News Roundup Friday 25th January 2019
News Roundup Friday 25th January 2019
One in six people overpay tax
One in six people pays too much tax because of mistakes on forms sent to HMRC, a study by Which? has found. About 11.4m people are required to complete a tax return for the 2017-18 tax year, but Which? found 28% find them difficult, 16% made mistakes that resulted in overpayment and 25% had to get professional help. Do not let yourself be one in six, contact Paul Southward today.
Daily Mirror, Page: 24
Brussels to sue UK over tax breaks for commodities traders
The European Commission is to sue the UK in Europe’s highest court, accusing it of creating a tax loophole for commodities traders that unfairly boosts the City of London.
Minister blasts Dyson
Business minister Claire Perry says there is a ‘future risk’ that Dyson will stop paying tax in the UK, following the company’s decision to relocate to Singapore. However, tax experts have said the move did not appear to be tax-driven, because Dyson has said it will still pay corporation tax on any UK-generated profits.
Daily Mail, Page: 22-23 The Daily Telegraph, Business, Page: 1 Financial Times, Page: 18
Polish PM attacks Ireland as tax haven
Leo Varadkar has been forced to defend Ireland’s stance on corporation tax after the Polish Prime Minister Mateusz Morawiecki said some nations were abusing “their taxation systems to the detriment of other countries”. Mr Morawiecki was speaking in support of the EU’s digital tax plan which Ireland has opposed claiming it breaches international treaty obligations. Mr Morawiecki said he was in favour of “eliminating all tax havens from Europe because this would bring a level playing field.” But Mr Varadkar hit back saying Ireland was “forever closing tax loopholes” like the Double Irish. He added that Ireland was opposed to the digital tax because it was based on turnover rather than profit. “The principle has to be that taxes are paid where they are created,” he said. The discussion on tax came amid clashes between European leaders on budget discipline.
Treasury fears online sales tax would breach EU state aid rules
The Treasury has ruled out an online sales tax to help high street shops because under the draft withdrawal agreement Britain has accepted “dynamic alignment” with Brussels on state-aid rules. The Times reports that Mel Stride, financial secretary to the Treasury, has written to Nicky Morgan, chairwoman of the Treasury select committee, to say there was a “high risk” that any such tax would breach the bloc’s state aid rules. Campaigners had urged the Government to introduce a sales tax to rebalance competition arguing online retailers had an advantage over traditional businesses due to the lower rates they need to pay.
EU takes UK to court over tax on commodities trading
The European Commission has referred the UK to the Court of Justice of the EU accusing it of failing to tax commodities traders in line with EU rules. A Commission spokesman said the UK had extended “the scope of a VAT derogation that applies a zero-rate to transactions carried out on certain commodity markets” since the derogation was notified to the Commission in 1977, “meaning that it is no longer limited to trading in the commodities as originally covered by the derogation.” The UK insists its approach is in line with EU rules.
Daily Express The Daily Telegraph, Business, Page: 7 The Times, Page: 45
Textile firms fined over pay
Clothing manufacturers have been forced to pay almost £90,000 to employees after failing to pay them the minimum wage, according to HMRC figures provided to the Environmental Audit Committee. Since 2012, HMRC has investigated 93 textile industry employers, and in 24 cases found arrears of £87,158 owed to staff. It said 14 investigations were ongoing. Mary Creagh, chair of the Committee, said payment of illegally low wages is “rife” in the UK’s textile industry and goes hand in hand with a “culture of fear and intimidation”.
Financial Times, Page: 2 Yorkshire Post, Page: 5
Former Tesco FD cleared of accounting fraud
Tesco’s former UK finance director has said he was made a scapegoat for the retailer’s accounting scandal that wiped £1bn off the company’s value. Carl Rogberg was cleared yesterday of fraud and false accounting. It comes after a trial involving Tesco’s former UK boss Chris Bush, and John Scouler, a former commercial director collapsed last month after the judge at Southwark Crown Court ruled the evidence was too weak to put before the jury. Yesterday’s ruling ends the trial brought by the Serious Fraud Office over Tesco’s £250m profit black hole, which at the time, in 2014, caused the retailer’s market value to collapse by £2bn. It has also led legal experts to question Tesco’s decision to accept a deferred prosecution agreement (DPA) that allowed the retailer to avoid prosecution by paying a £129m fine to settle the case.
The Times, Page: 35-37 The Times The Times, Page: 36-37 The Daily Telegraph, Business, Page: 3 Financial Times, Page: 13 Financial Times, Page: 17 Daily Mail, Page: 75 The Guardian, Page: 37 The Independent, Page: 68 The Sun, Page: 47
Johnson unlikely to buy back Patisserie Valerie
Patisserie Holdings administrator KPMG has said it is confident of selling the Patisserie Valerie chain. However, former executive chairman Luke Johnson is unlikely to buy it back amid concerns about a potential backlash. Mr Johnson is said to have made at least £20m over the past 12 years from Patisserie Valerie, which plunged into administration on Tuesday with the loss of over 900 jobs. Meanwhile, veteran restaurateur David Scott, who sold his former business Druckers to Patisserie Valerie more than a decade ago, is said to be planning bid for most of the remaining 122 outlets.
