NEWS FROM THE WEEKEND 23rd DECEMBER 2019
TAX NEWS FROM THE WEEKEND 23rd DECEMBER 2019
Government reveals loan charge rethink
The Government has made a number of concessions that reduce the impact of the controversial loan charge, an initiative designed to tackle tax avoidance. The charge will now no longer apply to anyone who entered into disguised remuneration schemes before December 2010, and nor will it apply to people who declared they had made use of the schemes in any tax year before the policy came into effect. Whereas those liable for payments had previously faced having to pay HMRC back taxes in one go, the Government has announced that they will now be able to spread their repayments over the next three years. With many people having already made repayments ahead of the January 2020 deadline, it was confirmed that those who have made settlements for years where the charge no longer applies will be refunded. The concessions on the charge follow an independent review that was commissioned by the Chancellor and led by Sir Amyas Morse, a for mer head of the National Audit Office, who concluded that the charge had gone “too far”. Sir Amyas welcomed the Government’s decision to follow his recommendations, saying it brings the loan charge “back into line with the wider tax system.” Campaigners the Loan Charge Action Group commented: “This is a big step forward, with a clear commitment that this dreadful law will be changed.”
Couples urged to act on tax allowance
Couples have been urged to act to ensure they secure tax rebates they may be entitled to. Pointing to the perks of the Marriage Allowance, which allows a person to transfer some of their personal allowance to their spouse, Sean McCann of NFU Mutual notes that couples who have not claimed it but want to backdate a claim to cover the last four years do not have long to do S o as HMRC will stop accepting claims for 2015/16 in April.
Britain is a world champion in pointless regulation
Camilla Cavendish, former head of the Downing Street policy unit, looks at regulation and red tape in the UK, suggesting a drive for tax simplification is among issues ministers should address.
Sir John Redwood urges Chancellor to review IR35
Sir John Redwood has demanded that the new Conservative government honours its pledge to review IR35 tax rules in support of contractors in their battle to overturn the legislation before it hits the private sector on April 6. The Wokingham MP published an open letter to Chancellor Sajid Javid stating that a number of major firms have already ended IR35 arrangements as the new rules were too complex and placed extra administrative burden on employers. According to Harvey Nash recruitment agency, one in five businesses in the UK are considering no longer employing off-payroll workers when the new rules are introduced, with GlaxoSmithKline, Barclays, RBS, Lloyds and HSBC already announcing the decision.
Voters want Corbyn’s agenda dumped by Labour
A BMG poll for the Independent reveals that roughly double the number of voters want Labour to shift away from Jeremy Corbyn’s policies than want to see the party continue with them. The survey found nearly half of those with a view want Labour to ditch its policy on tax, public spending and national security, compared with about 27% who are in favour. By contrast, the party’s position on healthcare and climate change is slightly more popular than unpopular. The Independent suggests those leadership contenders most likely to move to the centre are also the most unlikely to be chosen by the left-wing membership. Separately, the Sunday Telegraph says while Labour is unlikely to move back to the centre just yet, Boris Johnson has the chance to “make and win the case for democratic capitalism”. His next steps should be “to join the dots between Brexit and economic policy – to deregulate, create fre e ports in ‘left behind’ towns, cut taxes and really liberate the housing market by slashing stamp duty,” the paper asserts.
The Independent The Sunday Telegraph, Page: 17
Use of R&D tax credits set to increase
The Sunday Times’ Peter Evans looks at how the Conservatives could boost investment by increasing R&D tax credits and broadening out the range of businesses that can claim them, such as cloud computing and data firms. However, many industries fear boosting the tax credit system will not make up for the loss of access to EU research programmes and experts, such as Thomas Hayden at Moore Kingston Smith, warn expanding the system to allow companies to claim for spending on cloud computing infrastructure could mean an inadvertent subsidy for Amazon. The Conservatives have promised to increase R&D tax credits for big companies from 12% to 13%, a move experts say should boost engineering and scientific companies and their supply chains of smaller businesses.
HMRC’s data mining system leads to more questioning
HMRC’s Connect system has led to an increase in self-assessment taxpayers being questioned by the taxman on a variety of issues. Lucy Brennan, a partner at Saffery Champness, says more clients are receiving letters asking them to double check details and she expects the trend to continue: “It knows more about us than ever before.” Connect automatically collates information on taxpayers from dozens of sources, but other experts tell the Sunday Times HMRC inspectors cannot cope with the scale of information they are receiving from Connect so letters are sent out “on a scattergun basis” to scare people into correcting errors.
