NEWS FOR THE WEEKEND 16th DECEMBER 2019
NEWS FOR THE WEEKEND 16th DECEMBER 2019
TAX NEWS FOR THE WEEKEND 16th DECEMBER 2019
National insurance promise expected in Budget
The Conservatives’ pledge to raise the point at which people paid national insurance from £8,632 to £9,500 is expected to be included in a budget which could take place in February, the Times’ James Coney reports. The move would hand workers a tax break worth £96 a year and cost about £2bn a year. Laura Suter, a personal finance analyst at AJ Bell, points out that: “By shifting national insurance rates rather than income tax thresholds, Mr Johnson extends the giveaway to the lowest earners, in particular those on less than the existing £12,500 personal allowance.” Small businesses will also be hoping for the announcement of a cut in business rates by about £320m from next year, Coney adds.
Lloyd-Webber’s win Barbados property tax appeal
Lord and Lady Lloyd-Webber have won a two year battle with HMRC over whether they could offset a £6m loss in a failed Barbados property investment for tax purposes. HMRC argued that the contracts – to buy two plots of land and two villas that would be built later – the couple had entered into were not assets that could qualify, saying the true asset purchased was the land, which had not significantly changed in value over the years. However, the appeal was allowed by Judge John Brooks, who ruled against HMRC concluding the contracts themselves were allowable assets that could be offset to save tax.
The Daily Telegraph, Page: 23 Daily Express, Page: 24 The I, Page: 36 Yorkshire Post, Page: 7
UK Conservatives’ tax pledges could come back to bite them
Paul Johnson of the IFS warns that public finances don’t offer much fiscal room for manoeuvre for the Tories and the PM’s pledge not to raise rates of income tax, NICs or VAT “might well come back to bite the chancellor.”
Interest wipes out Nero profit
The Mirror reports that Café Nero has paid no corporation tax for 12 years because interest payments on a loan from its parent company wipe out any profit.
Daily Mirror, Page: 24 The I, Page: 80
460k chased tax refunds
Analysis by insurer Royal London shows that around 460,000 people had to contact HMRC for refunds of overpaid income tax last year. The firm’s Becky O’Connor comments: “This goes to show it’s a good idea not to assume the taxman is always right about what you owe.”
The Sunday Times, Business and Money, Page: 17
CORPORATE NEWS FOR THE WEEKEND 16th DECEMBER 2019
Arcadia secures loan from Apollo
Arcadia has secured £310m from US asset manager Apollo to remortgage its Topshop Oxford Street store. The original loan from RBS, due in June, was extended until the end of this month as part of a restructuring of Sir Philip Green’s retail empire. PwC , Arcadia’s auditors, had warned that if the company had been unable to refinance the property, lenders could have demanded immediate repayment.
M&C Saatchi directors ‘blocked’ accounting probe
Three non-executive directors who last week left advertising agency M&C Saatchi have accused the board of backtracking on a promise to hold an independent investigation into its accounting crisis. Lord Dobbs, Sir Michael Peat and Lorna Tilbian have signed a letter saying chief executive David Kershaw and chairman Jeremy Sinclair reneged on a promise to establish an independent committee overseen by the non-executives. Mr Kershaw and Mr Sinclair have reportedly insisted they wait until they see a full report from PwC – who have been brought in to run an external review – before giving the green light to an internal investigation led by the audit committee that the non-executives had demanded.
The Sunday Times, Business and Money, Page: 1 The Mail on Sunday, Page: 87
Concern over British Steel rescue talks
Sources say the rescue of British Steel could collapse, with talks with potential buyer Jingye at risk as a deadline to finalise terms approaches. Jingye Group is said to have warned that the deal is being hampered by controls on capital outflows imposed by the Chinese state. EY and Official Receiver officials are understood to be in informal discussions with alternative buyers, although the Government has denied it is in formal talks with other interested parties. Jingye insists it is on course to complete the deal by the end of January.
The Sunday Telegraph, Business and Money, Page: 1 The Sunday Times, Business and Money, Page: 3
Sports Direct to play down tax fears
Sports Direct is this week expected to reassure the City over a shock €674m Belgian tax bill which included 200% penalties and interest. The Sunday Times says the firm upset the market and its own auditors at Grant Thornton when it disclosed the possible charge at the end of a heavily delayed results statement in July. The paper notes that Grant Thornton resigned in August and stopped working for Sports Direct in September, leaving the retailer without an auditor until it hired RSM in October.
‘Business malpractice’ led to SFD collapse
An investor has claimed that Shopfittings Direct (SFD) went under due to “business malpractice”. A source close to Elaghmore said that despite undertaking extensive due diligence, a number of “undisclosed issues” with SFD’s finances only came to light after it had acquired the business. The venture capital group said the issues left it no option but to put SFD into administration. Administrator KPMG will present its initial findings to creditors before the end of the year.
