News Roundup Friday 6th September 2019
News Roundup Friday 6th September 2019
PM to order review of loan charge
The Prime Minister has promised to launch a review into the loan charge. The All-Party Parliamentary Group on the Loan Charge (APPG) argues that the charge is retrospective and overrides taxpayer protections. Ross Thomson, the vice chairman of the APPG, raised the issue during Prime Minister’s question time, noting that over 8,000 people have signed a petition relating to the controversial charge and asking Boris Johnson “what urgent action his Government will be taking to address this.” Mr Johnson said the loan charge is “a very, very difficult issue,” adding: “What I have undertaken to do is to have a thorough-going review of the matter”. Campaigners at the Loan Charge Action Group welcomed the review but added that it needs to be independent of HMRC and include a suspension of the policy.
Yorkshire Post, Business, Page: 1 Financial Times
Researchers sweet on snack tax
Researchers at the London School of Hygiene and Tropical Medicine and Cambridge University say a tax on snacks could do more to tackle obesity than the levy on sugary drinks. Writing in the British Medical Journal, the researchers say a tax of 20% on biscuits, cakes and sweets could cut obesity from about 28% to 25%.
Daily Mirror, Page: 22 The Guardian, Page: 28 Yorkshire Post, Page: 10
Labour tax plans questioned
Ross Clark in the Sun looks at what a potential Labour government and its proposed policies could mean, questioning shadow Chancellor John McDonnell’s tax plans. Mr Clark notes that in Labour’s 2017 manifesto, Mr McDonnell said that reversing corporation tax cuts would raise £19bn, but counters that “tax doesn’t work like that”. He considers a plan that would increase income tax for the top 10% of earners, with the top rate hitting 50%, adding that Mr McDonnell has previously expressed approval of 20% wealth tax that would hit the wealthiest 10% of the population.
The Sun, Page: 10
SMEs hit by late payments
Research from Hitachi Capital UK shows that late payments are costing SMEs an estimated £51.5bn. A survey of owners found that almost a third of SMEs have experienced late payments costing their business at least £10,000 in the last 12 months. More than one in four have experienced a profit squeeze because of late payments, and 12% have had to defer staff pay, equating to an estimated 1.95m employees seeing pay delays. Hitachi Capital CEO Robert Gordon said: “An imbalance of power between clients and suppliers, often driven by larger players abusing their position, has led to a widespread late payment culture that is damaging UK SMEs.”
The Independent, Page: 59
FSB: Business finance council needs SME input
The Federation of Small Businesses (FSB) has welcomed the creation of the Government’s new business finance council, but says SMEs must be given “a seat at the table”. FSB chairman Mike Cherry said while the council was “undoubtedly needed”, it would require “direct input from firms on the ground”. With a no-deal Brexit possible, Mr Cherry commented: “If we do suffer from a downturn in the months ahead – as a number of forecasters predict – we need reassurances that the banks are not going to turn off the taps for small firms as they did during the financial crash.” Warning that the financial crisis led to “thousands of small business banking horror stories”, Mr Cherry insisted: “We can’t have those same mistakes repeated.” The council will be co-chaired by Business Secretary Andrea Leadsom and Economic Secretary to the Treasury John Glen and include Small Business Minister Kelly Tolhu rst, as well as senior representatives from banks and alternative lenders.
The Daily Telegraph, Business, Page: 1 The Times, Page: 42 City AM
PERSONAL FINANCE NEWS
211k NHS staff turn down pensions
Health Minister Chris Skidmore has revealed that 211,485 NHS staff have opted out of the health service pension in the past five years. The pension scheme has made headlines in recent months as senior staff have been hit with huge tax bills after pay rises pushed them over the threshold for annual contributions. Steve Cameron of pension company Aegon said those who opted out over the past five years were likely to have been motivated by the high cost of contributions, with the impact of the annual allowance changes likely to be more apparent this year.
Interim Arcadia chairman steps down
Interim chairman Jamie Drummond-Smith has stepped down from Sir Philip Green’s Arcadia retail empire. Mr Drummond-Smith’s departure follows COO David Shepherd’s resignation earlier this week. A former partner at Deloitte, Mr Drummond-Smith joined in April to oversee Arcadia’s restructuring plan.
Oil and gas M&A deals at five-year low
Data collated by KPMG shows M&A transactions in the oil and gas sector have sunk to their lowest global level since the 2014 oil price crash. Figures show the volume of completed corporate oilfield services deals more than halved to 37 in the first half of 2019.
