News Roundup Friday 6th July 2018
News Roundup Friday 6th July 2018
Government’s ‘quirky’ tax tricks penalise innovation, experts warn
The Telegraph’s Harry Brennan warns that the government is devising increasingly quirky ways to generate income – including the “stealth tax” facing owners of new cars with a list price of £40,000 or more purchased since April 2017 who must pay an additional annual tax of £310 for five years. Danby Bloch of Helm Godfrey said he expected the Government to introduce more “tweaks” ahead of Brexit, while George Bull, a partner at RSM, complained that the culture of “quirky” tax reinvention had been around for years: “Chancellor after chancellor, particularly George Osborne, has attempted to squeeze every last ounce of tax out of existing charges rather than introduce new solutions,” while Rachael Griffin, a tax expert at Old Mutual Wealth, warned: “Arbitrary tax based on wealth penalises saving and disengages people from pursuing their financial g oals”.
HMRC failing business on VAT, ATT warns
The Association of Taxation Technicians (ATT) has warned that HMRC is causing “unnecessary uncertainty” for UK businesses on VAT matters – with no dedicated VAT helpline and lengthy disputes between HMRC and companies about VAT treatment being commonplace. “Businesses simply want to ‘get it right’ but are left frustrated by HMRC. The opportunities for businesses to obtain binding rulings on VAT from HMRC are very limited, especially considering HMRC’s refusal to simply say ‘yes, you’re right’ when they receive an enquiry from a business which sets out the full facts and reaches the correct VAT outcome,” said the ATT’s Stephen Taylor.
Scottish galleries not using new tax relief
Scott-Moncrieff and independent charity Arts & Business Scotland has warned that 76% of Scottish galleries and museums are not taking advantage of the Museums & Galleries Exhibitions Tax Relief (MGETR) initiative designed to support them putting on exhibitions. MGETR applies back to April 1 2017 and accepts claims of up to £100,000 for touring exhibitions and £80,000 for non-touring exhibitions.
Migrants exaggerated earnings in bid to remain
Immigration minister Caroline Nokes has told MPs that hundreds of highly skilled migrants trying to stay in the UK permanently have exaggerated their earnings on applications to the Home Office. She told MPs that in almost 90% of the cases reviewed, the applicants had amended their records with HMRC by increasing their earnings by more than £10,000. When applicants were given the chance to explain the discrepancy, most said only that there had been accountants’ errors.
Redwood: Tax cuts will boost Britain
Writing in the Sunday Express, Conservative MP John Redwood argues that the government must cut tax rates to boost the economy. He says every time the UK government has lowered the top rate of tax it has brought more revenue in from the rich, citing the cuts introduced by both Nigel Lawson and George Osborne. He adds that the government should cut stamp duty and CGT to encourage turnover in the property market. Elsewhere, the Sunday Telegraph’s leader also calls on the government to slash taxes, including cuts to generate business growth and save the high street from punishing rates, and cuts to income tax and NI to “make work pay.” Separately, the Sunday Telegraph examines the apparent divide between the Conservatives and business. The boss of one FTSE 250 firm comments: “It seems to me that the Government is trying to denigrate the very tax base that funds things that are near and dear to us in the UK, like the NHS; without business there is no tax base.”
Sunday Express, Page: 26 The Sunday Telegraph, Page: 17 The Sunday Telegraph, Page: 17
Government raising funds through tax tweaks
The Sunday Telegraph says HMRC is coming up with increasingly “quirky” ways to squeeze money out of the taxpayer, as the Government seeks to raise much-needed funding for public services. Experts have said the Government has been forced to come up with inventive ways to mitigate its funding shortfall, giving with one hand and levying taxes with the other, leaving many teetering on a tax “cliff edge”. Amongst the measures highlighted by the paper are changes to IHT and cuts to the pension allowance. George Bull, a partner at RSM, said the culture of quirky tax reinvention had been in existence for years. “Chancellor after chancellor, particularly George Osborne, has attempted to squeeze every last ounce of tax out of existing charges rather than introduce new solutions,” he said.
