NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
TAX NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
Publicis boss weighs into digital tax row
Maurice Levy, chairman of the French media giant Publicis, has hit out at multinational digital companies saying they shouldn’t benefit from infrastructure and consumers in countries without paying tax there. Levy told CNBC at the World Economic Forum in Davos that firms such as Google, Amazon and Facebook need to be taxed fairly in order to tackle the “unfair advantage” they have. His comments come as US Treasury Secretary Steve Mnuchin warned of tariffs on car exports from the EU if France and the UK went ahead with unilateral digital services taxes. The OECD advised the UK to “hold fire” on its proposed levy warning that it could create a “cacophony and a mess” and that a global solution needed to be found. Sajid Javid, the Chancellor, has insisted the UK will press ahead with its plans, putting Boris Johnson’s government on a collision course with the US.
Philanthropy no substitute for taxes, say wealthy celebs
More than 120 wealthy celebrities and business people have written an open letter calling for the world’s rich to pay more taxes to ensure societies were provided with adequate funding. Signatories included Richard Curtis, the screenwriter; Simon Pegg, the actor; Abigail Disney, the film-maker; Julian Richer, of retailer Richer Sounds; Richard Reed, co-founder of Innocent Drinks; and Paul Polman, former chief executive of Unilever. In their letter they say: “There are two kinds of wealthy people: those who prefer taxes and those who prefer pitchforks. We prefer taxes. And we believe that, upon reflection, you will as well.” They go on to describe philanthropy as “an inadequate substitute for government investment” and claim tax avoidance had reached “epidemic proportions”. Simon Pegg explains his position in a piece for the Times.
Carbon taxes a hot topic at Davos
Davos saw proposals for a series of new carbon-related taxes yesterday. Prince Charles suggested increased subsidies for green industries and more punitive taxes on pollution; the European Commission president, Ursula von der Leyen, warned China and other large fossil fuel producers they could face a CO2 tax on imports. Back in the UK, the Government’s climate change advisers have recommended increased taxes on air travel and incentives for farmers to plant trees.
Johnson hopes to cut taxes for poorest
Boris Johnson last night repeated his desire to cut taxes for lower-income households. During a “People’s PMQs” session broadcast from Downing Street on Facebook, the PM said his government had already announced a cut in National Insurance and was lifting the Living Wage by the biggest ever amount. He added: “I believe strongly in helping people on low incomes, making sure they are properly paid. We want to move to a high-wage, high-skill economy uniting and levelling up across the whole of the UK.”
Daily Express, Page: 1, 8
Off-Payroll workers in the private sector – Do you qualify for small company exemption?
Here is a quick guide to the rules for qualifying as a small company: –
US and France agree deal on digital tax
The US yesterday dropped its insistence that any international digital taxation agreement should be optional, bringing to an end a tussle between the US and France and paving the way for a global deal in 2020. The secretary-general of the OECD, Angel Gurría, said the negotiating process was back “on track” and he hoped countries would make progress in the next phase of negotiations in Paris next week. But Paris insists digital companies in France will pay their due taxes in 2020 despite allowing more time for an international solution. An FT editorial contends that the UK should join France and implement its own digital tax but suspend the collection of revenue while a deal with the OECD is thrashed out. Elsewhere, the Telegraph’s Jeremy Warner rails at the design of the digital services tax, arguing that shifting the basis for the tax from profit to revenues fails the key tests a new tax should pass: that it be “fair, equitable, simple, transparent and economically efficient.”
HMRC spearheads worldwide tax fraud probe
HMRC has helped spearhead a global day of action against the suspected tax evasion and money laundering of more than £200m in the UK alone. The action occurred as part of a series of investigations with allies into a Central American financial institution, whose products and services are believed to be facilitating tax evasion and money laundering for customers across the globe. It is believed that through this institution, a number of clients are using a sophisticated system to conceal and transfer wealth anonymously, to evade their tax obligations and launder the proceeds of crime. This is the first major operational activity for the Joint Chiefs of Global Tax Enforcement (J5), which was established to tackle international tax crime and money laundering.
Millionaires accused of hypocrisy after pleas for higher tax
Former Unilever boss Paul Polman, Innocent Smoothies co-founder Richard Reed and US real estate developer Jeff Gural all signed a letter calling for higher taxes on millionaires and billionaires yesterday. But they have been accused of hypocrisy by campaigners who say they previously sought specific tax breaks for their businesses. The letter was also signed by actor Simon Pegg, director Richard Curtis, heiress Abigail Disney and Julian Richer, founder of UK record chain Richer Sounds. The plea elicited this response from Matthew Lesh, head of research at the Adam Smith Institute: “We’ve all had enough of millionaires lecturing the rest of us about not paying enough tax. If these hypocrites really want to pay more, the Treasury will happily take their spare dosh.”
