Finance firms contribute record taxes

The financial services and banking industries paid a record £75.5bn in taxes last year, according to a report by PwC for the City Of London Corporation. The total was up on the previous year’s £75bn and comprised of £33.4bn in direct taxes, including corporation tax and business rates, and £42.1bn collected from employees and customers. Taxes from the sector made up 10.5% of the Treasury’s entire tax take. Andrew Kail, PwC’s head of financial services, said: “It’s important we look closely at our tax system to ensure it is fit for new ways of working and doing business while optimising the competitiveness of the sector post-Brexit.” The report added that financial services firms employ 1.1m people across the country – around 3% of all UK employment.

Daily Mail, Page: 74 The Times, Page: 42 The Independent, Page: 54 The Sun, Page: 43 The I, Page: 41 City AM, Page: 1 Yorkshire Post, Business, Page: 5

News Corp wins VAT dispute with HMRC

Rupert Murdoch’s newspaper group News Corp has won a landmark legal case against HMRC over whether the Times’ digital edition should be subject to VAT. The Upper Tribunal yesterday agreed that online editions of the Times and the Sunday Times should not be subject to a 20% VAT charge because their websites are only updated four times a day – meaning they met the legal definition of a newspaper. Philip Munn, a tax partner at RSM, said the ruling could have far-reaching effects other parts of the economy: “Over the last few years people have been switching from printed matter to digital, so this ruling could have quite profound effects on a number of other products which enjoy zero-rating when they are provided in hard copy, such as books and maps.”

The Guardian City AM, Page: 15

Edinburgh joins Slough and London as top spot for tax avoiders

A report from UHY Hacker Young reveals that Slough is the top spot for UK tax avoiders with 47 people per 100,000 admitting to underpaying tax from offshore investments last year. London came second with 39 while Edinburgh was the only location outside the Home Counties in the top five. The Scottish city scored 30 per 100,000 – the UK average was 17. UHY Hacker Young said individuals in these areas are likely to fall into higher income tax brackets and would, therefore, be tempted to keep more of their income or assets offshore. The firm’s chairman, Colin Wright, commented: “The growing resources at HMRC’s disposal means there is nowhere to hide for taxpayers with undeclared offshore interests. It, therefore, makes a lot of financial sense to make a disclosure as this can reduce penalties from up to 200% of unpaid tax to less than 100%.”

The Scotsman, Page: 11


Government to review IR35 rollout

The government is to review the rollout of the controversial IR35 tax plan, which is due to take effect in April 2020 to prevent workers from disguising themselves as freelance contractors as a way to pay less tax. The government said the review, to be concluded by mid-February, would engage with individuals and businesses on their experiences of the implementations of the reforms and that it would also launch a separate review to explore how it can better support the self-employed. Mike Cherry, chairman of the Federation of Small Businesses, called for a delay to the rollout of the new rules in the light of the review: “This important review presents an opportunity to reassess our flawed off-payroll legislation,” he said. His view was echoed by Tej Parikh, chief economist at the Institute of Directors, who added: “It’s not immediately clear how any new steps to smooth the process could take effect in time for A pril. Firms and contractors have already been impaired by the looming deadline and lack of clarity around the rules.” The CBI, the ATT and the ICAEW also backed a delay.

The Daily Telegraph, Business, Page: 1 Financial Times, Page: 3 The Times, Page: 36 City AM, Page: 3

Penalties for breaching minimum wage laws too soft

A report from the Resolution Foundation argues that national minimum wage legislation is not being enforced strongly enough after a rise in reports of non-compliance were recorded following a steady decline for 15 years. In 2016, one in five workers were being underpaid but the figure is now one in four. Researchers at the think tank pointed out that although HMRC can levy penalties worth up to 200% of wage arrears for noncompliance, the average in 2017-18 was about 90% – not enough to serve as a deterrent. Lindsay Judge, senior policy analyst at the Resolution Foundation, said: “As the government plans to increase the legal wage floor it is essential to strengthen the incentives for firms to comply. The government can act by encouraging HMRC to take a tougher line with minimum wage offenders and giving it the power to levy larger financial penalties.”

The Times, Page: 36 The Daily Telegraph, Business, Page: 8 The Guardian, Page: 7

Britons could still be hit by stealth taxes this year

Hargreaves Lansdown personal finance analyst Sarah Coles has warned that workers could yet pay out more tax despite the Conservatives’ promise not to increase key tax rates. Ms Coles says with income tax thresholds being frozen until April 2021 and rises in council tax and price rises on fuel and alcohol, Britons could fork out £1,000 more in tax than they expect to this year. Ms Coles urged taxpayers to take advantage of allowances such as Isas and pension contributions.