The Scotsman, Page: 37 City AM, Page: 11
Landlord challenges retailer’s CVA
Landlord British Land has launched a legal challenge to Monsoon Accessorize’s restructuring plan, challenging a CVA which would see rents cut by between 25% and 65% across 135 of Monsoon Accessorize’s 258 shops. British Land voted against the CVA which was supported by more than 90% of creditors in July.
The Times, Page: 43 The I, Page: 45
Demand for staff weakest in seven years
A report by the Recruitment & Employment Confederation (REC) and KPMG shows that permanent appointments declined at their fastest pace in more than three years in August. The analysis of data from around 400 UK recruitment and employment consultancies shows that advertised vacancies for both permanent and temporary jobs increased at “the weakest pace since the start of 2012”. James Stewart, vice-chairman at KPMG, said: “Brexit uncertainty continues to take its toll on the jobs market, evident by the quickest drop in permanent placements in over three years as employers delay hiring staff.” REC CEO Neil Carberry, who noted that permanent placements have dropped for six consecutive months, commented: “Much rests on business confidence – the confidence to invest, to hire someone, to try something new – and it’s clear that things are getting harder.”
The Daily Telegraph, Business, Page: 7 The Times, Page: 36 The Independent, Page: 53 The I, Page: 44 Daily Mirror, Page: 51 City AM, Page: 4
A report from Deloitte shows that 8% of companies have deployed over 50 cases of automation this year, twice as many as in 2018, with 58% of organisations worldwide having implemented some form of automation. Deloitte partner David Wright, noting previous research by Deloitte which suggests technological advances will lead to a net gain in employment, comments: “While new roles will be created to work in tandem with machines, there will be a greater demand for more strategic and creative thinking which only humans can bring.”
City AM, Page: 12
British bankers in German fraud trial
British investment bankers Martin Shields and Nicholas Diable have gone on trial in Bonn, accused of having defrauded the German state of €447.5m in lost tax. Charges centre on 34 instances of serious tax fraud between 2006 and 2011, when the men worked in London as stock traders for Germany’s fourth largest bank, HypoVereinsbank, and then for investment fund Ballance Capita. The accusations relate to cum-ex trading schemes, a practice that was blocked when legislators closed loopholes making such schemes possible in 2012.
The Guardian, Page: 22 Financial Times, Page: 6
Tribunal rules against Inmarsat tax claim
Inmarsat has lost a First Tier Tribunal case against HMRC, with the tribunal ruling that no tax deduction was available for costs related to satellites launched in the 1990s. Inmarsat, which has set aside £82m plus interest to cover its costs, will consider whether to appeal.
The Daily Telegraph, Business, Page: 7
Football agent faces fraud charges
Scottish football agent Willie McKay appeared at Manchester Magistrates’ Court yesterday over charges he spent £54,000 on a new car and £9,000 on a watch for his wife despite owing £902,000 to HMRC in unpaid tax and interest. Mr McKay, who denies two charges under the Insolvency Act, entered not guilty pleas before the hearing was adjourned until next month. Outside court Mr McKay, who was involved in the transfer of Emiliano Sala to Cardiff City before the striker died in a plane crash in January, claimed he was the victim of a “witch hunt”.
The Daily Telegraph, Sport, Page: 13 Daily Mail, Page: 83
Fraud a family affair
Father and son Geoffrey and Philip Butchers have been handed jail sentences after an investigation into a £1.5m VAT fraud. The men, who ran businesses that bought and sold horse boxes, failed to declare any sales and lied about the true value of sales on a second business they set up in 2015. Geoffrey, who pleaded guilty to VAT fraud, has been jailed for 26 months, while Phillip was handed a 20-month prison sentence suspended for two years after he pleaded guilty to money laundering charges. HMRC says it will do “all we can” to recover the money the pair stole.
Services growth slows close to recession
Growth in the services sector slowed in August, taking the UK another step towards recession. The IHS Markit/CIPS UK Purchasing Managers’ Index (PMI) dropped to 50.6 in the month, down from 51.4 in July on an index on which any figure under 50 indicates a contraction. Business confidence about the next 12 months in the service sector dropped to its lowest point since July 2016. IHS Markit’s chief business economist Chris Williamson said: “After surveys indicated that both manufacturing and construction remained in deep downturns in August, the lack of any meaningful growth in the service sector raises the likelihood that the UK economy is slipping into recession.” Taken together with the all-sector PMIs for July and June, the readings suggest a 0.1% contraction in GDP over the last three months. With the economy shrinking 0.2% in Q2 2019, contraction in Q3 would mean the country is in recession.
