MIDWEEK NEWS TO 4th DECEMBER
MIDWEEK NEWS TO 4th DECEMBER
TAX MIDWEEK NEWS TO 4th DECEMBER
Tech giants face tax avoidance claims
Tax transparency campaign group Fair Tax Mark says the big six US tech firms – Amazon, Facebook, Google, Netflix, Apple and Microsoft – have “aggressively” avoided $100bn (£77bn) of global tax over the past decade by shifting revenue and profits through tax havens or low-tax countries. The report also suggest that in some cases they have delayed payment of taxes. Amazon is identified as the worst offender, with Fair Tax Mark highlighting that it has paid $3.4bn (£2.6bn) in tax on its income despite revenue of $960.5bn and profits of $26.8bn. It adds that Amazon’s accounting is so complicated there is “no way to discern” how much tax it should be paying or is paying in the UK. Alex Cobham, chief executive of Tax Justice Network, said: “When multinational corporations abuse their tax responsibilities to society, they weaken the supports that our economies need to work well and create wealth.” Meanwhile, GMB and T UC officials will protest outside Amazon’s London offices today, saying the retailer should pay more in taxes.
Daily Mail, Page: 77 The Guardian, Page: 24, 43 Daily Mirror, Page: 9
Corbyn denies tax hike
Labour leader Jeremy Corbyn has insisted removing the marriage tax allowance is not a tax hike. With it suggested that 4.2m married couples face losing £250 a year from Labour plans to scrap the marriage tax allowance, Mr Corbyn told Sky News’ Sophy Ridge on Sunday: “We’re not raising tax.”
The Sun, Page: 10
Chancellor promises review of tax rule
Chancellor Sajid Javid has pledged to review tax rule changes coming into force next April under the IR35 regime, with Mr Javid saying he wants to ensure the reforms are appropriate. The rule change is shifting the responsibility for assessing the tax status of contractors from the individual to the employer. The reform is designed to prevent disguised full-time employees gaming the system to pay lower taxes but has raised concern among firms worried they will fall foul of HMRC rules, prompting some to cut ties with contractors. Seb Maley of Qdos, a tax firm for freelancers, welcomed the Chancellor’s promise of the reform coming under scrutiny, but said any review “must be genuine and not lip service simply to win the votes of independent workers, who could be crucial in the outcome of the election.” The review will come under a wider investigation into how new policies could help freelancers.
Retailers overcharged £1.4bn in business rates
Figures suggest that retailers may be overpaying £1.4bn in business rates, with 118,390 appeals having been lodged by firms that saw their bills increase following changes to how the tax is calculated. Of the appeals lodged with the Valuation Office Agency since April 1, 2017, 109,610 have been resolved, with two-thirds resulting in tax rebates for firms. With concerns that a rise in the number of outstanding cases risks creating a bottleneck, the British Retail Consortium (BRC) has described the appeal system as “broken”. Considering the number of appeals and proportion delivering rebates, the BRC says shops, restaurants and pubs may have overpaid £1.4bn in business rates over five years – or £280m a year. The Conservatives and Labour have both pledged to overhaul business rates if they win the upcoming election.
Daily Mail, Page: 73
PM to push ahead with digital tax
Prime Minister Boris Johnson has vowed to deliver a digital sales tax, saying: “I do think we need to look at the operations of the big digital companies and the huge revenues they make in the UK and the amount of tax they pay,” adding that there is a need to “make sure they make a fairer contribution.” The Conservative manifesto promises to implement a digital services tax that would place a 2% tax on UK revenues, with this set to come into force in April 2020. The tax could put the UK at odds with US president Donald Trump, whose administration has hit out at a similar levy imposed by France, saying it may place 100% tariffs on some French goods in response to the 3% levy. Lobby group British American Business said the UK’s proposed tax could damage “the momentum” of any trade talks between the countries and “distract from efforts” to come to a free trade agreement. Pau l Monaghan, chief executive of the Fair Tax Mark, has warned that if the UK does not roll out the digital services tax, it would be “enormously significant” and represent a “complete capitulation to the US.”
