News Roundup Friday 4th October 2019
News Roundup Friday 4th October 2019
TAX NEWS ROUNDUP
PM pledges a ‘tax-cutting Tory government’
Prime Minister Boris Johnson used his first speech to the Conservative conference as party leader to promise a “moderate, one nation, tax-cutting Tory government”. He described Britain as a “high wage, low tax, high skill, high productivity economy” and voiced concern over Labour’s plans if the party got into power. Mr Johnson told the conference: “If Jeremy Corbyn were allowed into Downing Street, he would whack up your taxes, he would foul up the economy.” Commenting on the Prime Minister’s comments, the TaxPayers’ Alliance said the speech was a “breath of fresh air”.
Daily Mail, Page: 8 The I, Page: 7 The Sun, Page: 2
CORPORATE NEWS ROUNDUP
Large firms utilise game scheme to avoid tax
Analysis of those benefitting from the Video Games Tax Relief (VGTR) initiative suggests that almost half the money intended to support small UK games makers has actually gone on giant multinational firms. A Guardian investigation shows that firms including Sony, Sega, and Warner have used the policy to avoid paying tens of millions of pounds in corporation tax. WarnerMedia, which owns several British game development companies, has claimed up to £60m in corporation tax relief, while Sony claimed almost £30m and Sega claimed up to £20m. Official figures show VGTR claims for more than £500,000 have taken at least 80% of the total tax relief, despite accounting for only a small fraction of claims. Applications for less than £50,000, while accounting for more than half of successful claims, were granted around just £10m of the total £324m in tax reductions. Alex Dunnagan, a researcher at TaxWatch UK, said the new findings show the scheme has “become a cash cow for large, tax-dodging multinational corporations who are milking the system to extract hundreds of millions of pounds in subsidies from the British taxpayer.”
The Guardian Metro
HMRC sacks eight staff members over inappropriate behaviour
HMRC has disciplined almost 100 members of staff over the last two years, for inappropriate use of computer systems, email and social media, with employees sacked, according to a Freedom of Information request. The department has not revealed the circumstances surrounding the sackings. George Bull of RSM UK said it was reassuring the tax authority had dealt with the rogue members of staff. “These people have access to huge amounts of personal data and anything less than 100% honesty is a breach of public trust, which would bring the workings of the civil service into disrepute. If these breaches were allowed to continue unchecked, public confidence would be seriously undermined”.
EMPLOYMENT NEWS ROUNDUP
Bank tightens rules ahead of tax clampdown
Barclays may no longer use off-payroll contractors as it prepares for a government clampdown on tax avoidance linked to the use of self-employed private sector workers, with a leaked internal email telling the bank’s line managers that they must no longer use freelancers “who provide their services via a personal services company, limited company or other intermediary”. This comes ahead of reform of IR35 rules set to come into force in April, with ministers seeking to stop people working off-payroll in the private sector to address tax avoidance. The rethink of IR35 rules, which shifts the compliance burden from contractors to recruiters, is expected to raise £3.1bn in extra revenues for the exchequer between 2020 and 2024.
Number of SMEs hits a record high
Figures from the Office for National Statistics show that there were 274,420 SMEs in the UK in 2018 – the highest number recorded since at least 2010. The number of SMEs in the UK has been rising steadily since 2011 and is up from 230,130 in 2010. The latest small business survey by the Department for Business, Energy and Industrial Strategy suggests that 40% of medium-sized businesses increased their number of employees between 2017 and 2018. Meanwhile, analysis by the Economic and Social Research Council shows that SMEs contribute 47% of revenue to the UK economy and have a key role in boosting UK productivity.
The Birmingham Post, Page: 61
Accountancy alumni form advisory team
Four senior accountancy professionals have come together as part of a venture targeting SMEs and family-owned businesses. The Edinburgh-based operation of advisory HNH will see a team that includes Neal Allen, former head of mergers and acquisitions for KPMG Scotland; Harry Linklater, previously a French Duncan partner; Bruce Walker, who led KPMG Scotland‘s debt advisory team and Chris Fawbert, a former assistant director in EY‘s corporate finance team. The practice will initially focus on providing M&A, debt and transaction services.
The Scotsman, Page: 35
PROPERTY NEWS ROUNDUP
Room boom for Scottish hotels
PwC analysis shows that a surge in the number of hotel rooms in Glasgow, Edinburgh and Aberdeen has led to a fall in the level of revenue generated per available room. Scotland’s biggest cities have added more than 2,000 rooms between them in the last year, while almost 5,000 new rooms are expected to be added by the end of 2020.
The Scotsman, Page: 36 The Press and Journal, Page: 30 I, Page: 39
Jail for launderer
Jamshed Bhatti, whose handwritten ledger books implicated him in a money laundering fraud totalling almost £3.5m, has been sentenced in his absence. He was charged in December 2016 but absconded to Pakistan before his trial. In his absence he has been found guilty of money laundering and sentenced to six and a half years. He told HMRC money came from his import and export business but no VAT registration or any tax returns for the business existed.
Construction activity slumps in September
UK construction activity fell at the second-fastest rate since the financial crisis in September, according to the latest purchasing managers’ index (PMI) from IHS Markit/CIPS UK. The headline index fell to 43.3, down from 45 in August and the fifth consecutive month below 50 – the level that divides contraction from growth. “The poor performance in residential building is particularly discouraging. Given its status as the bellwether of the sector, its continued decline shows the strain the market is under. We’re seeing developers shy away from committing to big spend – not dissimilar from the commercial sector,” said Jan Crosby of KPMG. Considering the economic impact of the data, Howard Archer, chief economist at EY Item Club , said: “Much will depend on how the dominant services sector performs so there will be significant interest in the August services PMI.”
Economist optimistic over recession
Debapratim De, a senior economist at Deloitte, says the economy is likely to avoid falling into recession in the case of a no-deal Brexit as businesses are well prepared to leave the EU. He said: “Under a no-deal Brexit, the NIESR forecast is for 1% growth this year, and actually for it just being flat next year, so there would be no prolonged recession next year in the case of a no-deal Brexit.” He said this forecast comes largely because of businesses preparing or having already prepared for a no-deal scenario and “a fiscal stimulus package that the Government has much touted.”
The Press and Journal, Page: 31
Law firms vulnerable to launderers
Edward Fennell in the Times looks at the suggestion that law firms “appear to be a soft touch for money launderers,” noting that there were almost 1,200 reports last year by accountants to the Solicitors Regulation Authority (SRA) over concerns about law firms’ conduct. Jenny Staight of Hazlewoods comments: “The National Crime Agency has identified law firms as being particularly vulnerable to being exploited by money launderers, so we expect to see this as an area of intensive focus by the SRA over the next few years.”
The Times, Page: 61
Contact Paul Southward.