News Roundup Friday afternoon 6th July 2018

NEWS ROUNDUP

TAX NEWS

CIOT concerns at HMRC’s “eagerness” to litigate

The Chartered Institute of Taxation (CIOT) has written to the Treasury Sub Committee expressing concerns at what it calls “HMRC’s eagerness to litigate despite an already overwhelming number of cases in the tax tribunal system”. Although it backs HMRC’s Litigation and Settlement Strategy (LSS) as a sensible framework for handling and resolving disputes with taxpayers, the CIOT said Alternative Dispute Resolution (ADR) should be promoted more widely as an alternative in cases that are unlikely to succeed in litigation.

Politics

Majority would pay more into NHS

A survey by the NHS Confederation has revealed that four in five people would be willing to pay more tax for a better NHS. Three quarters said they would be willing to pay more to see slight improvements while 61% said they would do so to ensure services remain at current levels.

Daily Star, Page: 2 Daily Mirror, Page: 8

20,000 fake tax websites deactivated

Over 20,000 malicious websites posing as HMRC have been taken down in the past 12 months following requests made by the taxman, an increase of 29% on the previous year.

The Birmingham Post, Page: 63

Raising fuel duty would be ‘absolute madness’, says Tory MP

Conservative MPs are resisting plans to raise fuel and alcohol duties in the Budget to pay for an increase in NHS spending, with backbenchers warning the move would hurt consumers. Tory MP Robert Halfon said it would be “absolute madness” to raise fuel duty. Some are predicting that dozens of MPs could vote against the Budget in the autumn if tax rises went too far, making it impossible for the Bill to pass the Commons.

Daily Mail, Page; 21 Financial Times, Page: 3 The Guardian, Page: 14 The Sun, Page: 16 The Daily Telegraph, Page: 6

HMRC told to go easy on Amazon

Parliament’s Treasury Committee heard yesterday that HMRC had been instructed to go easy on Amazon. Campaigner Richard Allen, from Retailers Against VAT Abuse Schemes, told MPs: “What the reason for that is I don’t know so that might be political. I can’t imagine a small business would ever be given that kind of slack.”

Daily Mirror, Page: 16

1m couples missing out on tax break

The latest figures from HMRC show three million out of the four million people eligible have claimed the so-called Marriage Allowance. The tax break, introduced in 2015, could save couples up to £238 a year and the Mail points out that because couples can claim for previous years, they could be owed as much as £900.

Daily Mail, Page: 47

Tinkler’s tax wheeze profiled

Rachel Millard profiles the case of Stobart Group’s former boss Andrew Tinkler – who is locked in a legal tussle with HMRC after he was blocked from cutting his tax bill by claiming a loss of £2.5m in his tax return for 2003-04. Tinkler, who earned £5m last year and lives in a £3m Cumbria mansion, is still appealing the decision.

This Is Money

Am I breaking UK tax rules with my French holiday home?

Gary Ashford, tax partner at Harbottle & Lewis and John Cassidy, a partner at Crowe, advise an FT reader on whether they are subject to the new ‘requirement to correct’ legislation.

INDUSTRY NEWS

ICAEW boss calls for more female CFOs

Fiona Wilkinson, ICAEW Deputy President and leader on diversity & women in leadership, argues that the accountancy profession must play its part in delivering more female CFOs. “It is not OK that only one in ten of the FTSE 100 CFOs are women. It clearly illustrates that not enough is being done in real terms. The accountancy industry must truly embrace inclusivity and diversity with all the benefits it brings to business,” she asserts.

Financial Director

Helen Brennan keen to help members thrive in interesting times

Helen Brennan, the newly elected President of the London Society of Chartered Accountants, says chartered accountants should see the current somewhat turbulent times as an opportunity rather than a threat.

ICAEW

FCA proposes new directory of financial workers to enhance transparency

The Financial Conduct Authority has proposed creating a new directory of people working in the financial sector – profiling all ranks of staff in an attempt to identify “bad apples”.

Financial Times, Page: 19

Accounting among top sectors for salary growth

A new report from CV-Library has revealed the top areas for salary growth in June. Advertised salaries for new roles across all sectors were up 1.2% in June, with accounting up by 2.3%.

