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In a Pythonesque podcast on man's battle with the Inland Revenue, Andy White and Darren Fell of Freelance Advisor analyse an interview with accountant Steve Crouch (Five Questions You Always Wanted to Ask Your Accountant, Part 1):

Andy: Now Darren I know that we sort of hijacked the episode with IR35 and that's completely my fault but I believe you've got some thoughts on the subject as well

Darren: Yes, as I said right at the beginning IR35 is such an interesting area, nobody's quite sure, in fact the Inland Revenue isn't quite sure what they can get away with with people, it's a scare tactic, so that really got me interested.

And Steve, although I've been through it with Steve already about me being a freelance to Crunch, he made me worried that if I was present at a desk in the office 5 days a week and if projects you know overran I'd stop being paid if I was a true freelancer well this isn't the case with Crunch so that concerned me

So one thing I see as a categoric way of getting around IR35 is something I can do with Crunch and that is employ other people through me so as soon as I am, say if I need to employ a copywriter say I need to employ others services from other people and I'm running it through the business I am obviously taking a risk but I then turn from a freelancer or contractor into an agency setup and there the Inland Revenue cannot complain because I am offering a whole business service to Crunch... but do that and I think it is absolutely categoric from Steve that there is very little the Inland Revenue can do with IR35

Andy: Some interesting thoughts there Darren on IR35. Now, Section 660, you got some thoughts there on that business, you know spouses, and shares, things like that?

Darren: Well (laughs) you can get tax-avoidant and then you can just be downright silly...

Andy: Wise words Darren. What about VAT?

Darren: Yes, some very interesting words from Steve on VAT, I mean it's all simple stuff, he was promoting flat rate in there, flat rate is an excellent way of actually making money out of the Inland Revenue because you only pay back say 13% if you're say a PR business but you all the time consistently claim 17.5% ...

Andy: Now in that interview with Steve I have to admit I got so enthused about IR35 that I didn't have time to ask the last 3 questions but we will be doing that in Part 2 with Steve in the next episode, so Darren let's just go through the next questions

Darren: Well I'll let you off on that Andy because I knew you went off in a tank ship with all your questions on IR35 but I actually got stuck into that conversation because I was so intrigued, and I think everybody is, and I think to that point we ought to do an IR35 special in the podcast series, because we all need to know a definitive line of attack to get past Inland Revenue, so I think an additional question to Steve about doing an IR35 special I will have to place

(You can hear the whole podcast, including what Steve actually said on the intriguing subject of IR35, here.)

[Update. Well, you actually can't hear the podcast, because Freelance Advisor has apparently taken it off the site, so if you click on the link you get a 404. As of 23.04.08 you CAN read Darren Fell on IR35 here, though for all I know it too may soon vanish into the Twilight Zone]

Accounting techniques like budgeting, sales projections and financial reporting are supposed to help prevent business failures by giving managers realistic plans to guide their actions and feedback on their progress. In other words, they are supposed to leaven entrepreneurial optimism with green-eye-shaded realism.

At least that's the theory. But when Gavin Cassar, a Wharton accounting professor, tested this idea, he found something troubling: Some accounting tools not only fail to help businesspeople, but may actually lead them astray. In one of his recent studies, forthcoming in Contemporary Accounting Research, Cassar showed that budgeting didn't help a group of Australian firms accurately forecast their revenues. In a second paper,he found that the preparation of financial projections added to aspiring entrepreneurs' optimism, leading them to overestimate their subsequent levels of sales and employment.

"It's been shown in many studies that people are overly optimistic," Cassar says. "What's interesting here is that, when you use the accounting tools, the optimism is even more extreme. This suggests that using the tools, which a lot of academics and government agencies say is good practice, can lead to even bigger mistakes."

From Knowledge@Wharton, courtesy Daily EM.