News Roundup Friday 12th July 2019
News Roundup Friday 12th July 2019
HMRC takes £37bn from new taxes in ten years
HMRC has collected £37bn from new taxes over the last decade, according to UHY Hacker Young, which warned that the favourable numbers could prompt more levies. The bank levy has raised £20.4bn, the apprenticeship levy £5.4bn, the bank surcharge £5.2bn, bank payroll tax pulled in £3.4bn, Swiss capital tax raised £957m, the annual tax on enveloped dwellings pulled in £954m, the diverted profits tax take was £369m and the soft drinks industry levy has raised £318m. Clive Gawthorpe, partner at UHY Hacker Young, said: “Each new tax adds more and more of a burden on businesses. Given the economic uncertainty perhaps the Government should be holding off on plans for new taxes.”
Government exempt from tax reforms as SMEs suffer
Government departments, NHS trusts and the Royal Household do not have to adhere to the Government’s Making Tax Digital rules, note the Telegraph. HMRC said the Government Information & NHS Trust service had additional requirements for VAT that were “different from those of normal businesses” and, as a review of VAT refunds is currently underway, such users are exempt from the changes. RSM‘s Philip Munn said HMRC had “repeatedly ignored concerns” raised by small businesses, industry experts and politicians, and added: “The recent news that the Government has given itself an indefinite extension to comply with the new rules is particularly galling”.
Tory hopefuls talk tax
Conservative leadership hopefuls Boris Johnson and Jeremy Hunt have taken part in a debate for ITV, with tax pledges among issues discussed. Mr Hunt questioned Mr Johnson’s pledge to give a tax cut to higher earners by raising the threshold at which people pay 40% tax from £50,000 to £80,000. Mr Johnson defended his comments, saying they had been part of a “package” of measures designed reduce the tax burden for both low and middle earners. Mr Johnson also commented that “too many people are being dragged into the higher rates” of income tax.
IHT the most hated tax
Victoria Bischoff in the Mail looks at the Office of Tax Simplification’s recent report on inheritance tax, summarising it thus: “This tax is an utter, unfair mess.” She notes that the report flags concern that some professionals are refusing to advise clients about the new main residence allowance because it is so complicated, commenting: “If the experts are struggling, then what hope is there for the rest of us?” Considering a number of issues around the levy, she concludes: “No wonder it’s the country’s most hated tax.”
Daily Mail, Page: 48
Corporate tax reform should reward long-term investors
Jeremy Hunt’s policy guru, John Penrose, says in a piece for City AM that corporation tax should be reformed so it rewards companies that invest rather than borrow. He says if the UK made capital expenditure fully tax deductible and stopped company debt interest being tax deductible the effects would be “startling”. Mr Penrose says: “We’d see much higher business investment in both digital and traditional industries, leading to stronger economic growth and better productivity across the entire economy.” He also points out that such a move would also mean multinationals would not be able to use intercompany borrowings to move their profits offshore.
City AM, Page: 18
Councils urged to promote exemplary tax conduct
Research by the Fair Tax Mark reveals almost one sixth of the total value of Government contracts handed out since 2014 have been won by firms with links to tax havens, amounting to £37.5bn. The group is urging local authorities to sign up to its Councils for Fair Tax Declaration, which calls for a change in the law so they can block firms with tax haven links and demands councils have ethically sound tax affairs of their own. Paul Monaghan, Fair Tax Mark chief executive, said: “As recipients of significant public funding, municipalities should take the lead in the promotion of exemplary tax conduct.”
Daily Mirror, Page: 49
Haulier hit by accounting error
Eddie Stobart Logistics has said an accounting error will hit its annual results, with new chief finance officer Anoop Kang having found problems in its accounting policies around leasing. The issue means the haulage and logistics firm will have to restate its results for the year to November 2018.
Renold counts cost of error
Industrial components supplier Renold has postponed its annual shareholder meeting after the discovery of “intentional” accounting mis-statements. The issue, which involves an overstatement of asset values and profits by about £1.8m, has affected its past three financial years. An independent investigation with PwC shows that adjusted operating profit had been overstated by £900,000 for the year to March 31.
The Times, Page: 36
Boris in British Steel pledge
Conservative leadership frontrunner Boris Johnson says that if he becomes Prime Minister, British Steel, which was put in compulsory liquidation under the control of the Official Receiver in May, will still be bankrolled by the Government until a buyer is found.
The Daily Telegraph, Business, Page: 1
Patisserie Valerie cuts 14 cafés
Causeway Capital, which acquired Patisserie Valerie from administrators at KPMG in February, is closing another 14 cafés – with KMPG having already closed 71 loss-making sites under the Patisserie Valerie and Druckers brands.
