News Roundup Friday 5th July 2019
News Roundup Friday 5th July 2019
Boris’ sin tax stance questioned
Conservative leadership hopeful Boris Johnson says he will review so-called sin taxes if he becomes Prime Minister, saying a recent proposal for a tax on milkshakes “seems to me to clobber those who can least afford it.” He added: “Rather than just taxing people more, we should look at how effective the so-called ‘sin taxes’ really are, and if they actually change behaviour.” The Telegraph’s Sam Barker notes that a tax on sugary drinks introduced in April 2018 is “on Mr Johnson’s chopping block,” but says the plan “would not trouble the state coffers very much” as by November 2018 the tax was on track to raise £240m for the financial year, short of the Treasury’s initial projection that the levy would bring in £520m a year. Mr Barker also highlights how Mr Johnson’s plan does not take on the two major sin taxes, alcohol and tobacco. Elsewhere in the Telegraph, Christopher Snowdon of the Institute of Economic Affairs says that of all the tax cuts proposed by Conservative leadership rivals, “the most progressive … would be to slash sin taxes.” Shadow Business and International Trade Minister Bill Esterson has questioned Mr Johnson’s stance, saying: “Boris put 10p extra on sugary drinks when he was Mayor of London, but now he’s against a sugar tax,” adding: “Flip-flop sugar puff Boris needs to make up his mind.” Mr Johnson’s leadership rival Jeremy Hunt said he was “totally confused” by Mr Johnson’s policy, adding: “He’s saying he doesn’t want these sin taxes, but he’s got Matt Hancock, the Health Secretary, in his team – who strongly supports them.”
McDonnell: Fairer system needed
Shadow Chancellor John McDonnell has implied that Labour could scrap inheritance tax, replacing the levy with a lifetime gifts tax. This would see everything a recipient received above £125,000 taxed annually at income tax rates. Mr McDonnell said of the proposals: “We need to have a fairer system of how we can ensure that wealth is more fairly distributed, that’s one idea and we are listening to a whole range of ideas.”
Consumers prefer fair tax firms
A survey commissioned by Fair Tax Mark shows that consumers are increasingly refusing to spend money with firms known to avoid paying tax. The poll saw one in three respondents say they would rather shop with – or work for – a business that can prove it is paying its fair share of tax and not using tax havens, with the proportion up 8% on a year ago. Paul Monaghan, chief executive of the Fair Tax Mark, said: “The public understands that there needs to be a level playing field on which businesses compete.” He added that Amazon and Google “have an unfair advantage” which “rightly generates anger among not just the public, but business at large.”
Daily Mirror, Page: 48
Serco pays £19m to avoid fraud prosecution
Serco has been fined £19.2m plus £3.7m in costs, taking responsibility for three offences of fraud and two of false accounting as part of a deferred prosecution agreement with the Serious Fraud Office. The matter relates to a scandal centred on electronic tagging, with the outsourcing firm charging for supervising the movements of people who were dead, in prison or had left the country. The £19.2m fine includes a 50% discount because Serco reported the problems itself and co-operated with the investigation. The Financial Reporting Council is investigating Deloitte, Serco’s auditor at the time, and plans to announce the outcome “shortly”.
Ferrexpo appoints new auditor
Ferrexpo has appointed a new auditor to check its books, with Deloitte having said in April that it was quitting over alleged wrongdoing. Deloitte said it was concerned about chief executive Kostyantin Zhevago’s potential connections to Blooming Land, a charity under investigation for its use of the company’s donations. The auditor said it had resigned because Ferrexpo delayed the launch of a full, independent investigation into the possible misappropriation of funds. Ferrexpo has confirmed that MHA MacIntyre Hudson, which is part of Baker Tilly International, will review the company’s half-year results.
The Times, Page: 46 Financial Times The Daily Telegraph, Business, Page: 2 City AM, Page: 10
Monsoon Accessorize granted rent cuts
Creditors at Monsoon Accessorize have approved the retailer’s company voluntary arrangement, which asked for rent reductions of up to 65% across more than half of its stores. The retailer did not disclose by what margin its CVA passed but said it was “with a majority significantly above the required threshold”. It will now see rent reductions between 25% and 65% at 135 of its 258 stores, after offering creditors participation in a £10m annual profit-sharing scheme, if its profits can recover.
The Times, Page: 43 The Daily Telegraph, Business, Page: 7 I, Page: 39 Daily Mail
Senior advisers resign from NPD
Two senior advisers to Northern Powerhouse Developments (NPD) have left the business after a series of allegations about its finances and claims of a multimillion-pound “black hole” in owner Gavin Woodhouse’s firms. Peter Moore, who was NPD’s non-executive chairman of leisure, has left, as has Russell Kett, a special adviser to NPD’s board, with the latter saying the group misused his “draft” figures to increase the value of its assets by £22m in its annual accounts. A NPD spokesman said: “We strenuously deny any wrongdoing,” while NPD’s accountants, Williamson & Croft, did not comment.
The Guardian, Page: 33
BBC sets aside £12m for tax bills
The BBC has set aside £12m to help settle the historical tax bills of presenters being pursued by HMRC, which says some staff were wrongly paid as freelance contractors for years when they were employees. The National Audit Office, the BBC’s auditor, said the £12m was “irregular” as the BBC was not liable for the money but added that the settlement option “is in the best interests of the BBC, the licence fee payer, and the individuals involved.” Glyn Isherwood, the BBC’s chief financial officer, said: “We have been working closely with presenters as well as HMRC to resolve these issues.”
NatWest offers SMEs Rapid Cash
NatWest is expanding its range of digital services for SMEs with the launch of a fast credit alternative to the traditional business overdraft. Rapid Cash offers credit limits based on firms’ unpaid invoices up to £300,000, is designed to plug easily into accounting software and will see firms only pay for what they use. Approval comes within a day and once funds are repaid businesses can draw down credit again. Paul Thwaite, NatWest head of sales, specialist businesses and business banking, said: “This is a unique market leading product making it easy for businesses, so they can concentrate on growing.”
Service sector takes economy into contraction
Brexit uncertainty continued to drag on the service sector in June, according to the latest PMI data from IHS Markit and the Chartered Institute of Procurement & Supply, which fell to 50.2 last month from 51.0 in May – taking the UK economy into contraction for the first time since July 2016. With declines in the manufacturing and construction sectors reported earlier in the week, all-sector PMIs fell to 49.2 in June. IHS Markit economist Chris Williamson commented: “The near-stagnation of the services sector in June is one of the worst performances seen over the past decade and comes on the heels of steep declines in both manufacturing and construction.” Howard Archer, chief economic adviser to the EY Item Club, said: “The June set of purchasing managers’ surveys fuel our belief that the economy likely contracted 0.2% quarter-on-quarter in the second quarter.”
Contact Paul Southward.