News Roundup Friday 30th August 2019

NEWS ROUNDUP

TAX NEWS

Tax threat contributes to tech deal slowdown

A slowdown in technology mergers and acquisitions across Europe has been blamed on the threat of digital taxes and increased regulatory scrutiny. Data released by PitchBook shows Europe is on track for its quietest year since 2009 with IT M&A slipping 18% to a five-year-low of 655 in the first six months of 2019. In the UK, deal numbers hit historic lows, slipping 37% across all sectors with just €18.6bn worth of deals taking place compared with €50bn the year before. A wait and see approach related to Brexit is also dampening activity in the UK. KPMG‘s Graham Pearce says a buoyant M&A sector is important: Without the lifeblood of “exited entrepreneurs who reinvest back into the sector they love” you’re “stifling the ability for the private sector to be entrepreneurial, innovative and creative.”

The Daily Telegraph, Page: 31

Taxman slammed over GSK contractor letters

HMRC has been criticised for writing to 1,500 self-employed contractors of GlaxoSmithKline accusing them of being “disguised employees”. Alasdair Hutchison of the Association of Independent Professionals and the Self-Employed said the letters were an “example of the chaos” caused by rules on self-employment and “this confusion is only set to get worse when the changes to IR35 are extended”. HMRC said it was not suggesting all the people it wrote to had “set out to pay less tax”.

The Times, Page: 42

John McDonnell slams Javid’s ‘panic-driven, stunt budget’

The Chancellor has brought forward a single-year spending review to next Wednesday with Sajid Javid saying he would announce higher public spending on health, schools and police in a statement that would “clear the decks for Brexit”. Mr Javid has pledged to stick within existing fiscal rules. The Times notes that Boris Johnson has said that he wants to increase the threshold at which people start paying 40% income tax from £50,000 to £80,000, which would benefit 4m people but cost about £9bn a year. Shadow Chancellor John McDonnell will say today that Mr Javid’s review is a “one-off, pre-election, panic-driven, stunt budget” that will bring another year of austerity. But Rishi Sunak, the chief secretary to the Treasury, dismissed his comments and accused him of trying to “wreck our economy”. He added: “Labour would hike taxes, waste more and drive away investment and, just like last time, hardworking peopl e would pay the price.”

The Times, Page: 13 The Independent, Page: 12

Advisory Fuel Rates from 1st September 2019

HM Revenue & Customs have published the new Advisory Fuel Rates applicable from 1st September 2019. Full details can be found here: –

Advisory Fuel Rates from 1st September 2019

CORPORATE NEWS

Sports Direct board faces investor rebellion at AGM

Sports Direct is facing a revolt against its board at its September AGM, led by Pirc, as the retailer fights to avoid becoming the first major listed UK business to fail to appoint an auditor. The shareholder advisory service cites concerns over the delayed publication of Sports Direct’s annual results, the disclosure of a £605m Belgian tax bill and a decline in its share price, which is down more than 70% since peaking in 2014. Auditors Grant Thornton are quitting after 13 years. Pirc has urged shareholders to oppose the re-election of billionaire tycoon Mike Ashley, chairman David Daly, and three of its four directors.

Financial Times The Sun, Page: 43 Daily Mail, Page: 62 City AM, Page: 3

Arcadia CVA can now progress

US retail landlords Vornado and Caruso have withdrawn legal challenges to Sir Philip Green’s restructuring plan for his retail business Arcadia. After the firm’s company voluntary arrangement plans were narrowly passed by shareholders earlier this summer, the landlords had stated their opposition, but an agreement is now believed to have been reached. Arcadia chief executive Ian Grabiner remarked: “With these legal challenges now withdrawn all the components of the CVAs can now be implemented.”

Financial Times, Page: 17 The Times, Page: 36 The Independent, Page: 56 Daily Express, Page: 53 The Sun, Page: 43

LCF bosses uncooperative, say administrators

Savers who invested in mini-bond firm London Capital & Finance (LCF) may only get a quarter of their cash back, administrators Smith & Williamson have said. The firm has sold vehicles and a horsebox owned by LCF and are pursuing a helicopter, horses and land that was to be developed as resorts in Dominican Republic. The firm went bust owing £237m to 11,500 customers who thought their money was being invested in hundreds of firms but investigators have found bosses poured it into their own luxury lifestyle ventures. Administrator Finbarr O’Connell said: “It has been extraordinarily complex. To make matters worse, administrators have had almost no cooperation from the main parties involved with LCF, both the company and its borrowers, which the administrators consider to be deliberate and probably coordinated.”

