Category Archives: News Roundup

News Roundup Friday 18th October 2019


News Roundup Friday 18th October 2019

NEWS ROUNDUP

TAX NEWS ROUNDUP

MONDAY

Moulding slams demand for digital tax

Matthew Moulding, chief executive of online retailer The Hut Group, has hit out at high street rivals for calling for internet-only businesses to pay more tax. He said: “If you want to tax digital businesses, then you should be taxing the electric engine for replacing coal, and all the other progressive industries. If it’s a case of managing the decline on the high street, well, the biggest closures have been bank branches, so there should then be a tax on every digital financial transaction and the likes of Monzo. The pubs are closing because people are leading healthier lifestyles, so I’d argue gyms should be taxed. If you’re going to tax one area of progress, then you have to tax them all, by that logic.” Mr Moulding added that an online tax would “protect businesses that have ripped out dividends left, right and centre rather than investing.”

The Times, Page: 43

Johnson warned not to copy Corbyn’s spending plans

Boris Johnson has been warned by the Taxpayers’ Alliance not to copy Labour’s spending plans in an embarrassing attack from the pro-Conservative think tank. The PM is accused of “pursuing a fiscal policy that plays to that of his left-wing opponents” and which will ultimately leave him exposed”. The criticism follows comments from the IFS last week which said Johnson’s spending plans would bring day-to-day government outgoings to levels similar to those implied by Labour’s 2017 election manifesto. John O’Connell, chief executive of the Taxpayers’ Alliance, says that the IFS analysis “laid out in stark terms how far the Tories had moved from their platform of fiscal prudence”. Writing in the Times, he says the Tories need to ease the growing tax burden to win back voters.

The Times, Page: 9 The Times

Tax dodging sentences increase

Prison sentences for tax evasion rose by 10% on average last year as HMRC pushed for tougher punishments. The average sentence for the deliberate non-payment of tax rose to two years and seven months in 2018 – an increase of two months on 2017’s figures.

City AM, Page: 15

TUESDAY

Tax evasion sees longer prison sentences imposed

Tax evasion increased by 10% on average in 2018, while the average sentence for deliberate non-payment of tax increased to two years and seven months. Steven Porter, partner at law firm Pinsent Masons remarked: “Longer prison sentences are a clear message from HMRC – it will not tolerate tax evasion.” This comes as HMRC’s latest ‘tax gap’ figure reached £35bn, up £2bn on 2017’s figures. Campaign group Tax Watch UK said official methodology was likely to “seriously underestimates” the true scale of tax avoidance, with a 2016 report by members of the Public Accounts Committee advising that HMRC “needs to increase the number of investigations and prosecutions, including wealthy tax evaders, and publicise this work to deter others from evading tax and to send out a message that those who try will not get away with it.”

City AM

HMRC registers traders for new import procedures

HMRC has automatically registered 95,000 businesses for its simplified import procedures allowing most traders up to six months to pay import duties and submit customs declarations, if the UK leaves the EU without a deal on 31 October. The scheme, known as Transitional Simplified Procedures (TSP), will make importing after Brexit on 31 October much simpler, particularly for businesses who would be completing customs processes for the first time. Up to now, businesses have had to apply for it – over 25,000 had previously registered.

Press Release The Times, Page: 46

WEDNESDAY

Uber is a test case for taxing digital platforms

HMRC’s VAT claim against Uber will prove a test case for digital platforms which gain an advantage over traditional businesses by shifting responsibility for paying VAT on to contractors or merchants.

Financial Times, Page: 13

THURSDAY

HMRC in scam warning

HMRC has warned of a scam that sees victims receive letters claiming there has been an underpayment of “tax” in relation to their salary, with the letter prompting them to call a number and pay up to £150 over the phone to rectify the shortfall. HMRC says it would not refer to this as “tax”, as it would be either PAYE or National Insurance – adding that it does not issue such letters.

Daily Express, Page: 14

FRIDAY

Road toll would plug tax shortfall

The Committee on Climate Change (CCC) has recommended the introduction of a toll that would see drivers pay for every mile travelled, with the levy designed to replace declining revenue from taxes on petrol and diesel which are being lost due to increasing uptake of electric vehicles.

The Times, Page: 15 The Scotsman, Motors, Page: 8

SMEs NEWS ROUNDUP

MONDAY

BBRS at risk of failing to provide a credible resolution platform

The Times’ James Hurley says plans for a business banking resolution service (BBRS) may fall flat after groups representing business owners threatened to walk away over eligibility criteria which would exclude any business that has been through formal legal action or even a previous bank redress scheme. Kevin Hollinrake, co-chairman of the All-Party Parliamentary Group on Fair Business Banking and Finance, which is among the bodies represented on the BBRS steering group, said it would “be a fundamental error to exclude complaints that have clear grounds to believe that they have been the victims of a terrible injustice. Indeed, it would risk undermining a principle premise of the scheme, the restoration of trust between [SMEs] and banks”. However, Nikki Turner, director of SME Alliance, is more confident: “Only in the last few weeks we have started to make some real progress, especially in regard to eligibility. The model w e have is far from perfect, but it is a moving feast and we believe it is heading in a positive direction.”

The Times, Page: 46

Brexit fears hamper SME investment

Research from Bibby Financial Services (BFS) and trade credit insurer Euler Hermes found almost a third of UK SMEs (29%) said they did not plan to invest in their business during the rest of 2019, with 66% citing uncertainty over Brexit as their greatest concern.

City AM, Page: 14

WEDNESDAY

Entrepreneurs issue rallying cry for independent Britain

Nearly 300 business leaders have written an open letter to Boris Johnson urging him to ensure that Brexit is not delayed further because “this rank uncertainty is crippling British business and it cannot continue”. The letter, organised by the Alliance of British Entrepreneurs, warns an extension will result in another hung Parliament “with more delay and more damaging uncertainty”. It adds that “the UK is the centre of world finance and a leader in the industries of the future. We are an immense global power. It’s time to start acting like one.” One signatory, Matt Taylor, the founder of investor Rockpool Investments, said: “Our businesses are prepared for no deal. With Government and Britain’s entrepreneurs working hand in glove, we can create a hyper competitive, business-friendly powerhouse of an economy – a true alternative to the sclerotic, backwards looking and lobbyist-riddled EU.&rd quo;

The Daily Telegraph

Poor broadband hinders business expansion

A survey by the Federation of Small Businesses has found that poor broadband and mobile connections holds businesses back with a third blaming poor connectivity for preventing them from contacting or being contacted by existing customers. Some 26% said that poor mobile coverage had led to a loss of business. Separately, a study on productivity, efficiency and general sentiment of UK small business by website platform Wix found two in five businesses still don’t have an online presence, while one in three that do have a website are not fully digital. Nine in 10 businesses that are completely digital – using tools for tasks such as invoicing and payments, customer service, chat and other automations – revealed their revenue had increased by an average of £35,000 a month.

The Times, Page: 42 Daily Mirror, Page: 37

FINANCIAL SERVICES NEWS

MONDAY

British financial services lead automation charge

UK financial services companies are integrating robo-advisers into their ranks faster than their global competitors, according to a new report from PwC. It shows that while 37% of UK firms surveyed have implemented robotic processing automation, only 28% of global firms in the sector have adopted the innovation. The research also revealed the dilemma presented by automation of how to balance “the need for human interaction with the digitally enhanced offerings customers also expect”, said PwC partner Rav Hayer. Some 27% of UK firms do not think they are meeting customer expectations with the right balance of digital and direct human contact. A fintech skills gap exists, and Hayer says firms need to prioritise technology at executive level, highlighting the finding that only 34% of UK firms have a C-suite level executive responsible for leading the company’s tech or digital strategy.

City AM, Page: 2

CORPORATE NEWS ROUNDUP

MONDAY

Questions MPs should ask Thomas Cook bosses

The Guardian’s Rob Davies proffers some questions he thinks MPs should ask Thomas Cook directors tomorrow when they appear before the BEIS committee, such as how were successive directors allowed to borrow so much. Mr Davies adds that the committee will also want to know why auditors, “already under intense scrutiny in the wake of a series of high-profile business failures, such as Carillion and BHS, signed off the accounts as the debt piled up.”

The Guardian, Page: 35

PROPERTY NEWS

TUESDAY

April tax crackdown sees landlords sell up

With owners leaving the rental sector before a new tax crackdown beginning in April. This has led to the number of “accidental landlords” falling to 7.1%, the lowest level in five years. The new regulations will reduce the amount owners can offset against their annual tax bills, while lettings relief, under which landlords receive a £40,000 tax break when they sell, will only apply to those who lived in the property with their tenants as of April. Research by Hamptons International shows that London, the South East and the East of England regions have seen the biggest percentage falls in the numbers of “accidental landlords” in the last 12 months, with the estate agent’s Aneisha Beveridge noting: “The tax changes being introduced in April 2020 will increase the capital gains tax bill for some accidental landlords who choose to sell after that date.”

The Daily Telegraph

WEDNESDAY

First-time buyers at highest levels since 2007

The number of first-time buyers in August reached the highest level since just before the financial crisis, according to the latest mortgage trends data by UK Finance, with 35,010 mortgage completions for new buyers – an increase of 0.7% on August last year. During the month there were 18,640 new remortgages with additional borrowing, down 2.9% on 2018, while the number of remortgages without additional lending slumped 2.3% to 18,100. There were also 5,900 new buy-to-let mortgages completed, down 2.2%. Andrew Montlake, managing director of mortgage broker Coreco, said: “First time buyers are absolutely flying. They are being driven on by a combination of reduced competition from landlords, once-in-a-lifetime mortgage rates, high employment and the buyer’s market we’re in.”

City AM Daily Mail

House prices face steep fall if no deal reached

Standard & Poor’s (S&P) predicts that in the event of a no-deal Brexit UK house prices will end the year 1.7% lower than in 2018. Over the course of 2020 prices will fall a further 10.2% and another 6.1% in 2021. House values will rise again in 2022 by 5.9%, S&P said. Last month, KPMG said prices could fall by around 6% in 2020 without a Brexit agreement, “with a drop of 10-20% not out of the question” if the market reacts more strongly than the consultancy projects.

The Independent, Page: 50

THURSDAY

House prices edge up

Property values in Britain increased 1.3% in the year to August 2019, Office for National Statistics data shows, despite the continued uncertainty surround the UK’s departure from the European Union. The average UK house price was £235,000, up £3,000 on a year earlier. London saw prices slide 1.4% annually, closely followed by the South East where they fell 0.6%, although the areas remain the most expensive in the country to purchase a property, at an average of £473,000 and £326,000 respectively. Growth was strongest in Wales, increasing 4.5% to an average of £168,000; in Scotland sale prices grew 1.6% to £155,000, in Northern Ireland they were up by 3.5% to £137,000, and values rose 1.1% in England, to £168,000. Howard Archer, of the EY Item Club, commented: “Should UK leave the EU with a deal on October 31 – or early next year – we believe reduced uncertainty could see house prices rise by around 2% in 2020.”

The Daily Telegraph, Business, Page: 5 Daily Mail City AM

PENSIONS NEWS

MONDAY

Companies encourage transfers out of pensions

Analysis by pensions consultancy Barnett Waddingham has estimated that about one in ten large companies have tried to persuade their employees and former workers to transfer out of traditional pension schemes over the past five years. About 20% to 30% of pension fund members aged over 55 were taking up transfer offers, Barnett Waddingham said. For under-55s, who cannot access their pensions immediately, the take-up rate was much lower.

The Times

TUESDAY

New pensions dashboard announced in Queen’s Speech

Included in the Queen’s Speech yesterday were Government plans for a new pensions dashboard that will allow people to see all their retirement arrangements in one place for the first time. The legislation will also see executives who plunder schemes or run them into the ground face up to seven years’ imprisonment. However, the bill did not contain any legislation to help the launch of “pension superfunds”, vehicles intended to consolidate legacy pension funds.

The Times, Page: 40

WEDNESDAY

Removal of 25% tax-free lump sum would be own goal

A proposal from the Institute of Economic Affairs that the tax-free lumpsum which savers are allowed to withdraw from their pension is scrapped has been roundly rejected by pensions experts. Mark Littlewood, the group’s director-general, explains that removing the ability to withdraw 25% tax free from a pension would provide an opportunity to reduce or scrap inheritance tax altogether. But Andrew Tully, technical director at insurance giant Canada Life, says: “The ability to withdraw 25% of your pension, tax free, is probably the most valuable perk of pension savings and certainly the best understood. You diligently save for many years and are likely to have clear ideas on how you want to use your tax-free cash lump sum. Many people use the money to pay off their mortgage, make home improvements or go on the holiday of a lifetime. No one is planning for this or expects the rules to change.”

Daily Mirror, Page: 34

Savers rush to top-up pensions

HMRC figures show savers are topping up their pensions in record numbers with people paying £119.3m in voluntary contributions last year, compared with just £12.8m in 2016/17. The surge is likely to reflect the introduction of the new state pension in 2016, which gave people the opportunity to plug gaps in their NI record through voluntary contributions.

Daily Mail, Page: 47

 PROBATE NEWS

TUESDAY

New probate fee ‘death tax’ abandoned

A major increase in probate fees, which would have increased the cost of applying for a grant of probate by up to 3,770%, has been abandoned by the Ministry of Justice after being criticised as a backdoor “stealth tax” and “abuse of power” by MPs and others. The Government was accused of trying to add a new death tax to existing inheritance taxes, with a spokesman for the MoJ noting: “Fees are necessary to properly fund our world-leading courts system, but we have listened carefully to concerns around changes to those charged for probate and will look at them again as part of a wider review to make sure all fees are fair and proportionate.” Simon Davis of the Law Society stated: “The Government should bear in mind that it is a false economy to impose charges that go beyond cost recovery. Equal access to justice is a fundamental part of the rule of law.”

The Daily Telegraph

REPORTING NEWS

MONDAY

Only prudence can keep bank accounts honest

Jonathan Ford says IFRS 9, requiring banks to make a provision when they make a loan, allows too much leeway when provisioning future losses and auditors must apply prudence to keep bank accounts straight.