Seven ways to gift to the grandchildren this Christmas
The Telegraph lists a variety of ways people can cut their tax bill while giving to their grandchildren. Families can gift money to children to help pay for important life events, such as weddings; bare trusts can be set up, one benefit of which is that the money is taxed as if it belonged to the child; excess income can be gifted to grandchildren free of IHT and can be any amount, providing they are regular. Additionally, an investment bond can also tap into a grandchild’s unused personal allowance and will be IHT-exempt providing the grandparent lives for seven years after gifting it. A child’s pension can also be contributed to, as can a deposit on a house, while smaller gifts of up to £250 are another way of passing on wealth tax-free.
Rise in firms liquidated due to unpaid tax
More businesses were forced by HMRC to liquidate in the 12 months to September than at any point over the past four years, data reveals. Over 4,300 winding-up petitions were filed against British businesses, a 6% rise on last year. Lucienne Parry, a partner at Moore, which compiled the data, said: “Once a winding-up order has been made by the court, there is little that can be done by the business to prevent liquidation, unless you can pay the tax bill. Banks also tend to freeze the company’s bank account during this process, putting a stop to all trading.”
Daily Express, Page: 42 The I, Page: 40
CORPORATE NEWS FROM THE WEEKEND 23rd DECEMBER 2019
The death of the department store
The Sunday Times looks at the slow demise of department stores on Britain’s high streets, noting that Beales has called in KPMG to conduct an urgent review. The retailer has 22 stores and thousands of jobs are at risk. Elsewhere, Sports Direct boss Mike Ashley has said more House of Fraser stores will be forced to shut unless there is a fundamental review of business rates.
The Sunday Times, Business, Page: 6 The Observer, Page: 63
SMEs NEWS FROM THE WEEKEND 23rd DECEMBER 2019
Lloyds makes offers to HBOS victims
Lloyds Banking Group has offered additional payments of £35,000 to each of the 191 small business customers who were victims of fraud in the HBOS Reading scandal. The £1bn fraud saw bankers and business consultants exploiting reckless credit policies to steal from the bank, damaging a number of SMEs, with some folding. The lender reassessed victims’ claims after a review of its handling of a compensation scheme found “serious shortcomings”, saying Lloyds blamed victims rather than the fraudsters for damage to the companies – and took an “overly adversarial approach in its assessment of claims”. The Financial Conduct Authority has said failings identified in retired High Court Judge Sir Ross Cranston’s review must be addressed quickly, adding that senior management must explain how and why the issues occurred. With Lloyds offering to review each case again, Nikki Turner, director of the SME Alliance, comments: “I think it’s a positive step to have people at the top of the bank right up to the CEO being actively involved in the process … I hope it will encourage other CEOs to engage with complainants.”
Purbeck predicts HMRC rule changes to boost P2P lending
Purbeck Insurance Services has predicted that P2P business lending will benefit from tighter credit terms and new insolvency rules next year. In its 2020 trend report, Purbeck said it expects P2P lending to increasingly fill funding gaps for businesses and to help launch many new start-ups. This comes as HMRC will become a preferred creditor in business insolvency for some tax debts in April 2020, which is expected to result in traditional lenders considering their risk exposure, which will in turn result in a rise in support for P2P services. Purbeck managing director Todd Davison said: “Small businesses have reason to be optimistic for the year ahead”.
Majority of SMEs back investment and tax pledges
A survey by the Federation of Small Businesses found that seven in 10 smaller companies backed the Government’s pledge for a £5bn investment in broadband, while two-thirds were in favour of plans to widen a discount on national insurance bills.
The Daily Telegraph, Business, Page: 27
EMPLOYMENT NEWS FROM THE WEEKEND 23rd DECEMBER 2019
Tories must live up to promises to workers
The Trades Union Congress (TUC) claims workers, including those from areas which previously voted Labour, want the Conservatives to stick to their promises on pay and taxation. A survey by the TUC found workers want the same level of protection guaranteed by the EU, higher tax rates for people earning more than £80,000 a year, a ban on zero-hours contracts and a £10 minimum wage. Frances O’Grady, the TUC’s general secretary, said: “The prime minister has no more excuses. Voters expect him to protect and strengthen rights at work. And they want him to get on with investing in our public services and boosting wages.”