Corbyn: Tax rise will boost public services
Labour leader Jeremy Corbyn has told ITV’s This Morning of his plans to fund improvements to public services, saying some of the cash will come from tax rises for big business. This, he noted, will come through corporation tax “which will go up to ultimately 26%, which is still less than it was in 2010 and less than it is in most industrial countries.” Mr Corbyn said he has raised the issue with business organisations, noting that “they didn’t welcome the tax rise but they said it’s something they could live with.” Elsewhere, businessman Surinder Arora, founder of hotel operator Arora Group, has hit out at Labour’s plans to increase tax on corporations and wealthy individuals, saying the plans could drive businesses and investors away from the UK.
Daily Express City AM, Page: 9
IFS: SNP manifesto short of tax plan detail
The Institute for Fiscal Studies (IFS) has analysed the SNP’s general election manifesto, saying that without new taxes to balance the SNP’s proposed spending, taxes would have to rise or further cuts would be needed elsewhere. IFS associate director David Phillips said that unlike its previous manifestos – and those produced by other main parties ahead – the SNP has not provided detailed costings or tax plans.
The Scotsman, Page: 1
Tax and charity
Mike Warburton, who was previously a tax director with Grant Thornton, offers advice on tax and giving to charity in the Telegraph, saying tax rules encourage charitable giving “so making donations can be useful for your finances”. Among advice, he highlights th at people can save inheritance tax by naming a charity in their will, with charities receiving bequests from about 10,000 estates each year, giving inheritance tax relief of £1.8bn. Mr Warburton cites HMRC analysis showing that while gift aid is worth about £1.3bn each year to the charity sector in reclaimed tax, a quarter of eligible donations are not gift aided at a cost to charities of £560m.
SMEs MIDWEEK NEWS TO 4th DECEMBER
Banks tighten lending to SME retailers
Figures from Moore show that lending to SME retailers has fallen 6% since 2016. Lending to SME retailers has fallen from £15.6bn to £14.7bn, with banks more reluctant to hand out loans amid Brexit-related uncertainty. Despite the fall in loans to smaller entities, lending to large retailers by banks rose by 20% from £31.5bn to £37.8bn. Bridget Culverwell, director at Moore, said: “It is a real worry for smaller retailers if banks are treating them less favourably than larger retailers.” She added that banks are expected to be “apprehensive to lend to the sector in the months ahead” while the final outcome of Brexit remains uncertain.
City AM, Page: 9
Uppal: Greater resources needed to support small firms
Paul Uppal, the former Small Business Commissioner, says a lack of resources and indifference from Whitehall officials have thwarted attempts to ensure small firms are treated more fairly by large customers, saying his budget was too small to tackle the “huge task” of getting big businesses to pay their bills on time. He said his successor will need more financial and strategic support from the Government, with more resources needed if the Small Business Commissioner “is going to do the job”. Bill Esterson, Labour’s Small Business Minister, said small companies were being failed because the commissioner does not have the resources required.
SME bosses warn of challenges ahead
A poll by small business platform Xero shows that a quarter of small business owners believe their company will go bust within 5 years. The survey saw 54% warn that late payments pose a risk to their firm, while 44% voiced concern over tax rates and the same proportion pointed to uncertainty over Brexit. Some 31% said maintaining or increasing levels of productivity presented a challenge, while 27% cited the risk of cyber-attacks, 25% were concerned by rental costs, 21% said retaining staff was an issue and 19% flagged the cost of recruiting new workers. The study of 500 business owners reveals that 40% believe the current climate is the most turbulent period they’ve ever experienced as an SME owner, while more than a third said their mental health has been affected by running a firm. The report shows that, on average, owners work an extra nine hours a week and have pumped £11,846 of their own money into their busi ness.
