NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
TAX NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
New rules for UK residential property sales after 6th April 2020
If you sell a UK residential property after 5th April 2020, you need to be aware of the new reporting and tax payment requirements. Details of the new rules can be found here: –
Contact Paul Southward for further information
PAYE issues result in record emergency pension tax payout
Savers who withdrew from their pensions in the last quarter of 2019 were repaid over £32m in emergency pension tax by HMRC. Between 1 October and 31 December, HMRC processed more than 10,000 pension tax repayment claim forms for pension flexibility payments resulting in some savers being charged an emergency tax. Underlining the record payout, Quilter head of retirement policy Jon Greer comments: “The problem has nothing to do with anything pensioners have done wrong and lies solely with the PAYE system. HMRC’s PAYE system is not built for one-off withdrawals from a pension and so does not fit with the new world of pension freedoms.” He added: “If you have been charged then you can fill in one of three forms: P55, P53Z and P50Z. These were created so people could claim back mid tax-year and not have to wait to receive money that is rightfully theirs.”
UK needs to show faith with the OECD over digital tax
Russ Shaw, founder of Tech London Advocates and Global Tech Advisers, writes in City AM that the UK needs to show faith in the OECD and not go it alone with a digital services levy. He says that tech companies must pay their “fair share” of tax, but countries that are determined to regulate on their own terms will fail to feed the growth of a thriving sector – something particularly relevant to the UK.
City AM, Page: 18
Belgian tax authority drops part of Frasers tax probe
Frasers Group, until recently called Sports Direct, has indicated that the Belgian Tax Authority has concluded most of its investigation into a tax dispute. The group, majority owned by Mike Ashley, said it will continue to fully engage and work with the tax authority in order to resolve the smaller remaining matters. The tax authority said it is satisfied with Frasers’ explanation regarding 73% of a query over value added tax of €674m (£570.2m). The FT earlier this week reported that Sports Direct is battling to keep private documents it handed to its accountants Grant Thornton and Deloitte from being passed to the Financial Reporting Council.
Survey contradicts MTD benefits
Nearly 90% of respondents to a new survey conducted by the CIOT and ATT say Making Tax Digital (MTD) for VAT has not reduced errors, while just 14% of respondents indicated an increase in productivity in their organisation as a result of MTD for VAT. Tina Riches, chair of the joint CIOT and ATT Digitalisation and Agent Services Committee, said: “These initial results underline our concerns that, far from bringing benefits to businesses and the Exchequer, MTD for VAT has so far created additional, costly obligations for most businesses beyond what was predicted by HMRC. The Government should undertake a detailed review of MTD for VAT, and determine any benefits, before rolling out MTD more widely.”
National Insurance cut from April
The government will raise the threshold for National Insurance contributions (NICs) from April by more than 10% to £9,500. A typical employee will save around £104 in 2020-21, Chancellor Sajid Javid suggested, while self-employed people, who pay a lower rate, will have £78 cut from their bill. Boris Johnson has said previously that his “ultimate ambition” is to raise the NIC threshold to £12,500 by the middle of the decade handing an overall tax cut of £465 to 31m workers.
City AM The I, Page: 4 The Sun, Page: 6 Daily Mail, Page: 10
Taxing times …
Dawn Register, partner in tax dispute resolution at BDO, writes to City AM in response to a story yesterday about the complexities of self-assessment. Ms Register agrees that making the tax return submission process simpler (and the tax system itself more equitable) should be a priority for 2020-2021. She adds that if only tax were as simple as online banking then maybe more people would file soon after April 5 – rather than have a mad panic 10 months later on January 31. Meanwhile, Victor Stensson, founder of AI accountancy tool Bokio, explains in City AM how technology has helped to take the pain out of self-assessment.
City AM, Page: 14, 17
Martin Griffiths, tax & structuring partner at Addleshaw Goddard, offers advice for businesses in City AM on the forthcoming IR35 tax regulations. He says that companies need to prepare for its introduction, noting that many firms are hoping that a latest consultation on the changes will recommend further delay. Griffiths thinks otherwise and says the consultation is very clear: to “help implementation”, not delay or cancel it.
City AM, Page: 15
VAT NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
Trading Internationally after leaving the EU
HMRC has written to VAT-registered businesses trading with the EU, or the EU and the rest of the world, outlining actions to be taken before the end of the transition period after the UK leaves the EU; the letter can be found here:
CORPORATE NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
BDO takes over as Norton Motorcycles goes into administration
Norton Motorcycles has entered administration after receiving a £300,000 tax bill, with the firm’s last full-year accounts showing sales of £6.7m on which it made a £33,701 pre-tax profit. BDO has taken over the running of Norton and a related hotel business, with BDO business restructuring partner Lee Causer noting: “Our job is to determine and execute the most appropriate strategy as swiftly as possible to protect creditors’ interests, bearing in mind the need to minimise distress for all parties.”
