News Roundup Friday 21st June 2019

NEWS ROUNDUP

TAX NEWS

Think-tank questions tax pledges

Analysis by the New Economics Foundation (NEF) think-tank suggests tax cuts proposed by Conservative leadership frontrunner Boris Johnson would force up to 100,000 families into poverty. The former Foreign Secretary has said he would look to raise the threshold for the higher rate of income tax from £50,000 to £80,000. NEF research shows this would cost £9.5bn a year and would make the wealthiest 20% of families £1,790 a year better off, while doing nothing to help the poorest 20%. As a result, 50,000 households would be forced into relative poverty. Mr Johnson’s plan to abolish national insurance on the first £1,000 of earnings each month, which has also been mooted by leadership rival Jeremy Hunt, would cost £8.2bn a year and would see the incomes of the richest 20% of families rise by £560 a year, while the poorest 20% would benefit by just £80 a year. The think-tank a lso crunched the numbers on Home Secretary Sajid Javid’s plan to cut the basic rate of income tax below the current 20%, saying it would cost £4.4bn a year for a 1% cut that would help the richest by £450 a year and the poorest by just £10. Alfie Stirling, head of economics at the NEF, believes the proposed tax cuts “will come as a double blow” for those hit by increased NHS waiting times, overcrowded school classes and unaffordable social care, “forgoing billions of pounds in revenues that could otherwise have been used to boost public services”. Elsewhere, figures obtained by Leeds MP Rachel Reeves show that 44% of the beneficiaries of Mr Johnson’s tax rethink would be located in London (23%) and the South East (21%).

The Independent, Page: 9 I, Page: 7 Yorkshire Post, Page: 4

Offshore ownership pledge welcomed

With Jersey, Guernsey and the Isle of Man vowing to adopt public registers detailing ownership of offshore companies incorporated in their jurisdictions, MP David Davis has welcomed the move, saying it means “greater transparency and less tax evasion”. Labour Shadow Chancellor John McDonnell commented: “We’ve insisted on greater tax transparency, so welcome these moves.”

The Daily Telegraph, Page: 8 Daily Mirror, Page: 28

CORPORATE NEWS

Goals ‘blocks’ accounting probe

Goals Soccer Centre, which in March revealed that it owed £12m in VAT, has been accused of having “stonewalled” calls from its largest shareholder, Sports Direct, for an external probe into its £12m accounting crisis. Mike Ashley had urged Goals to approve an external investigation over fears about the scale of the possible issues, over which former Goals auditor KPMG has been reported to be on standby for a potential lawsuit. Sports Direct says Goals’ lenders have appointed Deloitte to conduct an internal investigation but are yet to confirm whether this will be shared beyond creditors and directors.

City AM Financial Times, Page: 18

No buyer for Bathstore

BDO has been lined up to handle a potential administration of bathroom retailer Bathstore after the loss-making business failed to find a buyer. The latest accounts filed at Companies House show the retailer making a pre-tax loss of £22m on sales of £141m in the year to 31 July 2017.

The Guardian, Page: 39 City AM, Page: 5

Monsoon offers share of profits ahead of CVA

Monsoon Accessorize’s owner Peter Simon will offer landlords a share of future profits worth up to £10m as he attempts to persuade creditors to vote for a Deloitte-led CVA which would allow him to reduce the size of his stores and pay less rent. The insolvency procedure has been delayed for several weeks as landlords sought additional sweeteners, including an equity stake in the business. Mr Simon has also pledged to invest £34m in the 270-shop fashion retail chain to keep it afloat.

The Guardian City AM, Page: 5

Collapsed firm sold

Tech firm Hutchinson Networks, which last month went bust, has been sold to Irish tech group PlanNet21 Communications. Blair Nimmo, joint administrator and UK head of restructuring at KPMG, said the acquisition “will provide the new owners with a fantastic base from which to expand their operations into the UK.”

The Scotsman, Page: 36

Jobs saved at Redhall Networks

More than 50 jobs have been saved after the trade and assets of Redhall Networks were purchased by Enact. Chris Petts and Sarah O’Toole of Grant Thornton were appointed administrators.

Yorkshire Post, Business, Page¨1

Construction firm collapses

Construction firm Shaylor Group has fallen into administration, with FRP Advisory in discussion with the company’s clients regarding the transfer of sites and supporting workers affected by the closure.

The Birmingham Post, Page: 5

Investors to pick up Slack

The Telegraph looks at the IPO of messaging app Slack, noting that KPMG’s NYSE IPO guide says: “Once listed, a company will experience far greater public scrutiny and will have a range of continuing obligations with which to comply.”

