News Roundup Friday 29th March 2019
News Roundup Friday 29th March 2019
Government rules out delay to controversial ‘loan charge’ policy
The Treasury has published its review of the tax avoidance crackdown which has slapped 50,000 contractors with huge bills. Its controversial loan charge policy, affecting self-employed people who took income as a loan from an offshore trust, comes into force next week and the government has ruled out the six month delay demanded by campaigners and MPs, even branding the tax schemes used by those affected as “calculated and persistent avoidance”. Barrister Keith Gordon, of Temple Tax Chambers, said HMRC had failed to properly challenge many of the schemes for 20 years, despite opening tens of thousands of enquiries, adding: “Where the report is silent is in relation to HMRC’s own failings.” The Mail reports that UHY Hacker Young estimates around 1,100 people who used loan schemes have been sent bills by HMRC which never arrived.
A million yet to comply with MTD rules
Only 6% of the 1.2m small business owners required to sign up to Making Tax Digital have done so, with just one week before the deadline. MTD rules mean firms with a turnover above the £85,000 VAT threshold must keep all records digitally and submit them to HMRC using approved software, but only 70,000 have so far complied. Alison Horner of MHA MacIntyre Hudson said: “Making Tax Digital has been on the cards for some time, but HMRC hasn’t always been effective in communicating how it will work, and many businesses have held off making preparations for too long. Panic as the deadline approaches could lead to serious pitfalls.” HMRC has said businesses will be penalised if they do not comply, although it will not issue filing or record keeping penalties where businesses are doing their best to adhere to the new rules.
M&A volumes forecast to slow
The total value of mergers and acquisitions topped $467bn (£353bn) globally during the first two months of 2019 but activity is set to cool, according to research by Deloitte. The firm said its research pointed to a slowdown of between 4% and 7% in M&A deal volumes by the end of the first quarter, compared to the opening quarter of 2018. Gavin Hood, partner at Deloitte in Scotland, said: “The last five years have witnessed an unprecedented bull run in the global M&A markets, leading to significant increase in cross-border activity in Scotland and the UK more generally. Disruptive technologies are transforming industries and laying bare well-established business models. This is driving a fundamental shift in M&A strategy.”
The Scotsman, Page: 34
LCF savings scheme channelled millions to chief before collapse
Administrators at Smith & Williamson have said that the collapse of London Capital & Finance (LC&F) has revealed a “number of highly suspicious transactions” which enriched CEO Andy Thomson and the head of its biggest borrower, London Oil & Gas. LC&F went into administration in January after the Financial Conduct Authority found its advertising had been misleading.
Failure to invest in accounting software proves costly
A survey by Opinium has found that 22% of finance bosses are running out-of-date accounting software with 16% saying their systems did not allow them to use early payment discounts, costing them £6.7bn a year. Modelling by Barclaycard indicates CFOs reluctant to embrace technology were missing out on an average of £62,250 each per year while those labelled “trailblazers” were only missing out on an average of £1,705 a year.
City AM, Page: 15
PERSONAL FINANCE NEWS
Mortgage approvals remain sluggish
Data from UK Finance has revealed that the UK housing market remained sluggish during February. Overall 39,083 mortgages were approved for house purchases, down from a revised figure of 39,910 for the previous month. The figures also show 26,890 re-mortgage loans were approved in February, which was lower than in January but slightly up compared with December 2018. UK Finance had to reissue the figures after initially suggesting that 35,299 mortgages were approved, which would have been the lowest figure since April 2013.
Reforms planned to allow UK ‘mortgage prisoners’ to switch deals
The FCA has proposed reforms to affordability rules that will enable borrowers who are locked into expensive rates with failed lenders to switch to cheaper deals.
Barclays Brexit fund
Barclays has set aside £14.2bn to help SMEs to manage any fallout from Brexit. The bank said the money is intended for companies at various stages of development. It is additional to what the bank expected to lend to SMEs between 2019 and 2021.
Cheer for UK economy
The Guardian’s monthly tracker of economic news has revealed that employment has reached the highest level of record and consumers are continuing to spend on the high street, despite Britain’s looming departure from the EU. Companies stepped up their hiring to add another 222,000 people to the workforce in the three months to January, according to the latest available figures. This took the overall number of people in work to a fresh record high of 32.7m. Despite the data, business groups said the political situation has developed into a full-blown national emergency, with the uncertainty over Brexit putting their investment plans in jeopardy.
Government banking on new childcare tax scheme
The Government’s scrapping of childcare vouchers could result in monumental savings for the Treasury. Take up of the tax-free childcare scheme, which replaced childcare vouchers offered through employers, has been pretty dire – with just £32m spent on tax-free childcare in 2018, against the Government’s projected costs of £390m. The Treasury lost almost £800m in income tax and National Insurance in 2017-18 under the vouchers scheme however, according to a Freedom of Information request, and Becky O’Connor of pensions firm Royal London suggests: “The new system for support for childcare costs looks set to save the Government some cash – at the expense of working parents.”
Contact Paul Southward.