News Roundup Friday 5th October 2018

NEWS ROUNDUP

TAX NEWS

FTSE 100 companies failing to address tax evasion

A survey from Pinsent Masons has found that 55% of FTSE 100 companies do not include their strategy to combat tax evasion in their tax strategy documents, annual reports, environment social and governance policies or other related documents. Additionally, 33% of the financial services businesses in the index failed to mention tax evasion at all. Jason Collins, partner at the law firm said: “FTSE 100 firms failing to publicly address tax evasion could raise questions for stakeholders over their management of reputational and financial risks”, adding: “With the potential for unlimited fines it’s not surprising that shareholders and other stakeholders will want reassurance that big businesses have got the risks of tax evasion under control”.

Economia

Airbnb’s tax bill revealed as Hammond calls for tech tax

Airbnb paid almost £600,00 0 in tax in the UK last year, according to accounts seen by City AM. This is on an operating pre-tax profit of £1.8m for the UK office, which provides marketing services. The 2017 tax bill is over three times the sum paid in 2016 – £188,000. The paper’s Emily Nicole points out that the majority of Airbnb’s business profits in the UK are channelled through its Ireland headquarters, much like other tech firms such as Amazon, Facebook and Google. The accounts are due to be published later this week and follow a call from the Chancellor for a digital services tax for large tech firms, a move industry sources say will hurt investment in British companies. Meanwhile, in a letter to the FT, the ACCA’s Chas Roy-Chowdhury warns the Chancellor against going it alone with a digital services tax, because, as Germany realises, it will open the country up to retaliation.

City AM Financial Times, Page: 12

Heterosexual couples allowed civil partnerships

The government has announced that straight couples are to be allowed to enter into civil partnerships – ending the anomaly whereby same-sex couples can choose between getting married or a civil partnership, while opposite-sex couples are limited to marriage only. The move should bring equal tax, inheritance and pensions rights to mixed sex couples. Some Conservative MPs have demanded the change also extends the right to relatives who have lived together for more than 12 years so they avoid being crippled by inheritance tax.

Financial Times, Page: 2 Evening Standard The Independent, Page: 7 The Sun, Page: 4 Daily Mail, Page: 10 The Times, Page: 8-9 The Guardian, Page: 5

Chuck Chequers and return to Tory values – Johnson

Boris Johnson has slammed Theresa May’s Brexit plans as “politically humiliating” and an “outrage” that would leave the UK “locked in the tractor beam of Brussels”. In a speech to over 1,400 activists at the Conservative Party conference he urged delegates to pressure the PM to “chuck Chequers” and return to the vision she set out in her Lancaster House speech. Mr Johnson also championed the free market and low taxes, calling for a return to “basic Conservative ideas and values”.

The Daily Telegraph The Times Financial Times, Page: 3 The Guardian Daily Express, Page: 5

Amazon raises minimum wage in UK and US

Amazon has raised its minimum wage for workers in the UK and the US following criticism that its staffing was being subsidised by state welfare while politicians on both sides of the Atlantic have accused the company of paying too little tax. In the UK 40,000 permanent and temporary staff will get an increase to £10.50 an hour in London and £9.50 across the rest of the country – a rise of up to 28%.

The Daily Telegraph, Business, Page: 1 The Times, Page: 37 The Guardian, Page: 4, 35 Financial Times, Page: 1 Daily Mail, Page: 57 The Sun, Page: 43 The Independent, Page: 63 Daily Mirror, Page: 7 I, Page: 4 Yorkshire Post, Page: 9 The Scotsman, Page: 4

EU agrees to cut VAT on digital publications

The Government has been urged to scrap VAT on e-books after EU finance ministers agreed to allow member states to apply for reduced or zero-VAT rates for electronic publications. In the UK, readers of online newspapers, e-books, journals and magazines pay a 20% sales tax, while their print equivalents are zero-rated for VAT.

The Daily Telegraph, Business, Page: 7 The Times, Page: 2

Tribunal rules that CGT applies to non-existent flat

HM Revenue and Customs has won an appeal to charge £61,383 in capital gains tax on a property that had not been built – a decision described by Kingston Smith’s head of tax, Tim Stovold, as coming from the “world of Alice Through The Looking Glass”. The Upper Tribunal decided HMRC was right to apply the tax to Desmond Higgins, who paid a reservation deposit on an off-plan property in 2004 which was not finished until 2010. He sold the property in 2012 and was assessed by HMRC as owing capital gains tax of £61,383 for the tax year 2011-2012 – assessed including the period leading up to 2010, when the property had not yet been built. Higgins appealed to the First Tier Tribunal, arguing that the period of his ownership was coterminous with the period when the apartment was his main residence so that he was entitled to main residence relief on the whole of the capital gain accruing to him on the dispos al on 2012.

FT Adviser Economia

Future income tax rise for Wales ‘not ruled out’

Mark Drakeford, Wales’ finance secretary and frontrunner to be the next First Minister of Wales, has left the door open to raising income tax before the next assembly election in 2021. No changes to income tax were presented in Mr Drakeford’s £18bn draft budget for next year, announced on Tuesday; he said: “I will not move away from our manifesto commitment [to leave tax rates unchanged] unless I’m compelled to do so, but I don’t rule out the possibility that circumstances could change in a way that do have that compelling impact.”

BBC News

Taxpayers facing dividend penalties

Hundreds of thousands of taxpayers could end up being penalised for failing to report their dividend incomes for the past financial year because HMRC failed to update its advice about who needs to fill in a tax return. New rules mean basic-rate taxpayers who receive dividends of more than £5,000 are liable to pay the 7.5% dividend tax themselves. Until the tax year 2016-17, dividends were paid after deduction of basic-rate tax at source. HMRC said there was “discretion” over penalties and “we don’t rush to enforce them”. The deadline is tomorrow and failure to reveal unreported income could result in penalties of 100% of any tax due.

