NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
TAX NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
Backlash against Treasury plans to reduce pensions tax relief
The Prime Minister, along with new chancellor Rishi Sunak, is facing a growing backlash over a proposed reduction on pensions tax relief for 20% for all workers. The Institute for Fiscal Studies has cautioned that the proposals were “completely incoherent,” while former Conservative pensions minister Baroness Altmann remarked that the Treasury appeared to be “determined to stop people who want to save from saving.” This comes as analysis by savings and investments firm AJ Bell shows that those earning over the £50,000 a year threshold at which 40% income tax is applied would be affected by such cuts, and that while a 30-year-old higher rate taxpayer saving £1,000 a month in their pension could stand to lose almost £285,000 by the time they reached retirement, a 40-year-old saving the same amount could be over £150,000 worse off.
Daily Mail, Page: 10
Chancellor ‘should create sovereign wealth fund’
A letter to the Times from former Treasury minister David Gauke on the subject of pension tax relief argues that “further restrictions to the lifetime and annual allowances are likely to cause substantial political pain,” while “a flat rate of tax relief lacks a coherent rationale and struggles to cope with defined benefit schemes.” He urges the new chancellor not to phase out pension tax relief “simply to increase his income,” calling for the establishment of a sovereign wealth fund into which the pension relief revenue could be directed. Mike Warburton, former senior tax partner at Grant Thornton, also writes to the Times to say that “pensions should not be treated as a convenient source of revenue by ministers who have been reckless enough to limit themselves on other options.”
Hays study reveals Scots firms not ready for IR35 reforms
Research from Hays Salary Guide 2020 reveals that 33% of private sector organisations in Scotland that engage temporary workers are unaware of IR35 reforms intended to fight perceived tax avoidance. Hays’ managing director in Scotland, Akash Marwaha, remarked: “The timeframe between the review and the reforms coming into effect is very short, so it’s important for employers to act now to ensure they are aware of how these changes will affect their business.” He went on: “Our research in Scotland showed that 83% of employers see the biggest risk of IR35 to be potential cost increases, however, the loss of key talent is also a big concern.”
The Scotsman, Page: 35
Rural campaigners urge single tax for businesses
The Country Land and Business Association (CLA) has presented its Rural Powerhouse plan to the Treasury ahead of the Budget, in which it argues that farmers should not be taxed extra for each business they start on their land, calling for all businesses run on such land to be taxed under one bracket. CLA President Mark Bridgeman commented: “The proposal for the creation of a ‘Rural Business Unit’ will allow greater freedom of investment within rural businesses leading to productivity growth and more tax paid to the Exchequer, more income available for environmental protection and conservation, and more jobs to local communities.” He also noted that: “The administration of our proposed system would be a simplification, saving time both for HM Revenue and Customs and for rural businesses.”
Tax changes risk loss of a valuable resource pool
Haney Saadah of Addleshaw Goddard writes to the FT on the effects changes to off-payroll tax legislation (IR35) will have on vital specialist contractor staff for banks.
Warning over tax raid on pensions
Experts have continued to voice concerns over a tax raid on pensions, saying company retirement schemes could be left with a £1bn hole if pension tax relief is slashed in the Budget. Chancellor Rishi Sunak is said to be considering a rethink that would see anyone earning more than £50,000 a year hit by a 20% tax charge on their annual pension savings. If the same rules are applied to businesses, those offering a final salary scheme stand to lose £1bn in tax relief, consultant Willis Towers Watson estimates. Former pensions minister Sir Steve Webb said: “Words like mayhem spring to mind when thinking of the reform.” Describing the proposed reform as “radical”, Sir Steve added: “There’s a reason governments haven’t done this before and if they’re going to alienate millions of people then they have to have a really compelling reason.”
Businesses at risk from IR35 off-payroll tax reforms
Protests against reforms to the IR35 tax regulation are growing, and IoD chief economist Tej Parikh says “Many firms remain unprepared for the legislation, given its complexity.”
Solve the factory tax
In an opinion piece for the Telegraph, Ryan Bourne, the chair for the public understanding of economics at the Cato Institute, says that in order to solve Britain’s productivity puzzle, the weak private investment level in plant, machines and building needs to be addressed. He points to stingy capital allowances for these investments within the corporation tax code – a phenomenon the Adam Smith Institute (ASI) has called a “factory tax”.
HMRC investigates dating giant
Badoo, the largest dating app in the world, is facing an investigation by HMRC over its corporate tax bill.
PENSIONS NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
FCA warned on online investment ad fraud
Mark Taber, a campaigner against scam financial advertising online, has advised the Financial Conduct Authority (FCA) and Google of 126 separate promotions in just six weeks, telling them that as much as 90% of advertising on Google for investment ISAs and bonds could be fraudulent. This comes as the FCA reveals that savers stand to lose £20bn from bad pension advice, if regulation is not tightened. It stated: “Pension scams continue to be both a cause of significant consumer harm to victims and a threat to wider consumer confidence and market integrity.” Mr Taber, meanwhile, advised: “Don’t look for investments on Google.”
The Independent, Page: 51
Mis-selling scandal forces big employers to impose safeguards on pensions advice
With worries over pension mis-selling increasing, third-party checks are being imposed on financial planning companies by large firms providing retirement advice to their employees, the Financial Inclusion Centre reports.
