NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
TAX NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
Lisa Nandy: My plans to tax wealth as well as income
In a piece for The Guardian, Labour leadership contender Lisa Nandy describes how, should she win the contest, the party will campaign on a platform of tax wealth at the same rates as income, and ensuring gains from land, shares and property are “properly and fairly” taxed. “Under my leadership, Labour would build on our commitments of the past few years and put forward a bold programme of wealth redistribution – and creation – that does more to tackle the structural inequalities we face”, she writes. “This isn’t about penalising people for the rewards of hard work, or taxing aspiration, but recognising that high earners are increasingly transferring income to wealth, avoiding taxes that would otherwise be due. And we need to recognise that so much of the wealth held in this country today is not earned, but gifted, whether through inheritance, house price rises or playing the money market.”
The Guardian, Page: 4
City calls for end to bank taxes
City lobbyists are calling on the Government to scrap taxes that specifically target banks to help the industry become more competitive after Brexit. TheCityUK said in a letter to Boris Johnson: “The UK tax regime targets specific sectors like UK-based banking in a differentiated way, which may jeopardize future investment in this sector and thereby risks adversely impacting the broader ecosystem in which related businesses operate.” PwC says the banking sector contributed about £40bn in tax in 2018, the Telegraph notes, while the bank levy, which was introduced in 2011 after the financial crisis, is expected to raise £2.3bn in 2019-2020.
The Daily Telegraph, Business, Page: 4
Time to rethink IR35, Sunak urged
Writing in City AM, Charlie Cox, the commercial director of SThree, says Rishi Sunak should think again about IR35; citing a survey which found 98% of contractors don’t believe that the impact on the private sector has been adequately assessed. Additionally, 95% of contractors and 92% of end hirers said the policy as it currently stands would not achieve the government’s objectives. “IR35 has real potential to hinder innovation and productivity throughout the UK. While I’m supportive of the government’s attempts to ensure that everyone pays the appropriate amount of tax, it needs to be done properly. This proposed reform is not representative of that,” says Cox.
City AM, Page: 19
Capita certified by fair tax group
Outsourcing giant Capita has become the largest employer to be certified by the Fair Tax Mark, which recognises organisations that demonstrate they’re paying the right amount of corporation tax in the right place, at the right time. CEO Jon Lewis said: “This demonstrates our genuine commitment to responsible behaviour.”
Daily Mirror, Page: 46
UK adopts ‘light touch’ on tax rules for freelance contractors
Businesses will be absolved of penalties if they incorrectly assess the status of freelance contractors in the first year of changes to UK tax rules, under a “light touch” approach outlined by the government, which has published its review into the tax changes after announcing it would look into IR35 following concerns from business. The Treasury reinforced statements by Chancellor Rishi Sunak, who attempted to reassure business groups that HMRC would not be “heavy handed” in its implementation of private sector reforms to ensure the transition was “as seamless as possible”. In its review, the government said it had listened to the concerns and had changed its approach “where appropriate to better support affected businesses and individuals.” Despite the tweaks the government said it remains committed to IR35 and “believes it is right to address the fundamental unfairness of the non-compliance wit h the existing rules”. From April 6, hiring companies become responsible for determining the tax status of “off payroll” workers employed via limited companies.
R&D tax relief for firms in all sectors in Scotland
Derek Gemmell, head of innovations tax at Anderson Anderson & Brown, writes a piece in The Scotsman on the research and development tax relief offered by HMRC, which allows companies that are investing in innovation to claim additional tax relief on their qualifying expenditure. Relief for SMEs is currently set at 230%, allowing every pound of qualifying expenditure to deliver an additional £1.30 of Corporation Tax relief. Larger companies can also reduce their Corporation Tax liability or receive a repayment from HMRC through the R&D expenditure credit (RDEC) scheme.
CORPORATE NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
CEO at NMC Health fired over secret loans
NMC Health has fired CEO Prasanth Manghat after an investigation revealed the private hospital operator had guaranteed $335m (£260m) in loans taken out by companies owned by two major shareholders – including founder and former chairman BR Shetty – without the knowledge of the board. Finance chief Prashanth Shenoy has been granted extended sick leave and the FCA is investigating. Michael Davis, the COO, has been appointed as interim chief executive. “The arrangements were not reflected on the company’s balance sheet nor reported in the company’s financial statements for the financial year ended on 31 December 2018,” NMC said, nor were they disclosed as related party transactions in accordance with the listing rules. Michael O’Dwyer in the Telegraph says the revelations are likely to put a spotlight on the company’s auditor, EY, and could become the latest in a long line of accounting scandals.
