NEWS FOR MIDWEEK TO 29th JANUARY 2020
NEWS FOR MIDWEEK TO 29th JANUARY 2020
TAX NEWS FOR MIDWEEK TO 29th JANUARY 2020
Virgin Healthcare has paid no tax on £2bn NHS deals
Sir Richard Branson’s Virgin healthcare group has been accused of being “parasitic” in its involvement in the UK health sector, having paid no corporation tax despite landing £2bn in NHS and local authority deals. Campaigner Dr John Lister says the group consistently racks up losses, fragments services and poaches NHS-trained staff.
Daily Mirror , Page: 8
Javid to curb entrepreneur tax break
A senior cabinet minister claims the Chancellor will “recalibrate” entrepreneurs’ relief in the Budget in March, following criticism that the tax break benefits wealthy investors more than start-up companies.
US threatens retaliation against EU over carbon tax
The US commerce secretary, Wilbur Ross, has stated that the US will respond to EU plans to tax carbon imports if the measure is deemed to be protectionist.
A unitary tax would ensure multinationals pay their share
Nicholas Shaxson, the author of The Finance Curse: How Global Finance is Making us All Poorer, proposes the implementation of unitary tax on multinational tech firms. This would be a fairer way of taxing the companies while keeping tax havens out of the equation and ensuring that developing countries get a bite if the tax revenue pie too, he says. A unitary tax divides a multinational’s total global profits among each country where it operates, using a formula based on the number of employees, sales, turnover and physical assets in each place. Each country may then tax its portion at whatever rate it likes. Shaxson say this method “is the only rational basis for modern global corporate tax.” The Mail’s Stephen Glover complains about tech companies paying less tax in the UK than the likes of JK Rowling or Bet 365 boss Denise Coates and calls on Boris Johnson to face down Donald Trump on the issue of a digital services tax. Finally, David Richards, the CEO of WANdisco, says in the Telegraph that the tax issue is a symptom of a wider problem with companies like Facebook and Google which is their monopoly status – break these up and the tax problem can more effectively be solved.
The Guardian Daily Mail, Page: 18 The Daily Telegraph, Business, Page: 2
Holyrood warned over further tax hikes
The Scottish government has been warned that any further income tax divergence with the rest of the UK risks discouraging highly skilled workers from coming to Scotland. CBI Scotland is also calling for business rates to be brought in line with the rest of the UK, in a submission to finance secretary Derek Mackay ahead of next week’s budget.
The Scotsman, Page: 8
Government considers tax reliefs to help news publishers
In response to a review of the news media market the government has said it will consider “a range of tax incentives” to support news publishers. The Cairncross Review found that the print circulation of local and national titles had halved in a decade.
MPs group tells Government to cut IHT to 10%
The All-Party Parliamentary Group on Inheritance Tax and Intergenerational Fairness is calling for IHT to be cut from 40% to 10%, and 20% for estates worth more than £2m. The MPs say the changes would make the system fairer and reduce tax avoidance. However, the MPs also suggested removing tax-free allowances on family homes passed down to children and grandchildren and called for the rule that lets gifts made seven years before death go tax free to be scrapped. Rising property prices and the freezing of the £325,000 threshold since 2009 have dragged more middle class families into the net and driven the annual tax haul to a record £5.4bn. John Stevenson, the Tory who chairs the group, said the existing regime was too complex and an “unfair penalty on hard-working savers”, while its proposals would ensure the rich paid their fair share.
The Daily Telegraph, Page: 4 Financial Times, Page: 2 Daily Mail, Page: 2
Brexit could mean holiday home perks, for some
Former Grant Thornton tax director Mike Warburton considers some of the tax changes that could flow from Brexit, including adjustments to VAT on sanitary products, domestic fuel and other essentials. One other interesting possibility is a change in the rules on furnished holiday lettings, which were first introduced to support the UK tourism industry but had to be changed to apply to holiday homes in the EU after a legal battle. Depending on how negotiations go, Warburton also suggests individuals who own properties elsewhere in the EU may lose protection from the high tax and social security costs that are sometimes charged by countries on non-EU nationals.
INDUSTRY NEWS FOR MIDWEEK TO 29th JANUARY 2020
Directors’ duties survive a company’s collapse, judge rules
Insolvency rules have been “re-written” after a judge ruled that “the duties owed by a director to the company and its creditors survive” a company’s collapse. Critics of pre-pack deals say the process can be abused by directors using them as a way to sidestep debts and restart the business on the cheap. Liquidator Stephen Hunt sued a fire protection business and its director Brian Michie over the transfer of funds and the sale of a company property after it entered insolvency. Mr Hunt, a partner at Griffins, commented: “The whole point of a pre-pack for a director is being clean of liability. That may fundamentally change.”