Financial Times, Page: 10

ECONOMY NEWS ROUNDUP

MONDAY

Finance chiefs looks to cut costs as demand weakens

The latest quarterly survey of CFOs by Deloitte found 65% of finance chiefs said their businesses faced high or very high levels of external financial and economic uncertainty, with only 7% arguing that now was a good time to take risk. Some 58% of those surveyed citing cost control as a strong priority for the next 12 months, the highest level for a decade, and 70% said that they expected hiring to be reduced in the next 12 months. Ian Stewart, chief economist at Deloitte, said: “Perceptions of uncertainty are elevated and corporate risk appetite is vanishingly low. The priority appears to be curbing costs, not expansion. With Brexit cited as the biggest risk businesses face, the last quarter has also seen heightened concern over slowing growth in the UK and eurozone and CFOs are tightening their purse strings in response.”

The Times, Page: 37 City AM, Page: 10

Ramsden cautious over growth potential

The deputy Governor of the Bank of England, Sir Dave Ramsden, has warned that Brexit uncertainty has hampered the UK’s potential for growth to the extent that the Bank’s ability to help with interest rate cuts has been weakened. In a world of “entrenched uncertainty, I see less of a case for a more accommodative monetary position,” Sir Dave told the Telegraph. He blamed a fall in investment and productivity for the UK’s lower growth potential along with the global trade war.

The Daily Telegraph The Daily Telegraph

TUESDAY

Javid to hold pre-election Budget in November

Sajid Javid has announced a Budget for November 6th. The Chancellor said it would detail the Government’s plans to “shape the economy for the future”. The Treasury said that if Britain left the EU without a deal on Halloween, Mr Javid would make a statement before November 6th to outline the government’s approach to supporting the economy and businesses. A Budget would be held a few weeks later. If the UK leaves with a deal, a Nov 6th Budget is expected to showcase pre-election pledges including investment in infrastructure and tax changes.

Financial Times, Page: 2 BBC News The Daily Telegraph, Page: 4 Daily Express, Page: 5 Daily Mail, Page: 73

Business groups call for Brexit certainty

Boris Johnson’s promise yesterday to “get the gears on our national gearbox working again” was welcomed by the CBI and the British Chambers of Commerce, but both groups warned that the threat of a no-deal Brexit still overshadowed investment decisions.

The Times, Page: 40

WEDNESDAY

UK jobs market slows

Office for National Statistics figures show that the unemployment rate unexpectedly increased to an estimated 3.9% in the June-to-August period, as the number of people working declined by 56,000 to 32.69m. The ONS’s deputy head of labour market statistics, Matt Hughes, noted: “The employment rate is still rising year-on-year, but this growth has cooled noticeably in recent months.” Meanwhile Thomas Pugh, UK economist at Capital Economics, suggested that labour market activity is being restrained by underlying weakness in economic growth, but suggested: “However, it could also be evidence that the uncertainty around Brexit is starting to impact firms’ hiring decisions.”

BBC News Financial Times City AM The Guardian, Page: 37

THURSDAY

Inflation remains at lowest level for three years

Data from the Office for National Statistics shows that the consumer prices index (CPI) held steady at 1.7% in September. This comes despite analysts predicting a modest rise in the inflation rate. The figures mean families are better off because pay packets are growing much faster than prices, with average wages up by 3.8% in the 12 months to August. With next year’s business rate increase based on September’s CPI, accountants say the latest inflation reading means a rise in business rate costs worth a total £536m.

The Guardian, Page: 43 The Daily Telegraph, Business, Page: 5

SPORT NEWS

TUESDAY

Bury set for liquidation

Bury FC are set to be liquidated tomorrow after the club’s last hope of a rescue disappeared. The team, which was kicked out by the EFL last month, were set to contest a winding-up petition from HMRC but a potential buyer has pulled out. The Forever Bury fans’ group said it “will not now be putting forward a legal defence against the HMRC winding-up petition.”

The Sun, Page: 51

OTHER NEWS

MONDAY

Corbyn’s renationalisation will cost £200bn

Labour’s plans for nationalisation would cost at least £196bn, according to the CBI, £6bn more than the total income tax take for the last financial year. The increase in public ownership would raise the Government’s total debt to 94% of its GDP, the highest level since the 1960s, and cost around £2bn a year in interest payments, the CBI said. Labour disputed the figures describing the study as “incoherent scaremongering”. But Rain Newton-Smith, the CBI’s chief economist, described the cost of Labour’s renationalisation plans as “beyond eye-watering”, adding: “That’s only the starting point. It doesn’t take into account the maintenance and development of the infrastructure, the trickle-down hit to pension pots and savings accounts, or the impact on the country’s public finances.”

The Times, Page: 9 City AM, Page: 1 Daily Express, Page: 5 Daily Mail, Page: 4 The Daily Telegraph, Page: 4

Bank of England is a captive of groupthink

Former MPC member David Blanchflower says the BoE could have foreseen the financial crisis and it is its continued homogeneity and adherence to consensus that means it will fail again.

Financial Times, Page: 23

TUESDAY

Price faces more bankruptcy proceedings

A judge has given the go-ahead for Katie Price to be served with another bankruptcy petition after her creditors returned to court seeking £12,000 a month in payments. Judge Sally Barber, sitting at a specialist insolvency and companies court in London, said Price can be served with the petition by post, after lawyers representing her creditors said she had failed to attend an appointment to receive it in person.

Daily Star, Page: 9

Contact Paul Southward.

Paul Southward's News Roundup


News Roundup Friday, 11th October


News Roundup Friday, 11th October

NEWS ROUNDUP

TAX NEWS ROUNDUP

TUESDAY

PM’s spending plan may mean tax cuts are unaffordable

A report from the Institute for Fiscal Studies (IFS) and Citibank has warned that Boris Johnson’s proposed public spending would see the Chancellor overshooting the Government’s borrowing limit by £5bn in 2020/21 – leaving tax cuts pledged by the Prime Minister unaffordable. Mr Johnson, in pledges made during his leadership campaign, promised to cut income tax by raising the higher rate income tax threshold from £50,000 to £80,000 in 2020/21, a policy the IFS described as a “substantial and expensive tax cut from which only those on high incomes would gain”. IFS director Paul Johnson cautioned the Government against further tax giveaways given the “extraordinary level of uncertainty and risks facing the economy and public finances”. The IFS has also called for reform that would remove a “bizarre” and “arbitrary” income tax quirk that means higher earners pay an effective rate of 60%. The gradual removal of the £ ;12,500 tax-free personal allowance by £1 for every £2 for anyone earning more than £100,000 means that, once national insurance contributions are factored in, the effective rate can be as high as 67%. The IFS and Citi report also said the economy is about £60bn smaller than if the country had voted to stay in the EU, while a no-deal Brexit could mean zero growth for two years.

The Times, Page: 6 Financial Times, Page: 3 The Daily Telegraph, Business, Page: 1 The Daily Telegraph, Page: 12 The Guardian, Page: 1 Daily Mail, Page: 22

Opinion: Ministers must look at IHT

Rachel Griffin in the Express says the Government needs to “look closely” at inheritance tax rules and ensure the levy “is taxing those it intends to.” She warns that the system is a “minefield”, noting that the 2018/19 tax year saw more than 5,500 IHT investigations opened by HMRC.

Daily Express, Page: 8

WEDNESDAY

No-deal tariffs outlined as Brexit approaches

The Department for International Trade has published a revised list of temporary tariffs which would apply to UK imports in the event of a no-deal Brexit. Some 88% of goods would be exempt from import tariffs for a year, with around 80% of goods entering the country tariff-free under current trading arrangements. Centre for European Reform trade expert Sam Lowe described the plans as “quite an extensive unilateral liberalisation”, noting that: “The rationale is that they want to keep tariffs low on EU imports. On day one they are still going to be our main market. So you don’t want tariffs to shoot up all of a sudden as prices will just shoot up.”

The Daily Telegraph Financial Times The Times, Page: 37

 ‘Tax increases could damage UK business’ – Uber

A tax probe which could trigger a 20% VAT charge on all its bookings could cripple Uber’s UK business, the firm has stated as it released accounts showing a 15% rise in British revenues last year to £68m. Profits more than doubled from £2.4m to £5.1m. This follows an announcement by HMRC in May that the company was under investigation over allegations that it owes more than £1bn in taxes. The firm denies it is a transportation provider and therefore is exempt from VAT, a position HMRC disagrees with. Barrister Jolyon Maugham has taken the company to the High Court over an attempt to bring a VAT claim against it for a £6.34 journey.

The Daily Telegraph, Business, Page: 5

Lloyds contractors face job loss or pay cuts over tax changes

HMRC’s continued targeting of disguised employment has spooked Lloyds with the bank informing thousands of contractors they face losing their jobs or taking pay cuts of up to 30% after March 2020. Lloyds has told its contractors that they will have to provide work through third-party “umbrella companies”. This most likely would mean contractors taking a pay cut or joining the PAYE system through which direct employees are paid.

Financial Times The Times, Page: 35

THURSDAY

Anger over Cadbury’s tax “wheeze”

The Sun reports that Mondelez UK, the parent company of Cadbury’s, paid just £271,000 in UK tax last year despite sales of £1.7bn. Companies House documents show the company posted profits of £35m for 2018 but paid dividends of £200m to its parent firm in tax haven Switzerland. Robert Palmer, of Tax Justice UK, said: “We need to end clever wheezes that companies like Cadbury’s can use to slash tax bills.” Harry Fone, of the TaxPayers’ Alliance, added: “Armies of lawyers and accountants for multinational companies are able to exploit loopholes to reduce tax bills. We need a simpler, more competitive system.”

The Sun, Page: 26

Is getting married tax efficient?

The Telegraph analyses whether getting married for financial reasons is worthwhile, after an investigation by Blick Rothenberg, carried out for Telegraph Money, showed that couples with straightforward tax affairs could end up paying off the £32,000 average cost of a British wedding for 128 years, while those with more complicated tax affairs could do so with a property sale, or upon their deaths. The company’s Stefanie Tremain noted: “Of course there are other reasons to get married than finance, but this shows there are lots of things to think about from a tax perspective and couples should ensure that their financial arrangements are tax efficient.” Other examples using various incomes and scenarios are provided.

The Daily Telegraph

FRIDAY

Uber’s UK VAT liability confirmed

The FT considers HMRC’s VAT claim against Uber and the danger that time to collect a potential £1.1bn bill could run out unless the tax authority engages a protective assessment as soon as possible.

Financial Times

CORPORATE NEWS ROUNDUP

TUESDAY

Ashley dismisses HoF closure claim

Sports Direct owner Mike Ashley has refuted reports that he is planning to shut most of House Of Fraser’s 53 shops after Christmas, insisting he is renewing leases and investing in the chain. The Mail says Mr Ashley is “desperately trying to keep his ailing retail empire on the straight and narrow,” with the retailer seeking an auditor after Grant Thornton stood down. If the firm cannot find one, its future as a listed company could be at risk.

Daily Mail, Page: 72

Red tape bill for UK-EU trade under no-deal Brexit set to hit £15bn a year

HMRC has warned that a no-deal Brexit could see businesses facing an extra £15bn in admin costs related to customs paperwork, with the total excluding any new VAT costs.

Financial Times, Page: 1

Ikea could face EU tax repayment order

Millions of euros in back taxes could be paid by Ikea by the end of the year, with the European Commission preparing to complete an investigation into Inter Ikea, the brand owner of the furniture chain. Ikea stated: “Just like all other companies working under the Ikea trademark, Inter Ikea Systems BV is committed to paying taxes in accordance with laws and regulations wherever we operate.”

The I, Page: 39 City AM

Pizza Express set for talks over £1bn debt pile

Pizza Express has reportedly hired financial advisers ahead of a meeting with lenders to review its debt situation, with the restaurant chain understood to have brought on board restructuring experts Houlihan Lokey to discuss options. The firm’s net debt stood at £1.1bn in 2018, with £465m due to be repaid in less than two years’ time.

The Times, Page: 36 Financial Times The Daily Telegraph Daily Star, Page: 4 BBC News

IPOs see quietest quarter in a decade

EY ’s tracker of initial public offerings shows that just four listings took place in the UK between July and September, the quietest quarter for UK listings in a decade.

Daily Express, Page: 51

Pub chain creditors get 2p top up

Pub operator SFI Group, which was liquidated in 2005 paying unsecured creditors 28p in the pound, is to be restored to the register of companies due to the discovery of an account containing £241,000. Liquidators from PwC say the move may be worth only another 2p in the pound to creditors.

The Times, Page: 51

WEDNESDAY

Poor corporate financing to blame for Thomas Cook collapse

The CEO of the Association of British Travel Agents (Abta) has said the collapse of Thomas Cook was “more a failure of corporate finance than a failure of travel” claiming the company “paid £1.2bn in finance charges over the past six years, plus goodness knows how much in advisory fees to the City.” Mark Tanzer added: “Those were profits from its holiday business, money that in a more balanced financial model would have been available to invest and develop the business. It has ended up killing the milk cow they [the lenders] were feeding off.”

The Independent, Page: 16

THURSDAY

Links of London appoints administrators

Deloitte has been appointed as administrator to Links of London, which has collapsed with hundreds of jobs put at risk. Matt Smith, joint administrator, stated: “We intend to continue to trade the business and will be exploring any options for a sale. If this cannot be achieved, then we will seek to realise stock and other assets over a period of trading for the benefit of the company’s creditors.”

The Daily Telegraph, Business, Page: 8 The Guardian, Page: 37 The Times, Page: 35 Daily Mail, Page: 78

Thomas Cook’s shops bought by Hays Travel

Hays Travel has bought all 555 Thomas Cook shops in a move that could save 2,500 jobs. Hays has 190 shops, 1,900 staff, and last year had sales of £379m, reporting profits of £10m. Jim Tucker, partner at KPMG, which assisted with Thomas Cook’s insolvency process, said the Hays deal was “an extremely positive outcome”.

The Daily Telegraph, Business, Page: 2 Financial Times, Page: 18 City AM Daily Mirror, Page: 13 Daily Express, Page: 7 The Guardian, Page: 7

Toys R Us case goes to court next month

Toys R Us administrator Moorfields has revealed a November court date for its fight with a group of American investors to determine how much cash the pensions lifeboat can recover from the retailer. The court case will determine whether the hedge funds rank ahead of other creditors, which would reduce the sums available to unsecured creditors, including the Pension Protection Fund and HMRC.

