NEWS – FRIDAY 11TH DECEMBER 2020
NEWS – FRIDAY 11TH DECEMBER 2020
TAX NEWS – FRIDAY 11TH DECEMBER 2020
Mark Littlewood: A Covid wealth tax would be a disaster
In an opinion piece for City AM, Mark Littlewood, the director-general of the Institute of Economic Affairs, says proposals from the Wealth Tax Commission for a “massive, one-off confiscation of personal wealth and property” might seem moderate on the surface, but the “results could be devastating — for individuals, and for the UK economy as a whole.” Littlewood adds that there is no guarantee the move would raise the predicted £250bn; administration costs of the policy have not been considered nor has the fact that the super-wealthy would simply accelerate their use of debt to make their assets harder to plunder. He goes on to say that “even if the tax did bring in the claimed £250bn over five years, the downstream effects on growth and other taxes would be disastrous. What business adviser could recommend a wealthy citizen move to a country that has such a penalising tax? How could they guarantee that this “one-off” raid didn’t become a regular feature of the tax structure?” Littlewood is joined by the Institute of Directors which warns the plan could ruin efforts to rebuild after Covid and destroy entrepreneurship. Also commenting is Gary Heynes, a partner at the audit firm RSM, who points out that the top 1% of earners already pay 30% of the income tax take and asks: “Is it fair to layer another tax on the same group?” Finally, the FT’s Chris Giles asserts that a wealth tax is unnecessary. “Sensible income, expenditure, property and inheritance taxation can raise the revenues required to repair any holes in the public finances and redistribute income and wealth as society demands.”
Ramping up CGT will pour cold water over Britain’s entrepreneurialism
Writing for the Telegraph, Tej Parikh of the Institute of Directors and Lord Leigh of Hurley of Cavendish Corporate Finance say capital gains tax should be treated differently to income tax as there is more risk involved with investment. They write: “From a policy-wonk’s point of view, sharply hiking the tax on capital gains in order to equalise it with that on income seems superficially attractive, but it is flawed, and would come at the least opportune moment imaginable.” The pair go on to suggest that there may well be a case to investigate tightening the rules where CGT benefits those not taking on so much risk. “But any reform would have to be done with extreme care to prevent a knock-on effect. Positive entrepreneurialism will be more important than ever in the months ahead.”
HMRC accused of inhuman treatment of struggling Britons
The Times continues with its investigation into HRMC’s treatment of taxpayers, today revealing that the Revenue, along with councils, is using debt collection firms that have owners based in tax havens. On Thursday the paper revealed that HMRC has been sending letters to families during the pandemic accusing them of “deliberately” choosing not to repay debts and threatening to “take things you own and sell them”. The department has also passed on 4.5m personal records to private debt collection firms since 2014 without taxpayers’ specific consent. The Times details the experiences of vulnerable people who have been threatened by HMRC’s debt collectors with one small business owner saying she was left “terrified” and HMRC staff lacked “human empathy.”
Mullins backs tax on sharing companies
Charlie Mullins addresses reports that the Government is considering requiring companies in the sharing economy to pay VAT. In a letter to the Times, the chairman of Pimlico Plumbers says: “I strongly support the Treasury’s VAT review because technology should be embraced to improve business, and not used to give an unfair advantage to internet firms owing to a quirk in the tax system.” Elsewhere, the Telegraph’s Ben Marlow says the tax risks “choking the gig economy at precisely the moment we may need it most.” He understands the attraction of the idea, pointing to a PwC estimate that the value of the sharing economy could balloon from £7bn in 2016 to £140bn in 2025.
The Times, Page: 34 The Daily Telegraph, Business, Page: 2
PROPERTY NEWS – FRIDAY 11TH DECEMBER 2020
Tory MPs urge stamp duty reform
A group of Conservative MPs calling themselves the Property Research Group (PRG) are urging Boris Johnson to overhaul Britain’s “broken” property taxes – council tax, inheritance tax and stamp duties. They argue that the Government could promote home ownership, increase social mobility and deliver on the Prime Minister’s “levelling up” agenda by reforming the levies. Kevin Hollinrake, the group’s leader, said reforming property taxes would be “one of the most visible ways [Mr Johnson] could help put more money into people’s pockets”. He added: “Council tax, stamp duty and business rates are just three examples of an out-of-date system which is in desperate need of reform.”