PROPERTY NEWS FROM THE WEEKEND 23rd DECEMBER 2019
London set for more flexible offices
More flexible office space is set to be created in London and companies such as WeWork and Spaces which offer these types of office could represent 20% of leases in central London by 2030, according to CBRE. The real estate firm estimates occupancy of flexible offices could grow to 34m sq ft in the City and West End by 2030, up from 9.9m sq ft now. Stewart Smith, managing director of Flex at CBRE, said: “As employees begin to expect a more holistic office experience, employers are becoming more willing to pay for these in order to attract and retain talent.”
Reader stumped by stamp duty
The Times carries advice to a reader who submits a query regarding liability for stamp duty on a second property, with Adrian Benosiglio of RSM and David Hannah, the chief executive at Cornerstone, providing input.
INTERNATIONAL NEWS FROM THE WEEKEND 23rd DECEMBER 2019
Colombia approves tax reforms despite protests
The Colombian government has approved tax reforms that will cut the corporate tax rate from 33% to 30% by 2022 and VAT rebates for the poorest 20% of the population.
Warren’s wealth tax will not reduce inequality, says economist
Leading US economist Edward Wolff has said Elizabeth Warren’s planned tax on wealth would have a “minuscule” impact on inequality. The Democratic presidential candidate has proposed a 2% annual tax on wealth above $50m, rising to 3% above $1bn. The tax would raise an estimated $303bn from billionaires but have barely any effect at all on reducing inequality because it is such a small share of the total $84trn of US household wealth.
The Daily Telegraph, Page: 29
BREXIT NEWS FROM THE WEEKEND 23rd DECEMBER 2019
More shocks on the way for Brexit gloomsters
Roger Bootle argues against the “gloomsters” who claim Boris Johnson will never secure a trade deal with the EU by the end of next year, stating that it is eminently feasible given the starting point of zero trade barriers and regulatory alignment. Besides, continues Bootle, there is no reason why some matters cannot be negotiated later. Moreover, the UK should be desperate to get away from the EU’s regulatory regime, which is partly responsible for the bloc’s “comparative economic failure.” The chairman of Capital Economics concludes that Remainers are set for more shocks as they realise the UK economy is going to thrive without preserving close regulatory alignment with the EU.
PERSONAL FINANCE NEWS FROM THE WEEKEND 23rd DECEMBER 2019
Perks of the investment gift
The Telegraph suggests people should consider buying their loved ones shares in the companies that make the products they love, instead of the good themselves. This way, the paper says, they may also benefit from juicy discounts. such as Mulberry’s 20% off when you own 500 shares, or Chapel Down’s 25% discount when you own 2,000 or more. The paper goes on to cite the Share Centre’s Andy Parsons, who says shareholder perks are becoming harder to come by and warns investors not to pick
ECONOMY NEWS FROM THE WEEKEND 23rd DECEMBER 2019
GDP grows in Q3
GDP grew by 0.4% in the third quarter, according to a revised official estimate. The Office of National Statistics said this was higher than the expected 0.3% but “an underlying slowing” of the economy reflected high domestic and global uncertainty. The economy was stagnant in the three months to October. Services output grew 0.2% and this was offset by 0.7% and 0.3% declines in production and construction output respectively. Export growth reduced the current account deficit to £15.9bn in the third quarter, compared with £24.2bn in Q2. Commenting on the Q3 figures – and an estimate of 0.1% growth in Q4 – Howard Archer at EY Item Club said he expected overall GDP growth of 1.3% for the year. Capital Economics economist Andrew Wishart says that as Brexit uncertainty “looks set to persist,” the economy is likely to grow by about 1% next year and then 1.8% in 2021. Separate figures from the ONS show Government borrowing continued to rise last month, as public expenditure increased. The budget deficit – the gap between tax revenue and government spending – was £5.6bn in November, marking a £300m increase on the same month a year ago.
The Times The Guardian, Page: 42 City AM
Shoppers set to splash out
With consumers set to snap up last-minute gifts during the final shopping weekend before Christmas, it is estimated that £1.7bn will be spent today. Many stores will be cutting prices, with Deloitte analysis finding discounts ranging from 8% to 78% – and it expects the average to exceed 50 % by Christmas Eve. With retailers offering deals to lure in customers, Lisa Hooker, consumer markets leader at PwC, says: “We expect to see significantly higher promotional levels this weekend and a bumper Boxing Day sale for patient consumers.” PwC has predicted that people are planning to shop later and spend less this Christmas, in part because there is one less shopping weekend between Black Friday and Christmas Day this year.