CORPORATE NEWS FOR MIDWEEK TO 29th JANUARY 2020
Record number of firms are struggling
A new report from Begbies Traynor shows a record 494,000 UK businesses are in ‘significant financial distress’ with property, support services, construction and retail businesses the worst off. Julie Palmer, a partner at Begbies Traynor, said: “Businesses and the UK economy as a whole will want to avoid a repeat performance of 2019, where distress increased to record levels on the back of ongoing uncertainty around Brexit. These figures clearly demonstrate the impact of this indecision, and with political certainty and a clear Brexit path, UK businesses should, at last, be able to plan for 2020 with a greater sense of clarity.” Separately, a report by UHY Hacker Young shows the number of insolvencies among women aged 18 to 24 increased by 24% in a year, up from 3,175 in 2017 to 3,930 in 2018. The firm said redundancies in the retail sector could have driven the increase.
Financial Times Daily Mail, Page: 66 Daily Express, Page: 45 The Times, Page: 4 The I, Page: 40 The Press and Journal, Page: 28
Medium-size firms beat FTSE 350 for overseas revenue
Mid-sized UK businesses have grown overseas revenue by 69% to £167bn over the last five years, a jump of 11% in the last year, according to BDO. This contrasts with FTSE 350 and small businesses – with less than £10m in turnover – which saw overseas revenue decline 17% and 34% respectively.
City AM, Page: 7
Insolvency experts to advise on Flybe deals
The government has brought in Alvarez & Marsal to advise it on any rescue deals for Flybe, which is asking for a £100m loan. Several sources point out that a commercial loan from the government would be problematic because the airline has already mortgaged its assets with specialist lenders. Those assets not already offered as security for those loans have been mortgaged to Flybe’s shareholders. Alvarez & Marsal is the same firm brought in by the Civil Aviation Authority during the crisis at Thomas Cook.
LCF probe turns focus on property
Administrators investigating the collapse of London Capital & Finance have turned their focus to property developments in the Caribbean and in Cornwall linked with the £237m scandal. LCF sold high-risk, unregulated minibonds to 11,625 small investors, who now face heavy losses. A representative of Smith & Williamson has been appointed as a director of 14 companies controlled by Prime Resort Development, six of which were lent £70.1m of bondholders’ money.
Malsagov leaves Pure Circle
Magomet Malsagov, the former boss of Pure Circle, has resigned as an adviser at the firm less than three months after the company said that he was temporarily standing aside as its CEO pending an investigation by KPMG into its accounting.
The Times, Page; 46
SMEs NEWS FOR MIDWEEK TO 29th JANUARY 2020
Energy mis-selling hurts small businesses
Rogue energy brokers are conning small businesses, charities, churches and care homes out of millions of pounds by signing them up to deals which earn the brokers high commissions hidden within inflated supply agreements. Callum Thompson, the founder of Business Energy Claims (BEC), said 90% of micro-businesses using an energy broker may have fallen prey to mis-selling “in at least some form”. He added that energy suppliers were “completely complicit” because they help to hide the commission in their energy bills. A report on the scandal has been submitted to Ofgem, which campaigners say has failed to act for years on mis-selling.
The Guardian, Page: 30
Philip King takes over as small business commissioner
Credit management expert Philip King is to take over as interim small business commissioner replacing Suzanne Burk, who has been holding the fort since the departure of Paul Uppal. Mr King was chief executive of the Chartered Institute of Credit Management, which was responsible for running the prompt payment code, and he will now be charged with transferring the administration of the code. Kelly Tolhurst, the small business minister, said: “In Philip, small businesses will have a real champion with a proven track record of tackling late payments.” SMEs are owed a total of £23.4bn in overdue bills, an increase of £10.4bn on 2018, according to BACS.
The Times, Page: 45
Small businesses find broadband too slow
A survey by switching service Bionic has found that 59% of small businesses do not have the internet speeds needed to increase their output. Paul Galligan, chief executive of Bionic, said: “We live in an internet age, but the backbone of the UK economy is still being supported by copper connections and cash – rather than fibre and contactless.”
Daily Express, Page: 45
Funding Circle replaces finance director
Sean Glithero, the finance director of peer-to-peer lender Funding Circle, is leaving the firm. Mr Glithero will be replaced by Oliver White, chief financial officer at Vanquis Bank, the credit card division of subprime lender Provident Financial. Shares in Funding Circle, which matches investors with small businesses, are down 74% over the last 12 months. Mr White said yesterday that lending to small and mid-sized companies was “a substantial market” that “has been hugely underserved for years”.
