Polish builders will be rubbing their hands in glee at George Osborne’s announcement of a VAT increase.
On the face of it, the increase in the tax seems fair to everyone, as we all have to pay it on every non-essential item we purchase. But dig a little deeper and you will find – particularly at the margins of the VAT threshold and where the black economy thrives – that the law of unintended consequences will apply.
One of my family is a builder. On the basis of a very good year’s business, he went VAT registered; which means when he quotes for an extension, the punters automatically think he will be 17.5% more expensive than the “we work for cash” alternative. Now, that perceived disadvantage will be 20% – favouring the cowboys even more.
Someone else I know runs a respectable small transport business. Every week, he gets calls from east European white van men, offering to work for him on a casual basis. Trouble is, they never have the required security checks or relevant insurance cover that my friend’s big clients demand. But he’ll surely be losing more of his small business clients to Pavlov and his Transit van in months to come.
Another colleague runs an office maintenance company. Their handyman, fully insured and Health & Safety compliant, and using only the correct equipment, must be charged out at £40 plus VAT per hour. Which means already, before the VAT increase, small business clients are opting to stand on chairs and change their own lightbulbs – or get an out of work friend to do it for cash.
The irony is, with the squeeze on public sector spending, there are likely to be less public sector workers out and about to check up on compliance, making it all the easier for the black economy to thrive.
Is this evidence of a smart early move by the new coalition government, or just an opportunistic piece of luck? Either way, it’s a move that has landed Transport for London a ££million prize – for getting out of a property lease.
Usually the preserve of retailers vacating highly sought after locations, the lease premium is a rare beast these days. Here’s how the British government department pocketed a big sum – simply for agreeing not to move into new offices (still under construction) that they had contracted to occupy for 30 years.
The unique deal is a symptom of the log jammed commercial property market in London, where few brave souls have the financial strength to start building new office space. For those with real estate coming out of the ground, rarity value means the price of their upcoming office space is already rising.
Transport for London signed up to take 200,000 sq ft in the Shard, set to be London’s tallest building when it is finished in 2012, and agreed to pay £38.50 per sq ft in rent. The 30 year deal meant the developers had sufficient space committed and a guaranteed blue chip rental cashflow, to enable them to start building, in 2009. Today, that early rent deal looks less great for the developers, who are convinced they could relet the same space at a significantly higher rent; so convinced, they paid TfL an undisclosed sum to buy out the original deal.
For TfL in coalition Britain, the deal was too good to pass up, with pressure from the government and an instruction not to renew leases, and exercise all break options. And it’s good news for us taxpayers, as TfL staff will now be moved to offices costing less than £38.50 per sq ft. The question is where they will now move their staff. Think about better value locations just outside the central London area, with plenty of office space available and great transport links – maybe Stratford, or Croydon?
So finally, I have decided it is time to go cloud computing. I already back up online, and use some online CRM software. But I’m still carrying around a lot of files in a laptop. And relying on a two year old (ancient!) BlackBerry for instant connection.
I’ve picked the system I am planning to use, an all-in-one software package that will include accounting, file management, CRM and email that is held remotely and accessed anytime, from anywhere.
But the most immediate concern is which smartphone to use for accessing this new, easy to get to cloud system? I was all set to grab an Iphone, but now the water has been muddied by the possible imminent arrival of the new 4G model – what to do?
Check back as I report on my progress migrating to the cloud…..
I was watching some of the BBC’s coverage of the Chelsea Flower Show, and pondering on why there seemed to be so much of it.
I stand to be corrected here by a keener viewer, but it seemed lots more than in previous years, so I couldn’t help wondering if this was the credit crunch in operation – once you’ve decided to send the team to Chelsea, why not see how many hours of TV you can get out of them.
While I was musing this, I was entertained to see Alan Titchmarsh struggle to blurt out “…here at the Chelsea Flower Show, sponsored by M&G Investments…..” Apart from the obvious problem he seemed to have getting this to slip off his tongue, it set me wondering: is this the first time the show has been sponsored thus? Is it the first time the presenters have been required to mention the main sponsor on air?
Of course, the whole event has turned into a sponsor-fest, with just about every garden sponsored in some way, and there were plenty of M&G banners in shot hanging from posts. And on reflection, we’re quite used to Sue Barker introducing the “Flora London marathon” etc.
I thought not much more of it, until alerted to PC Pro’s blog about the BBC’s Formula One coverage, and the fact that Jake Humphrey can now be seen brandishing a clearly branded Ipad on screen.
Does this mean they will finally give up sticking Post It notes over the brand names on the ingredients on Ready Steady Cook?
That PC Pro piece is here.