Patisserie Valerie pushing for rebate on overpaid tax
Patisserie Valerie is seeking a £16m rebate from the taxman claiming it paid corporation tax on profits that may not have existed. Meanwhile, the Times reports that HMRC raised concerns with parent company Patisserie Holdings that some of its invoices and cheques had been forged more than two years before the café chain revealed the alleged fraud that led to its collapse.
Accounting slip at Metro Bank
Metro Bank has disclosed an accounting error that meant it did not have enough capital backing some of its commercial loans. The lender miscalculated the weighting for riskiness given to some of its commercial property and other specialist loans, meaning more money must be set aside to fund them.
Metro blunder prompts shake-up call
The ICAEW has called for an overhaul of the way lenders assess their loan books after an error that wiped more than £800m off the value of Metro Bank in one day. Metro’s shares fell by 39% on Wednesday when it disclosed it had mistakenly assigned risk weightings that were too low on some commercial property and buy-to -let loans. The ICAEW said the decisions that banks make about how much risk they should assign to loans should be subject to independent scrutiny by external auditors.
200k parents could have pension affected by child benefit complexity
Figures provided to the Treasury Committee by HMRC show that of the 7.9m households in the UK receiving child benefit, around 200,000 could be missing out on entitlements that could boost their State pension.
The I Daily Mirror, Page: 8 Financial Times The Sun
Scots business failures jump by fifth
The number of Scottish business failures in 2018 rose 21% year-on-year, from 780 to 945, according to analysis of the latest official figures from the Accountant in Bankruptcy (AiB). It marks the highest annual figure for corporate insolvencies since 2012 and is the fourth highest level ever recorded. Eileen Blackburn, head of restructuring and debt advisory at French Duncan, said: “That this is happening when interest rates are at historically low levels, when unemployment is at a record low and the economy is growing indicates something more fundamental is happening”.
The Scotsman, Page: 34 The Press and Journal, Page: 30
UK services exports to EU soar in the run-up to Brexit
Figures from the ONS reveal that in the first three quarters of 2018, UK services exports to the EU rose by 14% compared with the same period in 2016.
Household spend hits highest level since 2005
The amount households spent each week in 2018 climbed to £572.60, the highest level since 2005, according to the latest Family Spending Survey from the ONS. Households’ saving ratio fell to 3.9%, the lowest seen since records of that measure began in 1963. For all quarters in 2018, households were net borrowers. Separately, the latest Asda Income Tracker, produced with the Centre for Economics and Business Research, found that spending power was £11.37 a week higher compared with a year ago. The tracker charts the pay that households have left after taxes and basic living costs.
ECB warns eurozone at risk of further slowdown
The ECB has warned that a slowdown in the eurozone economy is showing signs of becoming long-lasting because of global trade tensions, Brexit and financial market volatility.
Utd beaten to top spot
Manchester United have been knocked off the top of the Football Money League and are now third behind Real Madrid and Barcelona. The findings, from Deloitte, reveal that the Premier League club generated €666m (£590m) in revenue last season, whereas Real and Barca brought in £665m and £611m respectively. A separate report by EY reveals Premier League clubs generated £3.3bn in tax revenue and contributed £7.6bn to the economy during the 2016-17 season.
The Sun, Page: 55 The I, Page: 52 Daily Star, Page: 17 City AM, Page: 19, 22 The Times, Page: 63
Accountants bored of dull definition
The ACCA has said accountants should not be dismissed as dull bean-counters, as it takes issue with the Oxford English Dictionary’s definition of the role. The organisation said it supports an effort by Gary Turner, the managing director of Xero, who claims that the word experts need to find a better definition of what being an accountant really means in 2019. The current definition lists an accountant as “a person whose job it is to keep or inspect financial accounts”. However, this “archaic” definition misses out the new role to advise companies on their accounts, says Turner.
OED can help alter perception of accounting
In a letter to City AM, Gary Turner, co-founder and managing director of Xero UK, says the Oxford English Dictionary (OED) should change its definition of the word “accountant”. He says that accountants today “don’t just crunch the numbers and observe financial operations. They advise business owners and fuel business objectives such as growth, improving efficiency, cost and productivity.” Mr Turner suggests the updated definition should read: “Accountant: a person whose job is to keep or inspect and advise on financial accounts”. He adds: “It’s time for accountants to be better represented in 2019, and the OED has the power to shake off the “archaic” perception of the industry and reflect how much the role has changed.”
City AM, Page: 18
Contact Paul Southward (not an accountant, but a tax and business adviser) if you have any queries.