NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

NEWS ROUNDUP

TAX NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

MONDAY

Firms’ cashflow boosted by holding onto tax

The Times’ Patrick Hosking details how delaying passing tax they have collected onto the taxman is a vital part of many firms’ cashflow. He notes that about £400bn a year of taxes and duties paid by consumers and employees are actually collected by businesses, highlighting that income tax through PAYE raises £16bn, VAT raises £15bn, and excise duties pull in £50bn. While each tax has different rules and schedules for delivery to HMRC, in most cases businesses hold the money for anything from a fortnight to four months. Mr Hosking says that while no-one – including the taxman – “has the first clue as to the overall cost to the public purse or the cashflow advantage it gives business … a simple back-of-the-envelope calculation suggests it could be very large.” John Cullinane, policy director at the Chartered Institute of Taxation, says the time-to-pay initiative h as allowed many companies to defer passing on taxes well beyond official deadlines.

The Times, Page: 38

Tax warning for overseas operations

Writing in the Press and Journal, Helen Brown of Anderson Anderson & Brown, looks at the tax implications for firms working in an overseas territory – noting that they must comply with the local tax laws. She advises that consideration should be given to whether there is a double tax treaty in place between the UK and the relevant country.

The Press and Journal, the Business, Page: 12

TUESDAY

Apple boss calls for tax system overhaul

Apple chief executive Tim Cook says the global corporate tax system needs to be overhauled. With the Organisation for Economic Cooperation and Development (OECD) pushing for reform that would see large tech firms pay tax in regions where they serve customers rather than booking profit in low-tax countries, Mr Cook said: “I think logically everybody knows it needs to be rehauled, I would certainly be the last person to say that the current system or the past system was the perfect system.” He said he is “hopeful and optimistic” the OECD will deliver a workable reform, adding: “It’s very complex to know how to tax a multinational… We desperately want it to be fair.”

City AM, Page: 3

Pension tax system review call

In a letter to the Times, Hargreaves Lansdown’s head of policy, Tom McPhail, says the Government “should abandon its attempts to find a quick fix” to issues with the pension allowance taper, saying that the pension tax system “is a bloated, inefficient mess”. He argues that it “fails to work effectively in so many different ways that only a comprehensive rethink will do”, before urging the Chancellor to announce a review of pension taxation in the Budget on March 11.

The Times, Page: 24

UK recruiters warn of damage from freelance tax reforms

A group of leading recruitment companies have written to Chancellor Sajid Javid, warning that changes to tax rules for off-payroll workers will hit their industry and could increase tax avoidance.

Financial Times, Page: 2

Taxman publishes list of bizarre excuses and expenses claims

In a timely reminder of the upcoming deadline for submitting your 2018/19 self-assessment tax returns on 31st January 2020, the taxman reminds us of the failed excuses and expenses claims:-

HMRC rubbish excuses

WEDNESDAY

Digital tax closes the door on US trade deal

Donald Trump said the US was looking forward to striking a trade deal with the UK, during his speech in Davos, praising Boris Johnson as a ”wonderful new PM”. However, US Treasury secretary Steve Mnuchin made it patently clear that the UK would face retaliatory trade sanctions if it persists with plans for a digital tax on US tech giants. The Telegraph’s Ambrose Evans-Pritchard says: “Britain’s decision to push its own tax in defiance of the US at this pivotal juncture of the Brexit talks seems extraordinarily ill-judged.” The warning from the US comes as France postponed its plans for a digital tax in return for a suspension of retaliatory tariffs on exports to the US. A spokesman for Boris Johnson said: “Britain wants a global solution on taxing digital firms.”

The Daily Telegraph, Business, Page: 5 Financial Times, Page: 1 The Times, Page: 12 The Guardian, Page: 33 City AM, Page: 2

Avoid fines for late returns if possible

More than a billion pounds in fines for filing tax returns late were avoided by taxpayers between 2012 and 2018 after they convinced HMRC to waive the charges, the Telegraph reports. But as the deadline looms for the 2018-19 tax year, accountants warn taxpayers to submit on time, even if they have a reasonable excuse for filing late. Zena Hanks, of Saffery Champness, said: “The appeals process is no quick-fix solution, and the procedure can embroil the taxpayer for years, with an uncertain outcome hanging over their head.”

The Daily Telegraph

Ireland faces “devastating impact” from CCCTB

Ireland is facing massive reductions in tax receipts at a time when spending is increasing at a rate deemed unsustainable by the Irish Fiscal Advisory Council (IFAC). Up to 60% of corporate tax revenues could be wiped out if international tax rules were changed – such as the European Commission’s proposed common consolidated corporate tax base (CCCTB), which would mean that multinationals paid corporate tax based on where they generated revenues.