The Times, Page: 41
Woodhouse loses control of Northern Powerhouse
Investors in a series of hotels and care homes may be closer to finding out what happened to money they invested with Gavin Woodhouse, with Duff & Phelps granted interim powers to go into the financier’s Northern Powerhouse Developments to help find the missing millions.
I, Page: 38
ECA says European banking stress tests are too soft
The European Court of Auditors (ECA) has warned that stress tests designed to assess the health of European banks have not taken some systemic risks into account. A report by the ECA highlights “shortcomings for assessing resilience against systemic risk” in the stress tests carried out by the European Banking Authority, raising questions over the risk-assessment measures that the body uses.
City AM, Page: 12
Fintech simplifies fund raising for SMEs
The Telegraph talks with Globacap CEO Myles Milston about how the fintech start-up is using blockchain technology to simplify the investment process, making it cheaper and easier for SMEs to raise money. The firm has developed an automated capital markets platform and uses software to create a security using blockchain, allowing everything from issuing the shares to managing the share register, paying out dividends, and even shareholder voting to be done with the click of a button. Investors are able to sell their stakes in just seconds. Mr Milston said: “Using blockchain and automation improves deals for SMEs, increasing the speed of the raise, with less manpower, and while paying lower fees.”
PERSONAL FINANCE NEWS
Multi-retiree families to exceed 1m in next 20 years
The number of families with multiple generations in retirement at the same time will exceed one million in the next 20 years, research by St. James’s Place has revealed. The study into intergenerational wealth and retirement planning, which analysed ONS data and included research among 4,000 adults in the UK, forecasts there will be 1.2m families containing more than one retired generation by 2039 – up from 624,000 families today. The study also found that future retirees expect to pass on £50,000 less when they die than their parents’ generation. Those with £50,000 or more in household assets who are not yet retired expect to pass on £74,000 in inheritance, a third of their savings – down from the £125,000 those already retired expect to pass on.
Jesse Norman defends business rates system
Jesse Norman, financial secretary to the Treasury, has rejected claims by MPs on the Treasury select committee that the business rates system was “inconsistent, inaccurate and unfit for purpose” arguing instead that the tax on commercial property “has the good qualities of a tax system you want” and that the appeals system was “very straightforward”. Nicky Morgan, chairwoman of the committee, said the “situation is deeply, deeply unsatisfactory” and accused the Treasury of not taking businesses’ concerns seriously enough.
Pound hits two-year low
The pound has dipped to its lowest levels in more than two years, with concern about a no-deal Brexit contributing to sterling’s decline. The pound dipped 0.4% to $1.246 and €1.112, the lowest level seen since April 2017. The dip came on the back of data showing slowing sales at UK retailers and economists forecasting a contraction in the economy in the second quarter. An update on the UK economy is due today, with growth data for the three-month period to May set to be released. Economists polled by Reuters expect growth of 0.1%, slower than the 0.5% recorded in Q1. The Mail says some analysts fear that Britain exiting the EU without a deal in place will trigger a further hit to the economy.
The Daily Telegraph, Business, Page: 3 The Guardian Daily Mail BBC News City AM, Page:7
The economy and Brexit
The Times’ David Smith considers the economic impact of Britain’s exit from the EU – and the narrative surrounding it – and notes that Deloitte‘s latest chief financial officer survey saw 83% of finance directors say that Britain’s long-term business environment will deteriorate as a result of Brexit.
The Times, Page: 37
UK economic growth beats economists’ expectations
The UK economy grew by 0.3% in the three months to the end of May, according to the Office for National Statistics (ONS), driven by a resumption of car production in the wake of shutdowns after the original Brexit deadline. John Hawksworth, chief economist at PwC, said the underlying picture of the economy was one of modest growth. “There are no signs yet that Brexit-related uncertainty has pushed the economy as a whole into recession, although it has clearly dampened business investment and the housing market,” he said.
The Daily Telegraph, Business, Page: 3 The Guardian, Page: 33 Financial Times, Page: 3
Thirteen arrested on suspicion of money laundering
HMRC has arrested 13 people and seized £1.5m in cash during a UK-wide operation targeting suspected money laundering. Simon York, Director of HMRC’s Fraud Investigation Service, commented: “Money laundering and the organised crime it supports is hugely harmful to businesses, citizens and society as a whole. That is why it is a priority for HMRC and this large scale operation demonstrates we will not hesitate to investigate those suspected of being involved.
Radio host escapes tax bill
Radio host Paul Hawksbee has escaped a £140,000 tax bill after a judge ruled he had too much artistic control on his Talksport show to be considered an employee.
Daily Mail, Page: 15
Contact Paul Southward.