News Roundup Friday 10th August 2018
News Roundup Friday 10th August 2018
Companies should reveal tax to secure Government deals
With Government procurement documents showing that Amazon received more than £11.8m in contracts in the first three months of this year, the Telegraph reports on calls for firms looking to secure public sector deals to be made to reveal the details of their tax arrangements. This comes after Amazon UK services cut its corporation tax bill to just £4.6m in 2017, despite increasing its profits to £79m. Richard Murphy, professor of International Political Economy at City University, said firms should record the tax they pay in the UK as a condition of public procurement. This would ensure public confidence that “the Government is paying for companies that are responsible,” he added. Labour MP Darren Jones of the science and technology committee comments: “Global companies have been able to pay their taxes in low-tax jurisdictions for years, but the rise of ecommerce and online purchases has made this a much bigger proble m.”
AAT: Rethink needed on rent-a-room rule change
The Association of Accounting Technicians (AAT) has urged ministers to drop plans to change ‘rent-a-room’ rules which allow people to earn up to £7,500 a year tax-free from letting out a spare room. The AAT fears that a new “shared occupancy test” that will only offer tax relief to landlords present at the property during the rental period will add unnecessary complexity to the tax system. Phil Hall, AAT’s head of public affairs and public policy, said the reform would force landlords to complete a self-assessment tax return when they otherwise wouldn’t, and may reduce the availability of accommodation by deterring people from renting out spare rooms.
Home Office could see £6m tax rebate
The Home Office could be in line for tax rebate of almost £6m after an Upper Tribunal ruling backed its claim that it has been paying over the odds in business rates for its central London headquarters. The office is believed to have the highest business rates in London, at around £12.5m a year, with Altus Group saying the decision in the dispute with the Valuation Office, part of HMRC, means the Home Office is due back just under £5.8m.
Daily Mirror, Page: 43
The Telegraph carries a guide to inheritance tax after official data revealed that the amount paid broke the £5bn barrier for the first time last year. The paper’s Sam Meadows notes that there are a number of ongoing reviews into the levy, including one by the Office of Tax Simplification, but adds that experts “aren’t holding their breath for any major changes”. “After all, nothing is certain except death and taxes, and death taxes,” he adds.
The Daily Telegraph, Page: 21
Time to incentivise an investment drive, says CBI
Writing in City AM, Annie Gascoyne, the head of economic policy at the CBI, urges the Government to recognise the utility of tax reliefs as levers for investment. “Capital allowances, R&D tax credits, and the patent box all incentivise capital spending in the UK,” she says. But it is not just about lowering taxes, rather “a stable, transparent, and simple tax system” is needed.
City AM, Page: 14
Insolvency Service to interview former Carillion directors
The Insolvency Service is to interview former directors of Carillion as it steps up its investigation into one of the biggest British corporate failures in recent history. The agency said it has now finished transferring 278 public and private sector contracts to new suppliers, and officials are now expected to focus their attention on an investigation into why the company failed. The inquiry will run alongside two parallel investigations into Carillion’s failure, with the Financial Conduct Authority looking into allegations of insider trading, while the Financial Reporting Council is examining the role played by auditor KPMG and former finance directors Zafar Khan and Richard Adam.
The Guardian, Page: 25
UK property market ‘resilient’ in June
The UK’s property market is in a “resilient” mood, according to the latest Mortgage Advice Bureau index. Buyer demand across the country has shown little sign of tailing off despite current political uncertainty, as property prices edged up from £249,862 in May to £251,573 in June and the value of average purchase loans remained broadly unchanged, rising to £175,929 in June from £175,487 in the previous month.
House of Fraser’s landlords deal removes rescue hurdle
House of Fraser has settled a legal challenge from a group of landlords against its restructuring proposals. Mark Fry of Begbies Traynor, and Charlotte Coates of JLL, the legal advisers to the landlords, said they hoped their challenge “sends a clear message to any other companies considering a CVA, on the importance of transparency and fair treatment for all creditors throughout a CVA process.” Closures of more than half of HoF’s stores will now go ahead putting 6,000 jobs at risk. However, if the retailer cannot secure a backer soon it will go under anyway.
Pound hits 11-month low
The pound has hit its lowest level in eleven months, falling below its mid-July low to the weakest point since September 2017. The dip has been partly attributed to comments from international trade secretary, Dr Liam Fox, who warned that a no-deal Brexit was now more likely than not, saying there was a 60:40 chance that the UK would leave the European Union without an agreement. The pound has fallen 2.5% against the dollar over the past month and weakened 1% versus the euro.
The Independent, Page: 51 The Guardian Financial Times
July sees consumer spending increase
Figures from KPMG and the British Retail Consortium show total retail sales were 1.6% up in July compared to a year earlier, with food and drink spending climbing 4.5% year-on-year. A separate survey by Barclaycard showed that consumer spending rose 5% year-on-year in July, capping the strongest three-month period since 2014.