The Daily Telegraph, Business, Page: 8

CORPORATE NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

MONDAY

Game firm claims £38m tax relief despite huge profits

Developer Rockstar North benefitted from £38m in video games tax relief last year, despite US-based parent company TakeTwo Interactive reporting profits of $333m. The firm, which made 2013’s Grand Theft Auto V – which is the most successful entertainment product of all time, having made more than $6bn – received the rebate under the Government’s video games tax relief scheme. Think-tank TaxWatch last year calculated that Rockstar had effectively paid no corporation tax in 10 years since it legally claimed the tax relief. TaxWatch has urged the Government to reconsider the scheme, with the think-tank’s George Turner saying the policy is not meeting its objectives, adding: “The idea that 40% of the relief would be claimed by one company is clearly absurd.” Rockstar said the relief was a “proven success” and had “directly resulted” in the firm “significantly increasing its investment in the UK”.

The Daily Telegraph

Department store to make insolvency decision

Department store chain Beales, which has been seeking a buyer since December and is looking to negotiate reduced rents on its stores, is said to be close to collapse. The chain, which recently appointed KPMG to assess “strategic and financing options” to “deliver a sustainable business model for the future”, will hold a board meeting today where it will make a decision on whether to call in administrators, with a source telling the Times the chain is “more likely than not” to do so.

The Daily Telegraph, Business, Page: 1 The Times, Page: 39 City AM, Page: 4

Restructuring firm sees £1m Links of London fees

Restructuring firm Gordon Brothers, which was drafted in to work with administrators at Deloitte after jeweller Links of London collapsed in October, is set to pick up almost £1m for helping to shut Links’ 28 UK stores and seven concessions. An administrators’ report estimates the fee at £890,000 plus tax. Deloitte, which was unable to find bidders for the business, has sold £5.3m of stock but said it is unclear if there would be any money left for unsecured creditors.

The Daily Telegraph

PE firms’ overseas assets up 50%

BDO research shows that UK private equity firms acquired £25.7bn of international businesses in the 12 months to 31 August 2019, a 50% increase on the £17.1bn recorded the year before, while £7.9bn of UK companies were snapped up in the same period. Jamie Austin, head of private equity at BDO, comments: “Accessing faster growth in other economies – even relatively close to home in Eastern Europe and the Baltics – can provide a substantial boost to returns.”

City AM, Page: 6

TUESDAY

Bosses back Britain

A PwC poll of almost 1,600 CEOs places the UK as the fourth most important country for international firms, behind only the US, China and Germany. The poll shows that bosses in Germany, France and Italy see the UK as being as attractive now as it was in 2015, with “a notable uptick since last year”. Almost one in four French bosses cite the UK as one of their three main growth markets, as do one in five American chief executives. Business Secretary Andrea Leadsom welcomed the study, saying: “It’s excellent to see such confidence in the UK.” Kevin Ellis, chairman of PwC UK, said: “The findings provide timely perspective on the UK’s standing as a place to invest and do business. Viewed against the turbulent global backdrop, the UK is a beacon of relative stability”. Writing in City AM, Mr Ellis says the UK should look to “capitalise on our key characteristics,” saying &ld quo;maintaining an open and globalised economy is crucial, as is an effective tax system.”

The Daily Telegraph, Business, Page: 1 The Times, Page: 1 Financial Times, Page: 1 The Guardian, Page: 38 Daily Mail, Page: 74 The Sun, Page: 43 City AM, Page: 1, 15

Beales falls into administration

Department store chain Beales entered administration yesterday, having failed to secure a buyer, leaving over 1,000 jobs at risk. KPMG has been appointed as administrator and the firm’s 23 stores will continue to trade while it assesses options for the business. Will Wright, partner at KPMG and joint administrator, commented: “With the impact of high rents and rates exacerbated by disappointing trading over the Christmas period, and extensive discussions around additional investment proving unsuccessful, there were no other available options but to place the company into administration.”

The Times, Page: 31 Financial Times, Page: 19 The Daily Telegraph, Business, Page: 1 The I, Page: 40 The Guardian, Page: 9 Daily Mail, Page: 73 Daily Mirror, Page: 16 Daily Express, Page: 47 The Independent, Page: 18 The Sun, Page: 43 City AM , Page: 6

Auditor raises concerns over Infrastrata

Auditor PKF has raised concerns about the finances of Infrastrata, the firm that saved the Harland and Wolff shipyard. PKF said the firm lost £1.2m last year and needs to bring in new funding to meet spending commitments, saying this raises questions over its future.

The Daily Telegraph, Business, Page: 8

M&C Saatchi looks to reassure investors

M&C Saatchi, which revealed an accounting scandal last year, has told investors it had a net cash position of at least £15m at the end of last year, saying this was ahead of expectations. The accounting issues prompted a PwC probe which saw the advertising group admit to £11.6m in accounting errors.