Ted Baker to cut 160 roles after ‘very challenging year’
Ted Baker is cut 160 roles following what acting chief executive Rachel Osborne described as a “very challenging” 2019. The retailer said the cuts are “the first of a range of expected initiatives to improve the efficiency and cost structure of the group”. The group has suffered falling sales, an accounting black hole and a string of profit warnings. Ted Baker revealed a miscalculation of stock provisions left it with a £58m black hole. Deloitte is conducting an investigation.
City AM, Page: 12 The Times, Page: 40 The Daily Telegraph, Business, Page: 4
UK regulator opens formal probe into NMC Health as stock suspended
The Financial Conduct Authority has opened a formal investigation into NMC Health following its admission that the company’s founder and another major shareholder had raised cash guaranteed by NMC but not approved by the board or disclosed to the market. The regulator has also agreed to a request by NMC for the temporary suspension of its shares. The development will add to pressure on NMC’s auditor, EY, and raise questions about whether UK listing rules are too lax. The Mail’s Alex Brummer says NMC’s shortcomings were not only overlooked by the London Stock Exchange, but by EY, the FCA and the Financial Reporting Council.
Persimmon chief quits amid row over firm’s building quality
Persimmon has announced the departure of chief executive Dave Jenkinson, as the housebuilder scrambles to improve the quality of its homes following a damning independent review and a deluge of customer complaints. Jenkinson, who took over 15 months ago in the wake of a backlash against his predecessor’s £75m bonus, may remain at the helm for a few more months while the firm looks for a successor. Julie Palmer, a partner at Begbies Traynor, said Jenkinson’s “replacement will need to rebuild the company’s image.”
The Guardian, Page: 41 Evening Standard
Finance boss to leave Aston Martin following losses
Aston Martin has announced that its CFO Mark Wilson would be leaving by mutual agreement after the carmaker reported a pre-tax loss of £104m for the past year, up from £68m.
SMEs NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
AI can help stem late payment losses
In a letter to City AM, Paul Christensen, the CEO of Previse, says technology exists today which could speed up the payment of invoices to small businesses, reducing the risk of failure and subsequently providing encouragement to entrepreneurs. Such use of artificial intelligence may even remove the need to hand out expensive tax benefits to lure investment.
City AM, Page: 18
Fuel duty rise fears
A hike in fuel duty would lead to a third of the UK’s small firms cutting staff wages or making people redundant. Additionally, three quarters of small businesses with a fleet of vehicles said they would be forced to increase prices for customers to cover a fuel duty rise and d 37% of pensioners said they would have to cut down on heating.
The Sun, Page: 2
Lending figures set to rise with return of confidence
The amount of peer-to-peer and other marketplace lending to SMEs fell from £2.37bn in 2018 to £1.9bn in the first nine months of 2019 while equity investments were also down from 2018’s figure of £6.7bn to £5.5bn. According to the latest 2020 Small Business Finance Markets report from the British Business Bank, lending from banks to SMEs was also down by nearly 2% year-on-year at £57bn compared with £58bn in 2018. Matt Adey, director of economics at British Business Bank, adds that business confidence was very low in 2019 but since the election, surveys suggest it is ticking up. “That will translate into investment plans,” he said. “There’s the prospect of things improving but that will take time to come through.” Over the last five years, peer-to-peer business lending volumes have risen by 374%, the BBB added.
Climate campaigners win Heathrow expansion case
The Court of Appeal has cast controversial plans for a third runway at Heathrow Airport into doubt. The government’s decision to allow the expansion was unlawful because it did not take climate commitments into account, the court ruled. Heathrow said it would challenge the decision, but the government said it would not appeal. The judges said that in future, a third runway could go ahead, as long as it fits with the UK’s climate policy. Mike Cherry, who chairs the Federation of Small Businesses, said the ruling would hit small firms needing more connectivity and export opportunities. But the Transport Secretary Grant Shapps signalled that the government was planning to shift focus to expanding regional airports.
EMPLOYMENT NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
Apprentice levy should not be used to help bosses
The education secretary has warned companies using funds from the apprenticeship levy to send senior managers on MBA courses that the practice will be stopped. Gavin Williamson said the funds are supposed to be used to “kick-start careers or level-up skills and opportunities” among those with few or no qualifications, not send executives on university courses. Universities were also found to be relabelling their academics as apprentices and sending them on their own courses.
The Times, Page: 10
PROPERTY NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
Majority of landlords don’t use a tax adviser
Over half of all landlords do not use the services of a tax adviser, according to research from Foundation Home Loans. The study found that 40% use one at least once a year, while 7% use one less than this. Of those that do use a tax adviser, 42% said they had been recommended one by a friend or colleague or another landlord. The Foundation says the high number of landlords without a tax adviser presents both an opportunity and a risk for mortgage advisers, suggesting that mortgage firms should establish introducer arrangements with tax advisers. Landlord’s and mortgage advisors, we can help you, contact Paul Southward today.