The Times, Page: 41

PENSIONS NEWS

FRIDAY

Cost of pension tax relief rises

Latest data from HMRC shows income tax relief on pension contributions is expected to cost the government more than £21bn this year, with national insurance relief to hit £18.7bn. Income tax relief on pension contributions is estimated to cost £21.2bn in 2019/20, up 4% from £20.4bn in the previous year.

FT Adviser Daily Mirror, Page: 51

EMPLOYMENT NEWS ROUNDUP

TUESDAY

Vacancies rise at slowest pace since 2012

Job vacancies rose at their slowest pace since January 2012 in September, a report from KPMG and the Recruitment and Employment Confederation shows. James Stewart, vice-chairman of KPMG, said: “The Brexit impasse continues to affect the jobs market, with employers stuck, unable to make informed decisions, and people unwilling to risk seeking new roles.”

The Times, Page: 38 The Scotsman, Page: 35

WEDNESDAY

Recruiters warn profits will be dented by global political uncertainty

Global political uncertainty from Brexit, Hong Kong protests and US-China trade friction, will hit profitability this year, two of the UK’s biggest recruiters have warned. PageGroup downgraded its profit outlook, while rival Robert Walters said its full-year profits would be flat compared with last year. Robert Walters insistent the turmoil was simply political adding that continued Brexit uncertainty would be worse than no-deal.

The Daily Telegraph Financial Times City AM The Times, Page: 45

THURSDAY

Employers PAYE Settlement Agreements

HM Revenue & Customs have admitted that their systems may have failed to issue payslips to all employers notifying them of the amounts they owe under PSA.  Employers are warned that despite the HMRC failings, they are still responsible for ensuring that the appropriate tax and NI is paid on time.  Late payers may be exposing themselves to penalties and interest.

FRIDAY

Think-tank says bosses should have legal duty to increase pay

Company directors should be put under a new legal duty to turn rising profits into increased wages and training for staff, according to the Social Market Foundation. Corporate governance laws should be tightened to increase pressure on bosses to help workers increase their pay over time, the think-tank said. in a report supported by the Joseph Rowntree Foundation, the SMF also called for pension funds and other big investors to support socially-responsible approaches to capitalism.

The Times Yorkshire Post, Page: 18

PROPERTY NEWS

TUESDAY

Halifax says house price growth at six-year low

Mortgage lender Halifax has said house prices increased 1.1% in the year to the end of September, the slowest rate since April 2013, and asserted that for as long as economic uncertainty in Britain continues price growth would remain “subdued”. The cost of the average home in September was down by 0.4% compared with August, at £232,574.

BBC News Daily Telegraph

SMEs NEWS

FRIDAY

Brexit preparation grants released

The Government is to release £10m in grants to a host of trade associations and business organisations to help them prepare the firms they represent for Brexit. The grants will be issued by the Business Readiness Fund with the Federation of Small Business and the British Chambers of Commerce among the organisations to have received grants through the scheme.

City AM, Page: 11

INTERNATIONAL NEWS

TUESDAY

Judge tells Trump to hand over tax returns

A judge has ordered US President Donald Trump to hand over his tax returns to investigators, saying Manhattan’s district attorney could subpoena eight years of Mr Trump’s personal and corporate tax returns from his accountants, Mazars USA. Lawyers for the President immediately appealed to the US Court of Appeals for the Second Circuit, which issued a temporary stay of the judge’s order.

The Guardian, Page: 22 Financial Times, Page: 6 The Times, Page: 31 Daily Mail The Independent, Page: 25 The Scotsman, Page: 23

THURSDAY

US billionaires now paying less tax than the working class

A study by economists Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley has found that America’s richest billionaires paid a lower effective tax rate than the working class for the first time. In 2018, the average effective tax rate paid by the richest 400 families in the country was 23%, a full percentage point lower than the 24.2% rate paid by the bottom half of American households. In 1980, by contrast, the 400 richest had an effective tax rate of 47% . In 1960, their tax rate was as high as 56%. The effective tax rate paid by the bottom 50%, by contrast, has changed little over time.

The Independent, Page: 29

ECONOMY NEWS

TUESDAY

Retail sales fall in September

The latest report from the British Retail Consortium (BRC) and KPMG shows that retailers last month had their worst September since records began in 1995. Total retail sales fell 1.3% year-on-year. Online sales climbed but by just 0.7%, the slowest growth on record. Lower spending is attributed to “the spectre of a no-deal Brexit”, with the BRC’s Helen Dickinson stating: “With four months of negative sales growth since March, the ongoing political gridlock surrounding Brexit is harming both consumers and retailers.” Paul Martin, UK head of retail at KPMG, commented: “Ongoing Brexit uncertainty is clearly having a material impact on the consumer psyche.”

The Daily Telegraph, Business, Page: 5 The Guardian, Page: 31 The Independent, Page: 48 Financial Times, Page: 3 The Times, Page: 35 The I, Page: 38 Daily Express, Page: 51 The Sun, Page: 43 City AM, Page: 4

WEDNESDAY

Retailers brace for tough Christmas as confidence slumps

Consumer confidence has slumped to a five-year low, pointing to a challenging Christmas trading period for retailers. A survey by PwC shows only 21% of shoppers think they will have more disposable income in the coming year, while 28% expect their amount of extra cash to decrease, marking the lowest autumn sentiment levels since 2014.

City AM Daily Mail, Page: 69

OTHER NEWS

FRIDAY

JMW Turner features on new £20 note design

The new design of Britain’s £20 banknote has been unveiled by the Bank of England. Security features on the next £20 note, featuring artist JMW Turner, will include two see-through windows on the note and a metallic hologram. In the first half this year, 88% of detected banknote forgeries were £20 notes, the Bank’s statistics show. The new design, which the Bank describes as its most secure, enters circulation on 20 February next year. The Federation of Small Businesses (FSB) welcomed the new, more secure design. “The introduction of this new £20 note is a great step to cutting down on fraud which is a thorn in the side of small firms,” said FSB national chair Mike Cherry.

Financial Times, Page: 2 The Times, Page: 15 The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 14 Daily Express, Page: 11 The Guardian, Page: 41

Contact Paul Southward.

Paul Southward's News Roundup


News Roundup Monday 7th October 2019


News Roundup Monday 7th October 2019

NEWS ROUNDUP

TAX NEWS

Netflix tax rebate questioned

Critics have questioned why streaming service Netflix was handed a €57,000 (£51,000) tax rebate last year despite the Government’s plan to make US tech giants pay more to the Exchequer. The rebate is the third UK tax credit Netflix, which funnels most of its UK turnover through the low-tax Netherlands, has been granted since launching a UK business in 2014. Netflix, which has more than 8m British subscribers, posted revenue of €48m at its UK arm for 2018, while analysis by research firm Ampere Analysis suggests that the firm generated about £500m from UK subscribers over the year. Prem Sikka, a professor of accounting at the University of Essex, said Netflix’s accounts which are published in the UK, “though legally compliant, are actually opaque.” He added: “You can’t see what they have done to get to a position where no profit is taxable or they’re declaring very low profits.” The issue, Prof Sikka suggests, “is just another reminder that the global system for taxing corporations is broken and needs urgent reform.” Shadow Chancellor John McDonnell has called for a crackdown to ensure Netflix pays its “fair share”, adding: “People will find it incredible that a company operating on this scale pays so little tax and rece ives a rebate.” The Telegraph notes that while the Government’s digital services tax plans will look to increase the tax take from large US tech firms such as Amazon, Google and Facebook, it is unlikely to target streaming companies such as Netflix and Spotify.

The Times, Page: 41 The Daily Telegraph, Business, Page: 5 Daily Mail, Page: 4 Daily Mirror, Page: 23 The Sun, Page: 49

Think-tank: Tax cuts could offset Brexit disruption

Think-tank Open Europe has suggested leaving the EU with no deal in place would cause “short-term disruption” not widespread disorder and economic chaos. In its analysis of the impact of a no-deal Brexit, the body suggests income tax and corporation tax should be cut to help offset any economic disruption.

The Sun, Page: 8

IFS calls for fuel tax rethink

The Institute for Fiscal Studies has suggested that fuel duty should be scrapped and replaced by road pricing as revenues from the fuel tax will all but disappear if a 2050 target of most cars being electric or zero-emission is met.

The Guardian, Page: 41 Daily Mail, Page: 22 The Daily Telegraph, Page: 9 City AM, Page: 12

Stamp duty take down by £745m since 2017/18

HMRC figures show that stamp duty receipts for residential housing transactions fell by £745m between 2017/18 and 2018/19, slipping from £9.07bn to £8.32bn in the first year-on-year drop seen since 2008/09. Meanwhile, the FT suggests Boris Johnson “clearly has stamp duty in his sights,” with the Prime Minister reportedly considering scrapping it for certain price brackets.

Financial Times, Money, Page: 2 Financial Times

IHT ‘here to stay’

The Telegraph’s Lauren Davidson suggests that when Chancellor Sajid Javid this week hinted that scrapping inheritance tax was “on his mind”, he was “merely taking his place in a long line of political panderers playing the ace.” She says despite a number of pledges over the years, the IHT threshold remains unchanged since 2009. Ms Davidson suggests that IHT is “a fruitful political bargaining chip” for politicians as it is “Britain’s most detested levy” She suggests that the tax is “a veritable fossil” and, although she hopes Mr Javid will “consign it once and for all to history,” she would not bet on it happening. Elsewhere, Richard and Judy in the Express believe scrapping the tax could be a vote winner, saying: “Passing the death sentence on the death tax would secure victory at a stroke.”

The Daily Telegraph, Money, Page: 2 Daily Express, Page: 20

Ministers urged to rethink tax relief rules

Campaigners are calling on ministers to offer greater support to people in part-time and low-paid jobs who are losing out on pension savings, with rules leaving 1.7m low earners without tax relief on their savings. Those affected earn between £10,000 to £12,500, enough to qualify for automatic pension enrolment, but not enough to pay income tax. As they have no tax deductions, they get no tax relief on their pension contributions – meaning their contributions cost 25% more than those on a slightly higher wage. Analysis shows that around two-thirds of the workers affected are women. Urging a rethink on the rules, signatories including former Pensions Minister Sir Steve Webb, the TUC and the Low Incomes Tax Reform Group have written to ministers, MPs and the Department for Work and Pensions.

The Sunday Times, Business and Money, Page: 5

Tax change ‘could get Britons moving’

Matt Kilcoyne, deputy director of the Adam Smith Institute, looks at fiscal policy that Boris Johnson’s government could consider, pointing to taxation as a starting point, with the tax burden at a 50-year high. He suggests a stamp duty rethink could be an option, saying the Prime Minister “could get Britons moving with a popular, positive and powerful tax cut.” On business tax he calls for reform related to investment, noting that firms buying paper and pens count that as a loss and it comes off the corporation tax bill immediately, but when they buy factory machinery or invest in future technologies, it doesn’t – saying firms are “effectively punished for showing foresight and attempting to improve productivity”. Mr Kilcoyne notes that reform in this area in the US saw investment climb by 17.5%.

The Sunday Telegraph, Page: 20

Sugar on tax

In an interview with the Sunday Times, Lord Sugar says that while he admires firms like Apple, Amazon, Starbucks and Google for the way they have grown, “I would go and assess their profits and make them pay a tax on that assessment rather than what they declare, because they are dodging.” On his own tax affairs, Lord Sugar says: “I have no problem paying 40%-odd tax on income above a certain level. I posted a picture of a cheque for £50m for capital gains on Twitter to show people I pay tax.”

The Sunday Times, Business and Money, Page: 20

795k seek tax extensions

Analysis of HMRC data by UHY Hacker Young shows that 795,000 businesses and individuals asked for extensions on their tax payments as of June this year, with these accounting for £2.3bn which is owed to the taxman. UHY Hacker Young partner Clive Gawthorpe said: “With the economy putting both small businesses and personal taxpayers under so much pressure it’s no surprise that people are struggling with their tax bills.” He added concern that time to pay arrangements are difficult to broker and often inadequate in length. HMRC commented: “We work with these customers on a case-by-case basis to help them pay any outstanding debt back in an affordable way,” adding that more than 90% are completed successfully.

City AM, Page: 11

Housing Secretary: IHT is unpopular and unfair

Housing Secretary Robert Jenrick has described inheritance tax as “unfair” as it means people are taxed twice, suggesting that it is “particularly unpopular” because people want to be able to pass on more to their families. His comments come after Chancellor Sajid Javid last week suggested that he was considering scrapping IHT, saying that he understood the arguments against the charge. Mr Jenrick told Sky News that people “can see the fundamental unfairness of paying tax twice,” adding: “I can see why the Chancellor is interested in this one.” HMRC figures show 28,100 estates paid the tax in 2016/17 – a 15% rise on 2015/16 – while the tax is forecast to raise £5.3bn for the Treasury this financial year, accounting for 0.7% of all receipts the Government brings in.

The Times, Page: 14 The Daily Telegraph, Page: 2 Daily Mail, Page: 4 The Sun, Page: 2

Chancellor urged to focus on tax

Mark Littlewood, director-general of the Institute of Economic Affairs, says that while taxation is the “blankest part of the Tories’ canvas”, Chancellor Sajid Javid “does seem to have a greater desire to reduce and simplify Britain’s tax system than his immediate predecessors.” In a piece for the Times, Mr Littlewood says that the Chancellor must, ahead of his Budget, be guided by three principles on taxation: that any meaningful tax reductions cannot benefit all sections of society equally; making the tax code less complex will involve rescinding exemptions and loopholes typically exploited by the better off; and that the Treasury should make more of revenue-maximising arguments. Elsewhere, Roger Bootle, chairman of Capital Economics, says tax reform and tax cuts “should be an essential part” of the Government’s agenda, saying there “wasn’t enough t alk about tax” at last week’s Conservative Party conference. Writing in the Telegraph, he argues that low rates of both corporate and individual tax are required to “galvanise the economy and incentivise effort”. He calls on the Chancellor not only to reduce the average level of tax, but to also seek to reform the tax system.