The Times, Page: 41

SMEs NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

MONDAY

SMEs plan to spend £1.7bn

A survey by finance firm Together has found that British SMEs are set to invest £1.7bn over the next two years, with subsiding Brexit uncertainty seeing firms more willing to spend. The poll saw a quarter of SME bosses say they will look to expand their premises, while 23% expect to hire new staff. With the decisive election outcome offering more certainty, 42% of SMEs are now optimistic about their prospects, compared with just 8% who would have been optimistic if the uncertainty had continued. Andrew Charnley of Together said: “The investment taps can now be turned back on.”

Daily Star, Page: 2 Daily Express, Page: 45

TUESDAY

Late payer crackdown

Lord Mendelsohn will today introduce a bill intended to tackle late payment of commercial debts and ban “predatory” practices, such as charges for being on supplier lists. It will also seek to strengthen the powers of the Small Business Commissioner, giving the watchdog the power to hand out fines.

The Times, Page: 40

WEDNESDAY

Small firms miss out on tax breaks

Research by digital bookkeeping app Receipt Bank has found that half of business owners feel overwhelmed by the amount of paperwork they need to deal with, and one in five say this slows their growth. A further 33% have suffered a financial loss from not filing all the paperwork demanded by HMRC while a quarter didn’t know that claiming business expenses could help to reduce their corporation tax bills. Rebecca Freeman, accountant at Receipt Bank, said: “Tax breaks exist to help small businesses invest and grow. Those that forgo their entitlements are putting themselves at a competitive disadvantage.”

Daily Mirror, Page: 33

EMPLOYMENT NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

TUESDAY

Investors want to know about staff treatment

A report from the Financial Reporting Council shows that investors want to know more about how companies treat their workers, saying they “overwhelmingly support” improved disclosure of workplace matters, including wages and working conditions. The watchdog says reporting on such matters needs to improve, advising that firms should view their workforce as “a strategic asset”.

The Times, Page: 40

WEDNESDAY

UK employment hits record high

The latest data from the Office for National Statistics (ONS) reveals the strongest jobs growth in almost a year, pushing the employment rate to a new record. The unemployment rate held at 3.8%, its lowest since the 1970s, but the number of people in work rose by 208,000. In the September to November period, the employment rate hit a record high of 76.3%, the ONS said, up 0.5 percentage points on the previous quarter. When bonuses were stripped out, pay growth slowed to 3.4% in the three months to November.

City AM, Page: 1 Financial Times

PROPERTY NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

TUESDAY

Demand could push up City space rent

Deloitte real estate’s crane survey shows that the number of construction starts for new office buildings in central London has fallen to the lowest level in five years. This however, has not correlated with a dip in demand, with JLL figures showing the volume of leasing deals in central London totalled about 11.6m sq ft in 2019, up on the 11.5m sq ft leased the previous year. JLL foresees this leading to record rents for the best sites, saying the best City spaces could be let at £90 per sq ft – a £5 per sq ft increase on the current price.

The Times, Page: 39

PENSIONS NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

WEDNESDAY

FCA warns advisers over pension transfers

The Financial Conduct Authority has warned financial advisers that they must do more to stop consumers being harmed by unsuitable advice, investment scams and excessive fees. In a ‘Dear CEO’ letter to advisers published yesterday, the regulator said it was seeing an increasing number of cases where the actions of firms were resulting in “significant harm to consumers’ financial well-being”. The FCA highlighted the failure of advisers to reduce the number of people being persuaded to transfer out of valuable defined-benefit pension plans. “We remain concerned firms are recommending large numbers of consumers transfer out of their DB pension schemes despite our stance that transfers are likely to be unsuitable for most clients,” it said. Tom McPhail, of Hargreaves Lansdown, said the FCA is “sensitive” over the issue of DB transfers following questions around its “regulatory shortcomings” in this area.

Financial Times The Times, Page: 38 The Daily Telegraph City AM FT Adviser

Economists say state pension age must rise

Credit Suisse economists have warned that the state pension age must rise dramatically to reduce pressure on a creaking benefits system. With life expectancy increasing among developed nations, analysts say benefits for those who retire early must be removed and governments should pay bonuses to workers who delay retirement.

The Daily Telegraph

INTERNATIONAL NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

MONDAY

Poland’s finance minister set for tax battle with Airbnb

Tadeusz Koscinski, Poland’s new finance minister, has called for US-based property rental site Airbnb to pay tax on the revenues it earns in the country.

Financial Times, Page: 6

TUESDAY

France signals breakthrough in US digital tax talks

French president Emmanuel Macron says he has had a “great discussion” with US president Donald Trump on digital tax, easing fears that a spat over the levy could result in a trade war.