Small firms fear for the future
Research from Notonthehighstreet shows that 22% of smaller UK businesses believe they could collapse within 12 months if Christmas trading is below average, while one in 12 said they would go under in a matter of weeks. Figures from KPMG show that 44 retail businesses went into administration in the six months to September.
The Independent, Page: 47
CORPORATE MIDWEEK NEWS TO 4th DECEMBER
Business confidence slips in Scotland
Research from the ICAEW reveals that business confidence in Scotland turned negative in the fourth quarter, with its Business Confidence Monitor showing Scottish businesses reporting slowing sales and profits growth as well as limited improvements in productivity. Despite the decline, confidence north of the Border remains above the UK average. ICAEW Scotland director David Bond said: “It is disappointing but not unexpected that business confidence has fallen back into negative territory this quarter, with ongoing uncertainty on issues such as Brexit likely to have had an impact.”
The Press and Journal, Page: 32
Ted Baker reveals accounting error
Fashion retailer Ted Baker has revealed an accounting error that saw it overstate the value of its inventory by between £20m-£25m. Law firm Freshfields Bruckhaus Deringer is to carry out a review and independent accountants are to be appointed to investigate. It has been suggested that auditor KPMG could come in for criticism following the revelation. In its latest audit of the retailer’s accounts, KPMG acknowledged there was a “risk” to the inventory valuation arising from the fact that “sales in the fashion industry can be extremely volatile with consumer demand changing significantly based on current trends.” KPMG has been Ted Baker’s auditor since 2001, with the audit last put out to tender in 2012. The Financial Reporting Council handed the audit firm a £3m fine last year for providing Ted Baker other services outside of audit.
The Times, Page: 43 The Daily Telegraph, Business, Page: 1 Financial Times, Page: 13 The Guardian, Page: 41 The I, Page: 41 Daily Mirror, Page: 43 The Independent, Page: 50 Daily Mail, Page: 71 The Sun, Page: 43 City AM, Page: 4 The Scotsman, Page: 32 Evening Standard BBC News
Kiddies Kingdom eyes Mothercare stores
Independent baby goods chain Kiddies Kingdom has put a proposal to Mothercare’s administrators PwC, saying it wants to take on some of the collapsed retailer’s stores and distribution centres, while also purchasing stock and retaining some staff.
The I, Page: 43
Trying times for rugby club creditors
The Times looks at financial woes at rugby club Yorkshire Carnegie which saw Begbies Traynor drafted in. The firm, which drew up a CVA that would pay out 15p to every £1 owed, issued a report showing that the club’s unsecured creditors include future player contracts worth £1,031,560.
The Times, Sport, Page: 64
Shipyard taken into public ownership
The Ferguson Marine shipyard has been formally taken into public ownership, the Scottish government has announced. Administrators from Deloitte had said public ownership was in the best interests of the creditors, despite receiving three commercial bids.
The Scotsman, Page: 64
Business creates firms for fraudsters
A Times investigation has found that London-based company Formations House has created a web of businesses, banks and tax havens used by international crime gangs and fraudsters. It says the formation agent has repeatedly failed to carry out proper due diligence on clients and has set up companies for known criminals. The paper says that directors of at least 40 UK companies that Formations House has created have been disqualified after allegations of wrongdoing, while Charlotte Pawar, its chief executive, told an undercover reporter that it was possible for company owners to conceal their identities and deposit funds at foreign banks. The Times says “lax” controls surrounding company creation agencies will prompt concerns that “fraudsters and organised crime are damaging Britain’s reputation for corporate governance.”
EMPLOYMENT MIDWEEK NEWS TO 4th DECEMBER
Disabled staff see 12% pay gap
Data from the Office for National Statistics (ONS) shows that disabled employees are paid 12.2% less than their non-disabled peers, with the median pay for non-disabled workers in 2018 at £12.11 an hour, compared to £10.63 for disabled staff. The ONS said disabled females were typically paid 10.1% less than non-disabled females last year, while the pay gap between disabled and non-disabled male employees was 11.6%. London had the widest disability pay gap between disabled and non-disabled staff at 15.3%, with Scotland’s 8.3% gap the UK’s narrowest. The Chartered Institute of Personnel and Development’s Dr Jill Miller, said: “Businesses that aren’t inclusive – and don’t manage health and disability effectively – risk missing out on hard-working and talented individuals, and damaging their reputation among staff and customers.”
