News Roundup Friday 12th October 2018
News Roundup Friday 12th October 2018
Hammond could abandon income tax cut
Philip Hammond could abandon plans to cut income tax for millions of working people to help pay for the NHS. The Mail reports that the chancellor is poised to postpone or scrap the manifesto promise to raise the starting threshold for both the basic and 40p rates of income tax in this month’s Budget – a move which could raise £2bn a year. Mr Hammond is also said to be considering reviving a controversial VAT change for small business, which could raise a further £2bn.
Daily Mail, Page: 4
Digital tax needed to tackle tech giants
The Sun’s Mick Hume says the revelation that Facebook paid just £7.4m in tax last year reinforces the need for a digital tax on global tech giants. He accuses tax-avoiding companies of “living on immoral earnings on an industrial scale.”
The Sun, Page: 10
EU aims for new tax on tech giants ‘by Christmas’
A new tax on technology giants could raise £4.4bn a year across Europe, the head of tax for the European Commission has said. Pierre Moscovici said a deal was “doable by Christmas”. However, he warned that if there was no deal by then, it could be the end of next year before it could be reconsidered. Elsewhere, Chris Denning, head of corporate and international tax at MHA MacIntyre Hudson, writes to City AM to warn that “going it alone with a digital tax, as Philip Hammond suggests, could damage the UK from an economic and fiscal competitiveness perspective.”
BBC News City AM, Page: 6, 20
City taxes under threat from Brexit
City minister John Glen has said the government now expects the City of London to lose 5,000 jobs due to Brexit, thereby reducing the £72.1bn in annual tax revenues from the financial services industry.
City AM The Daily Telegraph Daily Mirror The I, Page: 9
Has HMRC misled the NHS on IR35?
Tax professionals have questioned HMRC’s grasp of the laws surrounding IR35, following the exposure of a controversial webinar delivered to the NHS. Guidance regarding employment status from HMRC’s policy advisor on IR35, Mark Frampton, has been described as “misleading” and “inaccurate”.
Cadbury’s owner pays no tax
The Daily Mirror reports that Cadbury’s owner Mondelez UK paid zero corporation tax last year, despite profits of £185m.
Daily Mirror, Page: 1
CMA to conduct review of the audit sector
The Competition and Markets Authority (CMA) has launched a detailed study of the audit sector to examine concerns that it is not working well for the economy or investors. The review will investigate whether the sector is competitive and resilient enough to maintain high quality standards. The CMA has written to the government about its market study and the possible need for legislation to implement its findings and those of the independent review of the Financial Reporting Council led by Sir John Kingman. Commenting on the CMA’s review, a spokesperson for the FRC said: “We have expressed concern about concentration at the top of the audit market so we welcome this announcement.” Michael Izza, ICAEW chief executive, said the news was a “very positive development”. Bosses at each of the Big Four also welcomed the review, with EY chairman Steve Varley saying it was a “golden opportunity fo r the CMA to examine the role audit plays in society”.
Financial Times, Page: 13 The Times, Page: 37 The Daily Telegraph, Business, Page: 1 The Independent The Guardian, Page: 37 Daily Mail, Page: 63 Sky News BBC News Daily Mirror, Page: 38 The Sun, Page: 43 City AM, Page: 4 The Scotsman, Page: 37
Female FDs earn less than male peers
Despite a relatively narrow gender pay gap for accountants more generally, male financial directors earn almost £30,000 a year more on average than their female peers, according to Global Accounting Network, which has blamed an unnecessary focus on existing salary when negotiating remuneration. While the chartered and qualified accountant level pay gap, between males and females, sits at 5.1%, among financial managers and directors, the gender pay gap widens to 31.6% – with women earning an average of £42,674 compared to male colleagues’ £71,986.
BlackRock offers support to UK accounting watchdog
BlackRock has called for more power to be given to the Financial Reporting Council in its response to a landmark review of the regulator. The FT’s Jonathan Ford suggests the “somewhat insouciant” submission to John Kingman’s review of the FRC will be typical of the view of many fund managers.
