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John Lamb's Week: What's in the budget briefcase for high-tech?
Young hopefuls from the application service provider (ASP) industry will be gathering in Rome on Monday for the ASP Euro Summit. The history of ASP to date has been one of hectic activity by suppliers and equally hectic inaction on the part of potential customers.

By John Lamb

Published: Friday 02 March 2001

Questions about the reliability of services and the wisdom of handing over critical software to third party suppliers are still uppermost in the minds of users, particularly at the smaller companies that are the prime market for pay-as-you go software.

The fact that Summit will see the launch of the first purpose-built billing package for ASPs, will do little to reassure hesitant customers. Accurate and detailed methods of measuring usage and of billing customers must be fundamental to the development of the ASP business.

However, Geneva Technologies and Tertio have only now come up with industry's first purpose-built package for working out who owes what. Clearly there is still some way to go before the ASP business reaches the service and reliability levels achieved by conventional outsourcing suppliers.

Monday also sees the publication of a report - the State of Online Banking and Broking - from research firm Gomez. The report will reveal some striking figures, the company tells me, such as the fact that branchless banks attract customers with a higher average household income (41 per cent more) than traditional high street banks.

It also reveals the scope of the potential market, as over one third of internet users who do not currently bank online are likely to begin doing so within the next six months. Goodness me, can it be true that rich people are the most likely to bank online?

Wednesday will see the chancellor once again brandish a rather scuffed briefcase to waiting photographers. Inside will be his budget speech, but what will it contain of interest to high-tech industry?

Much was made in the last March budget of Gordon Brown's efforts to ease the tax burdens on start-ups. And he is still under pressure to go further in simplifying staff share schemes, allowing company buyers to offset the 'goodwill' element in their purchases against tax and to aid incubators by letting investors roll over capital gains tax into new investments.

Accountancy firm KPMG is also hopeful that new economy ventures will get a tax break on capital which they use to cover pre-trading expenses. During this period they are likely to receive interest from the money they have sitting in the bank. Yet current tax rules do not allow them to offset the pre-trading expenses against the interest received. This might be changed in the budget.

It is also possible that the Chancellor may respond to some of the complaints surrounding the controversial IR35 regime (particularly now that the Opposition is recommending abolition of IR35) by reducing PAYE paid by personal service companies.

Good news for freelance programmers who have used limited companies to pay less tax than other self-employed people and who have been threatening to blackmail the industry by passing on their extra taxes to employers in the form of higher fees.

The dot-com stockbroker Durlacher may be staring record losses in the face, but it remains determinedly upbeat about the future of mobile commerce. On Wednesday, in the City of London, Durlacher will launch a report that takes a contrary view of the impact of the billions spent on UMTS or third-generation communications licences.

Durlacher concludes the big pay out will not hinder the development of the mobile market and forecasts that by 2005, the industry will be raking in £48bn per year in revenues from high bandwidth wireless communications.