The Daily Telegraph, Business, Page: 1 The Times, Page: 28
Welsh minister criticises UK government over NHS pension measure
Vaughan Gething, the health minister for Wales, has said the government’s decision to cover the pension tax bills of doctors in England had left the Welsh executive with “no option” but to offer the same.
CORPORATE NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
Ted Baker warns of £58m writedown on inventory error
Ted Baker shares fell about 10% yesterday after the retailer revealed that an independent review by Deloitte found it had overstated its stock by £58m – more than double previous estimates. Ted Baker now expects to report full-year profits as low as £5m for 2019, down 90% on the year before. No explanation for the stock mis-valuation was given. City AM notes that Ted Baker’s auditor, KPMG, had previously concluded the misstatements were too small to affect the accounts. The Financial Reporting Council fined KPMG £2m in 2018 for misconduct relating to its work for Ted Baker in 2013 and 2014. City AM goes on to list other recent accounting blunders at Goals Soccer Centres, M&C Saatchi, Superdry, Patisserie Valerie, Metro Bank and RSM. The Mail’s Alex Brummer says this latest accounting blunder means the “case for the Government getting on with the audit reforms proposed by Sir Donald Brydon and Sir John Kingman is overwhelming.”
Financial Times, Page: 17 The Guardian, Page: 36 Daily Mail, Page: 78, 79 The Times, Page: 45 The Daily Telegraph, Business, Page: 1 City AM, Page: 8 The Independent, Page: 56 Daily Express, Page: 45 The Sun, Page: 45 Daily Mirror, Page: 45 The I, Page: 43 Yorkshire Post, Business, Page: 8
Sage reports strong revenue growth
Sage reported revenue growth of 6.7% in the three months ending 31 December triggering a near 5% rise in its shares yesterday. “We have sustained last year’s growth momentum into the first quarter of the 2020 financial year, as we continue to focus on driving recurring revenue through the transition to cloud-based subscription services,” said chief financial officer Jonathan Howell.
City AM The Daily Telegraph, Business, Page: 7
Sector ‘overcapacity’ takes Handmade Burger Co. into administration
Casual dining chain Handmade Burger Co. has fallen into administration, taking over 280 jobs with it. Following falling sales at the burger chain, all 18 restaurants have closed. Leonard Curtis was appointed as administrator of The Burger Chain Limited on Thursday morning, after unsuccessful attempts to secure a sale of the business. Joint administrator David Griffiths comments: “The casual dining market in the UK has experienced significant challenges over the last four years, largely as a result of overcapacity in the sector, which has resulted in a significant number of insolvencies.
The Times, Page: 43 The Daily Telegraph, Business, Page: 7 City AM The Sun, Page: 49 The Scotsman, Page: 33
Jingye proposes 500 job cuts at British Steel
Up to 500 jobs will go at British Steel after the Chinese firm acquiring the business made an agreement with unions. Jingye’s proposals will now be sent to British Steel staff for final sign-off. EY is managing the sale alongside the official receiver.
The Daily Telegraph, Business, Page: 3 The Guardian, Page: 37
Interiors group calls in administrators
Glasgow-headquartered interior design group Houseology is understood to have called in restructuring experts at Leonard Curtis, with 23 staff being made redundant with immediate effect.
The Scotsman, Page: 32
SMEs NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
RBS sets aside £1bn for female entrepreneurs
Alison Rose is today launching a £1bn fund to support women entrepreneurs. The Royal Bank of Scotland CEO has set a target for the bank to help create 50,000 businesses in the next three years. Before she got the top job at RBS, Ms Rose conducted a government-backed review into funding for female entrepreneurs finding less than 1% of all venture capital funding goes to female business owners. “It doesn’t matter what gender an entrepreneur is,” she said. “But if there are barriers in the way, we should do something about it.”
Daily Mail, Page: 75
EMPLOYMENT NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
Mental health support pays off, says Deloitte
Deloitte has urged firms to intervene earlier to help employees with mental health problems. A survey by the firm suggests the total cost to UK businesses in terms of lost productivity and staff turnover is as much as £45bn annually, a rise of 16% since 2016. Deloitte added that firms get £5 back in financial benefit for every £1 they spend helping employees with mental health problems. Vice-chairwoman Rebecca George said: “As our ways of working evolve, so do expectations of employers about how we should support our people. This analysis shows very clearly that it pays for employers to provide mental health support at work and that early intervention is vital, for those experiencing poor mental health and employers alike.”
The Press and Journal, Page: 31
Offer from business to develop immigration plan rejected
Attempts by business lobby groups to influence the design of the UK’s new immigration system have been rejected by Boris Johnson. The CBI, British Chambers of Commerce, the Federation of Small Businesses and Make UK – and about 30 trade associations offered to help the Government to create a new system. They specifically called for a two-year “temporary visa route” that would allow low-skilled migrants to continue to enter the country after December 31st. But a senior government source said: “Our new immigration system will be open to top talent from across the world, but business lobby groups should stop lobbying for unlimited labour from the EU and instead focus on investing and levelling up the existing workforce.”