INTERNATIONAL NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
Foreign aid study reveals billions ending up in tax havens
The Elite Capture of Foreign Aid study by the World Bank, which tracked aid payments to 22 countries and found that as much as a sixth ends up in tax havens, has been released, with the Bank issuing a statement defending its efforts to root out corruption. The report states: “Aid capture by ruling politicians, bureaucrats and their cronies is consistent with the totality of observed patterns: it can explain why aid does not trigger flows to non-havens, why the capital outflows occur precisely in the same quarter as the aid inflows and why the estimated effects are larger for more corrupt countries.” A spokesman noted that: “We have strict procurement and financial management procedures in place that deter and detect corruption and irregularities in ‘aid’.”
PROPERTY NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
Chancellor urged to reform stamp duty
MPs, economists and campaigners have called on the Chancellor to use next month’s budget to reform the broken stamp duty system. Experts believe that the tax is stopping families from moving and preventing millions of young people from getting on the housing ladder. As he prepares for his first Budget on March 11, new Chancellor Rishi Sunak is under growing pressure to introduce sweeping changes such as a higher threshold for paying stamp duty, exclusions for downsizers and a simpler system. “We are meant to be promoting home ownership, and taxing something you are wanting to promote is not really a great idea,” said Conservative MP John Redwood. Meanwhile, Paul Johnson, director of the Institute for Fiscal Studies, comments: “If you are living in a family house and the kids are gone and you want to buy something smaller – which may be the same price – it is going to cost you a lot of money to move. So people stay in properties that would be better used by somebody else”. Paula Higgins, chief executive of the Homeowners Alliance, tells the Telegraph that the system is so complicated it deters people, adding that her group would like to see a holiday for downsizers to get the market moving.
BREXIT NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
Calls for cuts to post-Brexit business costs
The head of the British Chambers of Commerce, Adam Marshall, has said that the British Government should reduce the costs of doing business in the UK in order to offset the impact of Brexit. Mr Marshall said the that UK’s exit from the EU “will create new costs for a lot of businesses that they wouldn’t have faced before,” adding, “Our challenge back to government is: what can you do to help reduce up-front costs elsewhere to help keep businesses competitive?” Boris Johnson’s approach to a post-Brexit trade deal with the bloc, aiming for a more distant economic relationship, will result in a sharp increase in business costs and paperwork for UK companies. Mr Marshall called for cuts to business rates and reviews of the levy companies pay to fund a number of initiatives such as the national living minimum wage and pensions auto-enrolment requirements.
ECONOMY NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
Inflation rises to six-month high
UK inflation hit a six-month high of 1.8% in January, according to the Office of National Statistics, up from 1.3% in December but below the Bank of England’s 2% target. The primary drivers of the increase were rises in the housing and household services, and transport, which rose 0.2% on rising fuel pump prices. The retail and hospitality sectors also recorded rises.
Logistics and supply deals double
The number of deals in the logistics and supply chain management industry doubled to 64 last year, according to BDO.
Yorkshire Post, Business, Page; 8
Retail sales rally
Figures from the Office for National Statistics show retail spending rose in January, with the volume of retail sales up 0.9% following 0.5% contraction in December. Retail sales excluding fuel rose 1.6% in January compared to the month before. Fashion retailers saw the biggest month-on-month rise between December and January, with a 3.9% increase, while supermarket sales were up 1.7% and department stores saw sales climb 1.6%. Paul Dales, chief UK economist at Capital Economics, suggests December’s election result, which ruled out a no-deal Brexit, “gave consumers the confidence to reopen their wallets”.
The Times, Page: 38 The Guardian, Page: 35 The Independent, Page: 53 Daily Mail, Page: 79 The Scotsman Daily Express, Page: 48
Insurers battered by storms
PwC estimates that storms Dennis and Ciara will cost insurers over £425m in flood and wind damage claims.
The Sun, Page: 49 The Guardian, Page: 19
INTERNATIONAL NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
First Panama Paper guilty plea
Harald Joachim von der Goltz, an 82-year-old former client of Mossack Fonseca, is the first individual to plead guilty in the U.S. in connection with an investigation precipitated by the leak of documents from the Panama-based law firm. He has admitted to charges of conspiracy to evade taxes, and commit money laundering and wire fraud. The leak of the firm’s internal files revealed that it had created hundreds of thousands of shell companies and offshore accounts for clients around the world. Mr. von der Goltz had initially pleaded not guilty to the government’s charges and was scheduled for trial early next month. He faces between 151 and 181 months in prison and a fine of between $35,000 and $350,000, U.S. District Judge Barbara Moses said.
OTHER NEWS FOR THE WEEK ENDING 21ST FEBRUARY 2020
TV star banned from directorships over unpaid tax
Reality TV personality Gemma Collins has been issued with a three-year ban on being a company director, after it was found that her business failed to pay over £70,000 in tax. After her firm Gemma Collins Boutique Limited was put into liquidation in 2017, the Insolvency Service began to look into her affairs, with HMRC claiming it was owed £71,745 in respect of VAT when the business was closed. It was also found that over £280,000 went out of the company bank account while it was behind on its VAT returns, while Ms Collins resigned as a director of her other companies last month ahead of the ban coming into force.
Daily Mirror The Sun, Page: 4 Daily Star, Page: 19
Accountant’s message in a bottle washes up after 82 years
A message in a bottle sent by a former chief accountant at HM Customs and Exercise has washed ashore after more than 80 years at sea. The note, dated 5 September 1938, asks the finder to “communicate” with a John Stapleford in Hertfordshire – and to send a photograph. Nigel Hill was walking his dog Reggie on a beach in the Bel Royal area of Jersey when he stumbled upon the bottle. Unfortunately, Mr Stapleford will never know that his message was discovered, after birth and death records reveal he died aged 91 in December 1980.
The Independent Daily Express, Page: 27
Contact Paul Southward.