City AM

Sympathy runs out for KPMG after Conviviality audit probe

The FT’s Lombard says the probe into KPMG’s work for Conviviality is not part of an indiscriminate crackdown by the FRC, hoping to save its own skin, as other auditors would have felt the heat too. Elsewhere, the Times’ leader says the recent string of investigations into Big Four audit work and the failure of companies like Carillion means it is time for the Financial Reporting Council to get tough, while the CMA should consider separating the advisory and audit practices of the four. The paper’s Patrick Hosking says the FRC is showing more curiosity as it faces the possibility of its own demise, while every “new inquiry and scalp just goes to underline how sleepy, slow and incurious they used to be.” Hosking adds that “Sir John Kingman in his review of the body needs to be unsparing in proposing new governance arrangements.”

Financial Times, Page: 19 The Times, Page: 25 The Times, Page: 35

Auditors accused of rubberstamping declarations

Amid criticism of PwC for signing off BHS’s accounts days before it was sold for £1 by Sir Philip Green, Frank Field MP, the chairman of the work and pensions committee, has accused accountants of failing to challenge big companies on their financial declarations. In a letter to Financial Reporting Council CEO Stephen Haddrill, Field said what PwC had done was not an isolated incident, adding that there were “insufficient levels of challenge from auditors”.

The Times, Page: 44

SMEs NEWS

HBOS fraud victims accepting compensation

The Commons’ Treasury Select Committee is today expected to reveal that over 50 of the 70 victims claiming redress for the HBOS Lloyds Banking Group fraud scandal have accepted some form of compensation. Though Lloyds initially set aside £100m to compensate victims, some estimates put the total losses at £1bn after struggling small businesses were loaded with unmanageable amounts of debt before being taken over and asset-stripped.

City AM Financial Times, Page: 13

Demand for finance falls

A new study from the British Chambers of Commerce (BCC) and Wesleyan Bank shows that 56% of British companies did not attempt to apply for finance in the past year, with 63% of small firms saying they did not seek finance. Limited investment intentions and weakened cash flow were cited as key contributors to the lack of demand for finance. Only 4% of those companies that did apply for funding used crowdfunding, peer-to-peer or angel finance options. The BCC said the results demonstrated the need to increase competition in banking, raise awareness of alternative finance options, and ensure the British Business Bank has sufficient funding to support promising firms.

The Scotsman, Page: 35

Entrepreneurs twice as likely to be non-white British

People from ethnic minority and immigrant backgrounds are twice as likely as their white British counterparts to start their own business, James Hurley reports. Research by Aston University in Birmingham found the gap between the stronger inclination for entrepreneurship among immigrants and ethnic minority Britons and the lower levels seen among white British people has “widened substantially since 2008”. Ethnic minorities and immigrants were found to be more likely to count “carrying on a family tradition” as a reason for running their own business than white Britons.

The Times, Page: 43

PENSIONS NEWS

Pensions equalisation lawsuit for Lloyds

Unions have warned that Lloyds could see a lawsuit by its pension scheme members regarding ‘Guaranteed Minimum Pensions’, which could result in a £20bn bill for thousands of other businesses.

Financial Times

Middle classes breaching lifetime allowance

Experts estimate as many as 500,000 savers could be at risk of falling foul of the lifetime pension allowance trap. Research for the Mail has found many workers whose salaries have risen to about £80,000 are breaching the £1.03m allowance, pumping an extra £70m into Treasury coffers. Tom Selby, senior analyst at AJ Bell, says: “The reality is many workers with final-salary schemes have no idea their pension is worth anywhere near £1m, so there is a risk they will be caught out and face a whopping tax charge.”

Daily Mail, Page: 48

PROPERTY NEWS

High street report urges rates rethink

Bill Grimsey, former boss of Iceland and DIY chains Wickes and Focus, has urged ministers to consider abolishing the “hated and out-of-date” business rates system in a bid to revive the high street. He also called for “decisive action” from local authorities, saying they should be given more power to penalise landlords who leave shops empty. His independent review warns that 100,000 shops could be left empty within a decade. Meanwhile, the British Retail Consortium has called for a two-year freeze on business rates and a town centre policy review.

The Daily Telegraph, Business, Page: 1 Financial Times, Page: 2 Daily Mail, Page: 18 The Guardian, Page: 2

CORPORATE NEWS

Calvetron Brands ceases trading

Jacques Vert and Precis-owner Calvetron Brands is to cease trading, with the loss of around 840 jobs and Duff & Phelps appointed as administrators. Its previous incarnation, Style Group Brands, went into administration in 2017 but was bought out in a pre-pack deal by former Jaeger-owner Harold Tillman.