Daily Mirror, Page: 11 Daily Mail, Page: 6 The Guardian, Page: 34 The I, Page: 23 The Scotsman, Page: 4 Daily Star, Page: 4 The Press and Journal, Page: 15
Woody says get ready for Brexit boom
The Sunday Express reports that Robert “Woody” Johnson, the US ambassador to the UK, has said Boris Johnson’s election victory paves the way for a huge boost in trade between the two countries. The UK now had “an amazing opportunity” and should get ready for the “Roaring Twenties” with a trade deal with the US set to bring a Brexit boom, he declared.
Sunday Express, Page: 1, 4
UK business confidence highest for three years
A survey by the Institute of Directors (IoD) reveals business confidence is at its highest for three years. The poll of members following the election recorded the IoD’s main confidence measure at 21%, up from -18% in November and the highest figure since the 2016 EU referendum. However, concern over the long-term relationship between the UK and the EU remains a cause for worry. Tej Parikh, the chief economist at the IoD, said: “Britain’s directors will be entering 2020 with a little more festive cheer than might have been expected only a few weeks ago.” A net balance of 18% expected their investment levels to increase, but higher costs were also predicted. The IoD said Conservative pledges to reform business rates and expand the R&D tax credit regime helped boost sentiment. Brexit-backing regions reported the strongest rise in confidence., hitting 71% in the North East of England and 40% in the West Midlands compared to 1 1% in London.
The Guardian, Page: 36 The Daily Telegraph, Business, Page: 27 Daily Mail, Page: 59 Yorkshire Post, Page: 15
North-South divide emerges among manufacturers
A new report from Make UK and BDO reveals a booming manufacturing industry in London and the South-east, which is now second only to the North-west, while the West Midlands is suffering with traditional industries such as car-making having been hit by both structural and economic shifts. The south has benefited from the global growth in investment in technologies such as robotics and artificial intelligence, Make UK said, and is on course to become the biggest manufacturing region in the UK if trends continue. Stephen Phipson, chief executive of Make UK, comments: “There is now a clear two-speed economy in manufacturing performance with London and the south east at full speed – while some other regions are stuck in first or second gear.”
Web retailers hurt by severe discounting
More than 9,000 internet retailers are suffering from financial distress amid savage discounting, steep return costs and stiff competition, insolvency firm Begbies Traynor has warned. This is up 65% over the past three years. Julie Palmer, a partner at the firm, said: “The competition online is ferocious but the rewards for those that succeed, such as Boohoo, are huge.” Elsewhere, Deloitte says average discounts on the high street are set to exceed 50% by Christmas Eve for the first time as stores try to tempt shoppers in.
The Times, Page: 35 The Daily Telegraph, Page: 8
OTHER NEWS FROM THE WEEKEND 23rd DECEMBER 2019
BoE appoints Bailey
Chancellor Sajid Javid has named Financial Conduct Authority (FCA) chief executive Andrew Bailey as the next governor of the Bank of England (BoE). He will take over from Mark Carney on March 16. Mr Javid said Mr Bailey, who spent 30 years at the BoE before his time at the FCA, was the “stand-out candidate in a competitive field.” Mr Bailey, a former BoE deputy governor, said that he was honoured to take the role, “particularly at such a critical time for the nation as we leave the European Union”.
The Times The Guardian, Page: 2 Daily Mail, Page: 91 The I, Page: 70 The Independent, Page: 15
Accountants offered Isle of Man incentives
Emigrate considers the appeal of the Isle of Man for accountants, highlighting perks, wages and tax breaks that may lure those looking to take advantage of the island’s shortage of accountancy staff. Those taking up residence on the island can expect a refund of the first 12 months of NI payments, totalling up to £4,000 dependent on salary levels, while full-time salaries are typically 14% higher than UK averages.
The UK’s most unattractive jobs
A survey carried out by PlayOJO has identified the 12 most unattractive jobs in the UK, with sewerage workers topping the poll with 34% of the vote. Accountants came in 12th, with 2% of votes in a survey asking what is the least sexy profession.
Contact Paul Southward – TAX CONSULTANT.
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WISHING YOU A PROSPEROUS 2020!