Dr Collins

I decided to write about the doctor I had as a child after realising that it was a bit weird. His name was Dr Collins.

I can remember him being a nice chap, He wore half moon glasses perched on the end of his nose which as a kid was exactly what I thought Doctors should look like.

He reminded me a bit of Professor Yaffle from Bagpuss, and Prof. Yaffle was the intelligent character of that show, so it all made sense.

Dr Collins used to have a small surgery in Portishead and my first memory is of it being here:

However, the current GPs practice mentions him in their history and say he was in the Folk Hall before that.

Portishead is a small place and we knew he lived close to the surgery, just along the high street back towards the school in a really nice house with a large back garden. A garden that was large enough to keep a horse in, which he did!

A new medical centre was built, still not too far from where he lived, and his surgery moved. As a kid, this was high tech, it had a panel on the wall with the names of the doctors and lights that would buzz when you could go to their room to see them. Science fiction stuff.

If you ever had an appointment with Dr Collins at 9am, you knew that would never be the time he buzzed you in. Typically he would start 15 to 30 minutes later. As a kid, I just assumed that was how it worked.

Walking into his office he had a large wooden desk with a green leather top. Placed on top of the desk were bottles, two I think, one contained ink, the other, I think was empty. Sticking out of the one bottle was a large feather quill with a metal fountain pen style tip.

He would sit there and ask what it wrong. If you said you were ill, he would back up slightly to move away from you. This would typically happen every time, with him trying to avoid any illness. But the consultation would end with him getting the quill and then writing out a prescription in illegible hand writing that only the pharmacist could read.

I think as a kid, I assumed every doctor used quills. But this wasn't the strangest thing about him.

When I worked for Ernst & Young some 20 years later I worked on the Employer Consulting team. This team was responsible for employer and employee related taxation and supporting clients in getting it right and paying the right amount (the lowest amount) of tax.

I was fairly low level when I was sent to work with the team in London. This was made up of some brilliant individuals who were incredibly clever. Some specialised in UK and international Social Security, so in the UK that meant National Insurance. Others were employment tax gurus and knew every piece of case law relating to employees and their taxes.

We would have lunchtime sessions where they would pick over the individual words used by judges in specific cases and what that meant, or, what the Inland Revenue thought it meant and why they were wrong. And if these people thought the Inland Revenue were wrong, it meant they were wrong and would lose any case that went to Court if that point ever got tested.

In the background were people who were even more brilliant and clever, whether that’s was some of the tax QCs we would go and see or some of EYs Partners.

One Partner I remember was Anne Redston. Although she was a Partner, she broke the mould a bit because she was very nice, she was not an alpha (fe)male with a point to prove or score to settle, she was fiercely clever, more so than 95% of the male Partners. A story that used to circulate about her was that 'she used to be a nun', which I believe to be true, and have found this old BBC article on her which confirms this.

I was aware that she was working with the Inland Revenue to simplify the tax code and as the team working along side her it was our job to know every word of the tax code and it’s legal interpretation. One part she was responsible for simplifying was relating to the rule that allows employees to claim tax relief on their expenses. This rule was quite restrictive.

Self Employed people could claim expenses which were:

'incurred in the course of business'

whereas employees could only claim expenses that were;

'wholly, exclusively and necessarily incurred in the performance of their duties'.

This was known to us at the time as section 198 of the Income Tax and corporation Taxes Act 1988 (1988 because the law gets consolidated into new acts from time to time without really changing, after simplification its now section 333 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003, which you can read by clicking on the link!)

Every single word in section 198 had multiple cases attached to it where judges have explained exactly what it meant. Most of it having the effect that employees can claim very little tax relief on any expenses.

For example, a self employed person could claim the cost of overalls because that was incurred in the course of their business. Employees could not claim tax relief on a business suit because you don't need clothes to work in a bank, you need clothes as a matter of normal decency, so it doesn't satisfy the legal interpretation of being “necessary in the performance of your duties”. Just necessary for life itself and so it can't jump the high bar for claiming tax relief as an employee.

I can't remember the exact date that this part of the Income Tax code was being re-written but it would have been between 1999 to 2002 Given that ITEPA is dated 2003. At this time section 198 was at least 100 years old, it may have been closer to 200 years, I can't remember. Either way it was law written for servants, chimney sweeps and cobblers and was being used against business expenses of people flying around the world.

But while any bog standard tax advisor would be able to quote section 198, as I have stated it above, the actual wording of this near 200 year old wording in section 198 was in fact this:

If the holder of an office or employment is necessarily obliged to incur and defray out of the emoluments of that office or employment the expenses of travelling in the performance of the duties of the office or employment, or of keeping and maintaining a horse to enable him to perform those duties, or otherwise to expend money wholly, exclusively and necessarily in the performance of those duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed.

And it was the second part of this law which brings me back to Doctor Collins.

As you sat waiting for him to arrive and wondering why he was late, you would hear the clip clop of horses hooves outside. On hearing this mum would always said that it wouldn't be long before Dr Collins would see us.

As you got called in staring at his leather bound desk, the window would be open. Staring in through the window would be his horse that he had tied up outside the window. if you spent too long talking, Dr Collins would get up and pat the horse or give it some food as he listened.

I just assumed that everyones doctor turned up to work on a horse. It was only when I was working in tax that I realised that keeping a horse, even if you kept it in your garden, was expensive, but if you could get the cost of that set off against the tax you paid on your employment income, say as a doctor, that would make the cost a lot easier to manage. And that is what he was doing, by riding it to work, tying it up outside he was keeping a horse that "enabled him to perform those duties" and therefore was probably able to remove much of the tax he would normally pay as a Doctor and instead, fund his horse habit at taxpayers expense!

This was probably my first experience of sensible tax avoidance, unfortunately, it wasn't my last and that will remain something I try and avoid writing about.