The Times, Page: 35 City AM, Page: 5 Daily Mail, Page: 75

PROPERTY NEWS

UK mortgage approvals soaring

The number of mortgage approvals in Britain rose to its highest level since early 2017, as buyers took advantage of increasingly competitive rates, according to financial services body UK Finance. Banks approved 43,300 mortgages in July, higher than the 42,800 in June and 10.6% more than in July last year, while remortgaging approvals saw a 15% year-on-year rise to 30,200 in July, the fastest increase since May 2018. Howard Archer, chief economic adviser to EY Item Club, said: “It is possible that mortgage activity is lifted by some people looking to complete before October 31, given the uncertainties surrounding the UK leaving the EU with a deal.”

The Times, Page: 34 Financial Times, Page: 3 The Daily Telegraph The Sun, Page: 43

Council joins campaign to close tax loophole for second homes

Scarborough Council is pushing the Government to change the rules on second homes, in a joint initiative with authorities in resorts in Devon and Cornwall, the Scilly Isles and the Lake District. Steve Siddons, leader of the council, said the region was missing out on £2.56m a year because second home owners were letting out their properties and using a loophole to pay no council tax at all. He added: “People can let out their house and classify it as a business which means they don’t pay council tax and instead pay business rates. But as they likely have a rateable value below £12,000, they can claim relief on that and pay nothing at all.”

Yorkshire Post, Page: 12

SMEs NEWS

Cyber fear for 60,000 small firms

According to insurance broker Gallagher, 57,000 small companies would be unable to continue trading if they were targeted by cyber criminals who froze their computers until a ransom was paid. Gallagher said 1.4m SMEs suffered a cyber crisis last year, costing a combined £8.8bn.

Daily Mirror, Page: 38 The Press and Journal, Page: 33

SPORT NEWS

Bury MP calls for inquiry into collapse

Bury FC has been expelled from professional football after it failed to secure a takeover. James Frith, Labour MP for Bury North who tried to broker a takeover, said he would institute a parliamentary inquiry into the governance of football. “There needs to be a prequalification test for club ownership,” he said. “The interests of a small number of financiers have come before the club and fans.” He has called for an Insolvency Service investigation into the company voluntary arrangement (CVA) organised to cut the debts of Bury. The Football Supporters’ Association also said that it had asked the insolvency practitioners’ professional body R3, and the Insolvency Practitioners Association, to investigate the conduct of the CVA.

Financial Times, Page: 2 The Guardian, Page: 50

INTERNATIONAL NEWS

Deutsche Börse offices raided as authorities investigate alleged tax evasion

German police have searched the premises of Deutsche Börse subsidiary Clearstream as part of an investigation into trades that were allegedly used to falsely claim tax rebates. The investigation centres on so-called cum-ex dividend trades. With cum-ex transactions, investors were able to obtain refunds for capital gains tax multiple times, even if the tax was only paid once.

City AM, Page: 3

Deutsche Bank says it has Donald Trump-related tax returns

Deutsche Bank has lodged a letter with a US court acknowledging that it is in possession of tax returns filed by President Donald Trump, his family or his businesses.

Financial Times

PERSONAL FINANCE NEWS

Warning issued over ‘heir hunter’ firms

Experts have said cases of mistaken identity surrounding family tracing firms or so-called “heir hunters” are common, warning anyone approached by such firms that they are financially liable to pay back the full amounts of any awarded inheritance moneys if someone with a superior claim later becomes known. One case of a Pembrokeshire man called Peter Chinnery, who was formally granted access to the estate of his first cousin four years after she died without leaving a will after being alerted to the legacy by UK People Finder, is analysed in the Telegraph. The firm took almost a third of the estate as a fee, before a number of nieces and nephews were subsequently identified, with Mr Chinnery only able to return the £28,000 left over. Solicitors who have contacted UK People Finder have reportedly received no reply. Hector Birchwood of genealogy firm Celtic Research advised: “It is unfortunate that many people who are contact ed by heir tracing companies may not realise that when they are put forward to act as the administrator to an estate, such a position confers a number of legal responsibilities for which they will be held to be personally liable.”