WEALTH MANAGEMENT NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
Adviser M&A on the rise
FT Adviser reports that M&A activity in the financial advice industry, and broader UK wealth management sector, continues at pace, driven by regulation, an ageing demographic and increasing PI insurance costs. Scott Stevens, director of adviser recruitment and acquisition at Quilter Financial Planning says: “When it comes to M&A we know advisers are an aging population, with many looking to exit and so want to merge with, or be acquired by, another firm so their clients are well catered for.” Stuart Dyer, chairman of consultancy firm Soprano Mergers & Acquisitions adds: “The regulatory landscape is becoming more difficult for the small -medium IFAs, alongside the factors driving consolidation, such as demographics, ageing population of principal/owners of IFA businesses.”
PENSIONS NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
One in five will retire with less that they thought
A survey by the Association of British Insurers has found that as many as 19% of savers could retire with smaller savings than expected because they do not review information about their pensions. The findings come as Parliament prepares to debate the Pensions Schemes Bill, which would legislate for the introduction of a “pensions dashboard” – a digital service allowing savers to see details about all their pension savings in one place.
The I, Page: 11
Lords backs ESG amendments to pensions bill
Peers in the House of Lords have shown their support for amendments to the pensions bill which will force schemes to report on their climate change strategies as well as how their investments support wider climate goals. Baroness Hayman, who put forward both amendments, said providing this sort of information on the pensions dashboards would help drive an increase in savings as many people nowadays have a strong interest in environment, social and governance issues.
ECONOMY NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
Javid issues warning over fiscal responsibility
Sajid Javid spoke in the Commons yesterday about his resignation as Chancellor, warning Boris Johnson that the merging of Treasury and No10 teams was “not in the national interest”. Mr Javid also warned against a Budget spending spree and tac hikes adding that the UK’s tax burden was already “the highest it’s been in 50 years”. However, the new Chancellor, Rishi Sunak is expected to shelve several big decisions on tax, spending and borrowing until the autumn. Proposals to impose a “mansion tax” on high-value properties, cut pensions tax relief for high earners and increase fuel duty are expected to be shelved until the next Budget.
Government told to ‘go big’ to tackle regional inequalities
The Government must “think big” and spend more if it is serious about levelling up the UK’s regions, an independent inquiry has said. An extra £200bn of regional funds should be channelled to disadvantaged parts of the country over the next two decades, the UK2070 Commission said. Commission chairman Lord Kerslake, a former head of the civil service, said “an over-centralised system”, as well as policies that were fragmented, under-resourced and too short-lived were to blame for regional inequalities that have “blighted” Britain. “We cannot afford to keep on repeating those mistakes. Government must therefore think big, plan big and act at scale. Bluntly, if it can’t go big, it should go home,” Lord Kerslake said.
Markets panic over coronavirus
The coronavirus outbreak has reached a “decisive point” and has “pandemic potential”, World Health Organization head Dr Tedros Ghebreyesus has said. Globally, more than 81,000 people in nearly 50 countries have been infected. If the outbreak takes hold in the UK then mass gatherings will have to be cancelled and schools shut for two months, the chief medical officer said. Fears over the impact of the virus has sent markets sharply down with the FTSE 100 losing £152bn over the last four days. New York’s Dow Jones New fell by 1,191 points, or 4.4% yesterday – its biggest one-day points fall in history.
OTHER NEWS FOR THE WEEK TO 28TH FEBRUARY 2020
HMRC to start charging NI on testimonial matches for retired players
Football clubs and other bodies organising testimonials for retired sportsmen and women will have to pay National Insurance on any money raised above the sum of £100,000 from April. Traditionally the matches feature the player’s former teammates and were a reward for long service to a single club, with the proceeds going to support the player in retirement. However, declining player loyalty has made them less common, with players who do receive a testimonial often donating the money to charity. HMRC did not make clear whether the National Insurance charges would apply if the proceeds are donated to charity. If a player has died and the money is given directly to their family, then the new rules would not apply.
Five promoters arrested on suspicion of loan charge fraud
Four men and one woman have been arrested on suspicion of fraud in connection with promoting arrangements designed to get around paying the loan charge. More than 100 HMRC officers searched business premises in Birmingham and further addresses in Coventry, Worcestershire, Northumberland, Buckinghamshire and Northern Ireland. A spokesman from HMRC’s Fraud Investigation Service said: “Those that enable, promote or facilitate tax fraud are firmly in our sights and we currently have more than 200 such suspected enablers under criminal investigation.”
Yorkshire Post, Page: 6
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