Monday Afternoon News Roundup 17th September 2018

NEWS ROUNDUP

TAX NEWS

HMRC powers under scrutiny from Lords Committee

The Lords’ Economic Affairs Finance Bill Sub-Committee is calling for evidence towards an investigation into HMRC powers and its Making Tax Digital (MTD) plan – to examine what principles should govern the development of the tax office’s powers in the digital information age. Lord Forsyth, chairman of the Sub-Committee, said: “We want to hear from a wide range of people and organisations, in particular those who may have experienced the use of HMRC’s powers or be preparing for MTD, and we are looking for sensible, pragmatic recommendations on how the current approach to these issues could be improved.”

Economia

HMRC targets undervaluation in IHT crackdown

Roughly one in five estates were investigated by HMRC for underpayment of IHT last year, according to UHY Hacker Young. Partner Mark Giddens said a rise in investigations could see more people, who may not be cash-rich, hit with hefty fines. He says: “HMRC knows that there is a temptation to undervalue residential property to save on inheritance tax, because it is typically the largest figure on the return […] If HMRC deems that there has been a lack of care in carrying out valuations, an estate could end up doubling the tax through penalties.” Mr Giddens adds that the area most likely to be queried is the valuation of residential property passed on to heirs. He points out that is a beneficiary gets a “professional valuation of the property, it might be argued that it is not correct, but you will not be charged a penalty because you have done the right thing.”

The Times, Page: 61

Archbishop faces accusations of hypocrisy

The Archbishop of Canterbury has been accused of hypocrisy after criticising Amazon over its tax affairs only for it to emerge that the online retailer is one of the Church of England’s top 20 investments. Justin Welby also described zero-hours contracts as “the reincarnation of an ancient evil”, but it later emerged that at least two CofE cathedrals are advertising for zero-hours jobs. The Church insisted it used its shareholder influence to effect change within companies. But the Times’ Patrick Hosking says Welby’s comments are a “bit rich” considering: “As a registered charity, [the Church] reclaims tax that would otherwise be paid by donors, through Gift Aid. Its £8.3bn investment fund pays no tax on dividends or on capital gains. Its churches pay no rates. It reclaims VAT on repairs to churches and church halls and is excused from charging VAT on everything from church fêtes to religious retreats. And it is a major beneficiary of public money through, for instance, grants from English Heritage.”

The Daily Telegraph, Page: 5 The Independent Daily Mirror, Page: 4 The Times, Page: 53 Yorkshire Post, Page: 14 The Scotsman, Page: 10

UK prepares legal fight with EU over commodities trading

EU attempts to force the UK government to increase taxes on commodity derivatives trading will be vigorously opposed, Treasury officials have said, as Brussels threatens court action.

Financial Times, Page: 2

Errors in pensions tax relief cost millions

Tens of thousands of employers have overpaid tax relief to workplace pension savers in the UK, with small businesses more likely to make mistakes.

Financial Times, Money, Page: 3

SMEs NEWS

Lords examine Bribery Act’s impact on SMEs

Pinsent Masons lawyer Jennifer Craven looks ahead to the findings from a House of Lords Select Committee which is examining whether the Bribery Act 2010 has led to stricter prosecutions of corrupt conduct, as well as the impact the act has had on SMEs. She notes that a report by PwC found that the number of UK businesses which had experienced bribery and corruption in the last two years had jumped to 23% from just 6% in 2016.

The Scotsman, Page: 36

Private equity sets up shop underneath the arches in London

Jonathan Derbyshire examines the threat to small businesses operating in railway arches following Network Rail’s decision to sell off thousands of sites to private equity groups.

Financial Times, Page: 14

ECONOMY NEWS

BoE holds rates over ‘greater Brexit uncertainty’

The Bank of England has left interest rates on hold at 0.75% as expected but flagged “greater uncertainty” around the Brexit negotiations. The Bank’s Monetary Policy Committee voted 9-0 to leave rates unchanged. The Bank’s regional staff reported that businesses were cracking down on costs and holding back on investment ahead of Brexit. However, it raised the forecast for UK economic growth in the third quarter from 0.4% to 0.5%, partly due to stronger consumer spending over the unusually warm summer.

The Independent The Times Financial Times, Page: 2

Carney warns no-deal Brexit could see house prices plunge

Mark Carney has warned the cabinet that a chaotic no-deal Brexit could crash house prices and send another financial shock through the economy. The Bank of England’s governor met senior ministers on Thursday to discuss the risks of a disorderly exit from the EU. His worst-case scenario was that house prices could fall as much as 35% over three years, according to sources.

