And if that were the end of the story it would be an extremely satisfactory one from everyone’s point of view. But it isn’t.
I had a wonderful time in Paris, eating and drinking too much and seeing old friends from art school, and came back feeling ready for anything. I thought that I ought to make the most of it, so I sat down straightaway and did my accounts, so that I could put in my tax return. (No, Julia, it would
When I’d finished, I took the accounts along to the income tax people in Worthing — it’s always better to do it in person, so that one can explain anything they don’t quite understand — and just to be helpful I took my bank statements as well. I handed everything over to a young man in horn-rimmed glasses, who seemed at first to be perfectly sensible and obliging, and he noticed an entry in my statement arising from one of the share sales. And when I explained what it was, he asked me to send him a list of all the shares I’d bought and sold during the past year. Which I did, that same afternoon.
And now he wants three thousand pounds.
When I first got his letter I thought it was just a mistake. I rang up and explained to him that shares are capital, not income, and I shouldn’t have to pay income tax on them. But he said it made no difference, and he was very sorry if it came as a shock to me.
It’s all very well for him to say he’s sorry — which I don’t believe he is at all — where does he think I’m going to get three thousand pounds from?
Well, I know, of course, that when I tell Maurice and Griselda they’ll raise their share of it somehow, and so shall I. But we’re all going to find it a bit difficult — it’s twice as much as we had in the first place, and, as I say, we’ve spent all the money, mostly on things we can’t get it back for. I dare say Maurice could sell the Virgil frontispiece, but I think it would break his heart.
So before I spread alarm and despondency, I’d very much like to know whether you agree with me, or with the beastly young man in horn-rimmed glasses. I enclose a copy of the list I sent him and of his beastly letter. I’m almost bound to see Maurice and Griselda in the Newt on Saturday, so I’d be most grateful if you could let me know by then what you think.
What makes me so furious is that if I hadn’t been trying so hard to be helpful the beastly young man would never have known anything about it.
With very much love,
Reg
I felt a trifle anxious on Julia’s behalf: knowing that she would wish to take that view of the question becoming to the duty and devotion of a niece, I feared that some provision or other of the Taxes Acts might prevent her doing so. Little as I know of such matters, I had the distinct impression that there was a tax called capital gains tax: it seemed all too likely that it was chargeable on capital gains.
“Yes,” said Julia, leaning back and drawing deeply on a Gauloise. “Yes, you’re quite right, Hilary, there is such a tax as you mention, and by some oversight on the part of the legislature my aunt Regina is not exempt from it. I am happy to say, however—”
Her remarks were interrupted by the arrival of Selena, who had noted my brief appearance next door and guessed that she would now find me with Julia. Having handed me the keys to Timothy’s flat, she sank with perceptible weariness into the remaining armchair. Her pale blond hair, normally brushed to polished smoothness, was rather engagingly tousled and there was a smudge of dust on her nose: she had the expression of a Persian cat which has been having a difficult afternoon.
In response to Julia’s sympathetic enquiry, she described the incident which I had lately witnessed in the Clerks’ Room: the young man who had fallen from the ladder was the carpenter recently engaged by her Chambers to install new cupboards and bookcases — he had experienced, it seemed, a sudden impulse to measure something; the gentleman on whom he had fallen was her most valued client.
“The carpenter?” Julia looked anxious. “Do you mean the young man with the eyelashes and the Renaissance mouth? Oh dear, I do hope he didn’t hurt himself.”
“The carpenter,” said Selena, “is a fit and agile young man who spends half his time climbing up ladders, and the other half, I dare say, falling off them again. A more suitable object of your concern would be my unfortunate client, who is a merchant banker in his midsixties, with very limited experience of being fallen on.”
It was plainly regrettable that such a person, no doubt frequently in need of the advice of Chancery Counsel and no doubt with ample resources to pay for it, should incur the smallest inconvenience in the precincts of 62 New Square. Still, he did not appear to have suffered any serious harm: neither Julia nor I could believe that he would deprive himself, on account of so trifling a misadventure, of the benefit of Selena’s advice.
“Hmm,” said Selena, wrinkling her nose, seeming to draw little comfort from our encouraging remarks.
It soon became clear that the true cause of her dissatisfaction with the afternoon was not the incident with the carpenter and the ladder, which had merely, as it were, added a final flourish to its vexations. Her conference with her client had gone badly: that is to say, she had been unable to assist him with the problem on which he had sought her advice. She felt that he was disappointed in her.
“What kind of problem was it?” asked Julia, preparing to be indignant on her friend’s behalf.
“He wants to retire from the chairmanship of his bank, and doesn’t know whom to nominate as his successor.”
“Oh, but that’s absurd — it’s obviously not a legal question. How can he expect you to advise him about that?”
“Well, there’s slightly more to it than that. He has reason to believe that one of the two potential candidates — this is all, I need hardly say, in the strictest confidence.” She paused to settle herself more comfortably in the armchair and looked, for some reason, rather severely in my direction. “Well, I shall name no names. My client, whom I shall refer to as ‘my client,’ is the Chairman of a small but highly respected merchant bank, which I shall refer to as ‘the Bank.’ On his retirement, his voice will be decisive in the appointment of his successor. There are two possible candidates, both already members of the board of directors, whom I shall refer to as ‘A’ and ‘B,’ though those are not their real names. My client has reason to believe that one of them has been guilty of… rather serious misconduct.”
She again fell silent — the details were apparently almost too shocking to be spoken of. Julia raised an eyebrow, inviting her to continue.
“The business of the Bank, as you’d expect, includes advising on takeovers — if one company’s thinking of taking over another, it goes to the Bank for advice on how to go about it and how much to offer. In theory the client company makes the final decision, but in practice the Bank’s advice is almost always acted on. And, as of course you know, the announcement of a takeover bid is usually followed by an increase in the price of the shares of the target company — sometimes quite a dramatic increase. So you see, Hilary, one way for you to get very rich would be to find out in advance what the Bank was going to recommend.”
“My dear Selena,” I said, “it’s most kind of you to think of it. I suppose there’s a snag of some kind?”
“Well, the snag is that the Bank goes to a good deal of trouble to make sure you don’t. It operates, as my client likes to put it, on the basis of a need-to-know system. So buying ice cream for the office boy or chocolates for somebody’s secretary, or even dinner at the Savoy for a senior executive, won’t do you any good, because they won’t have the information you need. My client, until a week ago, believed these systems to be entirely effective, and lived, in that belief, a happy and contented man. But then …”
“But then?” said Julia, perceiving some further encouragement to be expected.
“But then one of the Bank’s computer people, having nothing better to do and some exciting new software to play with, decided to do an analysis of the takeovers which the Bank had been involved in over the past two years. And the results were rather disturbing, because they showed that in at least eight cases there had been a significant increase, immediately before the bid was announced, in the buying of shares in the target company.”
“Phew,” said Julia. “And no one had noticed? Not the Stock Exchange or the Department of Trade or anyone?”
“Well, not so far. It’s really rather a lesson in the value of moderation. You see, if you look at each case