The Times, Page: 41 The Daily Telegraph, Business, Page: 7 Daily Mail, Page: 73
UK government warned against cutting ‘entrepreneurs’ relief’ in Budget
Business groups have said there was room for reform of “entrepreneurs’ relief” but cautioned against sweeping changes following reports that the measure will be targeted in the March Budget. Sajid Javid is reportedly drawing up plans to limit the tax break amid concerns it is overly generous to the wealthy.
Financial Times, Page: 2 City AM, Page: 13
EMPLOYMENT NEWS FOR MIDWEEK TO 29th JANUARY 2020
Home Office insists on points-based immigration system
The independent Migration Advisory Committee (MAC) has recommended the government lower the salary threshold for migrants coming to Britain with a job from £30,000 to £25,600. The MAC proposals recommended a hybrid system made up of a points-based approach for the most talented as well as salary and skills thresholds for skilled workers. However, a No 10 spokesman said the Government had been clear a “firmer and fairer” points-based system would be introduced from 2021. Alan Manning, chairman of the committee, said the proposals could lead to “very small increases in GDP per capita and productivity, slightly improved public finances, slightly reduced pressure on the NHS, schools and on social housing, though slightly increased pressure on social care.” The Home Office said it would “carefully consider” the report “before setting out further detail on the UK’s future immigration system” .
PERSONAL FINANCE NEWS FOR MIDWEEK TO 29th JANUARY 2020
Young Britons most optimistic about their finances
A new survey by PwC suggests Britons under 25 are more confident about their personal finances than their older peers, although consumer confidence across all age groups has benefited from greater political certainty since the general election. Lisa Hooker, consumer markets leader at PwC, said: “UK consumers are increasingly positive about their personal financial prospects and this spans the country, where sentiment is now relatively consistent, with no single region lagging behind the national average. It seems recent political certainty has seen consumer sentiment get a much-needed boost.”
PROPERTY NEWS FOR MIDWEEK TO 29th JANUARY 2020
Mortgage approvals surged last month
UK banks in December approved the most mortgages since August 2015, according to data from UK Finance, though mortgage lending fell overall last year. Mortgage approvals for house purchases hit 46,815 last month, while the number of mortgages approved rose 7.4% to 982,000 in 2019 compared to 2018. Approvals for remortgages were 7.9% higher over the same period and banks and building societies lent a total of £265.8bn in 2019, which was 1.1% down on 2018. “Repayments continue to offset spending, so that the level of borrowing on cards is currently growing at only 2.4% annually, continuing the general slowdown from the recent high of 6.6% in October 2016,” UK Finance said.
PENSIONS NEWS FOR MIDWEEK TO 29th JANUARY 2020
Fees cap could block millions from pension fund changes
The investment chief of Britain’s biggest pension fund has warned that proposals to help millions of pension savers to invest in unlisted securities will be difficult to push through. Simon Pilcher, chief executive of investment management at the Universities Superannuation Scheme (USS), said that most mainstream defined-contribution schemes would be stymied from unlisted investments because of the fees cap on pension schemes. The USS announced an initiative last week that would enable its 400,000 members to invest in assets such as unlisted equities, private debt and infrastructure. But Mr Pilcher said that the USS was unusual in that it had the vast scale and expertise to invest in the asset class relatively cheaply.
NHS leaders warn of managerial resignations over pension rules
A survey by NHS Providers warns that nearly half of senior NHS leaders could leave the health service because of pensions changes that have left many facing steep additional tax bills.
Workers forced to retire early face tax shock
Research from insurance giant Royal London suggests hundreds of people who take early retirement every year due to work-related sickness could find themselves in breach of their annual pension saving allowance. Someone who retires ten years early due to severe ill-health, for example, could see a decade of contributions added to their pension overnight, leaving them with a surprise tax bill.
Daily Mail, Page: 45 Daily Mirror, Page: 36
INTERNATIONAL NEWS FOR MIDWEEK TO 29th JANUARY 2020
IRS issues new cryptocurrency tax guidance
The US Internal Revenue Service (IRS) has issued updated guidance for reporting cryptocurrency holdings. A new form asks crypto traders in the US to report their cryptocurrency transactions for the very first time. If people are selling virtual currency, the IRS now requires any capital gain or loss on the sale to be recognized, subject to any limitations on the deductibility of capital losses.
US should embrace reform of goodwill accounting
The FT’s Jonathan Ford says the FASB is right to open up the issue of goodwill accounting and that it shouldn’t pass up this opportunity for reform.