Half of Scottish boards fall short on gender target
A body set up to monitor the gender balance in FTSE 350 businesses has found that seven of Scotland’s 14 publicly listed groups must improve boardroom diversity if they are to meet the UK government’s goal of 33% female board representation by December 2020. Hampton-Alexander review chair Sir Philip Hampton has urged business leaders to ensure that 50% of leadership position appointments next year are women. Across the UK, women’s representation in the senior leadership of FTSE 100 companies has risen to 28.6%, up from 27% in 2018. Across the FTSE 250, women’s representation has climbed to 27.9%, up from 24.9% a year earlier. Catherine Burnet of KPMG, which sponsored the review, said: “For too long now, women have faced unnecessary obstacles, damaging their prospects and compromising the opportunities that a truly balanced board creates for a growth-hungry company.”
The Scotsman, Page: 32
INTERNATIONAL MIDWEEK NEWS TO 4th DECEMBER
US threatens tariffs over France’s digital tax
The US says France’s digital services tax unfairly discriminates against US technology companies, adding that it may in turn impose 100% tariffs on $2.4bn of French goods and “fees or restrictions” on French services. US trade representative Robert Lighthizer said its investigation found that the French proposal was “inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies”, such as Google , Facebook, Apple and Amazon.
City AM, Page: 3 Financial Times
PROPERTY MIDWEEK NEWS TO 4th DECEMBER
Sector bodies call for VAT rethink
Property and construction bodies are calling on would-be ministers to cut VAT on home maintenance. In a letter to leaders of the four main political parties, groups including the Federation of Master Builders, the British Property Federation, the Royal Institution of Chartered Surveyors and the UK Green Building Council say cutting VAT on improvements to 5% could create 95,000 jobs and generate an extra £15bn in taxes. They add that such a move would promote and incentivise energy efficiency works.
ECONOMY MIDWEEK NEWS TO 4th DECEMBER
CBI expects modest growth
The latest report from the Confederation of British Industry (CBI) suggests economic growth for the next two years will remain “modest”, at 1.3% this year and 1.2% in 2020 before rising to 1.8% in 2021. The CBI says this is based on an assumption that the UK leaves the EU by 31 January and has “clear line of sight” to a trade deal involving alignment with EU rules. CBI chief economist, Rain Newton-Smith, said: “Transforming a lost decade of productivity will only be possible if supported by a good Brexit deal – one that keeps the UK aligned with EU rules, essential for frictionless trade, along with protecting the UK’s world-beating services sector, which accounts for 80% of our economy.”
The Independent, Page: 53 The I, Page: 38 Daily Express, Page: 11 The Daily Telegraph, Business, Page: 3
Manufacturing confidence climbs
A report from BDO and manufacturing industry body Make UK shows confidence in the economy rose after the threat of a no-deal Brexit on October 31 was averted, while export orders increased in the quarter to November and output was boosted by stockpiling ahead of the October deadline. Make UK expects growth of 0.1% this year, with a 0.3% increase in output next year. Tom Lawton, head of manufacturing at BDO, said: “Investment levels have slightly improved this quarter following a series of declines since the start of the year. While this is positive, and possibly a sign that the prospect of a no-deal Brexit is less of a short-term worry, firms are still facing an uphill battle.”
The Times, Page: 44 The Daily Telegraph, Business, Page: 3 The Independent, Page: 52 The I, Page: 38
Consumer debt at record high
Bank of England figures show consumer debt levels rose to an all-time high of £225bn last month, increasing by £1.3bn between September and October.