Chancellor declares end of austerity
Chancellor Sajid Javid yesterday declared the end of austerity and revealed £13.8bn of investment in areas including health, education and policing, saying every government department has had its budget for day to day spending increased “at least in line with inflation.” Mr Javid said a 4.1% rise in real-terms day-to-day spending is the biggest increase in 15 years. Public spending will rise to 38.6% of GDP in 2020/21, up from 38.1% last year and 38.3% this year. The announcement includes a £6.2bn increase in NHS funding; a £7.1bn boost for education spending by 2022/23; £750m for recruiting 20,000 new police officers; a 6.3% increase for Home Office spending; a 2.6% boost for the Ministry of Defence; and confirmation of an additional £2bn in Brexit preparation funding. Paul Johnson, director of the Institute for Fiscal Studies (IFS), said Mr Javid’s plan marked a “real change in direction on spending,” although the IFS said spending would still be 3% below its level a decade ago, and more than 9% lower in per person terms.
Carney pulls back on worst-case scenario
Bank of England (BoE) Governor Mark Carney has told the Treasury Select Committee that the worst-case scenario for a no-deal Brexit is less severe than the Bank had previously feared. Where last November the BoE had suggested there would be a peak-to-trough 8% decline in GDP, Mr Carney said the worst-case “no-deal, no-transition” scenario would be likely to see the economy shrink by 5.5%. He said unemployment would climb to 7% and inflation climb to 5.25%, down from 7.5% and 6.5%, respectively.
The Guardian, Page: 37 Financial Times, Page: 2 The Daily Telegraph, Business, Page: 8 The I, Page: 38 The Independent, Page: 13
Domestic orders decline
A report from trade body Make UK and BDO shows that domestic orders in the UK manufacturing sector declined in the third quarter for the first time in three years, while growth in export orders also weakened. The report, based on a survey of 292 companies between July 31 and August 21 also found that investment intentions turned negative for the first time in three years. It said: “Ominously, companies are cutting back on investment in transport equipment, factory machinery, and IT, just at the point in the economic cycle when spending would normally increase.” A statement from BDO head of manufacturing Tom Lawton and Make UK chief economist Seamus Nevin said: “On current trends the economy, and the manufacturing sector in particular, looks headed towards a very challenging winter.”
The Times, Page: 44 The Independent, Page: 59 Daily Mail Yorkshire Post, Business, Page: 5
No-deal bill a ‘chink of light’ for business
The head of the Confederation of British Industry (CBI), Carolyn Fairbairn, has said that progress in passing a bill to stop a no-deal Brexit in parliament has been a “chink of light” for UK business. However, she said that the “cloud has not gone away” for companies until a deal was agreed. As a result, Ms Fairbairn said, many businesses would continue to prepare for a potential no-deal. “So many businesses are stockpiling for 31 October in the same way they did for 29 March at enormous cost and expense,” she said. The CBI has previously said leaving the EU with a deal is essential to protect the economy and jobs.
The pound has rallied to its biggest two-day surge in 10 months as fears over a no deal Brexit on October 31 eased. This came on the back of two defeats for Boris Johnson in the House of Commons, with MPs voting in favour of a Bill designed to block a no-deal Brexit, while a separate vote saw the Prime Minister’s call for an early general election rejected. Sterling gained more than half-a-percent on the euro to stand at €1.1161 by 4pm yesterday, having reached a high of €1.1169 at around midday. It also rose 0.8% against the US dollar to $1.2349, building on Wednesday’s 1.4% climb – its biggest one-day jump since March.
High street sales fall 0.1%
A report from BDO shows that sales on the high street fell 0.1% in August, pointing to a “calamitous” fall in sales in the final week as hot weather prompted shoppers to stay away from high street stores.
The I, Page: 46 Daily Mirror, Page: 51 The Sun, Page: 47 City AM, Page: 6
A levy to wine about
A report by the Social Market Foundation think-tank shows that wine drinkers pay up to seven times more alcohol duty per glass than cider drinkers. Those opting for low-strength wine – that with 6% alcohol content – pay 50p duty per unit compared with 7p per unit for cider with the same strength of alcohol, with EU regulations meaning the beverages are taxed on volume rather than strength. The think-tank has suggested a post-Brexit rethink on the duty so the stronger the drink, the more tax it incurs. Scott Corfe, the report’s author, said: “The way we tax alcohol is a mess,” pointing to “inconsistent, irrational duty rates”.
The Daily Telegraph, Page: 13 The Times, Page: 12
Football revenue gap expands
Analysis by Deloitte shows that the gap in total revenues between clubs in the big five football leagues – England, Spain, Italy, Germany and France – and those in the other 50 top-tier European leagues combined grew from £3.7bn in 2007/08 to £8.6bn in 2016/17.
The Times, Sport, Page: 60
Contact Paul Southward.