EU will pay for no-deal Brexit, while Britain’s exports boom
Research by Economists for Free Trade shows Britain will gain more than £600bn by moving to WTO rules after Brexit, while EU countries will lose £500bn. Meanwhile, official figures show Britain’s exports hit a record £616bn last year with goods rising by 13% to £339bn while services increased by 7% to £277bn. The total trade deficit narrowed by £5bn to £25.8bn. Tory MP Anne Main said: “This is really encouraging news and highlights the confidence countries all across the world have in our markets and goods. This is another nail in the Project Fear coffin which should have been dead and buried a long time ago.” Finally, Matt Ridley in the Times backs trading on WTO terms pointing out that “Britain currently exports to more than 100 countries on WTO terms, and has grown those exports three times as fast as exports to the rest of the EU since 1993.”
Daily Express, Page: 1, 4 Daily Mail, Page: 10 The Times, Page: 19
Brexit pessimism eases among UK’s biggest companies
Research by the Institute of Chartered Secretaries and Administrators found that 55% of company secretaries expect Brexit to lead to economic pain, down from 69% a year ago. Additionally, 58% said Brexit would have no impact on their business. However, confidence in the economy had fallen with 55% predicting a decline, double the figure two years ago. A separate reading of business confidence by the ICAEW found business optimism had slid into negative territory in the three months to late July after rising for each of the preceding three quarters. The group blamed global trade wars, uncertainty over Brexit, GDPR and an increased regulatory burden.
Services sector contracts as Brexit uncertainty drags
BDO ’s Output Index recorded a drop of more than two points in services output in July, pushing the survey into negative territory for the first time since early 2010. Manufacturing output in July was down slightly month-on-month, but was still above the long-term growth trend. “Uncertainty about Brexit and the increasing possibility of crashing out of the EU without a transition deal is discouraging businesses from investing, with a resulting drag on productivity,” Peter Hemington, a partner at BDO, said.
The Times, Page: 31 The Independent, Page: 57
Accountant in dock over pensions claim
Accountant Hashmukh Shah has been charged with knowingly or recklessly providing false or misleading information to The Pension Regulator. It is claimed he told a client that staff had been enrolled in a workplace pension scheme when he knew this was not the case.
Daily Mail, Page: 63
UK SMEs positive about growth
Nearly two-thirds of UK SMEs expect to see growth of up to 40% over the next two years, according to research from Wesleyan Bank. The bank’s annual “SME Heroes or Zeros” report found that over 50% have more confidence over their company’s growth prospects than they did last year, while just 11% are concerned about the impact that the UK’s exit from the EU will have on their business. Survey respondents were also asked about how they utilised alternative finance options to help boost business growth: 59% said they used external funding at least once, up from 30% in the 2016 report, while more than 25% now rely on external finance, compared to 20% in 2016.
Construction firms accused of “utter disregard” for SMEs
The UK’s biggest construction firms continue to treat small business with contempt, business groups say, after figures were released from Build UK showing members are failing to hit agreed time frames for paying invoices. Interserve’s invoices weren’t met within agreed terms in 83% of cases, while Sir Robert McAlpine failed to meet agreed timelines with 70% of its invoices. Simon Hanson, development manager at the FSB said: “The poor payment practices that run rampant through UK supply chains are a national disgrace.”
Railway arch firms call for help
The New Economics Foundation has said small businesses based in railway arches that are due to be sold off by Network Rail contribute more than £725m to the economy every year. The Guardians of the Arches, a campaign group supported by the NEF, has called on the Government to intervene to ensure that small business interests are protected. Network Rail has also been accused of trying to inflate the value of the properties by hiking rents.
The Times, Page: 39 City AM, Page: 8 Yorkshire Post, Business, Page: 15
Peer-to-peer lenders fear being stymied
RateSetter CEO Rhydian Lewis says he will fight FCA claims that P2P lending is high risk as the industry faces the threat of unsophisticated retail investors being blocked from the lenders.
Price faces tax hearing
Television personality Katie Price is the subject of a hearing before the Deputy Insolvency and Companies Court Judge in the High Court today, with the hearing understood to relate to tax owed to HMRC.
Daily Mirror, Page: 7
Have more babies or we’ll have to work longer
HSBC economist and demographics expert James Pomeroy says a predicted fall in the UK’s working age population could mean slowed investment and a stagnant economy as businesses see their customer base fall, while Government finances would come under enormous pressure with fewer workers to pay for larger numbers of pensioners. An increase in the birth rate would not solve the problem quickly enough, says Pomeroy, so the only answer is increased migration or raising the retirement age, which is the best solution, but “an excellent way to not get elected”. He concludes: “You have to accept we are all going to have to work longer or get massively more productive, or we’re going to have to have more babies, or be open to migration, or be poorer. That is the alternative.”
Contact Paul Southward if you have any queries.