GAK gone bust...

[prowla]

1 hour ago, Steve Browning said:

Personally I don't buy the risk taking argument.

 

Do employees have more protection than directors/shareholders (redundancy rights, sick pay, etc.)?

[rmorris]

2 hours ago, Steve Browning said:

Depends on your views on tax avoidance. Personally I don't buy the risk taking argument. 

 

Like all avoidance, it's perfectly legal.

 

The risk taking argument really only applies to what in realistic terms can be judged to be real investment risk.

Where it is being used as a vehicle to subsidise unrealistically low PAYE income then, yes, it's avoidance ( unless HMRC / Courts find it to be evasion).

[Burns-bass]

1 hour ago, prowla said:

 

Do employees have more protection than directors/shareholders (redundancy rights, sick pay, etc.)?

Personally I have invested tens of thousands of pounds of my own money in my business. I have worked more hours than I should, in some cases to the detriment of my health and my relationship. 
 

During COVID I had to take on loans to keep the business going as we got zero support while others received tens of thousands. 
 

I’ve spent lots (and I mean Fodera/pre-CBS levels) on innovations. Some have worked, many have failed.

 

I’m probably no better off than had I maintained my career trajectory in-house.

 

I think my experience is probably similar to lots of Ltd company owners.

[prowla]

13 minutes ago, rmorris said:

 

The risk taking argument really only applies to what in realistic terms can be judged to be real investment risk.

Where it is being used as a vehicle to subsidise unrealistically low PAYE income then, yes, it's avoidance ( unless HMRC / Courts find it to be evasion).

That's a very blinkered point of view.

The risk is any exposure to which a PAYE employee wouldn't be party to and certainly isn't constrained to just investment and tax.

Of course, someone focused solely on tax would be dismissive of the other risks inherent in running a business.

And they're only interested in their deemed share of the profits; the risk of losses is none of their concern.

[rmorris]

2 hours ago, Burns-bass said:

will pay pretty much the same tax as PAYE employees (with no holiday pay, sick pay or other associated benefits).

 

GAK is more likely to have been the victim of changing circumstance bit corporate malfeasance, but we can’t say for sure.

 

The benefits thing is tired tbh. Of course owners / self employed don't get company paid benefits as they would simply be paying themselves. There is an argument around state paid benefits, esp SSP but it's fairly marginal. Holiday / Sickness Pay considerations etc need to be rolled into renumeration taken. It's why you pay a trade a multiple of the "?wage" itself.

Paid Directors are subject to PAYE and any contractual terms between them and the limited company. Of course, depending on the circumstances, this may be a zero sum gain.

Where it gets "interesting" is with multiple directors who are also shareholders and where there is disagreement on finance / policy / direction etc. Cause of many a company break up and bad feeling. Like being in a band 🤣

 

As for GAK specifically - I'd say - picked up by a notorious businessman for a punt. Aim to push further into online. Focus on high margin items judging from emails. When all incomes are under increasing cost pressure. Large physical shop in high retail value area. High staff costs. Accountants inform them it was no longer a viable operation so immediate lock up and nonsensical "Refurbishment" notice slapped on a door ?

 

[Burns-bass]

5 minutes ago, rmorris said:

 

The benefits thing is tired tbh. Of course owners / self employed don't get company paid benefits as they would simply be paying themselves. There is an argument around state paid benefits, esp SSP but it's fairly marginal. Holiday / Sickness Pay considerations etc need to be rolled into renumeration taken. It's why you pay a trade a multiple of the "?wage" itself.

Paid Directors are subject to PAYE and any contractual terms between them and the limited company. Of course, depending on the circumstances, this may be a zero sum gain.

Where it gets "interesting" is with multiple directors who are also shareholders and where there is disagreement on finance / policy / direction etc. Cause of many a company break up and bad feeling. Like being in a band 🤣

 

As for GAK specifically - I'd say - picked up by a notorious businessman for a punt. Aim to push further into online. Focus on high margin items judging from emails. When all incomes are under increasing cost pressure. Large physical shop in high retail value area. High staff costs. Accountants inform them it was no longer a viable operation so immediate lock up and nonsensical "Refurbishment" notice slapped on a door ?

 

It’s interesting where simply being bad at business or investing in a dying operational model mutates into wilful corporate malfeasance.

 

I don’t know enough about GAK to be honest, but the majority of failed businesses I’ve known aren’t through design, but circumstance.

 

If also say HMRC are, for the most part fantastic and fair. I had a problem and they sorted it, offered advice and enforced no penalties.

 

The systems we have aren’t perfect and can be abused (VAT is a classic one that open to abuse) but we have to deal with what we have.

[rmorris]

6 minutes ago, prowla said:

That's a very blinkered point of view.

The risk is any exposure to which a PAYE employee wouldn't be party to and certainly isn't constrained to just investment and tax.

Of course, someone focused solely on tax would be dismissive of the other risks inherent in running a business.

And they're only interested in their deemed share of the profits; the risk of losses is none of their concern.

 

No. Whilst there may be numerous risks in business, the relevant risk wrt taxation status (which is the area under discussion here wrt difference in tax / NI rates PAYE vs Dividend Income) IS the investment risk and whether it justified being taxed at a different rate.