The Times, Page: 39 The Daily Telegraph, Business, Page: 2

CORPORATE NEWS

Thomas Cook stores missed out on rate relief

The Telegraph’s Oliver Gill reports that EU rules prevented hundreds of Thomas Cook shops from accessing a tax break ahead of the firm’s collapse. More than 400 stores were liable for business rates relief as part of a £900m stimulus introduced by former Chancellor Philip Hammond. However, while the reduction applies to smaller high street premises, EU state aid rules make such reforms almost useless for larger companies, capping the amount they can save at €200,000 per company over a three-year period. Consultant Altus Group estimated 446 Thomas Cook shops had been excluded from cuts. John Webber, head of business rates at Colliers International, said: “Businesses like Thomas Cook are missing out,” adding that EU state aid provisions “make it very difficult for companies to claim the reliefs they need to keep their businesses moving forward.” Mr Gill says the cap on Brit ish business rates relief is likely to continue for the foreseeable future, whether a deal to leave the EU is agreed or not.

The Daily Telegraph, Business, Page: 3

Thomas Cook paid advisers £20m as collapse neared

Thomas Cook sought help from more than 30 advisers as it sought to secure a rescue deal, including the Big Four accounting firms, 20 law firms and restructuring advisers. With the firm, which collapsed last month, spending more than £20m on the advisors, Shadow Chancellor John McDonnell said Thomas Cook staff and customers “will look on aghast at the feeding feast that has taken place at this company by accountants and advisers,” while MP Rachel Reeves, who chairs the business select committee, said the issue “raised serious questions about the role of auditors, consultants and advisers”.

Financial Times, Page: 1 The Sun, Page: 6

Airbnb pays £400k tax on £300m sales

Airbnb, which channels most of its profits through its Irish European headquarters, paid less than £400,000 in UK tax last year despite enjoying sales of more than £300m in Britain. Combined sales at Airbnb UK and Airbnb Payments UK – its two subsidiaries in Britain – grew by £80m last year, and it made pre-tax profits of £1.4m, marking a 5% increase. The firm paid £390,000 in tax, lower than in 2017 because of a deferred charge. Looking at taxation of online entities, the Sunday Times notes that the Treasury is introducing a 2% digital sales tax on large tech firms, with this set to be introduced next April in a bid to address concerns that such firms are failing to pay their fair share.

The Sunday Times, Business and Money, Page: 3

HoF faces closures

Most House of Fraser stores could be set to close, with papers from administrators EY showing that owner Sports Direct is either not paying rent or is about to end the leases for the vast majority of the department store chain’s remaining sites. Sports Direct paid administrators £90m for House of Fraser after it collapsed last year, taking control of 64 sites including 59 stores. The Sunday Telegraph’s Laura Onita notes that Sports Direct is seeking an auditor after Grant Thornton formally quit last month. If it fails to find one, she says, the retailer’s future as a listed company could be at risk.

The Sunday Telegraph, Business and Money, Page: 1

Tesco Bank lines up Kingman

Sir John Kingman is being lined up to be chairman of Tesco Bank, a move that would rule him out of the running to become governor of the Bank of England. Sir John last year led a review of the Financial Reporting Council prompted by a series of audit scandals, recommending that the regulator be replaced by an entity with greater powers.

The Sunday Times, Business and Money, Page: 1

Opinion: Thomas Cook right to seek advice

Anne Diamond in the Sunday Express questions Shadow Chancellor John McDonnell’s criticism of Thomas Cook after it was revealed that the travel firm spent millions of pounds on advisers as it sought to prevent its collapse. Mr McDonnell said it was a “disgrace that the accountants and lawyers were paid for their advice”, but Ms Diamond suggests that seeking as much expert advice as possible was the right call.

Sunday Express, Page: 31

SMEs NEWS

1 in 4 small firms yet to review Brexit impact

Research from insolvency trade body R3 shows that almost a quarter of firms with fewer than 50 employees are yet to review the potential impact of Brexit on their suppliers or customers, compared to fewer than 1 in 20 companies with more than 250 workers. The poll of 1,200 senior decision-makers found that across firms of all sizes, one in six had not reviewed their trading partners. On Brexit planning, Mike Cherry, chair of the Federation of Small Businesses, said small firms are being made to wait for an update to the Government’s revised UK tariff schedule that would apply if no Brexit deal is agreed, saying this “must be published as a matter of urgency.” “The continued uncertainty is harming small firms’ ability to plan,” he added.

The Times, Page: 45

PERSONAL FINANCE NEWS

A quarter of adults spend half of wage on payday

Analysis by KPMG suggests that half of adults in the UK are forced to turn to credit cards, overdrafts or their partner to see them through to payday, with a quarter spending half of their income the day it’s paid into their bank. A look at payday outgoings places housing costs, utility bills and credit card or debt repayments as the most common.

Daily Mirror, Page: 51

Can I let my mother pay for our children’s school fees?

Paris Drew, a private client solicitor at accountants Kreston Reeves, offers an FT reader advice over lasting power of attorney.

Financial Times, Money, Page: 11

FINANCIAL SERVICES NEWS

Car loan concern

The Sunday Telegraph reports that it may be the end of the road for cheap and easy car loans. Research by the paper suggests a “gathering storm” that comes as the Financial Conduct Authority prepares a clampdown on the market; industry experts flag mis-selling concerns; and Rachel Reeves, chair of the business, energy and industrial strategy committee, demands “far more transparency and greater scrutiny” of lending. Graham Hill, former director of the National Association of Commercial Finance Brokers, suggests claims managers are turning their attention to the motor industry as they look for the next PPI-type scandal. Justin Benson, head of automotive at KPMG, says more people buying more desirable cars with easy debt is a “kind of virtuous circle”.

The Sunday Telegraph, Business and Money, Page: 8

PROPERTY NEWS

Pace of housebuilding slows

Housebuilding across England has fallen to the slowest quarterly rate for three years, according to official figures from the Ministry of Housing, Communities and Local Government. Between April and June, there were around 37,220 new homes starting to be constructed across England, a drop of 8% year-on-year and 24% lower than at their peak in March 2007. The number of houses completed rose to the highest level in 11 years, by 8% over the year to 173,660. However, analysts warned the annual 1% decline in new housing starts was a leading indicator for a future downturn in completions.

Daily Mail, Page: 81 The Guardian

Withdrawal a symptom of uncertainty

Analysis shows an increase in the number of properties being taken off the market this summer, with withdrawals hitting a three-year high in June. The report, by software platform Reapit, looked at data from estate agencies Knight Frank, Countrywide, Savills and Marsh & Parsons and found that withdrawals in June were up 60% compared with June 2016, while August’s figure was 40% higher than three years ago and 20% up on last year. Gary Barker, the chief executive of Reapit, says Brexit uncertainty has played a part, adding: “With a new Prime Minister who has promised to help the property market, we’d hope to see more homes being listed.”

The Times, Page: 63

In the midst of a correction

The FT looks at the property market, citing a KMPG report suggesting UK house prices are likely to drop by around 6% in the event of a no-deal Brexit.

Financial Times, Money, Page: 10

LEGAL NEWS

Chappell denies cheating the taxman

Former BHS owner Dominic Chappell has denied avoiding paying half a billion pounds in tax, having faced three tax evasion charges at a court hearing yesterday. It is alleged that he failed to register Swiss Rock, his bankrupt finance company, for taxes from the correct date, gave false information to HMRC, did not declare profits and failed to submit VAT returns. Mr Chappell is also accused of failing to pay corporation tax and personal income tax from dividends he received from Swiss Rock. He will go on trial in the High Court next year.

The Daily Telegraph, Business, Page: 35 The Sun, Page: 18 The I, Page: 65 Yorkshire Post, Page: 8

ECONOMY NEWS

Pound would see Brexit deal boost

A Reuters survey of economists suggests that the pound will experience a post-Brexit bounce if the UK leaves the EU with a deal, but will see further losses against the dollar if no deal is secured. The forecast suggests that sterling, which was yesterday trading at around $1.23, would rally if the UK and EU agree a deal and trade between $1.27 and $1.34, but could dip to between $1.10 and $1.19 in a no-deal scenario. Shaun Osborne at Scotiabank said: “A lot of bad news is priced into the pound so we would expect a relief rally to some extent, if a deal is reached.”

City AM

Minister notes retail support

With BDO’s High Street Sales Tracker showing that high street shops saw their worst September for eight years as in-store sales fell of 3.1%, High Streets Minister Jake Berry has noted efforts to support retailers, saying: “Rapidly changing shopping habits are a challenge for high streets across the country. To support local retailers we’ve slashed business rates by one-third, bringing the total amount of business rate support to over £13bn since 2016.”

The Independent, Page: 35

Over-50s unaware of costs faced by younger people

Over-50s are being encouraged to boost financial support for younger relatives, with a new study saying people in the age bracket underestimate the cost of living faced by younger people. The study, by charity the Intergenerational Foundation and Yorkshire Building Society, shows that many over-50s are unaware that under-35s spend £203 – nearly two-thirds of their weekly budgets – on basics such as housing, utility bills and transport, with just 13% aware of the financial pressures faced by younger generations. Looking at support that could be offered, more than 70% of over-50s were unaware they could pass on £3,000 a year in tax-free cash as an exempted gift under inheritance tax laws. The Intergenerational Foundation has called for the annual limit to be raised to £11,900.

The Mail on Sunday, Page: 99

Uncertainty sees 11% drop in investment

Analysis by the National Bureau of Economic Research (NBER) suggests that Brexit uncertainty has seen business investment dip, with a decline of around 11% in the three years following the referendum. This, the report says, is equivalent to a £20bn hit to the economy. The NBER analysis also suggests Brexit-related issues have seen a 5% dip in productivity. Using data from Bank of England’s Decision Maker Panel (DMP) covering almost 6,000 firms employing 3.7m staff, the research found a 3.8% a year impact on business and suggests this results in an 11% cumulative hit to the economy. The paper says Brexit is “unusual, in that it generated persistent uncertainty,” with there still a lack of clarity on the eventual outcome.

The Daily Telegraph, Business, Page: 7

Contact Paul Southward.

Paul Southward's News Roundup


News Roundup Friday 4th October 2019


News Roundup Friday 4th October 2019

NEWS ROUNDUP

TAX NEWS ROUNDUP

PM pledges a ‘tax-cutting Tory government’

Prime Minister Boris Johnson used his first speech to the Conservative conference as party leader to promise a “moderate, one nation, tax-cutting Tory government”. He described Britain as a “high wage, low tax, high skill, high productivity economy” and voiced concern over Labour’s plans if the party got into power. Mr Johnson told the conference: “If Jeremy Corbyn were allowed into Downing Street, he would whack up your taxes, he would foul up the economy.” Commenting on the Prime Minister’s comments, the TaxPayers’ Alliance said the speech was a “breath of fresh air”.

Daily Mail, Page: 8 The I, Page: 7 The Sun, Page: 2

CORPORATE NEWS ROUNDUP

Large firms utilise game scheme to avoid tax

Analysis of those benefitting from the Video Games Tax Relief (VGTR) initiative suggests that almost half the money intended to support small UK games makers has actually gone on giant multinational firms. A Guardian investigation shows that firms including Sony, Sega, and Warner have used the policy to avoid paying tens of millions of pounds in corporation tax. WarnerMedia, which owns several British game development companies, has claimed up to £60m in corporation tax relief, while Sony claimed almost £30m and Sega claimed up to £20m. Official figures show VGTR claims for more than £500,000 have taken at least 80% of the total tax relief, despite accounting for only a small fraction of claims. Applications for less than £50,000, while accounting for more than half of successful claims, were granted around just £10m of the total £324m in tax reductions. Alex Dunnagan, a researcher at TaxWatch UK, said the new findings show the scheme has “become a cash cow for large, tax-dodging multinational corporations who are milking the system to extract hundreds of millions of pounds in subsidies from the British taxpayer.”

The Guardian Metro

INDUSTRY NEWS

HMRC sacks eight staff members over inappropriate behaviour

HMRC has disciplined almost 100 members of staff over the last two years, for inappropriate use of computer systems, email and social media, with employees sacked, according to a Freedom of Information request. The department has not revealed the circumstances surrounding the sackings. George Bull of RSM UK said it was reassuring the tax authority had dealt with the rogue members of staff. “These people have access to huge amounts of personal data and anything less than 100% honesty is a breach of public trust, which would bring the workings of the civil service into disrepute. If these breaches were allowed to continue unchecked, public confidence would be seriously undermined”.

The Daily Telegraph

EMPLOYMENT NEWS ROUNDUP

Bank tightens rules ahead of tax clampdown

Barclays may no longer use off-payroll contractors as it prepares for a government clampdown on tax avoidance linked to the use of self-employed private sector workers, with a leaked internal email telling the bank’s line managers that they must no longer use freelancers “who provide their services via a personal services company, limited company or other intermediary”. This comes ahead of reform of IR35 rules set to come into force in April, with ministers seeking to stop people working off-payroll in the private sector to address tax avoidance. The rethink of IR35 rules, which shifts the compliance burden from contractors to recruiters, is expected to raise £3.1bn in extra revenues for the exchequer between 2020 and 2024.

The Times, Page: 44

SMEs NEWS

Number of SMEs hits a record high

Figures from the Office for National Statistics show that there were 274,420 SMEs in the UK in 2018 – the highest number recorded since at least 2010. The number of SMEs in the UK has been rising steadily since 2011 and is up from 230,130 in 2010. The latest small business survey by the Department for Business, Energy and Industrial Strategy suggests that 40% of medium-sized businesses increased their number of employees between 2017 and 2018. Meanwhile, analysis by the Economic and Social Research Council shows that SMEs contribute 47% of revenue to the UK economy and have a key role in boosting UK productivity.

The Birmingham Post, Page: 61

Accountancy alumni form advisory team

Four senior accountancy professionals have come together as part of a venture targeting SMEs and family-owned businesses. The Edinburgh-based operation of advisory HNH will see a team that includes Neal Allen, former head of mergers and acquisitions for KPMG Scotland; Harry Linklater, previously a French Duncan partner; Bruce Walker, who led KPMG Scotland‘s debt advisory team and Chris Fawbert, a former assistant director in EY‘s corporate finance team. The practice will initially focus on providing M&A, debt and transaction services.

The Scotsman, Page: 35

PROPERTY NEWS ROUNDUP

Room boom for Scottish hotels

PwC analysis shows that a surge in the number of hotel rooms in Glasgow, Edinburgh and Aberdeen has led to a fall in the level of revenue generated per available room. Scotland’s biggest cities have added more than 2,000 rooms between them in the last year, while almost 5,000 new rooms are expected to be added by the end of 2020.