Woodford investors face fresh blow
Link Fund Solutions has revealed that winding up N1eil Woodford’s Equity Income fund has cost investors trapped inside more than £10m to date. A further £22.5m will be needed to honour promises made to young companies backed by Woodford. Meanwhile, the suspension of the fund has seen Kent County Council suffer an initial loss of over £120m.
Former BHS director agrees to ban
Lennart Henningson has agreed to a ban by the government’s Insolvency Service that will prohibit him from company directorships in the UK until 2025, having served as a director of BHS in the period immediately before its collapse. He had transferred £1.5m from BHS to a Swedish company the day after the appointment of administrators was discussed by its board. This follows BHS auditor PwC being fined £6.5m in 2018.
Norton collapse ‘more complex’ than reports claim
The Guardian features a report on the demise of motorcycle manufacturer Norton, which fell into administration on Wednesday. While Brexit, a tax bill of £300,000 and international competition were cited as reasons for the firm’s collapse, the report suggests that “hapless pension holders, together with unsuspecting Norton customers, staff and even government ministers… repeatedly endorsed Norton as millions of pounds in taxpayer support flowed into the firm.” Owner Stuart Garner’s involvement in the company’s downfall is analysed, with some 228 savers’ pension pots making up the £14m invested into Norton following a fraud. It is also noted that a conman called Simon Colfer had admitted duping pension holders into transferring funds into Norton’s scheme and others.
The Guardian, Page: 40
Wonga loan victims set to get less than 5% in compensation
Administrators at Grant Thornton have said that hundreds of thousands of people who were mis-sold loans by the defunct payday lender Wonga will get less than 5% of the compensation they are owed. According to documents filed at Companies House, nearly 400,000 eligible claims were lodged against the company following its collapse in August 2018. Grant Thornton said it would pay all of the unsecured creditors 4.3% of their agreed claims over the next four weeks.
The I, Page: 40 BBC News The Guardian, Page: 41
Virgin Money’s chief financial officer to leave for Nordea Bank
Ian Smith, a former senior finance boss at Lloyds Bank and a former partner at Deloitte, is leaving Virgin Money to become Helsinki-based Nordea Bank’s new chief financial officer.
Blackmore misses another payment
Blackmore Bond, a minibond company that has raised more than £25m from investors, has missed a second consecutive interest payment. The company told more than 2,000 small investors that it was unable to pay their January interest payment having already not paid the quarterly coupon payment that was due in October. Investors have criticised Blackmore for a lack of communication and called for independent scrutiny of its business.
PENSIONS NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
Thousands deferring state pension to cut tax bill
Some 14,000 people used a little known loophole to turn off their state pension payments as a way of cutting their income tax bills in the 2018-19 tax year. Under a little known state pension rule, anyone can choose to opt out of receiving their payments, currently payable from age 66, however Peter Matthew, a financial planner at Jacksons Wealth, said the ability to suspend and restart payments was so unknown that even he didn’t know about it. People can boost the amount later when they receive “enhanced” payments when it kicks back in, though the total amount of “enhanced” payment they receive is dependent upon whether state pension age was reached before or after April 6 2016.
Pensioners reducing average withdrawal rate
HMRC figures reveal that pensioners have reduced their average withdrawal rate, with the average rate per quarter down to £6,820. This figure represents a fall of 39% from £11,132 per quarter in April 2016. Royal London pension specialist Helen Morrissey noted that people are using savings in a more “considered” way, after an initial tendency towards larger withdrawals in the early days of pension freedoms. Hargreaves Lansdown’s Nathan Long remarked: “More flexible options do create confusion, so it’s important retirees are clear and comfortable on their approach. Finishing work for good can be a great time to seek out advice, even for those who’ve been comfortable in managing their money themselves beforehand.”
Spouses to receive extra £20,000 if partners die intestate
With intestacy rules last updated by the government in 2014, the amount that a spouse automatically receives if their partner dies without leaving a will is to rise by £20,000 on 6 February to £270,000, to account for inflation. Personal finance campaigner Myron Jobson remarked: “There is no substitute to writing a will for those concerned about how their assets are divided when they shuffle off this mortal coil, yet our Great British Retirement Survey of 10,000 consumers found that a quarter (25%) of people haven’t already done so.” Meanwhile Tom Selby, senior analyst at AJ Bell, noted that: “Many more couples are living together but not getting married or entering into a civil partnership, and are leaving themselves in a precarious position if they have not drawn up a will.”
SMEs NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
Glen facing resignation calls
The resignation of John Glen, economic secretary to the Treasury, is being sought by small business owners and representatives of “mortgage prisoners”, who have written to the Prime Minister alleging banking misconduct and a shortage of help for the hundreds of thousands of homeowners trapped in high-interest mortgages because of a failure to meet stricter borrowing criteria. It is suggested that Kevin Hollinrake, co-chairman of the all-party parliamentary group for fair business banking, should replace him. Mr Glen recently told banking trade body UK Finance that he was open to using regulation to help mortgage prisoners, but that banks should “take the lead in making a real difference to this group.”
