such as YouTube.
On the subject of YouTube I’m delighted that we’ve recently put some free ACCA, CIMA and FIA courses onto YouTube at www.youtube.com/theexpgroup
One thing for certain though is that we will never get anywhere near the number of YouTube views that Red Bull’s historic event received but then again making our videos wasn’t quite as dangerous…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2012-10-15 14:54:082012-10-15 14:54:08Who was taking the biggest risk?
McLaren are one of the top Formula One motor racing teams. They are not only experts at ensuring cars are driven fast around racing circuits but they are also experts at ensuring that £34m fines are tax deductible…
Back in 2007 McLaren were fined £34 million pounds because it “had possessed and in some way used proprietary information belonging to Ferrari, and had thereby breached the rules of the FIA’s International Sporting Code to which McLaren was contractually bound”.
Or to put it another way, they had cheated by photocopying an 800 page technical document belonging to Ferrari that detailed the designs of the 2007 Ferrari cars.
Formula One’s governing body, the Federation Internationale de L’Automobile (FIA), weren’t happy about McLaren taking this approach and ordered McLaren to pay a £34m fine which they duly did.
The interesting thing though is that in their UK company tax return McLaren claimed a tax deduction for the fine.
In the UK as well as most countries around the world, fines are not tax deductible. This means that the expense does not reduce the level of profits on which tax is calculated.
McLaren argued though that this particular fine was tax deductible (i.e. the expense could be used to reduce the level of profits on which tax was applied). They said that it wasn’t a statutory fine for breaking the law (which would be non tax deductible) but instead was a fine imposed by their governing body and as such was a genuine business expense incurred in their trade which should be tax deductible.
The UK tax authorities understandably didn’t agree with this viewpoint and the argument went to an independent tax tribunal who surprisingly agreed with McLaren and said that the fine was tax deductible.
A surprising decision and there’s no truth in the rumour that the head of the independent tax tribunal is currently driving around in a McLaren…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2012-10-12 16:46:132012-10-12 16:46:13What type of fine do you get for cheating?
Whilst wearing Louboutin shoes and eating Cadbury chocolate would probably represent a pretty good night out for lots of women around the world, they are two very different products.
Louboutin shoes are top of the range designer ladies shoes that can cost well in excess of £1,000. They are worn by female auditors undertaking inventory counts in dusty warehouses some of the most famous (and wealthiest) women in the world.
Cadbury on the other hand are a UK company that has been producing chocolate bars since 1824.
So, what have they got in common?
The answer is colour and both companies have managed to get a trademark for the distinctive colour that is used in their products.
Most major companies will have trademarks on their name or logo but having a trademark on a colour is pretty unusual.
Louboutin shoes have a distinctive red sole and a couple of years ago they were successful in trade marking these red soles.
Cadbury has just been successful in registering its right to use their distinctive colour purple on their chocolate packaging. It wasn’t an easy process though as they first registered their right to use the colour purple back in 2004.
After they applied for the trademark 8 years ago, Nestle, a major competitor to Cadbury argued against the registration by Cadbury and the matter went to court.
The court case was finally settled this week with the judge deciding in favour of Cadbury.
This means that Cadbury are now the only company in the world that can have chocolate wrappers with the colour purple. Well, to be precise, they are the only company in the world that can have the Pantone 2685c purple colour on their chocolate wrappers.
Now, I’m an accountant and not an artist or designer but I do wonder just how different the Cadbury trademarked Pantone 2685c purple is from Pantone 2684, 2686, 2687…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2012-10-04 18:50:482012-10-04 18:50:48What have Louboutin shoes and Cadbury chocolate got in common?
I think that Ernst & Young (EY) are a great company but if I’m honest I think they are missing something.
I know a lot of people that work at EY and overall they seem to be both pretty switched on and very professional but I think they’ve got something seriously wrong.
For several years now there has been a financial crisis in most countries around the world. The term “recession” has been in all the papers and on the TV.
Companies around the world have been cutting back on staff and their sales are down.
But what about EY?
Surely they should also be following suit with a reduction in sales and staff cuts?
Well the impressive news is that they have just released their latest annual results and they appear to have got it completely “wrong”.
Their combined global revenue for the year ended 30 June 2012 grew by nearly 8% to US$ 24.4 billion (personally speaking I always feel that billions look far more impressive when written with all the zeros so US$ 24,400,000,000)
All of their service lines showed good growth (Assurance revenues were up 4.1%, Tax 7.0%, Transactions 9.4% and Advisory 16.2%).
Jim Turley, Global Chairman and CEO of EY said that “we are pleased that our business showed good results, the best since 2008, in the midst of what has been several years of uncertainty.”
In terms of regional growth then the emerging BRIC nations did particularly well with Brazil growing 17.5%, India 19.8%, Africa 10.2%, China 11.8% and the CIS 15.6%.
In the UK the growth was 11% and this was the highest level of growth in 6 years. Over 1,200 new jobs were created by EY in the UK last year and Steve Varley, UK Chairman and Managing Partner of EY appears to be committed to making EY in the UK a diverse and inclusive employer.
He said “Continuing to lead on gender diversity among the Big Four is something I am very passionate about – 28% of our UK leadership team and 18% of our partners are female. I know we can do more and I know we need to move forward so that we focus not just on gender, but also on the ethnic diversity of our people and partners.
So we have been bold, setting an aspirational goal that at least 30% of all our new UK partners are women and at least 10% are BME (black, minority ethnic) by 2015. We’re clearly not there yet and aspirations alone won’t drive change, but we believe diversity and inclusiveness is a business imperative.”
So, in summary there’s a global recession on and yet EY have increased sales in all their service lines, their global revenue has increased by nearly 8%, they’ve recruited significant numbers of people and are committed to a diverse workforce going forward.
Somehow I don’t think that EY have got it wrong…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2012-10-02 15:35:372012-10-02 15:35:37Did Ernst & Young get it wrong?