The Scotsman, Page: 36 The Press and Journal, Page: 30 I, Page: 39

LEGAL NEWS

Jail for launderer

Jamshed Bhatti, whose handwritten ledger books implicated him in a money laundering fraud totalling almost £3.5m, has been sentenced in his absence. He was charged in December 2016 but absconded to Pakistan before his trial. In his absence he has been found guilty of money laundering and sentenced to six and a half years. He told HMRC money came from his import and export business but no VAT registration or any tax returns for the business existed.

Press Release

ECONOMY NEWS

Construction activity slumps in September

UK construction activity fell at the second-fastest rate since the financial crisis in September, according to the latest purchasing managers’ index (PMI) from IHS Markit/CIPS UK. The headline index fell to 43.3, down from 45 in August and the fifth consecutive month below 50 – the level that divides contraction from growth. “The poor performance in residential building is particularly discouraging. Given its status as the bellwether of the sector, its continued decline shows the strain the market is under. We’re seeing developers shy away from committing to big spend – not dissimilar from the commercial sector,” said Jan Crosby of KPMG. Considering the economic impact of the data, Howard Archer, chief economist at EY Item Club , said: “Much will depend on how the dominant services sector performs so there will be significant interest in the August services PMI.”

The Daily Telegraph, Business, Page: 4 The Times, Page: 44 Financial Times, Page: 2 The Sun, Page: 47 City AM Evening Standard

Economist optimistic over recession

Debapratim De, a senior economist at Deloitte, says the economy is likely to avoid falling into recession in the case of a no-deal Brexit as businesses are well prepared to leave the EU. He said: “Under a no-deal Brexit, the NIESR forecast is for 1% growth this year, and actually for it just being flat next year, so there would be no prolonged recession next year in the case of a no-deal Brexit.” He said this forecast comes largely because of businesses preparing or having already prepared for a no-deal scenario and “a fiscal stimulus package that the Government has much touted.”

The Press and Journal, Page: 31

OTHER NEWS

Law firms vulnerable to launderers

Edward Fennell in the Times looks at the suggestion that law firms “appear to be a soft touch for money launderers,” noting that there were almost 1,200 reports last year by accountants to the Solicitors Regulation Authority (SRA) over concerns about law firms’ conduct. Jenny Staight of Hazlewoods comments: “The National Crime Agency has identified law firms as being particularly vulnerable to being exploited by money launderers, so we expect to see this as an area of intensive focus by the SRA over the next few years.”

The Times, Page: 61

Contact Paul Southward.

Paul Southward's News Roundup


News Roundup Thursday 3rd October 2019


News Roundup Thursday 3rd October 2019

NEWS ROUNDUP

TAX NEWS ROUNDUP

Javid considers scrapping IHT

Chancellor Sajid Javid could be considering scrapping inheritance tax, telling a fringe event at the Conservative party conference that that levy is a “real issue” and saying that changes were “on my mind” when it comes to IHT. Asked if he would consider axing the tax, Mr Javid replied: “We have already made some sensible reforms in that tax … I shouldn’t say too much now but I understand the arguments against that tax.” He added: “I do think when people have paid taxes already through work or through investments and capital gains and other taxes there is a real issue with then asking them on that income to pay taxes all over again.” This comes after the Brexit Party said it would abolish the tax, with party chairman Richard Tice last week describing IHT as “the most hated, the most unpopular tax in this country”, adding: “We’ll just get rid of it”.

The Daily Telegraph, Page: 6 Daily Mail, Page: 2 The Independent, Page: 12 The I, Page: 9 The Sun, Page: 2 Daily Express City AM, Page: 5

PM hints at tax cuts

Prime Minister Boris Johnson has suggested people can expect tax cuts in the upcoming Budget, telling the Sun he wants a “high wage, low tax economy.” Probed on whether this means income tax cuts are on the horizon, he said the Chancellor is “a great radical and he’ll want to do something for reducing the burden of taxation and stimulating growth” He added: “That’s what we want to see. That’s where we’re going.”

The Sun, Page: 4

Tax cut call for low earners

Tim Worstall, a senior fellow of the Adam Smith Institute, believes that the Chancellor should reduce taxation for poorer people. He argues that the personal allowance, the starting point for both income tax and national insurance, should be whatever number is declared to be the minimum wage – saying: “Raise one and increase the other.”

The Times, Page: 22

PROPERTY NEWS ROUNDUP

Stamp duty take tanks

Stamp duty receipts from residential property fell by more than £900m in 2018/19 to £8.4bn, according to HMRC figures, a 10% decline and more than at any point in the past decade. HMRC said the drop was driven in part by stamp duty relief for first-time buyers on properties worth up to £500,000 and the devolution of stamp duty to Wales last year, with an 8% fall in transactions over £1m also contributing. Richard Morley of BDO said the uncertainty surrounding Brexit has made families think twice about moving: “They just don’t know what’s going to happen and it’s putting them off. At the same time the richest are not buying at all and foreign investors are keeping well clear.” He added that the figure is “a big drop in revenue for the Treasury,” saying it begs the question of how the Government “is going to afford all of the tax breaks they have promised so far”. The HMRC data comes as house price growth has slowed to just 0.7% according to the latest figures from the Land Registry, with prices in the South East and North East falling by 2% and 2.9% respectively.

The Daily Telegraph, Business, Page: 3 Financial Times, Page: 2 Daily Mail, Page: 19

House prices growth slows

Annual growth in UK house prices fell back to 0.2% in September, according to Nationwide’s latest data, leaving the average UK house price at £215,352 last month, down from £216,096 in August. “Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty, ” Nationwide chief economist Robert Gardner said. Howard Archer of EY Item Club said that prices could “quickly drop around 5%” in the event of a no-deal Brexit at the end of this month.

The Times, Page: 39 City AM

SMEs NEWS

FSB: Firms would like 10 years to deliver wage increase

The Federation of Small Businesses (FSB) says many of its members would like a decade to implement Chancellor Sajid Javid’s plans to significantly increase the national minimum wage. The FSB’s employment policy chief Michael Mealing said: “Small businesses are agile and can adjust to change but they’re also fragile and need the maximum amount of time so that they can plan and change very much their cost base,” saying that while five years was reasonable, “I think many small businesses would consider ten years would have been better.” He also warned that for low-pay sectors “the advent of a very much higher national living wage, will make the problem in those sectors significantly worse”. Meanwhile, Craig Beaumont, the FSB’s advocacy director, has said the Chancellor did not consult business groups on his plan to raise the national living wage. He said: “Government would normally reach out on something like this, to understand the impact of £16bn being shouldered by small businesses that they know are struggling with employment costs.”

The Times, Page: 8 City AM

REGULATION NEWS

FRC to probe EY over Thomas Cook collapse

The Financial Reporting Council (FRC) has launched an investigation into the collapse of travel firm Thomas Cook, which will examine EY’s audit of the company for the year ending September 30 2018. The FRC said the investigation would first look at whether EY had a case to answer, and if it did so then the two sides would convene at a tribunal where the accountancy firm – or individual accountants – would have a chance to defend any allegations against them. MP Rachel Reeves, chair of the Commons Business Select Committee, has vowed to grill both EY and PwC as part of its own investigation into Thomas Cook’s demise. EY took over as Thomas Cook’s auditor from PwC in 2017 and Bob Moritz, global chairman of PwC, has claimed that the collapse of Thomas Cook will intensify the politically charged debate in the UK over what should be expected from an audit. The FT’s Matthew Vincent says that arguably, the FRC’s investigation “should find the auditor did no wrong.” Meanwhile, Thomas Cook’s operations in Belgium have officially been declared bankrupt.

The Times, Page: 34 The Guardian, Page: 33 The Independent, Page: 55 Financial Times Financial Times, Page: 18 Daily Mail, Page: 71 Daily Mirror, Page: 7 The Sun, Page: 43 Daily Star, Page: 4 Daily Express, Page: 2 City AM, Page: 3 Evening Standard The Scotsman, Page: 18 The Press and Journal, Page: 21 Yorkshire Post, Page: 7

INDUSTRY NEWS

ACCA: Tomorrow’s accountant needs diverse skills

Writing in the Scotsman, head of ACCA Scotland Craig Vickery says the accountancy body is “evolving” its continuing professional development and mentoring programmes, “recognising that the accountant of the future requires a diverse and broad range of skills to be successful and to be relevant in a fast-moving world.”

The Scotsman, Page: 28

CORPORATE NEWS ROUNDUP

£6m deal for Harland and Wolff

Energy infrastructure group InfraStrata has agreed a £6m deal to buy Belfast shipyard Harland and Wolff with administrators BDO, putting down a £500,000 deposit having secured a £2.2m loan agreement to cover the deal.

The Times, Page: 43 Financial Times

Firm bought out of administration

Consultancy firm Success Flow Digital has been bought out of administration by YouWeSuccessflow, which is backed by Dutch internet agency YouWe. Kris Wigfield and Joanne Hammond of Begbies Traynor were appointed as joint administrators of Success Flow Digital.

Yorkshire Post, Page: 17

PERSONAL FINANCE NEWS

Self-employed pension contributions plummet

Growing numbers of self-employed people in the UK have resulted in a sharp decrease in pensions contributions, by almost a third in four years, according to figures from HMRC. In 2013/14 the number was 600,000, though it fell to 410,000 in 2017/18. The amount that the self-employed contribute to pensions has fallen 18.3% in the past two years – from £1.97bn in 2015/16 to £1.61bn in 2017/18.

The Daily Telegraph

ECONOMY NEWS

UK manufacturers vulnerable

UK manufacturing output remained in the red last month as job losses piled up, according to IHS Markit’s latest UK Manufacturing Purchasing Managers’ Index, which shows that factory activity hit 48.3 in September. IHS Markit director Rob Dobson said: “Output, new orders and employment all fell further as rising political, trade and economic uncertainties exacerbated concerns about Brexit,” and cautioned that the sector may be sliding into recession. Separately, the Chartered Institute of Procurement & Supply warned manufacturers are cutting jobs at the fastest pace for six years.

The Daily Telegraph City AM Financial Times

OTHER NEWS

HMRC reports itself to watchdog over 4 tax suicides

HMRC has reported itself to the Independent Office for Police Conduct four times over the suicides of individuals facing the loan charge, financial secretary to the Treasury Jesse Norman has confirmed.

Financial Times

Contact Paul Southward.

Paul Southward's News Roundup


News Roundup Wednesday 2nd October 2019


News Roundup Wednesday 2nd October 2019

NEWS ROUNDUP

TAX NEWS

Trust could save £300m in life insurance payouts

Almost 8,000 life insurance policies with payouts worth £774m fell into the IHT net in 2016-17, HMRC figures show, triggering the 40% duty and an average bill of £37,500. The Daily Telegraph reports that people could have avoided paying £300m of this by simply ticking one box on their insurance policy paperwork. Sean McCann of insurers NFU Mutual said: “The latest numbers show more and more people are being caught out. But by contacting their provider and completing a trust form, families can potentially remove the threat of their loved ones facing a costly and unexpected bill.” The paper notes that a recent report by the independent Office of Tax Simplification, commissioned by the former chancellor Philip Hammond, said all policies should automatically pass into trust.

The Daily Telegraph, Page: 2

PENSIONS NEWS ROUNDUP WEDNESDAY

New rules force pension funds to consider ESG factors

New rules that come into force today require all defined-contribution schemes with more than 100 members to set out how they are addressing environmental, social and governance factors (ESG) when investing members’ cash. Pensions minister Guy Opperman said: “I believe that the changes coming this week will have a bigger effect on tackling climate change than almost any other decision by government.” Royal London policy director Steve Webb said: “If you’re investing billions of pounds of people’s money in companies, you actually want to know if they’re well governed and you want to know what the environmental impact is. This is a small step in a long journey… But it’s pretty clear which way the tide is flowing.”

City AM

Attempt to ease cap on pension fees is rejected

The Government has rejected a call from the British Business Bank to dilute UK workplace pension protections so savers can invest in riskier and more expensive venture capital. The Times’s Patrick Hosking says being able to invest in venture capital and private equity would not be a “panacea” for savers. He assumes a flood of fresh cash would reduce returns and describes as “deluded” the presupposition that there “is a vast supply of entrepreneurs with credible and viable ideas who can’t get funding at all.”

Financial Times The Times, Page: 43

BREXIT NEWS ROUNDUP WEDNESDAY

City warns no-deal not an option

Optimism within the financial services sector has fallen at its fastest pace since the global financial crisis, with 62% of the 83 companies surveyed by the CBI and PwC less optimistic about the business situation compared with three months ago, and only 5% more upbeat. Rain Newton-Smith, the CBI’s chief economist, commented: “The Government cannot ignore the voice of this bellwether of the domestic economy and one of the UK’s most important globally competitive sectors. No ifs, no buts, the government must heed the call to avoid a no-deal Brexit and secure an ambitious deal with our largest trading partner.” Andrew Kail, PWC’s head of financial services, added: “The deep concerns across the financial services industry cannot be downplayed.”

The Times, Page: 42 Daily Express, Page: 49 The Scotsman, Page: 32

Households well-placed to handle Brexit

The saving ratio for UK households rose to 6.8% between April and June and averaged more than 6% over the previous four quarters – two percentage points higher than last estimated. The figures have gone some way to allaying fears British consumers would be forced to slash their spending inf the economy tightened after Brexit. Samuel Tombs at Pantheon Macroeconomics in London said the figures highlighted “the scope to absorb future income shocks without cutting spending.”

Bloomberg

Treasury planning to mitigate no-deal Brexit

Sajid Javid revealed that the Treasury was drawing up plans to pump billions of pounds into the economy to mitigate the effects of a no-deal Brexit. In interviews before his speech at the Conservative Party conference, the Chancellor said that the Government was preparing a “significant economic policy response” to help businesses affected by the disruption.

The Times, Page: 8 Financial Times

EMPLOYMENT NEWS

Chancellor to increase National Living Wage

Sajid Javid has pledged to increase the National Living Wage to £10.50 per hour. Speaking at the Conservative Party conference, the Chancellor also promised to lower the age at which people are eligible to be paid it – from 25 to 21. The change would be phased in by 2024. “It’s clear it’s the Conservatives who are the real party of labour,” Mr Javid told the conference in Manchester. “We are the workers’ party.” However, the FSB said that higher staff costs could mark a breaking point for some companies while the British Chambers of Commerce warned of a risk to productivity and competitiveness.