More loans issued by BBB to northern firms
New figures have reveal ed that entrepreneurs in the north of England received more loans from the Government-backed British Business Bank than London firms, with the bank lending £ 151m through its Start Up Loans programme to 18,612 North East, North West and Yorkshire and Humber small businesses since 2012, while London-based companies had loans of £ 128m in total.
The Sun, Page: 47
Survey reveals increase in Venture Capital investment in Scottish scale-ups
The Global Venture Pulse Survey, produced by KPMG Private Enterprise, has shown that Venture Capital investment in Scottish scale-ups almost doubled last year, reaching £19.7m, from £10m a year earlier. KPMG Private Enterprise in Scotland manager Amy Burnett remarked: “Despite the political uncertainties, entrepreneurs have attracted investment from all over the world, closing significant deals and drawing the attention of VC investors focused on later stage companies.” She added: “While it’s an overwhelmingly positive picture, there is some concern that early and seed stage deals aren’t always getting the support they need to grow, which could slow innovation in the long-term and put Scotland at a competitive disadvantage.”
Insider The Scotsman, Page: 28 The Press and Journal, Page: 35
SME tax estimate tool launched
Countingup, the SME banking and accounting app, has added a tax estimate tool to its business current account. For self-employed sole traders, the tool provides a real-time estimate of how much Income Tax and National Insurance is owed under Self-Assessment. For limited companies, the tool provides a real-time estimate of how much Corporation Tax is owed.
Small firms expect Brexit sales bounce
More than one quarter (28%) of UK SMEs are expecting a revenue bounce in the first three months after the UK leaves the EU. The survey, which was commissioned by Leonne International, also found that 37% expect the UK economy to grow substantially following Brexit. Business owners from West Midlands are most confident of growth at 50%, followed by the North West of England (45%) and the North East (42%).
Yorkshire Post, Page: 3
RISK NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
Coronavirus hitting multinationals in China
The coronavirus outbreak in China is increasingly impacting multinationals in the region, many of whom have been forced to suspend travel, halt production and shut stores as the crisis deepens. Hundreds of the world’s top 500 companies, including Microsoft, German software company SAP and French car maker PSA, have a presence in Wuhan – the epicentre of the outbreak. Car maker Toyota has suspended production at four auto plants, British Airways has cancelled all flights to and from the country for the next few days, while IKEA, Starbucks, McDonald’s and KFC have all closed Chinese outlets. PwC, Facebook, HSBC, Standard Chartered and LG Electronics have suspended or restricted travel by employees to China.
INTERNATIONAL NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
Make the punishment fit the white collar crime
Brooke Masters, writing in the FT, discusses a recent insider trading case in which Swiss authorities refused to name the person involved or even the bank, contrasting this with U.S. policies.
ECONOMY NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
House price growth increases, Nationwide says
Annual house price growth rose 1.9% in January to £215,897, according to Nationwide, up from 1.4% growth in December and the fastest annual growth rate in over a year. Separately, buyers of luxury London homes got less-generous discounts in the final part of 2019, according the Coutts London Prime Property Index, which said buyers in the £1m to £10m bracket got an average discount of 10.2% off asking prices in the three months to December 31, compared to a 12.7% discount in the same quarter a year earlier. Howard Archer, chief economic adviser at EY Item Club, said: “There is compelling evidence that the housing market has got an initial leg-up from increased optimism and reduced uncertainties following the decisive election result, as well as greater near-term clarity on Brexit.”
Bank of England holds rates but lowers growth prediction
Despite a surge in expectations that it would reduce rates for the first time in four years, the Bank of England’s Monetary Policy Committee voted 7-2 on Thursday to hold the interest rate at 0.75%. The Bank slashed its longer-term growth predictions however and expects that the economy will grow just 0.75% in 2020, down from an initial estimate of 1.25%. The Bank estimates 1.5% growth in 2021, down from 1.75%.
Evening Standard The Daily Telegraph City AM
OTHER NEWS FOR THE WEEK ENDING 31ST JANUARY 2020
HMRC staff on strike
HMRC staff are launching a series of strikes in a dispute over office closures. Members of the Public and Commercial Services union in Ealing, London, are staging half day stoppages today, and are due to hold a 24-hour walkout tomorrow.
Yorkshire Post, Page: 4
More tax dodgers on the road
The DVLA has said that the number of tax-dodging drivers has nearly doubled to a whopping 1.37m! since the tax disc was abolished back in 2014.
Daily Star, Page: 7
Duty free back on the menu?
With Britain set to leave the EU at 11pm GMT tonight, the government has said that a no-deal Brexit would see duty-free shopping for British citizens visiting EU countries return. A no-deal scenario is however unlikely after the Prime Minister’s Brexit deal was approved by the European Parliament. The reintroduction of duty-free shopping would only take place should Britain and the EU fail to negotiate a deal after the transition period, due to expire at the end of the year, has finished.
Contact Paul Southward.