Published on: 29 Jan 2014
The deadline for submitting income tax returns in the UK is in a couple of days on 31 January. According to the UK tax authorities there are still over 2 million returns that need to be submitted.
There are no doubt a lot of people hastily getting their figures together to meet the deadline.
Over in the US, one individual took a somewhat unusual approach to claiming deductions in his tax return.
Brooklyn Tax Lawyer, William G. Halby, kept records of his visits to, um how can I say this, but let’s just say certain ladies of the night that provide a certain adult service.
He subsequently claimed the expenses of these visits as tax deductible medical expenses on his tax return.
Mr Halby was quite open about claiming the expenses and as a Tax Lawyer he represented himself at the State of New York Tax Tribunal when the tax authorities argued the expenses were not tax deductible.
Now this wasn’t a small amount which he tried to put in as a tax deduction. Over a 4 year period he claimed expenses of $322,000 for what he felt were for medical purposes.
In one year alone he claimed “medical expenses” on his tax return which were itemised in detail and amounted to over $110,000.
Now this got the accountant in me thinking about these figures and after spending a brief couple of days reviewing some of the New York Agency websites where these ladies advertise their services, I’ve found that the average price for a “consultation” is in the region of $500.
This means that on average Mr Halby made 220 “medical visits” in one year alone.
Undertaking this number of visits and then claiming them on his tax return is arguably proof of both dedication to solving his medical problem as well as maintaining suitable and sufficient records for tax purposes.
All of his expenses were however rejected by the Tax Tribunal. The full text of the Tribunal’s decision can be found here.
Mr Halby is aged 78 and is currently single.
Published on: 27 Jan 2014
Well, that was a bit unfortunate.
First of all their jewels were stolen and then they had to pay tax on those very same jewels that they no longer had.
Luxury New York Jewellers Harry Winston can only be described as being pretty unlucky.
The company had taken advantage of the French Customs warehousing provisions. In simple terms, warehousing provisions enable goods that are only temporarily imported into a country before being re-exported to be held in a secure Customs warehouse without officially entering the country. The benefit of this is that it means traders who are importing goods and then re-exporting them don’t have to pay VAT or customs duty on the temporary import.
Unfortunately for Harry Winston, the jewels were stolen from the customs warehouse during an armed robbery.
Now, whilst the company was no doubt contemplating the loss of his jewels, things got worse for them as the French tax authorities claimed VAT and customs duty on the jewels. They argued that as the goods had now left the Customs warehouse and entered the country, VAT and Customs Duty was due on them as they had now been imported into the country!
Perhaps understandably Harry Winston wasn’t too happy at this. Not only were their jewels stolen but they were now being told to pay taxes on them!
They decided to take the case to the European Court of Justice (ECJ).
The ECJ made their decision though and confirmed that VAT and Customs Duty were in fact payable by the company.
The ECJ stated that it was an unlawful removal of goods from the warehouse and this gave rise to a customs debt on importation (interestingly the law didn’t care too much that the unlawful removal from the warehouse wasn’t made by the owner but instead by some thieves!!).
The unlucky jeweller could have avoided the taxes if they could have proved that the items had suffered destruction or irretrievable loss. As they had been stolen there was no evidence that the goods had suffered destruction or irretrievable loss.
Published on: 16 Jan 2014
Although it’s difficult to pinpoint the exact time when wine was first made, it is commonly thought to originate from many thousands of years ago.
Since then people have drunk it, enjoyed it and on occasions no doubt regretted it following an almighty hangover the following day.
Over the years the methods involved in making wine have stayed fairly consistent. Grapes are crushed, the wine is fermented, stored and then drunk.
In management accounting terms the grape skins left over from the crushed grapes are considered to be a by-product.
In other words, the crushed grape skins that are removed during the wine making process have a limited value and are basically thrown away.
Spanish wine maker Matarromera has recently identified a novel use for the grape skins that are left over from the wine-making process.
The left over grape skins are rich in antioxidants and Matarromera has now launched a cosmetics brand called Esdor which mixes these grape skins with other natural products to produce cosmetics including nourishing creams, eye contours and moisturisers. The company claims that their products can help with anti-aging and anti-wrinkling.
Moving back to management accounting terms and given the success of the cosmetics line then the grapes will result in joint products – namely, the wine and the cosmetics.
There’s a saying in English that if someone has had too much to drink then they are “off their face”. Maybe with this wine it will be “on their face” as well.
Published on: 09 Jan 2014
A top boutique hotel has just opened in London that performs surgery.
Actually, that should really read a top hospital has just opened in London that has all the features of a luxury boutique hotel with the added advantage that it can perform surgical operations.
BMI Weymouth Hospital, just off the world famous Harley Street in central London, has opened with a target market of wealthy (and ill) people. It’s an exclusive private hospital with only 17 beds but 4 state of the art operating suites.
As well as having all the latest medical equipment and medical experts that would be expected at a top hospital it also boasts top chefs and en-suite custom designed rooms with all the latest entertainment systems and original artwork.
Fans of Michael Porter’s generic strategy will recognize this as a clear example of differentiation strategy whereby a “different” service is being provided and hence a premium price can be charged (as opposed to the opposite end of the spectrum where cost leadership exists).
It must be said though that although the hospital certainly looks very luxurious I’m sure that most of its guests would rather they didn’t have to check in.
Published on: 02 Jan 2014
The results for the UK KPMG partnership for the year to 30 September have been released and they must make pleasing reading for the partners.
The average KPMG partner pay has increased by 23% from £580,000 to £713,000.
KPMG’s profit rose by 27% to £455 million on revenue of £1.8 billion. The firm’s advisory unit made the most money for the organisation with profits of £308 Million.
So, KPMG’s average earnings per partner were £713,000 but how do these average earnings per partner compare with the rest of the “Big 4”?
Figures recently reported in the Times Newspaper, showed that the latest average earnings per partner in the UK based on reported partnership earnings were:
It seems that the longer the name of the Big 4 company, the higher the average earnings per partner.
Last year we saw Ernst & Young re-brand themselves to the shorter name of EY. After discovering that the longer the name of the Big 4 company, the higher the earnings per partner, will we now see EY changing their name back to Ernst & Young?
Thank you to all of you that read our blog during 2013 and also for your nice comments about our free courses (here are our free ACCA and CIMA courses).
Have a great 2014 and all the best from the ExP Team.