Business surveys scrapped in VAT switch
Hundreds of thousands of business surveys are to be scrapped as a result of the ONS switching to VAT data instead. The Monthly Business Survey, which involves 250,000 forms each year, will be abolished.
The Daily Telegraph, Business, Page: 3
RBS boss calls for regulation of SME lending
Royal Bank of Scotland chief executive Ross McEwan has called for improved regulation of small business lending in the UK, acknowledging that the market required proper checks and routes for complaints. Meanwhile, research by SME specialist bank Aldermore reveals almost half of small businesses operate with less than £1,000 in savings – and one in five has none at all.
Daily Mail Daily Express, Page: 47 The Independent, Page: 57 Daily Mirror, Page: 37 City AM, Page: 4
Late payments curbing SME growth
Small business owners have told MPs that chronically slow and late payment of bills is leaving construction firms unable to invest and expand. The business, energy and industrial strategy committee heard that big construction contractors were mistreating their supply chains as a matter of course, damaging productivity in the process.
Small firms fear VAT Budget raid
Philip Hammond is facing a backlash over plans for a £2bn tax raid on small business in this month’s Budget. The chancellor may decide to drag hundreds of thousands of firms into the VAT system as he looks for ways to balance the books. Mike Cherry, chairman of the Federation of Small Businesses, warned: “VAT is the most time-consuming tax. A small VAT-registered business spends more than a working week every year complying with VAT admin on average.” Meanwhile, the FSB has backed the Association of British Insurer’s #IPTsUnfair campaign against Insurance Premium Tax. Development Manager Claire Reading commented that IPT “deters small firms from making the right choices.”
Daily Mail, Page: 2 Press Release
Exempt small firms from business rates
Senior Conservative MP Sir Geoffrey Clifton-Brown has said small firms should be automatically exempt from paying business rates to help high-street stores faced with an “unfair” system.
Yorkshire Post, Page: 10
SMEs see automation as opportunity
Research from Scott-Moncrieff shows automation, robotics and artificial intelligence have provided business opportunities for almost four out of five SMEs in the UK.
The Scotsman, Page: 35
Tchenguiz invented claims against Grant Thornton
Grant Thornton has accused property tycoon Robert Tchenguiz of playing “tactical games” by bringing a lawsuit against the firm worth hundreds of millions of pounds that it claims is an “abuse of process”. Lawyers for Grant Thornton said that allegations by Mr Tchenguiz that the firm had “fed lies to the Serious Fraud Office” about him were “genuinely preposterous”.
Director banned over false invoice scam
David Marsden, director of financing company First Capital Factors, has received a ten year ban after heading a false invoice scheme to secure over £4m in illegitimate funds. Marsden instructed a number of his clients to produce false invoices before submitting them to secure funds.
Patisserie Valerie uncovers potential accounting fraud
The owner of Patisserie Valerie has uncovered “significant, and potentially fraudulent, accounting irregularities” and discovered HMRC has filed a winding-up petition against one of its subsidiaries. The café chain said it had been notified on Tuesday of accounting irregularities that could mean a “material misstatement of the company’s accounts”. In a separate announcement yesterday, it said HMRC has issued a winding-up petition against Stonebeach, its principal trading subsidiary, relating to £1.14m of unpaid taxes. Patisserie has suspended finance boss Chris Marsh as it investigates and has requested its shares be suspended from trading on London’s AIM market. Grant Thornton, the company’s auditor, had previously flagged revenue recognition as “one of the most significant assessed risks of material misstatement”. PwC is believed to have been called in to carry out a review of accounts and it is also expected that the Financial Reporting Council and Financial Conduct Authority will investigate. Gavin Pearson, a forensic accounting expert at Quantuma, said: “The mention of the word fraud does potentially imply that this is more than purely an accounting issue.”
