News Roundup Wednesday 26th June 2019
Home CGT plan criticised
The Telegraph looks at an idea put forward that could see a Labour government tax homeowners on any increase in the value of their property by scrapping the Capital Gains Tax exemption on the sale of main homes. The paper says the idea, detailed in a report called Land for the Many, would have the “inevitable result of making it harder for people to afford to move, and further gumming up the housing market”. It notes other measures carried in the report, including replacing inheritance tax with a “lifetime gifts tax” and the introduction of a tax on equity release that stems from the suggestion such withdrawals are used to avoid IHT. If enacted, the Telegraph argues, the proposals would deliver “an attack on private wealth of the sort not seen in this country since the Sixties.” Elsewhere, the Mail says the proposed CGT move “would kill the housing market and fleece million s of ordinary people”. Labour has insisted the homes tax, which the report says could help tackle “wealth inequality”, is “not under consideration” for its next manifesto. The party’s Jon Trickett said the report is “part of our policy development process for the next General Election“, with Andrew Gwynne telling Sky News: “The ideas are not Labour party policy.”
Think-tank warns over Scottish income tax blow
Think-tank IPPR has warned that Scotland could lose out on just under £1.8bn over the next five years due to weaker income tax growth compared to the rest of the UK. The report, entitled How Productivity Could Deliver Inclusive Growth in Scotland, says: “Despite welcome income tax rises in Scotland in recent years, we’re due to be worse off because of weaker income growth in Scotland compared to the rest of the UK.” A Scottish Government spokeswoman said: “Our decisions on taxation have resulted in a more progressive tax system, protecting those lower and middle income taxpayers, while raising additional revenue for the budget to invest in our public services and the Scottish economy.”
The Scotsman, Page: 4 The Press and Journal, Page: 27
Johnson: Labour want to tax ‘virtually everything’
Conservative leadership frontrunner Boris Johnson has said that Britain’s post-Brexit focus should be to “turbocharge” the “most innovative economy in Europe”, saying that the Tories will deliver higher pay while a Labour Government would mean higher taxes. Writing in the Telegraph, he says Labour leader Jeremy Corbyn “wants to tax virtually everything he can,” adding that this would see “swingeing inheritance tax; 50p income tax; the highest corporation tax in Europe; a financial transaction tax and many others so brutal that impartial estimates say he would end up actually reducing tax yields.”
Taxing time for Conservative contenders
Roger Bootle, chairman of Capital Economics, considers the role tax pledges have played in the Conservative leadership contest, saying that recent months have seen the pool of candidates compete “over the type and extent of possible tax cuts” they could offer. He muses that some leading Conservatives have suggested that tax cuts are not desirable as a “tax cutting agenda fosters competitive individualism as opposed to solidarity and communal action”. Mr Bootle argues that “truly Conservative economic programme” would combine tax cuts with more effective government action in areas where it is needed and a reduction in the role of government where it is not.
Impenetrable tax laws lead to Treasury losses
In a letter to the FT, Dr Rudolph Kalveks suggests HMRC could conduct reverse audits to identify those who overpay tax and proposes that tax legislation should be simplified.
Arrests made in Patisserie Valerie investigation
Several papers carry the news that the Serious Fraud Office last week arrested and questioned five people over issues related to the collapse of cafe chain Patisserie Valerie as part of an investigation into alleged accounting fraud, a story initially reported by the Sunday Times. Patisserie Valerie fell into administration after issues in its books were discovered, with it reported that accounts had been overstated and debts had been understated. A number of publications note that Grant Thornton, Patisserie Valerie’s auditor, has announced a review of its accounting operations.
The Guardian, Page: 14 The Daily Telegraph, Page: 3 Financial Times, Page: 8 The Times, Page: 34 City AM, Page: 3 Daily Mail
Craft distilleries in high spirits
The number of distillery businesses has increased by a fifth, research by UHY Hacker Young shows. There were 205 distilleries in 2018, while gin sales hit a record £2.7bn as exports grew 15% to £612m. James Simmonds, of UHY Hacker Young, said the UK craft spirits industry “is now a global powerhouse in the artisan spirits market.” He added that big manufacturers “have had to react and craft distilleries will need to continue to chip away at the big brands and not allow them to catch up.”
The Times, Page: 38 Daily Express, Page: 16 Daily Star, Page: 22 Yorkshire Post, Page: 3
GSCs botched sums are echoed across Aim as consultants clean up
Kate Burgess looks at issues faced by Goals Soccer Centres, noting that it has called in forensic accountants from BDO, hired RSM Tenon to check its books and appointed Deloitte to assess “future corporate options.”
Firms in Oddbins talks
The former owner of Oddbins is in talks with administrators to save the wine retailer, with Raj Chatha’s European Food Brokers and Duff & Phelps reportedly aiming to secure a deal that would rescue the chain’s remaining stores.
The Times, Page: 38 Daily Express, Page: 49
Carney: Fintech may help small firm finance
Bank of England Governor Mark Carney has suggested a boost to start-ups is on the cards, saying the Bank is to open up its balance sheet to a new generation of payment providers. He also pointed to the potential for fintech to improve the ability of small businesses to access finance, noting that smaller firms face a £22bn funding gap. Mr Carney said that part of the issue stems from the fact the assets that small businesses seek to borrow against are “increasingly intangible” and that many lack the historic data that lenders require for credit scoring. Technology, he added, could give lenders and borrowers a broader set of information by looking at data generated by online activity.
SME owners focus on valuations
The Market Invoice Business Insights poll has seen 66% of SME owners say increasing their company valuations is their top priority. It was also shown that only 30% increased their valuations by more than 10% in the past 12 months. Figures show that the average small business in the UK is valued at £2.9m, meaning the total value of all UK SMEs stands at around £3trn.
Daily Express, Page: 49 Yorkshire Post, Page: 15
Spending growth set to slow
Analysis by EY Item Club suggests consumer spending growth will slow from 1.8% in 2018 to 1.6% in 2019 and 1.7% in 2020. The report also suggests employment growth will slow to 1.0% in 2019 and 0.6% in 2020, from 1.2% in 2018. EY Item Club chief economic advisor Howard Archer comments: “The improvement in purchasing power has meant that consumers have been significantly less affected in their spending decisions than businesses by uncertainties over the economy and Brexit.” “However, we suspect earnings growth peaked in early 2019 and is likely to remain modestly below this level over the rest of 2019 and possibly beyond,” he added.
Manufacturers question industrial strategy
Research from BDO suggests manufacturers are increasingly frustrated that uncertainty over Brexit is stalling the Government’s industrial strategy, with 74% saying not enough progress has been made in the 18 months since the strategy was announced. Many of the 200 firms surveyed also voiced concern over an ongoing shortage of skilled workers.
The Guardian, Page: 32 The Independent, Page: 50
Women in Engineering
A Guardian analysis of the gender imbalance in engineering and technology careers notes research by PwC which saw half of women say the most important factor when choosing a future career is “feeling like the work I do makes the world a better place”.
The Guardian, Women in Engineering, Page: 32
Contact Paul Southward.