As EURO 2020 approaches, a throw-back to 1998 when the hero of England's progression to the EURO 96 semi-finals, Paul Gascoigne, was dramatically dropped from the World Cup squad and sent home.
Kevin writes ...
I read the news about Gazza from a café in Paris, having already embraced the digital nomad way of working (though it was definitely pre WiFi at this point). I thought it was so evidently a sensible way to work that I didn’t consider myself to be an early adopter.
I used the story to illustrate an article published in the June 1998 edition of VAT Intelligence, the sort of niche publication that would feature in Have I Got News for You.
The article highlighted the new challenges at the intersection of ecommerce and tax. I observed that the concept of a business establishment needing both human and technical resources was being challenged “it is almost possible to run a business with no human resources,” and “even if [tax authorities] succeed in spotting that trade is going on, VAT collection is likely to prove difficult, especially if the supplier has no EU presence.” Astonishingly, questions of collection and jurisdiction are still unresolved – as we have seen with this month’s outline G7s agreement to adopt the two pillars of taxing where revenue is generated, and applying a minimum overall tax rate.
One thing that struck me most was that there was a logical place to start ecommerce tax collection – the payment infrastructure. I noted “The most appealing [proposal], and one which has been advocated by the German authorities, is to use banks to collect the tax. This will be based on payments by credit/debit cards. by ecash (a virtual banknote with a unique serial number that can be passed from person to person anonymously, but does not form part of a bank account), or from an ewallet (a smart card that can be used to transfer funds to another party’s ewallet by means of a reader).”
This concept of starting a tax analysis from a bank transaction – and an electronic one at that – was again so natural to me. To the extent that the word “receipt” features nowhere in the article. Of course not all predictions were right – I thought that emerging ecash would be a stable currency rather than the volatility of bitcoin and other crypto assets. And ewallets, well … maybe the phone is a substitute for it.
It’s taken twenty years since that lightbulb moment for the use of transactions as the basis for accounting or tax to approach the mainstream. We estimate this simple shift is on course to save the nation’s SMEs 100 million hours a year in reconciliation. These things take time to be ready for adoption. Long enough for a whole new generation of footballers to be born, emerge and be ready to shine.