Daily Express, Page: 27

Do accountants care about tax avoidance?

The Times quotes Richard Murphy, director of Tax Research UK who complains that the ICAEW’s new code of ethics fails to mention tax avoidance. The paper notes that it was only last month when Sir Amyas Morse, former chief executive of the National Audit Office, warned in his report on the loan charge that there remained a “market of unscrupulous tax advisers”. Mr Murphy asks: “When will accountants take tax avoidance seriously?”

The Times, Page: 38



CVAs failing to save stores

A report from commercial property adviser Colliers suggests that CVAs are failing to prevent retailers having to shut up shop, with the restructuring tool often merely delaying the inevitable. Figures show that of 23 large CVAs entered into by businesses since 2016, 13 of the companies have since gone into administration, including BHS, Supercuts and Mothercare. David Fox, co-head of retail agency at Colliers, said: “CVAs were designed to help struggling businesses, but they do nothing to address high debt levels, which often require restructuring, refinancing or a debt write-off.” Ashley Armstrong in the Times says that the “rapid rise” of CVAs has led to hostilities between some retailers and property owners, with struggling firms seeking rent cuts before the end of their contracts. Will Wright, head of regional restructuring at KPMG, comments: “By definition you are dealing with an insolvent company and therefore you would expect a high degree of failure, but that doesn’t mean you shouldn’t give a company the opportunity to fix its fortunes.”

The Times, Page: 38

Hotel closures up 66%

Research by UHY Hacker Young shows that UK hotel insolvencies hit a five-year high in 2019, rising by 60% to 144. A decline in the number of overseas tourists drove a fall in demand, as did a dip in the number of business conferences and growth in the popularity of staycations – with increased competition from firms such as Airbnb also a factor. Peter Kubik, of UHY Hacker Young, comments: “Hotels – many of which are lagging behind in their use of technology – are going to have to quickly bring themselves up to speed.”

The Daily Telegraph, Page: 2 The Guardian, Page: 41 Daily Express, Page: 44 The Sun, Page: 26 City AM, Page: 4

A point on purpose

Rupert Dean, co-founder of co-working office x+why, looks at purpose-driven capitalism. He cites research from Harvard Business Review Analytics and EY‘s Beacon Institute which shows that companies focusing on purpose to drive performance see higher profitability, while a PwC study suggests millennials who have a strong connection to the purpose and culture of their organisation are 5.3 times more likely to stay there.

City AM, Page: 19


Chilango creditors back rescue plan

Chilango’s creditors and shareholders have backed a rescue package to keep the struggling Mexican restaurant chain afloat. Gordon Thomson, a director at RSM, which has been working with Chilango on the company voluntary arrangement, said the approval of the proposals “ensures the business is well structured to develop further.”

City AM

Creditors of Jamie’s Italian set to lose most of £80m owed

A progress report from KPMG, the administrators of Jamie Oliver’s failed Italian restaurant chain, states that creditors will lose most of the £80m they are owed after the company’s collapse last May.

Financial Times, Page: 13 The Guardian


Doubts over South Western’s future

Deloitte has said that South Western Railway (SWR) faces “material uncertainty” over whether it can continue operating and is at risk of being nationalised by the Department for Transport (DfT). The operator’s auditor cast doubts over the progress of talks with the DfT regarding strikes, timetable bungles and track upgrades. SWR is run by First Group.

The Daily Telegraph, Business, Page: 1 The Times, Page: 2 The Guardian, Page: 8 City AM, Page: 6 Daily Mail, Page: 2

Kantar hires Ian Griffiths as new FD

ITV executive Ian Griffiths has moved to Kantar as the market research firm’s new CFO. Mr Griffiths will take up the new role on 16th January. He has served as COO and CFO at ITV since 2017.

City AM, Page: 19



Standards board calls for new reporting rules

The International Accounting Standards Board has proposed new financial reporting rules that would see operating profit strictly defined, with analysis showing at least nine different definitions in a sample of 100 companies analysed.

Financial Times, Ft Fm, Page: 3

What 2020 may hold

Looking ahead to what the next 12 months may bring, Mark Kleinman says momentum behind reform of the audit sector will gather pace but is unlikely to follow the path regulators are currently mapping. He suggests a proposal for joint audits of listed companies’ books will be formally scrapped, while “a more robust separation” of the Big Four’s audit and consulting arms will be approved.

City AM, Page: 13



1,200 SMEs seek loans over Christmas

Data from loan firm Iwoca shows that more than 1,200 small business owners applied for a loan between Christmas and New Year’s Day, with almost 300 applications across Christmas Eve, Christmas Day and Boxing Day and 135 applications on New Year’s Day. Iwoca notes that applications between Christmas Eve and New Year’s Day were up 5% on the same period last year. It also revealed that in H1 2019, 55% of small businesses applied for finance out of hours, with a third of applications coming at weekends. Seema Desai, chief operating officer at the company, said that with SME owners facing “ever-increasing demands on their time,” demand for finance outside of traditional banking hours is climbing as firms “seek greater flexibility in how they access financial support.”