Socialists cut tax breaks in Portugal for expat pensioners
Portugal is planning to end a zero-tax regime for foreign pensioners. The country’s socialist government will also reduce a residence scheme for wealthy investors. From this year, pensioners arriving to live in Portugal face being taxed up to 10% on their income and those wishing to benefit from “golden visas” – given to foreigners who invest at least €500,000 in property – will be restricted to property in inland municipalities rather than the popular cities of Lisbon and Porto and the coast.
eBay warns US internet sales taxes will slow growth
Sales taxes imposed by state governments across the US have been hurting growth at eBay, with the online marketplace offering a disappointing earnings outlook yesterday.
ECONOMY NEWS FOR MIDWEEK TO 29th JANUARY 2020
BoE urged to keep rates on hold as confidence lifts
Bank of England policymakers are being urged not to cut interest rates as economists predict an uplift in growth. A new report from the EY Item Club estimates GDP growth for 2020 will be up 1.2%, a slight improvement on the 1% predicted in its previous quarterly forecast. Predictions for 2021 rose from 1.5% to 1.7%. Separate research from Deloitte, also out today, shows consumer confidence in the overall state of the economy jumped 27% on the previous quarter. Kerstin Braun, president of the Stenn Group, told City AM: “There is no need to do anything about the interest rates right now. There is enough dynamic and courage for investments coming out of the real economy to get out of the slow economy that we have had over the last three-and-a-half years.”
City AM, Page: 2, 9 The Times, Page: 2 Daily Mail, Page: 66 The I, Page: 38
London loses top spot as global finance hub
A survey by Duff & Phelps reveals London is no longer considered the world’s top financial centre by senior financial services executives, who now see New York as preeminent. Duff & Phelps managing director Monique Melis said: “It is difficult to avoid the suspicion that three years of uncertainty since the Brexit vote have contributed to London’s fall.” Stephen Jones, chief executive of UK Finance, added: “The results underline the importance of our appreciating the need to maintain our competitiveness in a challenging business and political environment. That is why we need world-leading regulation and a tax system that makes us attractive for international investment, while ensuring we are the safest and most transparent place for banking and other financial service providers to do business.”
Financial Times Daily Mail, Page:74 The Independent, Page: 50
High growth accompanied by stress up North
A study by KPMG has found that the number of companies in the North with revenues of more than £10m has grown by a quarter over the last five years. However, 24% of companies were financially stressed or distressed. Kenny McKay, who heads KPMG’s restructuring practice in Leeds, said: “Whether it’s long-established companies battling against well-known economic headwinds, or those entrepreneurial scale-ups who are struggling to maintain a grip on cash flow during periods of rapid growth, the fact is that without action, stress can very quickly turn into distress.”
Yorkshire Post, Business, Page: 1
Subdued spending figures fuel rate cut talk
CBI retail data show sales were flat in late December and early January as households remained cautious about their finances. However, sales across the last three months were the strongest for a year suggesting an improvement in sentiment. Howard Archer, chief economic adviser to the Ernst & Young Item Club, said: “The survey will likely fan expectations that the MPC could well vote to cut interest rates. It remains a very tight call, but we believe there are enough signs overall of improving economic activity for the MPC to sit tight and remain in wait and see mode.”
Daily Mail, Page: 66 The Guardian, Page: 37
OTHER NEWS FOR MIDWEEK TO 29th JANUARY 2020
Tax office workers to walk out on Friday, January 31st
HMRC staff will strike on self-assessment deadline day in a dispute over plans to close an office in Ealing, West London. The PCS general secretary, Mark Serwotka, said: “The government is already failing to collect huge amounts of tax and yet the obsession with cost-cutting means more jobs and skills will be lost due to its office closure plan.”
Daily Mirror, Page: 23 The Guardian, Page: 14 The Sun, Page: 14
Court orders against debtors reach 1.15m
Official figures show the number of court orders against individuals in England and Wales who failed to repay their debts climbed by 3% – or 30,138 – to 1.15m in 2019.
The Guardian, Page: 28
Football banter excludes women, CMA boss warns
Ann Francke, chief executive of the Chartered Management Institute (CMA), has suggested that sporting banter can divide offices and help to facilitate “laddish” behaviour. Speaking to the BBC’s Today programme, she said: “It’s very easy for it to escalate from VAR talk and chat to slapping each other on the back and talking about their conquests at the weekend.” Ian Tranter, employment law partner at JMW Solicitors, said that while workplace harassment was a serious issue, banning sports chat appears to be based on sexual stereotyping: “Furthermore, from a simple health and well-being perspective, shouldn’t employers be encouraging participation in sport and exercise? It seems 1 April has come early this year,” he added.
The Times, Page: 1 City AM, Page: 4 The Daily Telegraph, Page: 9 Yorkshire Post, Business, Page: 2 Daily Mirror, Page: 25
Contact Paul Southward.