In many cases it's not a problem tbh but it can be subject to abuse.

[rmorris]

7 minutes ago, Burns-bass said:

It’s interesting where simply being bad at business or investing in a dying operational model mutates into wilful corporate malfeasance.

 

Very much so. Malfeasance is another level as I see it. What I more often see is a business that is maybe going along okay but not stellar being acquired with the aim of pushing / expanding it hugely.

It's risky, it fails. Employees lose their jobs and the future opportunities along with them. The company owners can afford the loss and that loss is minimised by use of company structures and (legal) accounting practices.

 

7 minutes ago, Burns-bass said:

 

I don’t know enough about GAK to be honest, but the majority of failed businesses I’ve known aren’t through design, but circumstance.

 

Yes. Though a not insignificant number of "bad apples' eh "Phoenix companies".

Maybe I've spent too long in / around small scale businesses where the "bosses" have been more interested in their next car 🤔

 

7 minutes ago, Burns-bass said:

 

If also say HMRC are, for the most part fantastic and fair. I had a problem and they sorted it, offered advice and enforced no penalties.

 

That's interesting. I've also found HMRC okay (fingers crossed as I'm waiting to hear back from them on something atm)

But I know someone where it has been awful trying to get something personal resolved.

I believe there has been a significant degree of loss of experienced senior staff over time. Pay restraint and high offers from financial businesses drawing them away. Although many then not happy with the pressure piled on them.

 

7 minutes ago, Burns-bass said:

 

The systems we have aren’t perfect and can be abused (VAT is a classic one that open to abuse) but we have to deal with what we have.

 

[prowla]

1 hour ago, rmorris said:

 

No. Whilst there may be numerous risks in business, the relevant risk wrt taxation status (which is the area under discussion here wrt difference in tax / NI rates PAYE vs Dividend Income) IS the investment risk and whether it justified being taxed at a different rate.

In many cases it's not a problem tbh but it can be subject to abuse.

Not from my perspective; that’s cherry picking. 
The assertion of “Personally I don't buy the risk taking argument.” wasn’t specifically constrained as far as I can see. 
Tax is just one aspect.

The point is surely to encompass all of the factors pertaining to running a business. 

[rmorris]

1 hour ago, prowla said:

Not from my perspective; that’s cherry picking. 
The assertion of “Personally I don't buy the risk taking argument.” wasn’t specifically constrained as far as I can see. 
Tax is just one aspect.

The point is surely to encompass all of the factors pertaining to running a business. 

 

The context seemed clear to me but since that comment was going against my recognition of the risk aspect then you'd need to ask the poster about what exactly was meant.

As for "encompassing all of the factors..." - how would you propose to approach that ? (outside of the tax regime )

[prowla]

18 minutes ago, rmorris said:

 

The context seemed clear to me but since that comment was going against my recognition of the risk aspect then you'd need to ask the poster about what exactly was meant.

As for "encompassing all of the factors..." - how would you propose to approach that ? (outside of the tax regime )

Different people draw different perspectives from the posts they read.

I took the inference that the risks associated with running a business were being discounted out of hand and distilled down to tax avoidance.

I suppose discussing business with someone whose focus is tax is similar to the adage that everything looks like a nail to someone who is holding a hammer.

(As @Burns-bass said, "Steve is going to view this through the lens of a taxman.".)

Running a Business has many risks over a being PAYE employee and simply focusing on the tax alone is meaningless.

(I'm a PAYE employee, FYI; I don't need the hassle of running a business and the risks associated with complying with legislation, running costs, insurance, sickness/unavailability, tax investigations, ROI, etc.)

[Steve Browning]

6 hours ago, Burns-bass said:

Steve is going to view this through the lens of a taxman. Owners and employers jointly create wealth, which is true. 
 

The argument for lower taxes on business people is that it encourages them to invest and take risks. But taxes aren’t lower for most small businesses.

 

The reality is that dividend reliefs are pretty much gone and most Ltd company directors (like me) pay similar rates of tax to PAYE employees. 

The lens of a taxman is that something that is legal is fine. 

 

In many companies, it is the employees who create the wealth. The owners enjoy it. That's, of course, mildly facetious but a successful business is not necessarily taking many risks. Employees are also risking their livelihood too. 

 

I've yet to meet a businessman who wouldn't shaft his employees for his own advantage. 

 

That's my taxman experience based on a different business every day for nigh on 10 years. 

 

Again, avoidance is fine. It is for governments to address it, if it is perceived to be problematic. 

 

My only gripe, and it applies to absolutely everything, is that everyone is treated exactly the same. Ah Utopia!!

[Burns-bass]

8 minutes ago, Steve Browning said:

The lens of a taxman is that something that is legal is fine. 

 

In many companies, it is the employees who create the wealth. The owners enjoy it. That's, of course, mildly facetious but a successful business is not necessarily taking many risks. Employees are also risking their livelihood too. 

 

I've yet to meet a businessman who wouldn't shaft his employees for his own advantage. 

 

That's my taxman experience based on a different business every day for nigh on 10 years. 