Financial Times, Page: 3 The Times, Page: 8 The Times, Page: 39 Daily Mail, Page: 10 Daily Express, Page: 4 The Daily Telegraph, Business, Page: 3

CORPORATE NEWS ROUNDUP WEDNESDAY

Jamie Oliver took a £5.2m from business prior to collapse

Jamie Oliver and his wife took £5.2m in dividends from his food and media empire last year – just months before the collapse of Jamie’s Italian resulted in 1,000 job losses. The collapse of Jamie’s Italian left creditors facing losses of up to £83m, according to the most recent administrators report. Accounts for the Jamie Oliver Group which exclude the collapsed UK restaurant business, show pre-tax profits slipped 57.4% to £4.8m in the year to December 2018.

Financial Times The Daily Telegraph Daily Mail City AM

Black hole at Goals could be higher

Bosses at Goals Soccer Centres have admitted that the £12m black hole in their accounts could be far higher than expected. The announcement came as the five-a-side pitch operator was delisted from the stock exchange after the accounting issues – relating to unpaid VAT – could not be resolved before yesterday’s deadline.

The Times, Page: 45 The I, Page: 36 Yorkshire Post, Business, Page: 5 The Sun, Page: 43 The Daily Telegraph, Business, Page: 3 Daily Mail, Page: 70

INDUSTRY NEWS

High street continues to face insolvency challenge

The latest research from insolvency and restructuring trade body R3 has found that the percentage of shops in Yorkshire deemed to be at elevated risk of insolvency in the next 12 months was 42.5% compared with the national average of 40.6%. Nearly 4,400 of the 10,300-plus shops in Yorkshire were deemed to be at higher than normal risk of insolvency. Nationally, more than 59,700 of the 147,200-plus physical retail businesses were considered to be in the enhanced risk category.

Yorkshire Post, Business, Page: 1

ECONOMY NEWS

Economy beats expectations, credit growth slows

The economy beat expectations in the first quarter of the year, according to Office for National Statistics (ONS) figures, with UK GDP up 1.3% in the year to the second quarter of 2019, 0.1 percentage point above economists’ predictions. The April to June period however saw the biggest fall in production output since 2012 as Brexit stockpiling was relaxed – a downwardly-revised fall of 1.8%. Separately, figures from the Bank of England show consumers increased their borrowing at the slowest rate since 2014 in August – down to 5.4% from its peak of 10.9% in November 2016. Britons also borrowed less to buy houses, the BoE noted, with net mortgage borrowing by households weakening to £3.9bn in August.

City AM, Page: 6 The Times, Page: 42

OTHER NEWS

Cash will virtually die out by 2028

A report by UK Finance has suggested that fewer than one in ten purchases will involve cash by the year 2028. The rise of contactless payments means many consumers no longer carry notes and coins and only 4% mainly use cash. The report also found that 6,240 cash machines were removed during 2018, taking the total down to 63,360.

Daily Mail, Page: 4

Contact Paul Southward.

Paul Southward's News Roundup


News Roundup Tuesday 1st October 2019


News Roundup Tuesday 1st October 2019

NEWS ROUNDUP TUESDAY

TAX NEWS

Loan charge: MPs say no evidence of deliberate ‘aggressive tax avoidance’

MPs have met with Sir Amyas Morse who will conduct the review into the loan charge. Leading figures from the All-Party Parliamentary Loan Charge Group (APPG) communicated their “serious concerns” about the policy, which critics say undermines the rule of law. A submission compiled by the APPG states: “The evidence clearly shows that the main reason the vast majority of people entered into payroll loan schemes was not to avoid tax, which is the basis for the aggressive pursuit by HMRC and indeed the whole punitive approach of the loan charge.” The statement added: “The overwhelming majority of people sought and followed professional advice. Many sought further reassurances that the schemes were legal and compliant with tax law. They were advised that they were. The way the Treasury and HMRC continually claim that people entered into these schemes as a form of deliberate ‘aggressive tax avoidance’ is simply not supported by the evidence.”

Yorkshire Post, Page: 15

Airbnb questioned over its tax bill

City AM reports that filings from Airbnb show the firm remains subject to “tax enquiries and proceedings concerning its operations and intracompany transactions”. HMRC first began questioning the firm two years ago and the latest filings reveal it has been contacted regarding its application of tax laws, “some of which may result in litigation”. A spokesperson said: “We follow the rules and pay all the tax we owe in the places we do business.”

City AM, Page: 1

Public disagree with Labour’s school tax

The chairman of the Headmasters’ and Headmistresses’ Conference, Fiona Boulton, is the latest educator to come out against Labour’s plans to abolish private schools. In a speech today, she will say political activists who want to tax good schools to death are making “ignorant” decisions which are not supported by the public. The imposition of “crippling” taxes will amount to “abolition by the back door”, Ms Boulton will add.

Daily Mail, Page: 21

CORPORATE NEWS

Former Clarks boss sues company

Mike Shearwood, the former CEO of Clarks, has sued the company claiming that he was ousted when he tried to blow the whistle on financial mismanagement. Mr Shearwood was dismissed from the footwear retailer last year for allegations of workplace misconduct. However, in a workplace tribunal that starts today, Shearwood will claim that he was removed because he was set to reveal the company’s questionable accounts. In a statement, Clarks said he was “fabricating a frivolous and vexatious narrative surrounding his time at Clarks purely with the intent of eliciting a termination payment.”

Daily Mail, Page: 26

Baby chain hires advisers to explore sale

Mamas & Papas, the nursery and baby accessories retailer, has hired Deloitte to explore its future options including a potential sale. Stork Beta, Mamas & Papas’ parent company, unveiled annual losses of £8.2m for the year to end of April 2018, down from a £10.3m loss a year earlier, in its filing at Companies House. Sales were flat at £121.7m. Mamas & Papas said that its operating costs had risen by £670,000 in one year because of the impact of sterling depreciation and living wage rises.

The Times, Page: 39

MPs urged to stop posturing over Thomas Cook failure

City AM picks up on the Thomas Cook story noting that the Financial Reporting Council may investigate EY and PwC, which audited the company. The Financial Conduct Authority is said to be considering the levels of market disclosure in the run-up to the travel firm’s collapse. The paper says MPs probing the failure may well focus on bosses’ pay, but it is more likely the directors are “open to charges of incompetence and arrogance.”

City AM, Page: 2

SMEs NEWS

Mayor celebrates move towards a fairer, more inclusive society

Writing in City AM, Peter Estlin, the lord mayor of London, explains how the Lord Mayor’s Dragon Awards, run by the City of London Corporation, are encouraging firms to put innovation, inclusion and social responsibility at the very heart of their business. Mr Estlin says the City is also funding the charity Heart of the City, which supports SMEs with their responsible business programmes. It is looking now for London’s SMEs to join and learn how their businesses can make a positive impact on people, places and the planet. He concludes that firms that embrace these values “attract highly motivated employees, improve their reputations and boost staff satisfaction – a win-win for us all.”

City AM, Page: 22

Enterprise Finance Guarantee scheme losing its lustre

Loans made to small businesses under the Enterprise Finance Guarantee fell to £226m in the year to June 30, down 70% from the scheme’s peak a decade ago, the Times reports. The paper’s James Hurley suggests the decline in borrowing from the scheme may reflect the fact that small businesses have become less inclined to use external credit since the financial crisis. Accounting firm Moore said the 2% fee acts as a disincentive considering the base interest rate is 0.75%.

The Times, Page: 39

LEGAL NEWS

Cases involving FTSE 100 companies fall to seven-year low

Data compiled by Thomson Reuters show the number of court cases involving FTSE 100 companies dropped to a seven-year low, but the firm’s Raichel Hopkinson said corporations should not become complacent. She says cash-rich litigation funders are ready to act. Energy giants are among the most prone to litigation. Hopkinson said: “Oil and gas businesses operating in emerging economies often face an elevated risk of legal claims being made against them. For example, tax disputes can be a hazard.”

City AM, Page: 11

UK to introduce Magnitsky law

Foreign Secretary Dominic Raab promised at the Tory party conference that the Government will introduce a UK Magnitsky law, “to place visa bans and asset freezes on those individuals deemed responsible for serious human rights abuses, including torture.”

City AM, Page: 7

PENSIONS NEWS

ECJ ruling could land PPF with huge bill

The Mail’s Alex Brummer reports on how a case before the ECJ in Luxembourg could result in the UK Pensions Protection Fund (PPF) facing a bill for tens of billions of pounds. Gunther Bauer, a worker for a defunct German company, asserts that under human rights law and the Insolvency Directive, pension bail-out funds have no right to cut benefits and should pay in full. If successful, the PPF would be required not just to upgrade future payments by 10pc but also, at huge cost, to back date to the date when schemes entered the PPF.

Daily Mail, Page: 65

WEALTH MANAGEMENT NEWS

Peter Flavel: ‘It’s not venture capital, it’s patient capital’

The FT interviews Coutts CEO Peter Flavel, who talks about how the bank brings together clients and companies they wish to invest in and mentor, describing it as patient capital.

Financial Times, Fm, Page: 4

ECONOMY NEWS

Confidence slumps ahead of Brexit

A survey by Lloyds Bank found optimism in the economy fell to a balance of -10 this month, its worst level since before the referendum. The bank said concerns about Brexit have escalated over the past month with Scotland, Northern Ireland, the South West and London the most pessimistic regions. The most confident areas were the East and West Midlands and Yorkshire and the Humber. Separately, a study by Santander reveals that 35% of businesses have made no plans for Brexit. Of those that have, 46% plan to cut costs and 33% will cut jobs to mitigate an expected fall in economic activity.

The Times, Page: 39

Treasury urged to take holistic approach to spending

Former Treasury head of fiscal policy Richard Hughes has said the department needs a holistic approach to public finances, as recognising the value of public assets would enable more infrastructure investment.

Financial Times, Page: 2

OTHER NEWS

Draghi backs calls for fiscal union to bolster eurozone

The outgoing European Central Bank president Mario Draghi has backed calls for a common eurozone budget in order to strengthen the economic and monetary union.

Financial Times

Contact Paul Southward.

Paul Southward


News Roundup Monday 30th September 2019


News Roundup Monday 30th September 2019

NEWS ROUNDUP MONDAY

TAX NEWS

Over two-thirds back wealth taxes

A survey by Tax Justice UK and Oxfam has found that 69% of adults agreed that earnings from wealth should be taxed at the same level, or more heavily, than earnings from income. More than half of respondents supported the idea of a new tax on wealth over £750,000. Robert Palmer, executive director of Tax Justice UK, said: “Tory and Labour voters, Remainers and Brexiteers all support greater taxes on wealth. This should be a no-brainer for any government. Failing to back this policy wouldn’t just be bad economics, it would go against the grain of public opinion, too.”

The Times, Page: 50

Jacky Wright to return to Microsoft

HMRC’s digital leader Jacky Wright is to leave next month and return to Microsoft. Wright joined as the tax agency’s chief digital and information officer (CDIO) in October 2017 on a two-year “loan arrangement” from Microsoft. HMRC said, during her time in Whitehall, Wright had “overseen a wholesale transformation” of the digital and IT function and had also “radically changed the employee experience across HMRC” by implementing new technologies and methods.

Public Technology

No replacement named for HMRC chief Jon Thompson

Sir Jon Thompson, the head of the HMRC, is due to take up his new job as chief executive of the Financial Reporting Council at the beginning of October but has not been replaced at the tax authority. HMRC has confirmed it is still looking for a replacement for the outgoing chief executive and first permanent secretary after over two months.

Accountancy Daily

Google chief wants multilateral action on tax

In an interview with the Sunday Telegraph, Google chief Sundar Pichai has claimed that digital taxes applied unilaterally by nation states are doomed to fail. Mr Pichai said only a multilateral approach would work through the OECD and that Google “are strong believers in the OECD process.” It was the lack of progress by the OECD that led the UK and France to propose their digital taxes, the paper points out, but Mr Pichai says for him “it’s a multilateral trade issue which countries have to resolve and guide multinational companies.” Separately, the New Statesman reports the European Commission vice-president Margrethe Vestager has given the OECD until the end of 2020 to strike a deal on taxing tech companies or the EU will go ahead with its own tax plans. The publication notes research by Tax Watch which claimed that Facebook, Google, Apple, Microsoft and Cisco avoided paying £5bn in UK taxes in the last fi ve years.

The Sunday Telegraph, Page: 1 The New Statesman

Daniel Hannan: Boris Johnson’s tax cuts will benefit all

Writing in the Sunday Telegraph, Daniel Hannan argues that Boris Johnson’s proposed tax cuts will benefit everyone, boosting the economy, attracting investment and creating jobs. He says complaints by the likes of the Institute for Fiscal Studies (IFS) that certain tax cuts benefit the wealthy more than the poor are “an argument against nearly all tax cuts” and misses the point that “tax cuts will necessarily bring more immediate gains to people who pay taxes than to people who don’t pay taxes.” The PM’s plans to raise the threshold for higher-rate income tax from £50,000 to £80,000 and abolish National Insurance contributions on the first £12,500 people earn will together “make Britain a more attractive place to live, work and hire people.”

The Sunday Telegraph, Page: 24

Corbyn’s threat to private schools will drive them abroad

Private schools are warning Jeremy Corbyn they will move abroad if a Labour government tries to strip their assets. “It is a straightforward decision for a boarding school to move from England to Dublin, Paris, Calais or Amsterdam,” said Barnaby Lenon, chairman of the Independent Schools Council. “It would be the end of the great British boarding tradition.” Labour voted last week for manifesto policies that would strip private schools of charitable status, add VAT to fees and redistribute their endowments to state schools.

The Sunday Times, Page: 10

CBI calls for “tax holiday” to help firms weather Brexit

Dame Carolyn Fairbairn, the director general of the Confederation of British Industry (CBI), has called for the Government to give companies more time to pay tax bills to help them weather the impact of a potential no-deal Brexit. She says it would help firms manage their cash flow if trading is disrupted. Adam Marshall, director general of the British Chambers of Commerce, also called for enhanced annual investment allowances for businesses.

The Sunday Telegraph, Business, Page: 1

Three non-executives join HMRC Board

The Prime Minister has confirmed three new appointments to the HMRC Board. Michael Hearty, Patricia Gallan and Paul Morton will join as non-executive directors. Michael Hearty steps up to become chair of the HMRC audit and risk committee. Patricia Gallan is a former senior police officer who was Assistant Commissioner Specialist Crime and Operations of the Metropolitan Police. Finally, Paul Morton was appointed Tax Director of the Office of Tax Simplification in March 2017. Before that he was Tax Director for RELX Group plc.

