News Roundup Friday 4th January 2019

NEWS ROUNDUP

TAX NEWS

Iceland attracts ire of HMRC

A Christmas savings scheme offered to staff at Iceland Foods has fallen foul of HMRC, with the taxman accusing the company of breaching minimum wage rules and threatening it with a bill of at least £21m to put right. HMRC claims that because staff voluntarily had sums deducted from their weekly wage packets – to be saved in a separate account and returned on demand, usually at Christmas – their pay technically had fallen below the minimum wage. The alleged underpayment is of about £3.5m a year for six years, even though staff chose to participate in the scheme and received all the money they had put in. Iceland also may have to pay a fine that in a worst-case scenario could be double the amount of the alleged underpayment. The company is also accused of breaching minimum wage rules because it issued guidance for shopfloor staff to wear “sensible shoes”. HMRC’s minimum wage taskforce claims that the pay for store staff who chose to buy their own footwear would have fallen below the minimum wage in the weeks that the shoes were purchased.

The Times, Page: 31

INDUSTRY NEWS

Corporate failures to hit 20 Scottish firms every week

Around 20 Scottish businesses are set to fail each week in 2019, according to French Duncan, with corporate insolvencies having risen “dramatically” in the past year. Continued uncertainty surrounding Brexit, an increase in competition and a squeeze on prices in many sectors are all key factors. French Duncan has also predicted that nearly 12,000 Scots will be made bankrupt this year, as rising household bills and sluggish wage growth continue to impact personal finances.

The Press and Journal, Page: 26 The Scotsman, Page: 5, 32

SMEs NEWS

More firms forced off Aim

Analysis by UHY Hacker Young shows insolvency or financial distress forced sixteen companies off the Alternative Investment Market last year – up from nine in 2017. But despite the year-on-year increase, the number of businesses delisting after insolvency or financial distress was still lower than the average in recent years, with 24 failures recorded in each of 2016 and 2015 and 18 in 2014. Critics have argued that Aim’s regulation is too weak and has led to several scandals, although the stock exchange group made some moves to address these concerns, with new rules obliging companies to apply a “recognised corporate governance code”.

The Times, Page: 35

FSB in business plea

The Federation of Small Businesses has urged politicians to stop squabbling and focus on the issues that matter. Chairman Mike Cherry said: “There are lots of ways the UK’s 5.6m small businesses can be supported. It’s time politicians remembered this and stopped spending so much time on political infighting.” He added that whatever happens with Brexit, the Government should help the small business sector sell their wares abroad.

The Sun, Page: 42 (01/01/2019)

PENSIONS NEWS

Small firms expect workers to opt out of pensions

Smaller employers expect more of their staff to opt out of saving for their pensions once minimum deductions from their pay packets are increased this April. According to a survey by the Association of Consulting Actuaries, 65% of businesses employing fewer than ten people expect modest or substantial decreases in participation. The Department for Work and Pensions estimates about 6.1m employees face a cut in their take-home pay when pension deductions under the automatic enrolment rules are increased. Minimum employee contributions are due to be raised from 3% of eligible pay to 5% in April, while employer contributions are due to be raised from 2% to 3% at the same time.

The Times, Page: 33

ECONOMY NEWS

Business leaders fear deteriorating economic conditions in UK

Research by Ipsos Mori shows the majority of the UK’s 500 largest companies expect Britain’s economic condition to decline over the next 12 months amid continuing Brexit uncertainty. Meanwhile, a poll of economists by the FT concludes that uncertainty will hobble UK business investment and depress consumer spending in 2019.

Financial Times, Page: 1 Financial Times, Page: 17

Optimistic Britons defy gloomy outlook

Half of Britons believe that their personal finances will remain the same or improve in 2019, a poll for the Times has found. Asked about their financial prospects for the coming year, 13% believe they will get better and 37% say they will remain the same. However, the number who believe that their financial situation will worsen has grown by three percentage points from 37 at the end of 2017 to 40 in the latest poll, with “don’t know” on 10%.

The Times, Page: 1-2 (01/01/2019)

High street set for more closures

More high street chains are expected to run into trouble in the coming months, as retail landlords prepare for one of their most challenging winters in recent memory. Ric Traynor, chairman of Begbies Traynor, said he expected “a lot of retail fallout over the first quarter” as the shift to online shopping and the annual cash flow crunch experienced after Christmas collide with “very weak consumer demand”. High street firms are also facing a 2.4% rise in business rates from April.

The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 6

Contact Paul Southward if you have any queries.

Paul Southward