City AM The Times, Page: 41 The Guardian, Page: 35 Daily Mail, Page: 75

Compass FD to leave

Compass Group FD Johnny Thomson is stepping down at the end of this year after missing out on the CEO role. Thomson received a total pay packet of £2.1m last year and has been at Compass for the past nine years.

The Daily Telegraph, Business, Page: 7 The Times, Page: 42 Yorkshire Post, Business, Page: 3

Union goes to court over Carillion workers

Unite has launched legal action on behalf of 27 workers who were made redundant following the collapse of engineering giant Carillion, claiming they and the rest of their company’s employees were dismissed by liquidators PwC without consultation.

The Independent, Page: 68 The Daily Telegraph, Business, Page: 5

Russo goes to Wilko

Wilko has hired Asda’s CFO Alex Russo as its new top accountant. Russo, who has been finance chief at the grocer for five years, will be replaced by former Amazon UK finance chief Rob McWilliam.

Daily Mail, Page: 64 City AM, Page: 10

INTERNATIONAL NEWS

Malaysian ex-PM charged in corruption case

Former Malaysia n premier Najib Razak has now been officially charged with criminal breach of trust and abuse of power in relation to the 1MDB corruption case.

Financial Times

Supreme Court online tax ruling boosts accountants

American accountants, tax consultants and software companies are set to reap the benefits of new state levies on ecommerce businesses as smaller firms are forced to pay out for compliance.

Financial Times, Page: 16

Former Malaysian premier arrested over 1MDB scandal

Najib Razak, the former Prime Minister of Malaysia, has been arrested in connection with a probe into missing money from the 1MDB state fund. Last month, KPMG told 1MDB that its audits do not provide an accurate picture and should not be relied upon.

City AM Financial Times

Auditing watchdogs should remind the Big Four of their public duty

Former PCAOB member Steve Harris says PwC’s $635m fine for its Colonial Bank failures is further evidence that large reforms are needed in the audit sector.

Financial Times, Page: 11

ECONOMY NEWS

Services sector growth boosts rate hike potential

Britain’s services sector has hit its highest level since October 2017, according to closely followed data firm IHS Markit, boosting the potential of a Bank of England rate hike in August. Its services purchasing managers’ index (PMI) hit a seasonally adjusted reading of 55.1 in June.

The Guardian, Page: 35 Financial Times, Page: 2 Daily Express, Page: 6 The Times, Page: 38 The Daily Telegraph, Business, Page: 3

Pub sector set for return to growth

Pubs are set for a resurgence after years of closures as consumers develop a taste for craft beers and spirits, according to a report from BDO. High-quality pubs are once again attracting the interest of investors as the booming industry in craft beer and gin particularly continues to attract consumers and create strong returns, BDO’s Restaurants and Bars Report said.

The Scotsman, Page: 21 Yorkshire Post, Page: 5

Construction output growth hits seven-month high

New figures show that the UK’s construction sector reported its sharpest rise in output since November of last year. IHS Markit’s monthly purchasing managers’ index (PMI) came in at 53.1 in June, up from 52.5 in May and above the 50.0 no-change value for the third month in a row.

Financial Times The Times The Guardian, Page: 33

OTHER NEWS

Malaysian ex-PM charged in corruption case

Former Malaysia n premier Najib Razak has now been officially charged with criminal breach of trust and abuse of power in relation to the 1MDB corruption case.

Financial Times

Diesel car sales ‘to plummet’

Diesel-powered vehicles are expected to fall to just 5% of the EU car market by 2030, according to a new study by AlixPartners, which says declines will accelerate sharply. Diesels share of the European market has already fallen from 52% to 45% between 2015 and 2017, the firm says.

BBC News

Directors banned over MTIC fraud schemes

The Insolvency Service has banned two directors, Nadeem Ahmed and Ulhaque Ahtamad, who involved their firms in complex VAT scams in an attempt to cheat HMRC out of millions. The two were involved in complex Missing Trader Intracommunity (MTIC) fraud schemes, which involve artificially extended trading chains.

Gov

 Contact Paul Southward if you have any queries

Paul Southward