The Daily Telegraph, Business, Page: 4 The Sun, Page: 2
REGULATION NEWS – FRIDAY 11TH DECEMBER 2020
Permanent ban on mini-bond marketing
A permanent ban on the marketing of mini-bonds to retail investors has been confirmed by the Financial Conduct Authority. The move comes after a series of scandals involving unregulated bonds, including the collapse of London Capital & Finance (LCF) last year. The confirmation follows a temporary ban introduced in January after the regulator found the risks linked to the mass-marketing of mini-bonds was sufficiently “serious and immediate” to justify intervention without consultation. It later published a consultation paper over the summer setting out the scope of the ban. Mini-bonds are not regulated by the FCA, and concerns have been raised that ordinary investors do not understand the risks they carry and are unable to afford the potential financial losses involved. Matt Hopkins, head of digital banking and fintech at BDO, said: “Bearing in mind the scandals surrounding retail bonds, this permanent ban is a good thing.”
The Times, Page: 48 City AM
CORPORATE NEWS – FRIDAY 11TH DECEMBER 2020
Nightclub owner files notice to appoint administrators
Deltic has filed a notice to appoint administrators. The nightclub owner remains in talks over an emergency sale after coming under intense financial pressure from the enforced closure of nightclubs. It is understood that Scandinavia bar operator Rekom Group has emerged as preferred bidder to buy Deltic through a pre-pack administration. Deltic is behind brands such ATIK, Bar&Beyond and Vinyl, but a deal to buy the company out of administration could result in some venues closing permanently.
SMEs NEWS – FRIDAY 11TH DECEMBER 2020
Small business gets go ahead for Kickstart
Small firms have been given the go-ahead to provide Kickstart placements to unemployed young people, the Sun reports. The scheme was launched by the Department for Work and Pensions to create new job placements for 16 to 24-yearolds on Universal Credit. Mike Cherry, chairman of the Federation of Small Businesses, said: “Small businesses can be the ideal environment to nurture talent.”
The Sun, Page: 48
Box maker lifts on pandemic demand
Small businesses shifting online due to COVID-19 were behind a 700% rise in enquiries to DS Smith for personalised boxes. The cardboard packaging manufacturer said demand by e-commerce firms nearly doubled last year, to £400m.
The Sun, Page: 47
PENSIONS NEWS – FRIDAY 11TH DECEMBER 2020
FCA fines firm for unsuitable pension transfer advice
The Financial Conduct Authority has fined LJ Financial Planning £107,200 after finding it transferred millions of pounds worth of clients’ pensions into high-risk and illiquid investments without giving proper advice. According to the FCA the advice firm recommended 114 clients transfer their pensions into self-invested personal pensions between March 2010 and December 2012, but without providing any advice on the underlying investments held in the Sipps.
ECONOMY NEWS – FRIDAY 11TH DECEMBER 2020
Rebound stalls as growth slows in October
The UK economy grew by just 0.4% in October as the recovery continued to slow in the face of tougher coronavirus restrictions. According to the ONS, the economy remains well below the size it was before the crisis. The UK has been recovering from a record slump earlier this year induced by the first coronavirus lockdown. But output is expected to shrink again in November after England’s second shutdown forced businesses to close. October was the sixth consecutive month of growth for the UK after the economy contracted by a record 19.5% in April amid the first lockdown. The economy initially rebounded at a record rate, but growth has now begun to slow – with October’s growth figure down from the 1.1% seen in September. Yael Selfin, chief economist at KPMG, estimates that the economy could shrink 2% in Q4 compared with the previous three months, which would be “one of the worst [performances] among developed economies”;.
Contact Paul Southward