The Sunday Telegraph, Business, Page: 9
Pension calculator poised to go back online
HMRC is aiming to bring its annual pension calculator back online from Friday 6th July. The calculator was taken down in April following complaints from Royal London it was giving savers wrong information.
Call for urgent reform of rates
The Centre for Retail Research claims high street shops are paying four times as much in business rates as their online rivals and the equivalent of 2.3% of turnover while online firms pay 0.6%. The figures come as retailers across the sector call for reform to avert the risk of killing the high street.
Daily Mail, Page: 1, 2 Financial Times, Page: 2
Estate agents struggling
Research by Moore Stephens indicates that one in four high street estate agents is showing signs of financial distress due to a slowdown in the property market and competition from online rivals.
Daily Mirror, Page: 46
Green considering suing FRC
The Mail on Sunday reports that Sir Philip Green’s family firm Taveta is considering legal action against the Financial Reporting Council over its report into the audit of BHS. It comes after a judge last week said the FRC could publish its report, but that it may be “defamatory”. A source close to Green said the FRC would leave itself “very open” to being sued if the report was published in full. Elsewhere, the Sunday Times reviews Damaged Goods: The Inside Story of Sir Philip Green, the Collapse of BHS and the Death of the High Street by Oliver Shah. The book suggests the likes of Green are becoming figures of the past, as ever-increasing corporate governance restrictions have curbed the amount of power any one individual can exercise over a company.
Insolvencies expected to jump
Turnaround specialist Alvarez and Marsal is predicting a jump in the number of companies going bust this year, as the high street crisis deepens and other parts of the economy begin to struggle. Richard Fleming, Alvarez & Marsal’s top restructuring adviser in Europe, estimates that Britain will see a 15% increase in insolvencies in 2018.
Campaigns target sky-high business rates
The Mail and the Mirror are each calling for a root and branch review of business rates, as they launch campaigns to ‘save Britain’s high streets.’ Chief executives of some of the country’s biggest retail chains, along with politicians from all parties, have warned that sky-high rates are stifling investment and driving long-established companies to the wall. It comes as new research by the Press Association shows about 50,000 UK jobs have been axed or put at risk this year, with the high street bearing the brunt of the losses. Most of the jobs have been lost in the retail industry with the likes of Toys R Us, Poundworld and Maplin collapsing into administration and others, including House of Fraser, planning to close dozens of stores in order to survive.
Daily Mail, Page: 1-2 Daily Mirror, Page: 1, 8-9 The I, Page: 38 The Times, Page: 4 The Independent, Page: 11 The Daily Telegraph, Business, Page: 8
Scots SMEs want to reverse Brexit
More than two-thirds of Scottish SMEs want to reverse Brexit, according to Citibase’s Business Confidence Index. It found that 70% of SMEs in Scotland would like to retain EU membership, an increase from 63% in the first quarter. The national average for SMEs across the UK wanting the decision reversed was slightly lower at 66%.
The Scotsman, Page: 34
Pensions providers urged to clean up records
Analysis of pensions records by Experian reveals that one in eight has incorrect or incomplete data, putting the Government’s “pensions dashboard” scheme at risk. Richard Howells, the director of pensions at Experian, said: “Pensions providers have work to do to ensure the correct data is shown to people on a pensions dashboard. Data quality is a challenge. We believe hundreds of thousands of records held by providers are missing correct addresses, first names or surnames, while many more have no postcodes. Errors like these could result in people being unable to pass validation to use the dashboard.”
Women could close the pension gap by taking more risk and making more contributions
Research by Fidelity shows women could eliminate the gender pension gap by putting an additional 1% of their salary into their pension pots and increasing their investment risk. The increase would provide an extra £35 a month over 39 years, removing the difference in retirement incomes between men and women, which is estimated to be on average around £15,000.