The Guardian, Page: 27 The Times, Page: 33 The Times, Page: 34-35 The Daily Telegraph, Business, Page: 1 Financial Times, Page; 1 Daily Mail, Page: 67 Daily Mirror, Page: 48 The Sun, Page: 45 Daily Express , Page: 54 BBC News City AM, Page: 1
Tesco chief tells court of profits ‘shock’
Tesco’s chief executive has told a court of his “genuine shock” on learning of the £250m overstatement of the company’s profits. Dave Lewis told Southwark Crown Court he had “no indication at all” of the issue until brought to his attention by the supermarket’s legal department. He was giving evidence in the trial of former Tesco directors for fraud and false accounting.
Firms may have to report ethnicity pay gap
Companies may be forced to reveal their ethnicity pay gap under plans unveiled by the Prime Minister to help minorities at work. Theresa May has launched a consultation on whether mandatory reporting will help address disparities between the pay and career prospects of minorities. The move follows the decision to make firms reveal their gender pay gaps.
Fourth time lucky for Domino’s?
Domino’s has appointed David Bauernfeind as its fourth finance chief in four years. He previously served as CFO of Swindon-based distributor Connect Group.
City AM, Page; 11
Tax purge slashes flow of offshore pension cash
Fresh figures indicate that the 25% tax charge imposed on transfers of UK pensions to Qualifying Recognised Overseas Pension Schemes (Qrops) have significantly stemmed outflows of retirement cash abroad.
BoE warns of risky business debt
The Bank of England has expressed concern about the rapid growth in lending to risky UK businesses. The Bank’s Financial Policy Committee said there had been £31bn of loans this year to companies that already had a high level of debt. The £31bn total of so-called “leveraged loans” to highly indebted businesses compares with £10bn of standard lending by UK banks to this type of company.
Britain vulnerable to recession, says IMF
The IMF has warned that the underlying state of Britain’s finances is one of the worst in the world following the 2008 financial crash, leaving it dangerously exposed to a recession. The financial watchdog calculated the net worth of 31 countries and found that almost £1trn had been wiped off the wealth of the UK’s public sector – equivalent to 50% of GDP – putting it in the second weakest position behind Portugal.
The Times, Page: 37, 40 The Guardian, Page: 35 City AM, Page: 6
BoE predicts new dawn for pay growth
The Bank of England’s chief economist has said a “new dawn” is breaking for pay growth. Andy Haldane said the Bank’s database of wage settlements showed strong evidence of an upward shift in pay in the private and public sectors. However, he also warned that increased automation in the workplace could lead to weaker wage growth and a smaller share of national income going to workers.
Hot summer heats up economy
The UK economy grew by 0.7% in the three months to August, buoyed by the hot summer, according to the ONS. However, it also said that in August, GDP growth was flat. Economists had predicted 0.1% growth. The three-month measure was the fastest pace of growth since February 2017, economists said.
Criminal accountant ordered to pay £1.7m
An accountant who funded a flamboyant lifestyle by running Britain’s biggest synthetic drug racket has been ordered to pay £1.7m. Paula White, 49, made more than £12m from a global crime operation and was jailed in 2015 for nine years. She was brought before Carlisle crown court yesterday and ordered to surrender some of her criminal gains or face another eight years in jail.
Lobby group wants levy on consumers to help foot fraud bill
UK Finance has suggested consumers should pay a tax on all payments to help foot the bill for compensating victims of fraud. The lobby group’s chief executive Stephen Jones told the Treasury committee that lenders should not always be on the hook for payouts when criminals trick people into transferring money into their bank accounts.
Woman who spent £16m in Harrods revealed
A woman who spent £16m at Harrods in a decade has been identified as the target for the UK’s first Unexplained Wealth Order. Zamira Hajiyeva lost a legal battle to stay anonymous after the media argued the public should know the full facts. She risks losing her £15m home near the London store if she fails to explain the source of her wealth to the High Court.