The Times, Page: 2

SMEs NEWS

Government pledges to pay 90% of SMEs within 5 days

The Government has pledged to pay 90% of their SME suppliers within 5 days when invoices are uncontested, an improvement on the current target of 80% in five days and 30 days for the remainder. Business minister Kelly Tolhurst also said the Government will consult on how to improve payment times in the private sector, including looking at using new accounting technology and requiring companies to nominate a director responsible for fair payment practices. Mike Cherry, the chairman of the Federation of Small Businesses, welcomed the announcement and called for a “new tough and transparent compliance regime” to be imposed. However, writing in City AM, Greg Carter the CEO of Growth Street, says a robust and enforceable payment code is needed and SMEs should be persuaded to use trade credit insurance – “insurers can give SMEs valuable information about the likelihood of big corporates paying on time or at all.”

The Daily Telegraph, Business, Page: 1 Daily Mirror, Page: 45 City AM, Page: 27 Yorkshire Post, Page: 4

PROPERTY NEWS

Lenders attempt to galvanise B2L market as tax changes bite

Lenders are improving their offer to buy-to-let landlords after changes to the tax rules cut demand for borrowing. Landlords were being discouraged by the stamp duty surcharge on second homes and were slowly losing the ability to offset mortgage interest against profits, experts said.

The Daily Telegraph

London developers hit by new stamp duty tax on overseas buyers

Shares in developers reliant on overseas investors to fund new luxury apartment blocks in London fell yesterday after the government announced plans to tax foreign buyers of UK property.

Financial Times

PENSIONS NEWS

DB pension deficits fell in September

The most recent figures from PwC’s Skyval Index show the deficit of defined benefit (DB) pension funds in the UK fell from £170bn at the end of August to £150bn at the end of September 2018. PwC’s chief actuary, Steven Dicker, said the change was “predominantly due to increases in gilt yields impacting liabilities more than assets.”

FT Adviser

CORPORATE NEWS

Moves

The Gym Group has appointed former Tesco director Mark George as its chief financial officer. Most recently, Mr George was CFO at Auto Trader. Elsewhere, STV Group has revealed that CFO George Watt is to leave the company in the spring after two decades of service.

City AM The Times, Page: 42 The Scotsman, Page: 34

ECONOMY NEWS

UK businesses dismissive of immigration plans

Businesses across the UK have strongly rejected the government’s latest proposals to cut “low-skilled” immigration after Brexit, arguing that the changes would mean price hikes leading to lower standards of living. The reaction came after Sajid Javid confirmed that EU and non-EU migrants will be treated the same after Brexit. In response, Mr Javid told firms to wean themselves off cheap foreign labour.

The Independent Daily Mail, Page: 8-9 The Daily Telegraph, Business, Page: 2

UK services sector activity slowed in September

UK service sector growth slowed in September, according to IHS Markit’s latest purchasing managers’ index, down to 53.9 from 54.3 in August. Firms reported Brexit concerns and increased input costs.

Financial Times The Times, Page: 40 The Scotsman, Page: 35

Half of Yorkshire stores vulnerable to insolvency

The ratio of Yorkshire stores at risk of insolvency has risen from 30.2% to 44.3% in the last nine months, according to trade body R3, which adds up to over 4,400 shops. In the region, the breakdown of different types of shops reveals that home furnishings stores face the toughest challenges, followed by shoe shops and clothes stores.

Yorkshire Post

OTHER NEWS

Trump denies tax dodging

Donald Trump has denied he engaged in tax avoidance and fraud after a New York Times investigation claimed he and his siblings owed over $500m in tax on their parent’s $1bn fortune but paid only $50m by undervaluing holdings and setting up “a sham corporation” to help disguise millions of dollars in gifts. Charles Harder, Trump’s lawyer, said: “There was no fraud or tax evasion by anyone. The facts upon which The [New York] Times bases its false allegations are extremely inaccurate.”

Daily Express, Page: 2 Daily Mirror, Page: 15

Government must help councils through austerity

Writing to the Independent, Paul Dossett, head of local government at Grant Thornton, asserts that the government’s 2019 spending review must provide a “genuine long term funding solution” for local authorities to help them navigate austerity. Local government needs emergency funding to see it through the next five-years, he urges, just like the NHS has received, which could be funded through specific grants, council tax increases or business rate retention decisions.

The Independent, Page: 39

Lord Sugar: No £50m cheques for Corbyn

Lord Sugar has vowed to quit Britain if Jeremy Corbyn comes to power. The businessman told the Sun: “If he’s in, I’m out. I won’t be writing £50m tax cheques any more. I’m gone. I don’t know where but I won’t be here.”

The Sun, Page: 19

NCA wins test case for new anti-corruption powers

The National Crime Agency (NCA) has won a case against a banker’s wife who must now respond to an Unexplained Wealth Order requiring her to explain how she could afford two UK properties worth £22m. Her lawyer argued that her husband, who is in jail for large-scale fraud and embezzlement offences relating to a partially state-owned bank he was chairman of, was not a “politically exposed person” but simply a “fat cat” banker and that the UWO was “disproportionate”. But Mr Justice Supperstone disagreed but allowed the details of the case to remain undisclosed to the public pending the outcome of an application for permission to appeal.

Financial Times Daily Mail The Guardian, Page: 21

Contact Paul Southward if you have any queries.

Paul Southward