The Times, Page: 1 The Daily Telegraph, Page: 1 Financial Times, Page: 1 The Guardian, Page: 1

Scotland’s business confidence amongst highest in UK

Scottish business confidence is among the highest in the UK, according to the latest business confidence monitor from the ICAEW. Confidence north of the border remained firmly positive in the third quarter at +9.9, well above the UK average of -0.2 and second only to the West Midlands. However, separate research by French Duncan shows the number of Scottish restaurants to go bust has almost quadrupled in the past ten years. A total of 73 food businesses collapsed last year according to analysis of Insolvency Service statistics, compared to just 19 in 2007.

The Scotsman, Page: 11, 37

Businesses on standby to accelerate investment

The ICAEW predicts a sluggish economy over the rest of the year with a possible no-deal Brexit leaving businesses cautious about investment spending. However, “fundamental financial conditions remain good,” said CEO Michael Izza, “and we expect a modest acceleration in investment from 2018 (1% growth) into 2019 (2.3%).” He adds that “rates of return on investment remain very strong relative to recent years. Once negotiations come to a climax, whether it is a deal or no-deal Brexit, businesses will have more clarity on what to expect for the future.”

ICAEW

Carney predicts £16bn bounce to UK economy from Chequers Brexit deal

The FT has learned that during his presentation to ministers on Brexit, BoE governor Mark Carney said the PM’s Chequers plan would boost the UK economy by £16bn if they were accepted by the EU. The report follows news that Mr Carney said the worst-case scenario, a chaotic, no-deal Brexit, could lead to a 35% fall in house prices.

Financial Times, Page; 2 The Daily Telegraph The Independent, Page: 4

Hammond: Corbyn’s Labour party must be stopped

Jeremy Corbyn’s policies would bankrupt Britain, writes Philip Hammond in the Daily Telegraph. “At the core of Labour’s economic philosophy is endless spending, increased centralisation and mounting debt,” the Chancellor says, adding: “It’s a danger the likes of which we have not faced for decades and one that we must stop, for the sake of future generations.”

The Daily Telegraph, Page: 27

CORPORATE NEWS

John Lewis pays £174m in rates

John Lewis shelled out £174m in business rates last year – 12 times the amount paid by Amazon on its warehouses across England and Wales. The retailer paid £10.4m on its flagship Oxford Street store alone last year – the third highest business rates bill paid by a retailer on a single property in the UK. John Lewis also announced a 99% fall in profit, figures described by Julie Palmer of Begbies Traynor as being “as significant as the fall of the Roman empire”.

Daily Mail, Page: 14 Financial Times. Page: 18

Carillion watchdog lampooned

In the latest attack on the government’s handling of the Carillion crisis, MPs have poured scorn on the Cabinet Office’s crown representatives, who oversee the finances and operational efficiency of government contractors. Frank Field, chairman of the work and pensions committee, said the crown representatives were more “Johnny English than James Bond”.

The Times, Page: 40

Unilever shareholder wants tax guarantees

A major Unilever shareholder is threatening to vote against the consumer group’s plan to abandon its dual-governance structure in London and Amsterdam. Unilever lobbied the Dutch government to scrap its withholding tax on dividends, but it is not expected to be abolished until 2020. Nick Train, joint founder of Lindsell Train, said that Unilever should be offering a “perpetuity guarantee” to UK shareholders in case the tax break does not materialise. The Times points out that domestic critics have dubbed the proposals “a tax break for foreign investors.”

The Times, Page: 51

OTHER NEWS

HMRC seeks head of networks

HMRC is hiring a head of networks, offering a salary of £100,000. The advertisement states: “We’re creating a dynamic, agile technology organisation that works on two levels: we want the most amazing experience for customers and citizens, both internal and external; and we are building careers that are rewarding and enjoyable for all of us.”

The Register

Nessie worth a monster £41m

A chartered accountant has estimated that the Loch Ness Monster is worth nearly £41m a year to the Scottish economy. Gary Campbell carried out the study using recent visitor figures for the Loch Ness area.

Daily Mail, Page: 35

China’s highest earning actress disappears

China’s highest earning actress is believed to have been detained for tax evasion. Fan Bingbing has not been seen in public for more than three months amid a crackdown on celebrities failing to adhere to China’s code of morality.

The Times, Page: 47 International New York Times, Page: 3

Contact Paul Southward if you have any queries.

Paul Southward