The Daily Telegraph

ECONOMY NEWS

Sajid Javid to fast-track spending review

The Chancellor cancelled his debut speech yesterday, less than 24 hours before it was due to take place, igniting speculation that the Government is preparing for a snap general election in October. The Treasury said it was fast-tracking a spending review initially planned for later in the year. Sajid Javid is expected to detail the Spending Round next Wednesday, setting the tone for the Conservatives’ election push. In a piece for the Telegraph, Mr Javid insists the Government will not break its “fiscal rules” on public spending in the run-up to Brexit adding that any Whitehall departments “expecting a blank cheque will be sorely disappointed.”

Financial Times The Daily Telegraph, Page: 1 The Daily Telegraph The Times Daily Mail

Prices driven lower in August

Prices in Britain’s shops fell by 0.4% in August driven by a 1.5% decline in prices for clothes, consumer goods and other non-food items. The BRC blamed the slowdown on weak consumer spending and a rise in discounting among retailers.

The Times, Page: 36 The I, Page: 38

Sterling falls after parliament suspended

The pound dropped and shares in British-focused companies were marked lower yesterday following the suspension of parliament for five weeks. The City saw Boris Johnson’s announcement as shortening the odds on a no-deal Brexit. James Smith, an economist with the ING banking group, said, “This means the Brexit process is likely to go down to the wire. No deal has become more likely, although we narrowly think a no confidence vote, which leads to an Article 50 extension and early elections, remains the most probable scenario.” Housebuilding stocks fell yesterday as Brexit uncertainty dented investor confidence in the property sector. Persimmon, Berkeley, Barratt Developments and Taylor Wimpey were among the biggest decliners on the London stock exchange, all down between 3-5%.

The Times, Page: 13 Daily Mail, Page: 72 The Guardian, Page: 6 City AM, Page: 3 The Daily Telegraph, Page: 29

OTHER NEWS

Policy-making needs to catch up with technological change

Harry de Quetteville talks to economist Carl Frey in the Telegraph, who believes AI and robotics will “worsen the employment prospects for the already shattered middle class” and that it could take decades for those affected to see the payoff from today’s industrial revolution. However, Frey is optimistic about AI, believing the tech will ultimately “give a boost to productivity and make more jobs interesting” with Mr de Quetteville adding that it is how the disruption is managed that matters. In a 2013 paper, Frey predicted that tax examiners and collectors and Revenue Agents had a 93% chance of being put out of a job by robots.

The Daily Telegraph

Brits hold on to £1.5bn in old notes

The Bank of England has said Britons still have £1.5bn of old £5 and £10 notes more than a year after they ceased to be legal tender. The Bank says 118m paper £5 notes and 94m £10 paper notes have still not been returned. The Bank said there is no deadline to exchange them for new polymer notes. It added: “All notes withdrawn from circulation keep their face value for all time and can be changed.”

Daily Mail, Page: 25 :Daily Mirror, Page: 13 Daily Express, Page: 7

Hoard of Norman coins is an early example of tax avoidance

Experts from the British Museum have said that the largest hoard of coins ever discovered from the post-Norman Conquest period are an early example of tax avoidance . The hoard of 2,528 coins dating back to the Battle of Hastings, which was found by an amateur during a metal detecting lesson, included rare examples of “mules”, which have the face of one king on the head and another on the tail to allow coin-makers to avoid paying extra tax [An HMRC spokesperson said they are taking urgent action to close this loophole]. It has been reported to be worth up to £5m, though experts have indicated this is likely to be an overestimate once the condition of coins and the sudden flooding of the market they would cause are taken into account.

The Daily Telegraph The Times, Page: 3 Daily Star, Page: 15 The Guardian, Page: 21

Contact Paul Southward.

Paul Southward