 

Again, avoidance is fine. It is for governments to address it, if it is perceived to be problematic. 

 

My only gripe, and it applies to absolutely everything, is that everyone is treated exactly the same. Ah Utopia!!

If all you ever see are the negative examples of business behaviour, then no wonder you’re so jaded with it all.

 

Thats fine. We need regulators to keep things in check. But not all businesses - and business people - are bad. Neither are we criminals, tax dodgers or rule breakers. 

If we’re doing stereotypes, there are enough of those about tax people, but we won’t go there. 

Workers do generate wealth, that’s completely true - but this situation only occurs because someone has create a vehicle, with the inherent risks associated with it, to enable them to do so. 
 

We don’t need to invoke the spirit of Marx to explain why they shouldn’t capture *all* this wealth, but the rewards should reflect the risks (as they do in all walks of life).

 

Oh, and I’m writing this while taking a break from building a new business website. Can’t imagine any of my contractors are doing the same…

 

[Steve Browning]

Just now, Burns-bass said:

If all you ever see are the negative examples of business behaviour, then no wonder you’re so jaded with it all.

 

Thats fine. We need regulators to keep things in check. But not all businesses - and business people - are bad. Neither are we criminals, tax dodgers or rule breakers. 

If we’re doing stereotypes, there are enough of those about tax people, but we won’t go there. 

Workers do generate wealth, that’s completely true - but this situation only occurs because someone has create a vehicle, with the inherent risks associated with it, to enable them to do so. 
 

We don’t need to invoke the spirit of Marx to explain why they shouldn’t capture *all* this wealth, but the rewards should reflect the risks (as they do in all walks of life).

 

Oh, and I’m writing this while taking a break from building a new business website. Can’t imagine any of my contractors are doing the same…

 

You missed my point spectacularly. 

 

I saw typical businesses for 10 years. Good and bad. I'm not remotely jaded. I'm passing on conclusions based on around 3000 businesses against your 1. I'm not criticising here.

 

By the way, talking of stereotyping (as I wasn't), a tax inspector gets difficult only when evidence (actual evidence) deems it necessary. It's a bit like people complaining about being done for speeding, somehow forgetting they were speeding. 

 

Anyway it's a nice day so what the hell. 

[rmorris]

Back to GAK - just been past. Stock shifted and Shop to Let signs up.

[Steve Browning]

16 minutes ago, rmorris said:

Back to GAK - just been past. Stock shifted and Shop to Let signs up.

It really is a shame that such a place has gone (and with Bax too). Brighton still has some interesting music shops to look at. In some ways they are more precious than GAK. The remaining places are more like old school shops, with some eclectic (and s/h) gear in them.

[prowla]

3 hours ago, Steve Browning said:

You missed my point spectacularly. 

 

I saw typical businesses for 10 years. Good and bad. I'm not remotely jaded. I'm passing on conclusions based on around 3000 businesses against your 1. I'm not criticising here.

 

By the way, talking of stereotyping (as I wasn't), a tax inspector gets difficult only when evidence (actual evidence) deems it necessary. It's a bit like people complaining about being done for speeding, somehow forgetting they were speeding. 

 

Anyway it's a nice day so what the hell. 

I've been for a walk - 14,053 steps according to my wrist-gadget.

[Steve Browning]

1 minute ago, prowla said:

I've been for a walk - 14,053 steps according to my wrist-gadget.

Not so many for me. Stroll round Farnham and a very nice brunch and then home to clean up the garden. Good going to get to 14k plus.

[rmorris]

1 hour ago, Steve Browning said:

It really is a shame that such a place has gone (and with Bax too). Brighton still has some interesting music shops to look at. In some ways they are more precious than GAK. The remaining places are more like old school shops, with some eclectic (and s/h) gear in them.

 

Yes. But beyond our bass centric world - GAK went beyond the bass / guitar / amp area. More full range with drums / studio / keys etc. Nearest thing now for UK may be Gear4Music. Thomann in Germany obvs. Not a new thing though - on the studio side anyone remember Thatched Cottage Audio ? And more recently the demise of Studiospares?

[Wombat]

25 minutes ago, prowla said:

I've been for a walk - 14,053 steps according to my wrist-gadget.

You sure you meant walk?

[rmorris]

43 minutes ago, Wombat said:

You sure you meant walk?

 

I see what you did there 🤣 Naughty 😳

[Wombat]

I’m normally over 15k steps 😉

[Stub Mandrel]

It used to be that the system was somewhat loaded in favour of establishing a small company instead of being self-employed. The ideabis to encourage entrepreneurs and grow the economy. Doing this and being VAT registered has enabled me to subcontract out work I would no otherwise have taken on.

 

The income benefit of having a personal company instead of being self-employed was eroded so much under a succession of tory governments (reductions in dividend allowances and increase in dividend tax rates) the benefit is now so small that it is questionable if it's worth the effort.  The way covid support was set up excluded single person companies and forced us into covid loans we are still paying off.

 

Quite extraordinary for the 'party of smsll business'.

 

[BassBiscuit]

2 hours ago, rmorris said:

 

 And more recently the demise of Studiospares?

Now 'Gear4music' aren't they...?