Manufacturing sector employment dips
Factories are laying off workers at the fastest rate in seven years, the IHS Markit/CIPS Purchasing Managers’ Index (PMI) for manufacturing shows. The analysis shows employment dipped for the eighth month in a row and the pace of job losses hit its steepest level since September 2012. November also saw new orders fall for the seventh consecutive month. The PMI slipped to 48.9 in November from 49.6 in October, with a reading below 50 indicating that a majority of businesses reported falling output. Brexit uncertainty, attempts to cut costs, and redundancies were cited as contributing factors for the dip. Rob Dobson, a director at IHS Markit, said uncertainty created by a further delay to Brexit “was accompanied by growing paralysis ahead of the forthcoming general election.” He added: “Destocking at manufacturers and their clients following the latest Brexit delay was a major contributor to the weaknes s experienced by the sector.”
The Guardian, Page: 42 Financial Times The Independent
Retail sales up in November
British Retail Consortium/ KPMG data shows that retail sales grew 0.9% in November from a year ago. Stripping Black Friday sales from the data shows sales were down 4.4% and 4.9% on a like-for-like basis. Paul Martin, UK head of retail at KPMG, said: “Over the course of November, consumers will have held off making purchases in anticipation of discounts to come, despite many retailers spreading out promotions across several days, if not weeks.”
The Times, Page: 50 Daily Express, Page: 47 Yorkshire Post, Page: 4
Apps deliver an extra £400m for restaurants
Deloitte analysis suggests that food delivery apps such as Deliveroo, Just Eat and Uber Eats are contributing an extra £400m in revenue for European restaurants. The study shows that £1.6m of extra meals were sold each week over a year in Paris, London, Madrid and Warsaw – with independent restaurants accounting for almost half of the additional sales. London restaurants saw revenue climb £323m and profit increase by £189m.
City AM, Page: 11
Construction sector shrinks
New survey data has shown that the UK construction sector contracted for the seventh month running in November as new work fell sharply amid yet more political uncertainty. The IHS Markit/CIPS UK construction PMI came in at 45.3 in November, compared to 44.2 in October. A figure below 50 indicates contraction. Economists had predicted a score of 44.5, meaning November’s figure beat expectations and was the slowest drop in overall construction for four months. Duncan Brock, group director at CIPS, said: “Brexit uncertainty, an impending general election and wet weather all combined to keep the construction sector firmly in its contraction hole last month.” Tim Moore, associate director at IHS Markit, commented: “Construction companies reported a particularly sharp fall in demand for commercial projects amid a greater squeeze from domestic political uncertainty and delayed investment decisions.”</>
Financial Times City AM
OTHER MIDWEEK NEWS TO 4th DECEMBER
UK insurers forecast to post losses as costs and claims rise
EY forecasts that the motor and home insurance industries will see underwriting losses next year, with the ratio of claims and costs as a proportion of premium income hitting 107% and 102% respectively.
New chapter for audiobooks
Deloitte ’s annual technology and media trend predictions report suggests audiobook sales are on course to overtake ebooks. It forecasts that the global audiobook market will grow by 25% to almost £4bn in 2020. The report also predicts that the global podcast market will pass £850m in 2020.
Comment on content
City AM looks at the challenge broadcasters face in ensuring output reaches audiences, with David Elms, head of media at KPMG, saying: “Future business models will be increasingly driven by the quality of the programmes and the ease with which viewers can access them.”
City AM, Page: 17
Drug could treat condition
Research supported by PwC and the Medical Research Council UK suggests the symptoms of endometriosis could potentially be reduced with a drug previously investigated as a cancer treatment.
The Guardian, Page: 25
Six richest Brits have as much money as poorest 13m
Analysis by the Equality Trust shows that the UK’s six richest people control as much wealth as the poorest 13m. The study found that the six richest people in the country have a combined fortune of £39.4bn, a sum equal to the assets of 13.2m Britons.
The Independent, Page: 51 Daily Mirror, Page: 8
Contact Paul Southward.