Financial Times

ECONOMY NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

MONDAY

A third of listed retailers warn on profits

Analysis shows that a third of retailers were forced to put out profit warnings in 2019, with 32 listed firms in the FTSE Retailer index doing so. The report, from EY, notes that the figure is down 11% on the 36 recorded in 2018. So far in 2020, four firms have issued profit warnings – the same number that did so in the whole of Q4 2019. EY’s Lisa Ashe said the sector has been hit by “intense promotional activity”, with prices cut to attract customers.

Daily Mail, Page: 78

TUESDAY

IMF downgrades global growth forecast

A report from the International Monetary Fund (IMF) predicts that economic growth in Britain is set to be sluggish over the next two years, with a forecast that GDP will grow 1.4% in 2020 and 1.5% in 2021. The IMF says the forecast “assumes an orderly exit from the European Union at the end of January followed by a gradual transition.” The report suggests the eurozone will see a slightly lower rate of growth, with an increase of 1.3% this year and 1.4% next, while global growth is expected to be 3.3% in 2020 and 3.4% in 2021. Looking at 2019, the IMF expects global growth to come in at 2.9%, lower than its previous prediction of 3%. It predicts that UK GDP rose 1.3% over the last 12 months.

The Times, Page: 1 Financial Times, Page: 1 The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 74 The Independent, Page: 50 City AM, Page: 2 Evening Standard

Household optimism hits 12-month high

A IHS Markit survey has found that UK households became more upbeat about their finances in January, with optimism hitting a one-year high. Households saw living-cost inflation dip in January, while incomes from employment continued to grow. The conclusive election result seen in December and the clarity it brings in regard to Brexit are among drivers of the optimism, with Joe Hayes, economist at IHS Markit, saying: “Latest survey data certainly show some post-election bounce for UK household.” The poll also reveals that 23% of people expect the Bank of England’s next move on interest rates will be a cut, up from 19% in December.

City AM

WEDNESDAY

Carney: Businesses must plan for a green transition

Mark Carney has warned businesses to plan for a transition to a green economy or face extinction. Speaking at the World Economic Forum’s meeting in Davos, the outgoing Bank of England Governor said: “From where I sit, there is a fundamental reshaping of the system under way … It means not just profitability going down, it means companies going out of business in sectors that have become sunset industries.”

The Times, Page: 13

The power of UK financial services

A report from the City of London Corporation and PwC outlines how the City continues to dominate other financial centres. Lord mayor of the City of London William Russell said: “Ten days away from our formal exit from the EU, this important report reiterates the UK’s strengths in financial and professional services. It is essential we continue to reaffirm why firms should come here to do business.”

City AM, Page: 5

OTHER NEWS FOR THE MIDWEEK TO 22nd JANUARY 2020

MONDAY

Fox calls for state deals

Former International Trade Secretary Liam Fox believes the Prime Minister should negotiate trade deals with individual US states while working toward a post-Brexit free trade agreement with America. On an free trade agreement Dr Fox says regulatory autonomy after Brexit will be key to removing long-standing trade barriers. He points to a mutual recognition agreement negotiated by the Government between the Institute for Chartered Accountants of Scotland and two US accountancy bodies, a deal which made professional qualifications in each country compatible with each other.

The Daily Telegraph, Page: 12

Tea plan targets Blue Monday

The Express looks at the day dubbed Blue Monday – with today, the third Monday in January, said to be the most depressing day of the year due to factors such as winter weather and Christmas credit card bills. Kelly Feehan from CABA, a charity supporting the wellbeing of chartered accountants, said: “It can sometimes feel like a long and difficult month to get through.” In a bid to help alleviate the stresses, the Samaritans will hand out teabags at railway stations, with its Brew Monday campaign hoping to encourage conversation on the strain some people are under.

Daily Express, Page: 9

TUESDAY

Increase in workplace fraud

Analysis by KPMG shows the number of cases involving embezzlement more than doubled last year. With 369 court cases involving alleged fraud in 2019, 74 saw employees and management staff accused of trying to cheat their bosses out of £46m – up on 2018’s 34 cases totalling £22m.

Yorkshire Post, Page: 5 The Press and Journal, Page: 31

WEDNESDAY

Goldman joins move to regions

Goldman Sachs is looking for a new office outside London in which to create a technology hub. The US bank’s search for a regional base comes after PwC opened its largest regional office in Birmingham this month. Simon Bedford, partner at Deloitte Real Estate, said professional services firms were among those growing their businesses in the regions, attracted partly by the graduates who have decided to stay put rather than move to London.

The Times, Page: 36

Contact Paul Southward.

Paul Southward