Ups and downs

It was a series of conversations with people in the tourism industry that identified two interlined issues.

I was initially astonished to hear that the Lewis & Harris tourism trade is down by about 25% compared to last year, and that this looks like being the trend for the entire year.

It's actually quite obviously - with hindsight - that the success of tourism was grossly oversold last year.  The truth is that the demand for beds was wildly distorted by the demands of the contractors who were absorbing so many bed nights.

They were generally occupying the cheaper accommodation and pushing the tourists into higher priced/better accommodation, giving a huge boost to hotels and the higher-end Guest Houses.  Suddenly, this year there is a dearth of tourists - or more accurately, the number are back to where they were before the major construction worker inflow took place.

In the meantime, the demand has encouraged more people to make houses available for self-catering, and I understand that there are more than 100 extra properties available this year then 2/3 years ago.  This excess supply is pushing down prices, and fewer people are going to have a decent living.

There are a couple of other issues that need to be resolved too.

I am reliably informed that there are more available beds in Harris than the ferry could cope with, if all the guests left on the same day.  There will have to be a lot of work by the industry in encouraging different patterns of visiting.

Allied to this, a recurring and long-flagged up issue arises.  The ferries are not big enough and potential and actual tourists are being turned away due to a lack of capacity.  You reduce fares, passenger numbers increase.  It's not rocket science, and we need a practical demonstration that RET is here to stay by the Government committing to new, much larger ferries on all routes: and not another 'consultation' to defer the issue.

It was during the course of these chats that I was told some important and sensitive information about a local business, which I can't even hint at, due to real or perceived client conflicts.

In just the past few weeks, our firm has won some new major local clients which has effectively blocked me from commenting on some major local issues due to the business or location of the clients, and some topics are now completely off limits for me, which is a bit of an explanation to an anon correspondent.

This has been a growing problem, that is going to have to be addressed by me....

Taxation neeedn't be taxing. But it is.

I've decided to move the accountancy practice offshore.

Nicolson Accountancy EU Sarl will be based in Luxembourg, and the Stornoway office will become an 'order fulfilment centre'.

I will employ literally a brace of people in Luxembourg, one to answer the phone and one to spend all day taking money to the banks, and as there is no tax to pay in the UK, I can cut prices by over 20%, driving the competition into the wall.

I'll then fill this gap, by getting a Scottish Government grant to expand the premises and bring employment to an unemployment blackspot; that I have helped create.

Alternatively, I'll mortgage everything I have.  Lend it all to a British Virgin Islands company, who lends it back to the UK company at double the interest rate I pay.  I'll get a tax deduction on all this interest on money I borrowed but don't actually need, whilst the BVI company will earn it all tax-free and pay of my mortgages and give me a very nice lifestyle.

Any spare cash will be lent back unnecessarily to the UK company in a tax-deductible/tax-free circle that continues until UK Corporation Tax becomes zero.  At this point, I'll trumpet my multi-million pound investment in Scotland, and be invited for tea at Bute House (which will appear on the official record).

The former, is of course, the Amazon style; and I didn't appreciate the full extent of their tax manipulation until this week, thinking that my spend was recycling in the UK.  It's not.

According to the Guardian, there are 2,265 employed by Amazon in the UK, and 164 in Luxembourg covering the entire EU.  But the UK seems bizarrely unprofitable, generating a mere £3m in taxable profits compared to an expected £100m.

The second is the News International structure, with debt used to move profits around.  It is surprisingly easy to do this, and has recently been enshrined in law as completely permissible - for large companies multi-nationals only.

So the correct and fair question that needs ananswer is: What will be the tax position of these two examples in an Independent Scotland?

Are we to become a "tax haven" as Francis Maude was rightly pilloried for aspiring to, or will we follow the Scandanavian model and insist on profits earned being tax here?

The SNP cannot remain silent on this, or try and deflect to the current taxation policies in the UK, for the very simple reason that we are supposed to be looking forward to a bright new future, not building a future based on past mistakes.

Political parties have to issue manifestos that address the real issues, or they will find themselves flailing about, in the same way that MacNeil did with a Shetland opt-out from Independence.

This is the biggest decision in many generations, and no-one seems prepared to try to come up with answers to some of the key questions and that, I am afraid, is just not good enough.  If 50 years of waiting, and 5 years in power are not long enough to find coherent answers then there is something far wrong.