IFS warns of potential pensions crisis
The Institute for Fiscal Studies has warned a pensions crisis is brewing among the pre-retirement generation, as the UK hits “peak pensioner”. A return to higher inflation or a stock market downturn could prove catastrophic for the private pension generation according to IFS director Paul Johnson. Those that are a decade from the retirement age may not even have saved enough to last until they die, Mr Johnson said. Meanwhile, it has been claimed that a government scheme to give savers a better understanding of their pensions could mislead millions of people because their records are incorrect or incomplete. According to a database of millions of pension records seen by Experian, one in eight pensions has the wrong address attached to it, while tens of thousands also have wrong names.
The Daily Telegraph, Business, Page: 1 The Daily Telegraph, Page: 10
Women face ‘glaring’ gender pension gap
Women are facing a “glaring” gender pension gap owing to career breaks to raise children and lower pay, an investment company has said. Young women aged in their late 20s or early 30s faced an 11% smaller pension pot than men by the time they retired, Fidelity International found.
Customers could pay £25k in pension fees
Analysis for the Sunday Times has found that people who take their pension pots as cash during retirement face paying more than £25,000 in fees. Hymans Robertson found some savers are paying as much as 2.5% in annual fees, and for a £100,000 pension pot cashed in during a 20-year retirement, the customer would fork out £30,036 in fees.
Rising costs hitting manufacturing growth
UK manufacturing output fell to its lowest level in a year and a half during the second-quarter, according to IHS Markit’s latest manufacturing purchasing managers’ index (PMI), which rose slightly to 54.4 in June. Some firms said that “cost increases were being exacerbated by shortages of certain raw materials”, IHS Markit said.
Freeze on fuel duty could end to fund NHS spending
The Government is considering lifting the freeze on fuel duty as part of efforts to raise funds to pay for increased public spending, according to the Guardian. An inflation-linked increase would raise £800m extra for Treasury coffers next year.
The Guardian, Page: 1, 2 Daily Mail, Page: 16
UK plc debts at record high
Debt levels among Britain’s listed companies have hit an all-time high of £390.7bn, as firms loaded up on credit to pay dividends and make investments during a period of weak profitability. Net debt has surged by £159.6bn since a low in 2011, with £122.6bn of this taken on in the last three years alone, a report by Link Asset Services revealed. Separately, UHY Hacker Young says the UK’s top 100 restaurant groups have seen debt soar 19% in the past year to £1.96bn.
The Times, Page: 40 The Independent, Page: 51 Daily Mail, Page: 74
Tech listings boom
Research from EY shows a listings boom in London is being powered by pioneering tech firms, with 17 IPOs in the second quarter of 2018 worth £2.1bn in total.
The Times, Page: 44 Daily Mail, Page: 74
BoE’s Cunliffe warns of painful outlook
Bank of England deputy governor Sir Jon Cunliffe has warned that a cocktail of risks is stirring in the global economy that could be damaging for Brexit Britain. Escalating trade wars, strains in emerging markets and a rising possibility of a Chinese credit crisis could combine into a “painful” experience for the British economy, he told the Sunday Times.
Oil and gas tax revenues pick up
Oil and gas tax revenues in the UK have gone back into the black after two years of losses, according to official figures from HMRC. Tax receipts have risen significantly to £1.1bn for 2017-18. The previous year saw a record loss of £316m.
NHS wasting £300m a year on consultants
The NHS has been urged to stop using management consultants, with researchers from the universities of Bristol and Warwick claiming £300m a year could be saved by ditching the advice, which, they claim, makes hospitals less efficient by about £10,600 a year.
Rate-setters unfazed by shake-up of GDP statistics
From next week, the ONS will release both a monthly indicator and a rolling three-month figure for UK GDP on the back of new data from VAT returns and faster processing of service sector data.
Cyberattacks inevitable, say bosses
Chief executives of some of Britain’s biggest businesses believe becoming a victim of a cyberattack is unavoidable, according to a KPMG survey. Four in 10 UK chief executives believe a cyberattack on their business is now a case of when and not if, although UK chief executives were more optimistic than their global counterparts, where 49% said that they had visualised a cyberattack.
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