GOV

Brexit Party vows to abolish IHT

During The Brexit Party’s conference in London, chairman Richard Tice unveiled some non-Brexit related policies, including a pledge to abolish inheritance tax, slash the foreign aid budget by half to fund public services, and to invest in broadband across the UK.

The Sun

CORPORATE NEWS ROUNDUP MONDAY

Thomas Cook was profitable for some

The Telegraph’s James Burton considers the role of advisers and executives in the collapse of Thomas Cook. He cites Unite’s Oliver Richardson, who says: “The directors, lawyers, accountants and auditors advising the company all played a huge role in the collapse of Thomas Cook. Their focus appeared to be about maximising their income rather than what was in the long-term interests of the company.” Elsewhere, accounting professor Prem Sikka writes in Left Foot Forward about some of the accounting methods used by Thomas Cook, noting the continued use of “one-off” costs and rolling over goodwill regardless of how worthless it had become would have inflated performance related executive pay. He points out that Financial Reporting Council rules enable companies to show goodwill in their balance sheets almost indefinitely, adding: “The FRC itself is arguably culpable as its rules permit companies to engage in dubious accounting practices.”

The Daily Telegraph, Page: 39 Left Foot Forward

Thomas Cook – CEO blames the banks, staff blame the Tories

The collapse of Thomas Cook is widely covered in Sunday’s papers, with Geoff Ho in the Sunday Express noting that the Financial Reporting Council is considering an investigation into the holiday firm’s accounting practices. Thomas Cook is accused of classifying regular costs as one-off “exceptional items” in its results and of failing to reduce the goodwill of MyTravel for years after it was acquired in 2007. EY, after it took over from PwC as auditor in 2017, challenged some of the treatments, the Observer notes. One insolvency expert told the paper: “If you remove the MyTravel goodwill then it’s been bust pretty much since it bought the thing.” The paper goes on to suggest that the probe by the BEIS should not be distracted by the idea corporate greed brought the company down – it was “incompetence and hubris in the boardroom.” The paper also reports that Thomas C ook staff are set to hold protests at the Conservative party conference over the Government’s decision not to step in and save the company from liquidation. Finally, Peter Fankhauser, the company’s CEO, insists in an interview with the Sunday Times that he did everything he could to save Thomas Cook and accuses the banks and bondholders of failing to move quickly enough to stave off its demise. Fankhauser also speaks with the Mail on Sunday, hitting back at claims he is a “fat cat” and insisting he is “deeply sorry”.

Sunday Express, Page: 43 The Observer, Page: 32, 63 The Sunday Times, Business, Page: 1 The Mail on Sunday, Page: 12, 95 The Sunday Times, Business, Page: 5

SMEs NEWS

Labour’s four-day week will drive firms into the ground

Labour’s plan to reduce the working week to four days or 32 hours within a decade, without reducing workers’ pay, would drive profit-making firms into the ground and threaten future investment in the UK economy, the CBI’s director general has said. Labour’s policy also prompted a backlash from the Federation of Small Businesses. Chairman Mike Cherry said: “Our productivity gap cannot be closed by simply reducing working hours. Forcing a shorter working week on small firms is not feasible.”

Daily Express

Nearly 40% of SMEs believe no-deal will hurt

More than a third of small British firms think a no-deal Brexit on 31 October will hurt their business, according to the Federation of Small Businesses. A fresh survey showed 39% of small companies believe a no-deal Brexit would be negative, while 34% predicted no impact and 11% a positive impact.

The I, Page: 72 Yorkshire Post, Page: 25

REPORTING NEWS

Time for charities to comply with the rules

The Yorkshire Post criticises charity trustees for failing to ensure their organisations’ books are properly examined. The Charity Commission has found “significant failings” in the accounts of a sample of charitable organisations. The paper says that with public confidence in the charity sector at a low ebb “it is vital that trustees use their positions of strength to ensure staff not only adhere to charity law but more than comply with its obligations.”

Yorkshire Post, Page: 26

Broker critical of Imperial’s statements

Liberum has accused Imperial Brands directors of aggressive accounting following the tobacco company’s profit warning this week. The broker said the group had reduced the usefulness of its financial statements by including gains on the sales of businesses, pension restructuring and the sale and leaseback of its Bristol headquarters in its adjusted operating profit.

The Times, Page: 52

PROPERTY NEWS

A tip for married landlords

The Times talks to Stefanie Tremain, a director at Blick Rothenberg, who says many married couples are unaware that, if they buy property to let, they should do so as tenants in common with the person liable for the least tax owning the larger share. This can substantially increase the profit they make from rent. However, couples should be aware that HMRC will assume they share income from the property on a 50-50 basis unless they provide a declaration of interests and income (income tax form 17).

The Times, Page: 58

PERSONAL FINANCE NEWS

Stockbrokers call for risky Isa to be scrapped

Three of the country’s biggest fund shops, AJ Bell, Interactive Investor and The Share Centre, have called for the “innovative finance” Isa to be withdrawn. They say the Isa, which allows peer-to-peer and other alternative investments to be held in a tax-free wrapper, can legitimise high-risk schemes which are not protected by the compensation scheme for savers.

The Daily Telegraph, Money, Page: 3

Wealthy families continue to ditch trusts

The FT looks at the continued decline in the popularity of trusts, with Mike Hodges at Saffery Champness explaining that a “punitive tax regime and draconian regulatory requirements [has created] a toxic combination.”

Financial Times, Money, Page: 3

PENSIONS NEWS

Thousands more hit by tax penalties for breaching annual pension allowance

Several papers pick up on news that the number of pension savers landed with tax bills for annual allowance breaches has jumped by more than 40%. The Treasury has netted an extra £325m in tax after 26,550 people breached the annual pension savings limit in the 2017-18 tax year. An additional 4,550 pension savers breached the lifetime allowance of £1m, raking in £510m for the taxman. Tom Selby, a senior analyst at investment platform AJ Bell, says: “As we approach an inevitable general election, political parties need to reflect on the anti-savings message being given to the British public by these measures.” Separately, Ann Ashworth says in the Times that the over-complex pensions system is in itself becoming a disincentive to save.

Financial Times, Money, Page: 3 The Times, Page: 65 The Independent, Page: 43 The Times, Page: 61 The Guardian, Page: 51

BREXIT NEWS

Bin Brexit and UK can expect to bail out the euro

Writing in the Sunday Telegraph, Liam Halligan warns that revoking Article 50 and cancelling Brexit would mean the EU’s latest “growth-stifling” regulations would apply to the UK, as would closer tax harmonisation; while the prospect of euro membership could be revived. Moreover, the UK would be on the hook “when the jerry-rigged single currency finally implodes.” If the UK left with a deal, Halligan predicts a growth spike and a sharp rise in sterling along with the release of pent-up investment. The damage of a no-deal Brexit “has been grotesquely exaggerated”, argues Halligan, and although there would be some economic impact this would be limited by Government counter measures. The prospect of an extension only brings more uncertainty and the danger of Jeremy Corbyn in No 10.

The Sunday Telegraph, Business, Page: 2

INDUSTRY NEWS ROUNDUP MONDAY

The consequences of changing airline insolvency rules

Duncan Swift, president of insolvency trade body R3, suggests changing airline insolvency rules could have unintended consequences. After Monarch collapsed reforms were mooted that would enable carriers to continue running planes to repatriate holidaymakers. But this could see aircraft impounded abroad until debts were paid, putting crew at risk. The costs of repatriation would also “deplete the value of what the insolvent airline can repay to creditors”, Swift said, which may deter lenders from financing airlines or suppliers from trading with them.

The Times, Page: 49

Ombudsman raps Stargate over high-risk investments

The Financial Ombudsman Service has ordered Stargate Capital Management to repay a pensioner the £75,000 it gambled on “unsuitable” high-risk investments. The ombudsman ruled the firm had “watered down” the likelihood its “risk averse” client would lose money and ordered compensation and any loss to be paid back with 8% interest.

The Daily Telegraph, Money, Page: 8

Sage acquires Dublin start-up AutoEntry

Following a two-year partnership with Sage, Dublin-based AutoEntry has been bought by the enterprise software company. AutoEntry automates data entry for accountants, bookkeepers and businesses. The automation solution is currently used by more than 3,000 accounting and bookkeeping practices, and it services in excess of 150,000 businesses. According to Sage, AutoEntry will be offered to its customers worldwide in the coming months.

Silicon Republic

Global start-up accelerator program seeks new applicants

The Association of International Certified Professional Accountants (Association) and CPA.com are seeking new applicants for their joint start-up accelerator program, which focuses on innovation in accounting, finance and regulatory technology. The program is open to entrepreneurial companies worldwide.

Business Wire

Big Four accountants facing changing times

Tabby Kinder says in the FT that the Big Four’s monopoly over auditing looks certain to end, in the UK at least, amid increasing scrutiny from politicians and regulators.

Financial Times, Page: 14

ECONOMY NEWS ROUNDUP MONDAY

Continued Brexit uncertainty could lead to interest rate cut

Bank of England MPC member Michael Saunders has suggested interest rates could be cut even if a no-deal Brexit is avoided. A deal would still leave uncertainties over future trading arrangements with Europe. Speaking at a business event in Barnsley, Mr Saunders said if high Brexit uncertainties persisted UK growth would continue to be depressed, in which case it “probably will be appropriate to maintain an expansionary monetary policy stance and perhaps to loosen further.”

City AM The Daily Telegraph Daily Mail, Page: 105 The Times, Page: 50 Daily Express, Page: 69

Eurozone suffers biggest monthly fall in confidence ten years

Overall economic confidence in the eurozone fell to its lowest level in four years this month. Business confidence in Germany and Italy tumbled to a six-year low amid worries over shrinking order books, according to the European Commission. The fall in confidence was the steepest in ten years.

The Daily Telegraph

Business saw drop in activity in Q3

The CBI’s latest growth indicator shows that a balance of 6% of companies across services and manufacturing reported a drop in sales or output volumes in the three months to September. For the three months to December, a balance of 16% expect falling volumes. “Decision-makers in boardrooms across the country have been watching politics this week with a heavy heart,” said Rain Newton-Smith, the business lobby’s chief economist. “Despite all the noise, what must not be forgotten is the importance of getting the UK economy back on track.”

The Sunday Times, Business, Page: 1 The Mail on Sunday, Page: 93

Data expected to confirm 0.2% fall in GDP for Q2

Economists expect the Office for National Statistics to confirm tomorrow that GDP shrank by 0.2% over the period April to June. Markit/CIPS figures due over the course of next week are expected to show slight falls for manufacturing, construction and services.

Sunday Express, Page: 44

OTHER NEWS

Organised crime gang sentenced for £3.5m fuel fraud

Five people, including the former owners of a Sussex petrol station, have been sentenced for distributing and selling an estimated 4.8m litres of illicit fuel to unsuspecting motorists including haulage companies across the south east. Three were given jail sentences totalling more than 16 years.

Press Release

TAX DODGER NEWS

Tax-dodging pair caught with £180,000 stash

Husband and wife fraudsters Shezaad and Sabina Karim have been sentenced for dodging tax on sales and income to the tune of nearly £200,000. Investigators found a key to a safety deposit box in Birmingham inside which they found £180,000 in cash and a stash of gold and jewellery. Shezaad, the director of MAK Digital (AA) Ltd which traded in electronics and mobile phone accessories, and wife Sabina Karim, used the stolen cash to finance their lifestyle. They were sentenced to 28 months and 18 months suspended, respectively.

Birmingham Live

Contact Paul Southward.

Paul Southward


News Roundup Saturday 28th September 2019


News Roundup Saturday 28th September 2019

NEWS ROUNDUP

TAX NEWS

Boris Johnson’s tax cuts will cost £26bn a year, IFS claims

The Institute for Fiscal Studies (IFS) has challenged Boris Johnson’s flagship policy to lift the thresholds for both higher rate income tax and National Insurance, claiming the giveaway “risks putting the public finances on an unsustainable path”. Mr Johnson pledged to raise the threshold for paying higher rate income tax from £50,000 to £80,000. The IFS said the PM’s proposed tax cut would cost the Treasury up to £9bn a year if introduced immediately and would take 2.5m people out of paying 40% higher rate tax. About three-quarters of the tax benefit would go to the highest-income 10% of households. Increasing all the National Insurance thresholds to £12,500 in line with the personal allowance for income tax would cost £17bn a year, the IFS said.

The Times, Page: 2 Daily Mail, Page: 2 The Guardian The Daily Telegraph, Business, Page: 3 The I, Page: 10

INDUSTRY NEWS

FRC: Audit firm transparency reports not visible enough and ineffective

A review from the Financial Reporting Council (FRC) has concluded that transparency reporting by accountancy firms performing audits is currently ineffective with a lack of awareness amongst investors and Audit Committee Chairs that the reports even exist and many being used as a marketing exercise. While mandatory Transparency Reports broadly contain the required information, for those aware of the reports, there is a view they are too long and overly positive to be useful. The FRC is concerned that many firms treat the reports wrongly as a marketing tool which damages their perception among stakeholders and limits their usefulness. The regulator is calling on firms to reduce the length of their Transparency Reports and explain within them the challenges they are facing in seeking to deliver consistently high-quality audits, along with their assessment of how successful they are being at meeting those challenges. Sitting alongside the reports on audit quality that the FRC publishes, Transparency Reports by the firms should provide stakeholders with important information about each firm’s quality processes and initiatives to improve audit quality.

Economia Financial News

Brexit: EU audit and accounting rules retained

A motion to approve draft legislation retaining EU accounting and audit law after the UK leaves the EU has been passed in the Lords. The statutory instrument (Statutory Auditors, Third Country Auditors and International Accounts Standards (Amendment) (EU Exit) Regulations 2019) also completes the process of extending powers to the UK’s competent authority, the Financial Reporting Council. It extends the FRC’s ability to regulate third-country auditors to include EEA and Gibraltarian auditors. It also puts beyond doubt that those EEA auditors who have already registered in the UK as statutory auditors will retain that status after exit.