The Times, Page: 15 The Daily Telegraph, Page: 12 The I, Page: 13
PENSIONS NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
Savers warned about drawing on pensions early
A record 7,683 savers dipped into their pension as soon as they could in the second quarter of 2019 – up 10% on last year. The total number of 55-year-olds who decided to draw down on their pension for a regular income increased to 29,700 in the 12 months to the end of June 2019, up nearly 3,000 on the same period the year before. Campaigners are warning that savers risk running out of money in later life by making injudicious use of the “pension freedom” rules. They also trigger a cut in the maximum annual contribution that can be made with tax breaks, which falls 90% from £40,000 to £4,000.
Bailey fears fall in asset values
Financial Conduct Authority chief executive Andrew Bailey has warned that Britons have become far more exposed to a fall in asset prices, partly because of changes to pension rules. Speaking on an internal FCA podcast, the incoming Bank of England governor said that increased exposure to asset values had been accompanied by declining understanding of the fallout from a decline in prices, saying that the issue was “one of the things that worries me most”. Equity markets have been on a bull run stretching back to 2009 while average UK house prices are near record highs, and Mr Bailey said many people were planning their retirement income based on assumptions on asset values that may prove to be overly optimistic.
Hargreaves reports measured approach to pension withdrawals
Customer data compiled by Hargreaves Lansdown has found that the majority of people investing their pension to live off it in retirement are taking a measured approach to withdrawals. About 45% have simply opted to take all or some of their 25% tax free cash – as a result they are not falling foul of a tax rule limiting people making additional withdrawals to paying in just £4,000 a year. Of those who do start drawing an income, just two out of five start immediately. Among those who wait, 40% put it off for at least half a year.
ECONOMY NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
UK borrowing falls
UK government borrowing in December was less than expected, at £4.8bn, and down £0.2bn compared to the same month a year earlier, according to the latest figures from the Office for National Statistics (ONS). As chancellor Sajid Javid prepares to boost spending in his March Budget, for the financial year so far – March to December – UK government borrowing stood 8% higher than a year earlier at £54.6bn. Overall public debt was £1.82tn at the end of 2019, an increase of £35.5bn on December 2018, while corporate tax receipts dipped 3.4% year on year, the biggest drop since 2012/13. PwC chief economist John Hawksworth said: “If current trends continue, the Chancellor should have some room for manoeuvre in his Budget in March, particularly in terms of increasing planned infrastructure spending.”
UK manufacturers upbeat amid poor figures, CBI says
New orders among UK manufacturers fell at their fastest pace since the financial crisis in the three months to January, according to the Confederation of British Industry’s (CBI) latest survey. Its confidence gauge however, the difference between businesses reporting higher rather than lower optimism, recorded its biggest swing since the survey began in 1958 – taking confidence to its highest level for almost six years. “It looks promising,” said Howard Archer, chief economist at the EY Item Club. “This is all good news for the Chancellor. The economy certainly seems to be picking up.”
Sajid Javid tries to calm nerves over post-Brexit rules
The Chancellor has tried to reassure businesses concerned about the UK shifting away from EU rules after Brexit by saying Britain would only diverge when it was in the best interests of industry. Sajid Javid told UK chief executives at a Davos lunch that although the UK could not be a rule taker, for democratic reasons, “it doesn’t mean we will diverge for the sake of it”. Carolyn Fairbairn, CBI director-general, welcomed the clarification adding that the Conservative’s decisive general election victory had been a boost to confidence.
INTERNATIONAL NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
Isabel dos Santos scandal claims PwC scalp
PwC ’s head of tax in charge of Portugal, Angola and Cape Verde has quit following revelations of PwC’s links with Isabel dos Santos, the daughter of the former PM of Angola. Ms Dos Santos is accused of siphoning billions from the country.
OTHER NEWS FOR THE WEEK ENDING FRIDAY 24th JANUARY 2020
Brussels to hold financial services hostage under equivalence regime
The Telegraph reports that the European Commission has drawn up a list of UK financial services that could have access to the EU market removed as Brussels seeks to leverage equivalence rules in negotiations with Britain. The paper suggests that by “pinpointing specific industries and sparing others, the EU would be able to ensure its continued access to vital clearing services and global capital markets”.
Chancellor launches search for new OBR chief
Sajid Javid has launched the search for the next head of the Office for Budget Responsibility (OBR) as Robert Chote’s tenure draws to an end. The UK’s budget watchdog was formed in 2010 by George Osborne to ensure the government stuck to its spending and borrowing rules.
Contact Paul Southward.