Daily Express, Page: 44 The I, Page: 41

Fake reviews hit small firms

Research from the Federation of Small Business (FSB) suggests small firms are being hit by fake reviews being posted online. Small businesses also warned that sudden changes to terms and conditions are hampering their online efforts. FSB boss Mike Cherry said: “Businesses are using the online opportunities being offered to grow their firms. But huge difficulties lie ahead. Crucial to small firms are websites like eBay, Amazon and Facebook which are central to advertising, sales and exporting aims. However, small businesses’ use of online platforms is not without problems and still too many encounter problems such as fake or malicious reviews, problems with intellectual property and sudden delisting of their products.”

Daily Mail, Page: 2 The I, Page: 40 The Scotsman, Page: 34 The Sun, Page: 2

Financial admin keeps microbusiness bosses awake

A third of microbusiness owners say their personal lives are affected by the volume of financial administrative tasks they face, with research from Starling Bank showing that such firms spend the equivalent of ten weeks every year sorting out their finances. The study saw 11% of microbusiness owners say the matter had left them sleepless, while one in twenty said that it had made them ill.

The Times, Page: 44


Suppliers worst hit by Jamie’s Italian collapse

Jamie Oliver has been criticised over the collapse of his Italian restaurant chain which left investors and suppliers £80m out of pocket. Suppliers including butchers and fishmongers are owed six-figure sums. Mike Cherry, chairman of the Federation of Small Businesses, said: “Small businesses further down a supply chain are often the last in line to get anything back when a large business goes under. Sadly many of these businesses that are left out of pocket will not be able to recover and will go under themselves.”

Daily Mail, Page: 7



Reforms push landlords from market

A survey by insurance broker Simply Business has found that 26% of landlords are planning to sell at least one property this year due to regulation changes and tax hikes. Just 13% said they would expand their portfolio in 2020.

City AM, Page: 9



Savers piled into UK funds after Tory victory

British savers ploughed £153m into equity funds on the day the general election results were announced and a further £181m when markets opened the following Monday, according to Calastone. The firm said it was the biggest increase in investment since it started collecting data in 2015. Investors poured a net total of £1bn into UK-focused funds in December, more than double the previous largest monthly inflow in July 2015. Edward Glyn, head of global markets at Calastone, said the removal of the threat of a Jeremy Corbyn-led Labour government released pent-up demand as did bringing an end to the Brexit deadlock.

The Daily Telegraph



Operational risk ‘increasing’ due to rise in City watchdogs

UK Finance says regulation of the City since the banking crisis has been counterproductive, increasing systemic risk, driving up compliance costs and delivering overlapping initiatives from watchdogs with no overarching strategy.

Financial Times



Treasury the ‘biggest barrier to pensions policy’

Former pensions minister Sir Steve Webb has described the Treasury as a “barrier to pensions policy”, saying it is “shocking” that it has resisted reforms that would boost pension savings but would require upfront tax relief on individuals’ income. Sir Steve, a director of policy at Royal London, commented: “It is shocking that the biggest barrier to pension policy is the Treasury. Because every time you put a pound in a pension, they miss out on some tax today.” A Treasury spokesman told the Telegraph: “We want people to save into a pension for their future … We restrict tax relief available for the highest earners to get the balance right between encouraging saving and managing government finances.”

The Daily Telegraph


HMRC failed to warn savers over rogue schemes

The Mail continues with its campaign for the victims of pension transfer scams who, along with the employers, were duped into moving their savings into dodgy schemes because they were easily registered with HMRC and the Pensions Regulator. The paper lists a series of blunders by HMRC which allowed fraudsters to continue to target savers despite concerns having been raised – in one instance even after investigators had arrested the fraudsters running the schemes.

Daily Mail, Page: 36



Fewer jobs for school leavers and graduates

An Institute of Student Employers (ISE) survey reveals that employers are planning to recruit far fewer school leavers and graduates than they were a year ago. The ISE report shows that employers are planning to increase graduate recruitment by just 3%, compared with the 18% rise in graduate vacancies predicted this time last year. Growth in the number of apprenticeship and school leaver programme vacancies has slowed to 2% from 7% last year.

The Guardian, Page: 43



Europe will hit back if Trump punishes France for tax on Big Tech, warns Paris

France has warned the US that trying to impose “highly disproportionate” trade tariffs in response to France’s digital tax would “deeply and durably affect the transatlantic relationship” and prompt EU retaliation.