The Daily Telegraph, Business, Page: 5

SMEs NEWS

Government set to tackle late payments

The Government is aiming to deliver measures designed to tackle late and slow payments, Small Business Minister Kelly Tolhurst has announced. She said the proposals would “ensure that small businesses are given the support they need” and bring an end to the “unacceptable culture” of late payment. The plans would see Small Business Minister Paul Uppal’s powers strengthened. This would include handing him the ability to fine businesses that do not pay bills within agreed contractual terms. The Commissioner would also be given powers to make firms detail payment terms and practices. Payment plans that ensure bills are settled quickly could also be enforced. The plan was welcomed by Mike Cherry, national chairman of the Federation of Small Businesses (FSB), who said companies would be “delighted” with the proposals. The FSB estimates that late payment forces about 50,000 businesses to collapse every year. The Institute of Directors also welcomed the proposals, saying they marked “a significant step forward”. Phil Hall of the Association of Accounting Technicians believes the Government “could and should” go further, suggesting maximum payment terms could be cut from 60 to 30 days.

The Times, Page: 47 City AM, Page: 7

PROPERTY NEWS

London dragging on UK house prices

London continues to drag on UK house prices, according to data by the Office for National Statistics, with the capital enduring the lowest annual growth out of any region with prices falling 1.2% over the year to April 2019. Prices across the UK rose an unadjusted 0.7% month-on-month in April, the first rise in eight months, taking the average property price to £229,000. In England, the East Midlands saw the strongest annual house price growth in April, with a 2.9% increase. Regionally, Wales saw the strongest growth in the UK of 6.7% in the year to April, followed by Northern Ireland at 3.5%, Scotland by 1.6% and England by 1.1%. Northern Ireland remains the cheapest country in the UK to purchase a property, with an average house price of £135,000.

The Daily Telegraph The Independent, Page: 59 City Daily Mail AM

LEGAL NEWS

VAT fraud hits renewable energy industry

HMRC is cracking down in the trading of renewable energy certificates “with immediate effect” to counter “a serious and credible threat to the VAT system”, with criminals believed to be charging VAT on the sale of renewable energy certificates of origin, with the money siphoned off rather than making its way to the taxman.

The Guardian, Page: 39

ECONOMY NEWS

Bank set to hold interest rates

The Bank of England is expected to hold interest rates again today, with economic growth slowing sharply after a stock-building boost at the start of 2019. The MPC is expected to keep rates at 0.75%. Data released yesterday showed that inflation had fallen to a target of 2% in May, down from 2.1% in April, a development that could give the Bank more breathing space to keep rates unchanged. Core inflation, which excludes more volatile food and energy prices, dropped to 1.7% – the lowest figure since early 2017.

The Times, Page: 40 The I, Page: 40 The Daily Telegraph, Business, Page: 3 The Independent, Page: 58

Factory output slows

According to the latest industrial trends survey from the CBI, factory output almost ground to a halt in the three months to June. The business lobby group said that a net balance of 2% of businesses reported an increase in output during the period. This was down from 14% the previous month, when manufacturers were lifted by Brexit-related stockpiling. The CBI said that ten out of sixteen sub-sectors experienced growth. The balance of manufacturing businesses reporting higher-than-usual orders fell to -15% in June, down from -10% last month.

The Times, Page: 40

Young people see spending power shrink

Young people’s spending power is less than it was in 2001, Resolution Foundation research has found. The analysis reveals that 18 to 29-year-olds are spending £380 per week on non-housing items, marking a 7% decline in real terms on what those in the same age group spent in 2001. In the same period, those aged over 65 have seen a 37% increase in spending power.

The Independent, Page: 17 I, Page: 9 Yorkshire Post, Page: 9

OTHER NEWS

No-deal could hit law firms

Analysis of the accounts of the top 50 law firms by Smith & Williamson and Legal Week shows that on average they hold enough cash to cover just three week’s wages, with the average monthly payroll £610m and firms typically holding £410m in cash. Giles Murphy, head of professional practices at Smith & Williamson, said: “If there’s a shock to the economic system for example, a no-deal Brexit, clients may decide to delay payments and that could be devastating to law firms.”

City AM, Page: 11

Oxbridge dominates in hunt for new income

The FT looks at the finances of universities, citing Ian Koxvold at PwC who estimated that around 50 institutions are in deficit.

Financial Times, Page: 2

Contact Paul Southward.

Paul Southward