Sunday Express, Page: 45
Lenders plot break-up of Premier Oil
The Sunday Telegraph reports that lenders to Premier Oil are demanding a break-up of explorer as it nears a deadline to pay back loans. Premier Oil, understood to be supported by EY and law firm Slaughter & May, has $2.6bn of loans due for repayment in May 2021. Sources say the company hopes to refinance the debt before May 2020 to avoid causing complications in having its accounts signed off by auditors.
The Sunday Telegraph, Business and Money, Page: 3
The Sunday Times looks at finances within the automotive industry, citing Deloitte figures showing that electric car makers target underlying profit margins of 4%-5% but typically see a loss of between €500 and €1,000 on every vehicle, while combustion cars earn margins of 8%-10% and hybrids see target margins of just 2%-4%.
Asda shopping for finance chief
Asda is planning to change finance director as it prepares for a float, with the retailer – which appointed Rob McWilliam CFO in August 2018 – working with headhunter Heidrick & Struggles to find a finance chief who could help lead a listing.
The Sunday Times, Business and Money, Page: 2
PROPERTY NEWS FOR THE WEEKEND 16th DECEMBER 2019
Election result expected to boost property market confidence
Estate agents and mortgage brokers are predicting an injection of activity in the housing market after Christmas but warned buyers and sellers not to expect vast price rises. Andrew Montlake of Coreco described Boris Johnson’s victory as a “massive adrenaline shot” for the housing market, but Liam Bailey, global head of research at Knight Frank, warned: “Supply is likely to rise as political uncertainty recedes and private and public spending stimulate the UK economy [but this] “will put downwards pressure on prices.” Meanwhile, the Guardian reports that a super-rich European family bought a house in central London on Friday for £65m, saying their decision was a direct result of Mr Johnson’s historic election victory. The Telegraph cites James Hyman of Cluttons who says foreign investors, who largely target new builds, are likely to move fast before currency rises reduce their buying p ower – boosting developers. Hyman adds that the promised extra 3% surcharge for overseas buyers will be of little consequence in the short-term.
Daily Mail The Guardian The Daily Telegraph
BRC pushes Johnson on rates
Retailers quickly called on Boris Johnson to fulfil his pledge to overhaul businesses rates following his election victory with Helen Dickinson, chief executive of the British Retail Consortium, saying: “The Prime Minister must fulfil his manifesto pledge and urgently begin a fundamental review into the broken business rates system.” The Conservative manifesto outlined plans to extend a retail discount from 33% to 50% for businesses with a rateable value below £51,000.
Daily Mail, Page: 98
House price growth set to hit 2%
Leading economists have predicted that house prices will rise 2% next year as confidence returns to the market. Howard Archer, chief UK economist at EY, said the Conservative victory would boost house price growth from its current level of about 1% a year. He said record low interest rates would also help homebuyers although experts now think there is less chance of a rate cut by the Bank of England. “Housing market activity could be given a modest lift in 2020 if the Government introduces specific measures aimed at boosting the sector in the Budget. Low mortgage interest rates and a shortage of properties for sale should provide some support to prices,” said Mr Archer.
The Mail on Sunday, Page: 85 The Independent
EMPLOYMENT NEWS FOR THE WEEKEND 16th DECEMBER 2019
Staff shortages make it hard work for UK employers
Employers in the UK are finding it harder to attract and retain staff as the shortage of workers gives job candidates unprecedented levels of influence while trainers are skilling people who would normally remain outside the workforce. Separately, campaigners are pushing for the cost of visas for overseas staff coming to UK universities to be reduced, calling them discriminatory and out of line with other research intensive nations.
BREXIT NEWS FOR THE WEEKEND 16th DECEMBER 2019
Business seeks trade assurances from Johnson
Business groups have urged the PM to avoid a no-deal Brexit and secure close alignment with the EU in the future trade deal. Stephen Phipson, the chief executive of manufacturers’ organisation of Make UK, said the first job is “cementing frictionless trade, access to key skills, regulatory alignment and space for business to prepare for new arrangements.” Institute of Directors director general Jonathan Geldart said businesses were keen for clarity on the long-term future relationship with the EU, but Legal & General boss Nigel Wilson said uncertainty over a future trade deal would not deter investors from putting their money into the UK. There was a “wall of money” wanting to invest, he added. This chimed with business leaders and who said confidence was returning already and dealmakers who said private equity activity is “going bonkers” with advisers predicting a “tidal wave” of deals. Meanwhile, Donald T rump has tweeted his congratulations to Boris Johnson and raised the prospect of a “massive” post-Brexit free trade agreement between the UK and the US. The president tweeted: “This deal has the potential to be far bigger and more lucrative than any deal that could be made with the EU. Celebrate Boris!”