Financial Times, Page: 1


IMF chief urges tax and spend changes to tackle inequality

Kristalina Georgieva, the managing director of the International Monetary Fund, has said the better off should pay higher marginal rates of tax to help close the gap between rich and poor. “Tackling inequality requires a rethink”, Georgieva said in a blog. She added: “Despite the political difficulty of implementing reforms, the payoffs for growth and productivity are worth the effort. Progressive taxation is a key component of effective fiscal policy. At the top of the income distribution, our research shows that marginal tax rates can be raised without sacrificing economic growth.” Tax and spending should also have a gender dimension, she said. “While many countries recognise the need for gender equality – governments can use gender budgeting to structure spending and taxation in ways to advance gender equality even further – increasing women’s participation in the work force and, in turn, boosting growth and stability.”

The Guardian, Page: 39

France and US seek to resolve digital tax dispute

Bruno Le Maire, the French finance minister and US Treasury secretary, Steven Mnuchin have agreed to redouble efforts to resolve a trade dispute revolving around a new French digital tax targeting big technology companies. The US launched a probe into the French plans and Washington has threatened similar inquiries into the digital services tax models of Austria, Italy, and Turkey. Britain could be next with a 2% sales tax set to be imposed in the Spring. Britain and France have both said they favour a solution tabled by the OECD, which could bring forward an preliminary agreement this year.

Financial Times, Page: 4 The Times, Page: 36

Ireland braces for public spending dispute in election campaign

Irish politicians are debating future spending plans keeping in mind the tax revenues the country has enjoyed from multinationals will not last for much longer.

Financial Times, Page: 7



‘Boris bounce’ boosts economy

Business confidence picked up following the general election, according to the IHS Markit/CIPS purchasing managers’ index (PMI) survey, which also suggested that the increased clarity over Brexit brought by Boris Johnson helped to boost the UK economy. The services industry recorded a PMI of 50 in December, up from 49.3 in November, a reading which although does not return the sector to growth did stop it from contracting. Employment too picked up, new orders increased and firms’ optimism for the future climbed in the month.

Financial Times The Daily Telegraph, Business, Page: 3 The Times Daily Express Daily Mail The Guardian, Page: 33 The Sun, Page: 43

Sajid Javid sets March 11 date for Budget to ‘level up’ UK regions

The Chancellor will today confirm the 11th March as the date for a tax-and-spend Budget designed to begin a promised “levelling up” of economic performance across the UK. It is understood that Sajid Javid will announce a shake-up of the way the Treasury allocates investment in an attempt to even up spending between the regions.

Financial Times, Page: 2 The Times, Page: 10 The Guardian Daily Mail


Britain will be “the winner” after Brexit, says Blackstone

Equity strategists at asset manager Blackstone predict that the pound will rally after Brexit and stock markets will rise once a deal has been secured. The UK being the winner from its divorce from the EU is one of ten “surprise” outcomes for 2020 predicted by Blackstone’s private wealth chairman Byron Wien. Of all European markets, only Britain will outperform the United States and Asia, Blackstone said.

The Times, Page: 35



Top bosses earn average worker’s annual wage by today

By 5pm today the bosses of FTSE 100 companies will have earned as much as the average worker does in a year, research by the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre shows. The average FTSE 100 chief executive was paid £3.46m in 2018, equivalent to £901.30 an hour. This is 117 times the £29,559 annual salary of the average full-time worker. The report comes in a year when publicly listed firms with more than 250 UK employees must, for the first time, disclose the ratio between CEO pay and that of their average worker. Business Secretary Andrea Leadsom said reform to the UK’s “world-leading legislation” will increase transparency and “ensure companies cannot shy away from required reporting on executive pay.”

The Daily Telegraph The Guardian, Page: 41 Financial Times Yorkshire Post, Page: 2


Restaurant bosses plea for wine tax cut

A group of London restaurant bosses, including Jeremy King, whose Corbin & King empire runs the Wolseley and the Delaunay, and Mark Derry, chief executive of Brasserie Bar Co, have written to Government Exchequer Secretary Simon Clarke MP calling for a cut to wine taxes to help the struggling hospitality sector provide consumers with some much needed relief. They say duty on wine has risen 12% since 2014, compared with 2% for spirits and a 0.2% fall for beer.

Evening Standard


Central banks running low on ways to fight recession, warns Mark Carney

The outgoing Bank of England Governor has warned that central banks were running out of the ammunition needed to combat a downturn. Mark Carney said the global economy is heading towards a “liquidity trap” that would undermine central banks’ efforts to avoid a future recession.

Financial Times, Page: 1 The Daily Telegraph

Contact Paul Southward.

Paul Southward