Hansard

REGULATION NEWS

MPs to launch inquiry into Thomas Cook collapse

The Business, Energy and Industrial Strategy (BEIS) Committee said on Thursday that it would seek to question Thomas Cook executives over the travel firm’s collapse on Monday. MPs will be focussing on the company’s accounting practices, executive pay, and the role of its auditors. The announcement follows requests from Andrea Leadsom, the business secretary, to the Financial Reporting Council (FRC) and the Insolvency Service to expedite investigations. The Insolvency Service has launched an investigation and the FRC said it was reviewing “as a matter of urgency” whether to join that probe. As part of the government inquiry, BEIS chair Rachel Reeves said the committee would follow up on its “longstanding interest in corporate governance, executive pay and audit reform”. Ms Reeves has also written to Ms Leadsom to raise concerns about the “slow progress of audit reform”. The audit work of EY and PwC, who had audited Thomas Cook since 2008, before handing the reins over to EY in 2017, will come under intense scrutiny from the FRC should an investigation take place. Meanwhile, Government figures suggest the cost of Thomas Cook’s failure will exceed £500m with industry sources suggesting it was likely that the total could almost wipe out funds held under the Air Travel Organisers’ Licence (Atol) scheme. The Times’ Alistair Osborne points out that if insolvency reforms following the collapse of Monarch had been put in place the state could have saved tens of millions.

Financial Times The Times, Page: 43 The Times, Page: 16 The Times, Page: 45 Financial Times, Page: 20 The Guardian, Page: 2 Daily Mail, Page: 29, 87 Daily Mirror, Page: 19, 31 Daily Express, Page: 15 Yorkshire Post, Page: 6 The Herald, Page: 5

PENSIONS NEWS

Latest pension tax grab brings renewed calls for reform

New figures show there has been a 44% increase in pension savers being hit with a tax bill for exceeding their annual allowance. HMRC said on Thursday that 31,050 people were hit by tax charges, paying an estimated £510m for the 2017-18 financial year. The rise from £375m the previous year is mostly due to the “annual allowance”, which allows savers to pay up to £40,000 each year into their pension, but savers were also breaching the £1.05m lifetime limit. Sir Steve Webb, of insurer Royal London, and a former pensions minister, warned: “The annual allowance cuts are just starting to bite, but they take time to work through because you can carry forward unused allowances from earlier years. Now we are starting to see the restrictions biting, because with each passing year you have less and less opportunity to carry forward unused allowances from before the cuts.” Mr Webb said the “worst part& rdquo; of the system is the tapered annual allowance for higher earners. “It’s so complex that people just don’t know where they stand. It’s unreformable – it just has to go.”

The Daily Telegraph, Page: 12 Financial Times Daily Express

Rothesay Life signs UK’s biggest ever pension transfer deal

Rothesay Life has taken on the huge £4.7bn GEC pension scheme in the UK’s biggest ever pension transfer deal. Last month Rothesay raised £900m of fresh capital from investors to back new deals. Before the latest agreement, it had signed £4.4bn of deals so far this year. Telecoms firm Telent said the deal would secure payments to 39,000 members of the GEC 1972 plan, many of whom were hired by GEC and Marconi – Telent’s previous incarnations.

Financial Times City AM

SMEs NEWS

FSB: Small businesses unprepared for no-deal Brexit

A UK-wide survey of small businesses by the Federation of Small Businesses (FSB) has found that almost 40% of small companies would be negatively affected by a no-deal departure – and of those only one in five has planned or prepared for disruption. Nearly two-thirds said they felt unable to plan because they were unsure about what to plan for. The FSB’s Mike Cherry said: “Ongoing uncertainty is to blame for preparations hitting the skids with the picture still not clear as to how the UK will leave the EU.” The FT notes that Liverpool Council is establishing a £15m loan fund to aid small businesses in a no-deal scenario.

Financial Times, Page: 2 The Sun, Page: 49 The Times, Page: 54

P2P lenders given final warning by regulator

The Financial Conduct Authority has warned Britain’s peer-to-peer lending industry to “act now” to clean up poor practices or face a “strong and rapid” crackdown. In a letter sent to 65 firms the FCA highlighted problems including weaknesses in disclosure of information to clients, opaque charging structures, inadequate record keeping and suspect due diligence. Investors were not as aware of risks as they should be and platforms had changed their business models without informing the regulator; taking “additional, opportunistic risks” in areas beyond their expertise.

The Times, Page: 43

CORPORATE NEWS

Gold app Glint collapses just months after fundraising

UK start-up Glint has collapsed in a blow to backers including MP Steve Baker and Dave Mortlock, global head of investment banking at Berenberg. The Glint app allowed customers to swap currencies into gold. They could then spend it via a debit card. FRP Advisory has been appointed as Glint’s joint administrator.

Financial Times, Page: 27 Financial Times, Page: 14

Ted Baker poaches Debenhams’ finance chief

Debenhams’ finance chief Rachel Osborne is leaving after only a year to join Ted Baker. Debenhams’ Mike Hazell will step up to chief financial officer from group finance director.

Financial Times The Daily Telegraph The Times, Page: 49 Daily Mail, Page: 87 The Scotsman, Page: 30 The I, Page: 46 Yorkshire Post, Page: 18

Bond firm delays accounts again

Manchester-based Blackmore Bond, which has raised more than £25m for property developments by selling minibonds, has delayed filing its accounts for a second time. A spokesman said the delays were caused by the resignation of Grant Thornton in the spring.

The Times, Page: 53

PROPERTY NEWS

Holiday-home businesses on the rise

Letting agency Mulberry Cottages is running masterclasses for investors who want to run a holiday-home business, the Express reports. The move has been driven by an increased number of people shifting away from buy-to-let due to a reduction in tax benefits. Holiday-let home-owners, however, are still able to offset expenses from insurance and water rates to crockery, linen and cutlery, as long as their property is available to rent as a furnished holiday home for 30 weeks in the tax year and is actually rented out for at least 15 weeks.

Daily Express, Page: 26

ECONOMY NEWS

Economic fears weigh on household confidence

September’s consumer confidence index from GfK reveals that households are generally happier than they were in August but are still more worried than they have been for six years. The survey of 2,000 adults found that expectations for the economy over the next 12 months were deeply negative, although people’s confidence in their personal financial situation over the coming year was positive.

The Times, Page: 46

OTHER NEWS

 ‘German problem’ at ECB exposed by Lautenschläger departure

The FT says the departure of Sabine Lautenschläger from the European Central Bank is the latest example of German dissatisfaction with the ECB’s loose monetary policy. Ms Lautenschläger, an executive member of the board representing Germany, resigned just over halfway through her eight-year term. The Telegraph says the move is a worrying sign for incoming ECB head Christine Lagarde

Financial Times, Page: 6 The Times, Page: 46 The Daily Telegraph, Business, Page: 4

Accountant jailed for shears attack

Argentinian accountant Brenda Barattini has been jailed for 13 years after cutting off her blindfolded lover’s manhood with garden shears. Ms Barattini, 28, was found guilty of the attempted murder of musician Sergio Fernandez, 42.

Daily Mail, Page: 31

Contact Paul Southward [Tax Consultant].

Paul Southward


News Roundup Thursday 26th September 2019


News Roundup Thursday 26th September 2019

NEWS ROUNDUP

TAX NEWS

Labour planning comprehensive tax raid

The Telegraph’s Harry Brennan examines Labour’s tax policies, including the effective income tax rates of more than 67% for higher earners and the loss of up to £875,000 in inheritance tax breaks for families. The 80,000 people currently living as “non-doms” in Britain would lose their beneficial tax status while capital gains tax would rise to match new income tax rates. Council tax would also be replaced with a “progressive property tax” payable by the owner and not the tenant, with rates set nationally and not locally. Elsewhere in the paper, Tim Wallace looks at the hit to businesses from Labour, through the financial transactions tax and hikes to corporation tax.

The Daily Telegraph The Daily Telegraph, Business, Page: 4

Use of BPR falls to decade-low

Families have significantly cut the amount of inheritance tax relief (IHT) they claim from investments via business property relief (BPR), according to HMRC, which has fallen to its lowest level this decade at just £1.3bn. Just over 1,000 people used BPR, which provides 100% exemption from IHT for investments in qualifying businesses, to cut inheritance tax bills last year. The drop is 22% down on the preceding tax year, when £1.6bn was saved, and 45% down on 2014-15. More people than at any point in the past decade are paying the 40% death duty, data indicates, helping HM Treasury take a record £5.4bn in 2018-19.

The Daily Telegraph

UK public struggle with understanding tax, survey finds

A survey by Deloitte has found British people have a poor understanding of personal tax issues and lack basic knowledge of the tax system. Tax codes and income rates were among the issues least understood.

Financial Times

REPORTING NEWS

M&C Saatchi hit by profit warning and accounting scandal

M&C Saatchi shares fell sharply yesterday after it warned that full-year profits would be lower than expected. The firm also said it had appointed PwC to review its books after it was caught up in an accounting scandal earlier this year. The company has restated its accounts for the first half of last year, reducing its reported profit by £6.4m. It overstated turnover by £2.6m after declaring some fees that it had yet to receive, as well as understating overheads by £3.1m.

City AM, Page: 7 The Times, Page: 47 Financial Times Daily Mail, Page: 82

Muddy Waters restates claims against Burford Capital

Muddy Waters has repeated its claims that litigation funder Burford Capital has questions to answer over its accounting practices. Burford issued a 45-page presentation to investors which defended its practice of recognising revenue from unfinished legal cases, so-called fair value accounting. But Muddy Waters said: “We believe Burford is manipulating the cases it deems ‘concluded’ in order to avoid truing up marks.”

City AM, Page: 4

REGULATION NEWS

FRC mulling Thomas Cook investigation

The Financial Reporting Council has announced that it is considering investigating the collapse of travel company Thomas Cook. The move comes amid reports that Royal Bank of Scotland and Lloyds Bank had called for extra funding at the beginning of August – much earlier than CEO Peter Fankhauser had claimed. EY took over as Thomas Cook’s auditors in 2017 from PwC. In 2018, it “strongly recommended” the travel firm strengthen its accounting procedures and voiced particular concern about the firm’s use of one-off costs. The business select committee said it wanted answers about the collapse. Its chair, Rachel Reeves MP, said: “There are serious questions to answer, including about the company’s accounting practices, its remuneration policy and practice, and about the stewardship of the company.”

Financial Reporting Council The Daily Telegraph, Business, Page: 1 Financial Times, Page: 14 The Times, Page: 42 The Times, Page: 41 City AM, Page: 4 The Guardian, Page: 12 Daily Mail, Page: 15 Daily Express, Page: 55

WEALTH MANAGEMENT NEWS

Family offices prepare for market downturn

A survey of 360 family offices by UBS and Campden Wealth found that 55% expected the global economy to sink into a recession before the end of 2020. Some 63% of family offices believe that Brexit will be negative for the UK as a destination for investment long-term while over 90% cited tensions between the US and China as a concern. Dr Rebecca Gooch, Campden Wealth’s director of research says while family offices are not making “wholesale changes” to portfolios, mitigating risk is becoming a priority, with 45% re-aligning investment strategies and 42% building up cash reserves.

Financial Times City AM

PENSIONS NEWS

Pensions should be invested in private companies too, says report

A report written by the British Business Bank and consultancy Oliver Wyman has recommended that money from pension savers should be invested via open-ended funds to buy illiquid, unlisted stocks. The Future of Defined Contribution Pensions report says that defined-contribution schemes are missing out by not being able to invest in open-ended funds that back venture capital and other private companies. Risk would be mitigated by limiting investment in such assets to 5% of a pension scheme’s total portfolio. The Treasury-backed study argues that young people today would be 7% to 12% better off in retirement if the barriers to investment were removed.

The Times, Page: 44

PROPERTY NEWS

Property transactions broadly flat, HMRC says

Property transactions in August fell year-on-year, according to new data from HMRC, with 99,890 residential deals in the month, down 0.9% on last year but up 15.8% on July 2019. The average price of newly listed homes fell by 0.2% month-on-month in September, according to Rightmove. Nick Leeming, chairman of Jackson-Stops, said: “Brexit and the recent political uncertainty has undoubtedly delayed the market’s seasonal bounce this year. Finally, after months of waiting we’ve seen a healthy uptick in transactions in August.”

City AM

INTERNATIONAL NEWS

EU court strikes down Brussels tax ruling against Starbucks

A European Union court has overturned a ruling by the European Commission that a tax deal between the Dutch government and Starbucks amounted to illegal state support for the coffee giant, stating that Brussels was “unable to demonstrate the existence of an advantage in favour of Starbucks” from a so-called “sweetheart” corporate tax arrangement for the U.S. company in the Netherlands. In 2015, the Commission ruled that the Netherlands gave tax advantages to Starbucks, leading to Dutch authorities recovering EUR25.7m from the coffee giant

Financial Times, Page: 6 Daily Mail The Sun, Page: 45 The I, Page: 41

PayPal faces Australian watchdog probe

Australia’s financial crime agency has ordered an audit of PayPal following concerns that the online payments company is not meeting the reporting rules aimed at fighting serious crimes such as child sex exploitation.

Financial Times Financial Times, Page: 14 The Independent, Page: 56

PERSONAL FINANCE NEWS

Public remain wary of digital-only banks

A survey by KPMG has found two-fifths of UK consumers won’t consider using a bank with no presence on the high street, demonstrating more needs to be done to give consumers confidence in digital-only banking.

Daily Mirror, Page: 40

ECONOMY NEWS

Manufacturers predict decline over next three months

UK factories are continuing to struggle, according to the latest monthly CBI Industrial Trends Survey, weighed down by Brexit and the global manufacturing slowdown. The survey found that output expectations this month are at their lowest level since April 2009. Order books weakened and stockpiling reached the highest level since the downturn. Anna Leach, deputy chief economist at the CBI, said: “UK manufacturers have become noticeably gloomier in September.”

The Daily Telegraph Daily Mail The Times The I, Page: 39

ONS reforms push up borrowing

Revised figures from the Office for National Statistics, including changes to student loans, public sector pensions and corporation tax, increased borrowing in the year to March by 75% to £41.4bn. John Hawksworth, chief economist at PwC, said: “Based on the new and revised data, it does look quite likely that the budget deficit in 2020-21 could exceed the 2% of GDP target set by the previous chancellor, even assuming that a no-deal Brexit can be avoided.”

Financial Times, Page: 4 The Daily Telegraph The Times, Page: 44

Contact Paul Southward.

Paul Southward