ECONOMY NEWS FOR THE WEEKEND 16th DECEMBER 2019
Stocks and Sterling bounce on Tory majority
Sterling rose above $1.35 at one point on Friday following Boris Johnson’s victory – its highest level since May last year – and hit a three-and-a-half-year high against the euro. The FTSE 100 rose 1.1% and the FTSE 250 briefly hit record highs before closing 3.4% higher. Shares in water, rail, telecoms and energy companies at threat from Jeremy Corbyn’s nationalisation programme saw significant gains and housebuilders rose sharply. Deepa Venkateswaran, utilities analyst at Bernstein Research, commented: “The Labour party’s dismal performance means that the risk of nationalisation has been taken off the table for good.” UK-exposed banks were buoyed with Barclays, RBS and Lloyds up 6%, 8% and 5% respectively. The combined value of the biggest 350 companies rose by about £33bn. Guy Foster, head of research at Brewin Dolphin, said that “the potential for a smooth Brexit removes some of the downside risk for the UK economy. This should be positive for both business and consumer confidence, at least in the short term, with a gradual acceleration in GDP growth and confidence.”
Analysts raise forecasts for economic growth
Analysts are predicting faster economic growth than previously predicted after Boris Johnson’s victory provided potential for greater political certainty. GDP growth would rise above 1.5% in 2020, up from 1%, and to 1.7% in 2021, up from 1.5%, analysts at Jeffries said. Samuel Tombs, of Pantheon Economics, said quarter-on-quarter GDP growth should pick up to a 0.4% rate in Q1 and Q2 2020, exceeding this year’s average 0.2%. “Many firms will be able to invest, knowing that corporation tax likely won’t rise, wages won’t increase rapidly and Labour’s socialist agenda will not be implemented soon,” he added. However, Andrew Goodwin, of Oxford Economics, said the Tory manifesto “proposes a very limited package which […] would have a negligible impact on the economy.” Fund managers were bullish that the UK equity market was finally about to return to favour for investors, but their confidence was tempered by concern over the speed at which a trade deal with the EU and the US could be reached. Separately, writing in the FT, Paul Marshall, chairman of Marshall Wace, says Boris Johnson’s Conservatives “are the first western political party to absorb the populist pressures unleashed by globalisation and convert them into a radical and constructive agenda for change” and the “country could be set to boom.”
Wolfson: Planning rethink would boost economy
Lord Wolfson of Aspley Guise has suggested that the Government should look to reform planning laws to boost the economy, saying it would have more of an impact than tinkering with tax rules and delivering cuts. He suggested a rethink of restrictive planning laws that have held up the housing market, saying: “Planning stops growth, it slows it down. If we want our economy to grow faster, making faster planning decisions will do that.” On tax breaks and subsidies for various industries, Lord Wolfson warned that the money “has to come from somewhere, either from another industry or eventually their customers.” He added that it is a “huge waste of time” but makes politicians “feel they are doing something rather than changing the fundamentals of our economy.”
The Mail on Sunday, Page: 84
Failure risk for 52k retailers
Financial health monitoring group Company Watch says more than 52,000 retailers are at serious risk of failure – an increase of nearly 49% on a year ago. In a system where a rating of 25 or less places a firm within a warning area, 38,800 firms have a health score of less than 15, while a further 13,124 had health ratings between 16 to 25. Of those in the warning area, 8,287 were not in that position last year, while 10,282 had fallen into the area for the first time. Company Watch says that around one in four of the groups in the warning area go on to fail completely over a three-year period.
Sunday Express, Page: 45
OTHER NEWS FOR THE WEEKEND 16th DECEMBER 2019
Tobacco and pill dealing pensioner back behind bars
A London pensioner, who fled to Thailand almost five years ago to escape punishment for selling illegal tobacco and Viagra-type pills, is back behind bars after he was tracked down by HMRC. Brian Frederick Hipwood of North Ealing, London, was arrested by HMRC officers at Gatwick airport on 8 July 2019, before he boarded a flight to Belfast.
Emma Agyemang wins award for loan charge reporting
FT journalist Emma Agyemang has been named business journalist of the year at the Words By Women Awards for her reporting on the loan charge.
Creditors seek exhumation of Quadriga founder’s body
The body of Gerald Cotten, founder of cryptocurrency exchange QuadrigaCX, could be exhumed after its customers demanded authorities investigate the “questionable circumstances” surrounding his sudden death. After the death of Mr Cotten, who died last year at the age of 30, the exchange was unable to locate or secure significant cryptocurrency reserves, with Mr Cotten the only person who had passwords to digital wallets containing £105m in bitcoin. A report from EY earlier this year identified issues with how the exchange was managed and found Mr Cotten had used aliases to create several accounts which he may have used to trade on the exchange.
Banks set to clear stress tests
The Sunday Telegraph looks at Bank of England stress tests for lenders, saying they are expected to get a clean bill of health. This means none would be forced to raise more capital. Rob Smith of KPMG said that although the tests will put banks through a nightmare Brexit scenario and a recession “more severe” than the 2008 crash, banks’ capital positions are slightly improved on last year which is why no bank is expected to fall short.
The Sunday Telegraph, Business and Money, Page: 3
Contact Paul Southward.