Are the politicians too emotionally in hock to the multi-nationals to ever consider the impact on the wider economy of a grant-shopping, grant-hopping, local-economy destroying giant?

Are we to become a nation of over-taxed individuals, flipping burgers and packing books to pay the taxes for the social services, whilst the multi-nationals take the profits tax-free to Luxembourg and the Caribbean?

Or is the country going to take it's share of taxable income from the multi-nationals and build schools, Universities, roads and a sense of a viable future?

The absence of any kind of answer is - sadly - very telling, and will result in an eroded Scottish tax base, as the moderately wealthy emigrate in search of a better balance between taxation and standard of life; and the wealthiest emulate the multi-nationals.

It's the economy, stupid! (updated thrice)

With the population in the islands expected to crash by nearly 11% in the next 25 years the demographics look ominous for the islands.

It is not so much the absolute change that is the scary factor, and more the relative ageing of the population that poses such a threat the future economic viability of the islands.


The curve is more a death spiral, with - for instance - future school provision requirements looking to be grossly over-estimated at the moment.  There will be fewer pupils attracting smaller grant support to pay for ageing and more expensive buildings.

The lack of economic development in the islands is a very major issue.  Indeed, I would go so far as to say that it may be the potentially terminal issue if it is not addressed.  For without economic growth there won't be the children to fill the schools or build new businesses or inherit their parent's hard work.

When was the last time that the Scottish Government announced something positive for the future economy of the islands?

Just this week we are told to be grateful for the reinstatement of single-journey fares for hay lorries and vivier tanks.  A discount that should never have been abolished, and we are expected to cheer to the rafters when it is reinstated our MSP makes false claims of his successes.

Businesses cannot plan if they cannot be sure about the future.  With commercial RET up and down like the proverbial, how can long term investment be secured, when the Government doesn't know (or won't say) if a policy is staying, going, being amended or "out to consultation".

My good lady wife is away this week meeting with large existing clients to discuss extending the services we provide.  This has huge potential, not least as the clients are keen to see what we can do.

But as it is a business flight, there is no ADS available, increasing fares by 167% which is just enough of an impediment to make us consider if the journey is really necessary.  We are trying to win work for the islands, but Government cost-cutting is affecting our ability to create employment.

I know of one large capital investment that has been cancelled, as the additional costs for transporting building materials have tipped the balance - and that was in the service sector.  How is affecting those who have to use the large hauliers as a matter of course?

Incoming Councillors must be forced to pledge to continue the fight against this policy before it drives the economy, and the future of the islands, over the edge.

Update: I can't use specifics for professional reasons, but Ian MacIver can.

Update 2: I'm told that the poor truaghan Alasdair Allan has resorted to telling hauliers that tale that full RET will be reintroduced in an Independent Scotland.  Presumably with the choice of gold or silver cutlery in the dining room.

Blowing our own trumpet

Nicolson Accountancy have just won an exclusive contract with Nova Subsea AS, a major Norwegian employment agency who operate across the world.

Our specialist foreign tax service, Norway-tax.co.uk has been appointed as the sole provider of Norwegian tax advice to all the UK contractors employed by Nova.

This innovative approach will result in us making sure that there is full compliance with the requirements of Skatteetaten - the Norwegian Tax Authority - as well as advising on the interaction with UK taxes.  

Sue Nicolson said, "Our mission is to ensure that all taxes are minimised and that accurate and timely reporting takes place, and we are looking forward to working with Nova and its employees and contractors in the coming years."

SNP Tax

A haulier has been in touch to ask how to add an extra line to his computerised invoicing.

He is thinking about adding an additional surcharge onto every invoice:

SNP tax --- £15

It may not be big or clever, but he wants to get a message across.

Government survey

IPSOS Mori phoned me tonight to ask me to participate in a special survey about how the Scottish Government 'could help my business'.*

Ferret meet drainpipe.  I thought...

RET?  ADS?  Less red tape?

Nope.

"What sort of problems have you had in borrowing money in the past three years?"  Name the banks.  Name the problems.  Identify the borrowing requirements.

Tangential questions about staffing and some other issues, but all about how the banking system had failed us.  Not that I am suggesting there were leading questions.

Even questions about growth aspirations and expectations were underplayed.

All in all, I felt like my comments were being used to justify a stick to complain about matters outwith the Scottish Governments control rather than any real interest in how control could be used to help our business grow.

As I have done in the past, I explained how we grow, how we could be helped to grow, and the obstacles to growth.  Ooops. My answers didn't fit the criteria, or the questions didn't seek these sort of answers.

I had to recall how I told a very senior business development officer how to grow the entire local professional services market.  Thrice.  No reply.  No interest.  And when suggestions were made, a flat refusal to help "on policy grounds" delivered by an underling.  The impression that one needs the right handshake is not helped by previous and subsequent events.

Thankfully, at least one person is interested in building a case, despite their superiors (sic).

Still onwards and upwards waving two fingers in the air.....

(And I have great story about a local politician who proclaims to b pro-business...  But that's for later)

* Forgive me from quoting Ronald Regan, who said the nine scariest words were "I'm from the government and I'm here to help".

Legal actions

In about 1990 or 1992 I gave evidence in a commercial legal action where I was subject to serious cross-examination by QCs, which was quite entertaining and a fabulous experience.  My element focussed on a valuation certificate that the client denied existed, but that I had seen and read upside-down on his desk.

The legal action dragged on due to changes in lawyers, appeals and associated actions.

After the legal action concluded various professional advisors were sued; counter-sued; and sued again.

The list of legal actions following the original case is immense including a recalled insolvency petition and the removal of assorted liquidators.

The lawyers for the successful litigant have only just had a judgement in their favour for the balance of the legal fees, some 20 years on.  There may still, of course, be an appeal.

Jarndyce v Jarndyce it was not; but I suspect it is going to appear in the legal text books when it finally finishes.

Good things come to those who wait...

My erstwhile good friend J Arthur Guinness had it right.

It's just that sometimes things take that bit longer than they ever should.

So two elderly residents of Stornoway will no doubt be very happy when their unjustifiable 7 year wait for justice comes to a conclusion later this year, and they can stop biting their tongues.

Full details about Mr Liar, Cllr Liar and Mr Liar to follow in due course.

Imitation and flattery

It is very nice to see a competitor trying to copying what you are (successfully) doing.

It is even nicer to see them doing it in a half-hearted, incompetent and unsuccessful way in a desperate attempt to emulate your achievements.

Organic SEO is not something you can achieve overnight, and paying for Google Adwords in a desperate effort to emulate that in a highly competitive marketing environment is a sure fire way to burn £50 notes for no reward.

Keep up the poor work.  :-)




(Good to know they read the blog)

Business Gateway

I have a good working relationship with Business Gateway and their mostly successful support for local business.

Why, I am asked by a local businessman, are Business Gateway (Western Isles) aka Comhairle nan Eilean Siar, providing grant support to an Aberdeenshire business??  Albeit one run by the Lewis diaspora.

I truly hope the new business succeeds, but when I see other businesses who are refused funding you have to ask if the criteria are being equitably and objectively.

Commonwealth Games

We tendered for the payroll for the entire Commonwealth Games in 2014, which would have created another full time job (or two) in the office.

Sadly, we didn't make the final short leet - but not by much - about which we are rather gutted, but onwards and upwards and onto the next tender.

Harris Tweed Hebrides

There has been so much good news and so many press releases acclaiming this company that we are almost expected to accept the total world domination as a matter of course.

That's not to demean in any way what has been achieved in growing from nothing to 95% of the industry in a matter of a couple of years; albeit assisted by the suicidal business polices of Mr Haggas.

So amongst all this good news, why are the accounts to December 2010 now nearly three months overdue at Companies House, and why is the Annual Return overdue?

And why was a new company called Harris Tweed Hebrides Shawbost Ltd formed in November 2011?

The sole director is Malcolm Holmes (no, not the drummer in OMD!) of Tods Murray, solicitors, whose work skills includes expertise in corporate reorganisation.  With the one share held by nominees, I suspect a major restructuring is in prospect.

The question is: why?  With 5 mortgages, the suspicion is clear.

Interested observers will be intrigued by the eclectic list of members, who presumably have provided significant investments in the company.  Uist readers will recognise the Storas unofficial executive board.

Another victim of the recession

I'm told that the Receivers arrived at MacAskill Haulage this morning, and whilst deliveries are being made today, ther is no guarantee of what is going to happen tomorrow.

It appears (and this is informed speculation) that the bank wanted borrowings reduced, but that the cash wasn't being generated to do this.

I am told that the business is asset rich and cash poor, and that it seems likely that the cash is there to pay back most if not all creditors.  This would seem to concur with the fact that the accounts are not overdue.

Hopefully something can be rescued from the wreckage.

Modesty prevents me....

Sod modesty.

We have been shortlisted for "Independent firm of the year - Scotland", which we are extremely proud and very pleasantly surprised about.

The awards are announced on 30 November, but with most of the public sector, including the schools, being on strike that day, there is no way we can be sure that we can get there and back in a sensible number of days.

As we'll be at least runners-up, we'd have liked the photos for publicity purposes, but perhaps we'll just hold our own ceremony that day.

Employment vacancy

We have a vacancy for an International Tax Accountant to assist us primarily with the preparation and control of foreign tax returns and payroll processing, along with many other activities.

The full details of the vacancy are on our website, and applicants will want to look at www.norway-tax.co.uk and www.dutch-tax.co.uk for an appreciation of what we are doing.

This is an exciting and rapidly growing aspect of our business, and we are seeking an appointee who can meet our needs.

Google Adwords - updated

I just got the statistics through for this month, and I think that they are quite impressive.

Apparently 11.17% of people who see one of our online ads are clicking through the advert for more information, and whilst we haven't got exact figures for conversions as we rely upon our recollection of phone class and emails during the month, we estimate that 15-20% of clicks turn into new clients.

That's a very health 1.67% of everyone who sees our advert becoming a client.

It can be done; and location is not an issue

Street lighting

As I drove into wrok very early this morning, the reason for the metal attachements on the trees in Bayhead palypark became obvious.

Beautiful blue lights, to guide the competitors from the Whisky Olympics home; in the absence of street lights.

I went to take a photo, and in the 15 seconds that passed between exiting the car and coming back out from the office, the street lights came on and the fancy lights went out.

Can some other early bird take a photo and sent it on for use on the site, please?

Mobile phone coverage

An online report indicates that (some) of our connectivitiy problems may be solved...

The UK's Chancellor has confirmed that the government will sink £150m into buying up cell sites with the intention of extending rural coverage to 99 per cent of the population.
Ofcom will advise the government on how it should go about spending our cash on sites for base stations to be utilised by multiple operators, with the intention of creating greater coverage for existing networks and encouraging operators to roll out next-generation services to the edges of the UK.

Details are still scant, with more to come from the Department of Fun (properly Culture, Media and Sport) at some future point, but the basic idea is to buy up sites during 2012 and make them commonly available by early 2013. Operators will be able to move in cheaply, to provide service to the six million or so people who currently aren't getting blanket coverage today, hopefully with 3G or 4G services, but at least 2G.

I just hope it is true, and reaches here.

The top-secret final submission from the high-tech high-speed node-sniffers at Bayhead, is shown below, and no doubt influenced the Chancellor greatly.

"You can only get a signal if you stand to the left of the wooden sheep"

Supermarket wars

Spotted in Tesco on Friday, a member of the Board accompanied by the usual entourage of groupies, assistants and flibbertigibbets.

A very brief and very rapid tour of every single aisle was followed by a swift exit; without the need to converse with the merest of employee.

About 2 hours later the same party of suits were seen touring the Co-op in the same high speed and aloof manner; quite obviously checking out the opposition.

With rumours of a greenfield site having been identified, it seems that Tesco have big plans to challenge the Co-op.

And as is the way, the small local shops will suffer collateral damage.

Would you like salt with it?

I went past Market Stance a dozen times in the past few days, and was - like most of Uist - awe inspired by the veritable Mt Everest of road salt that had been shipped in, and is now left to be rained upon over the winter, and lose it efficiency with every raindrop.

Today, the following email was issued by the Council....

A notice that you have registered an interest in has been cancelled. The notice details are shown below.

   Notice ID: JUL095586
       Title: Ice Gritting and Snow Clearing 2011 – 2015
   Authority: Comhairle nan Eilean Siar

Reason:

This contract has now been readvertised. See new advert 29.09.11

Are any Councillors interested in the reasons for this contract being withdrawn?


Perhaps the question is, how could the very senior persons involved in this get it so fundamentally wrong?

BTW, Councillors and contractors may also be interested to know that many of the scores achieved by the original tenderers are in the semi-public domain.

That'll engender confidence in the fairness and confidentiality of the process.