News Roundup Monday 10th June 2019

NEWS ROUNDUP

TAX NEWS

Couples can cut tax bills

Mike Warburton in the Telegraph says clever financial planning could see couples save thousands of pounds in taxes by transferring assets between them. He suggests people “should not feel reticent about taking sensible steps to save tax”, saying he believes “we are entitled to play the hand we are dealt given that the Government holds all the aces by setting the rules.” Mr Warburton also notes that the first recorded example of tax avoidance saw Roman poet Virgil (70-19 BC) bury a fly on a plot of valuable land he owned, declaring it a cemetery and avoiding a land tax.

The Daily Telegraph

INDUSTRY NEWS

Accountants to ‘keep calm and carry on’ after scandals

The Telegraph’s Lucy Burton considers how accountancy firms are looking to “keep calm and carry on after a torrent of scandals”. She notes that PwC auditors are to be given “scepticism lessons”, KPMG staff are taking part in a retreat to learn how to have “challenging conversations” through role play and EY is testing workers’ happiness and productivity using psychologist Abraham Maslow’s hierarchy of needs. She notes that PwC’s efforts stop short of splitting audit and consultancy, a break-up the competition watchdog called for amid concerns about conflict of interest among the Big Four. MP Frank Field, chair of the work and pensions committee, comments: “Anything that might improve the quality of audits is, of course, to be welcomed, but this is not the radically different approach we called for.” “It is root-and-branch reform of the entire audit sector that is needed, not tinkering at the edges,” he added. Elsewhere, the Times’ Tabby Kinder also looks at the “bizarre initiatives” the Big Four are turning to, including yoga and mindfulness sessions and seeking psychological insight into how audit teams tick. Meanwhile, Ben Marlow in the Telegraph looks at the accountancy sector. He says it has “had its reputation torn to shreds by scandal and ineptitude” and points to audit failings that contributed to the collapses of Carillion, BHS and Patisserie Valerie. He also looks at the responsibilities auditors have, noting that Grant Thornton boss David Dunckley earlier this year told the Treasury Select Committee: “We’re not looking for fraud, we’re not looking at the future, we’re not giving a statement that the accounts are correct”. This, Mr Marlow notes, prompted many commentators to ask: “Then what are you meant to be doing ?”

The Daily Telegraph, Business, Page: 4 The Times, Page: 38 The Daily Telegraph, Business, Page: 2

Appetite for audit reform is strong, Tyrie warns

Lord Tyrie, chair of the Competition and Markets Authority (CMA), has warned the Big Four that appetite for reform of the audit market is “very strong” in Government. Though Rachel Reeves MP, chair of the Commons’ Business, Energy and Industrial Strategy (BEIS) Committee, asked Lord Tyrie if voluntary reforms by the Big Four went far enough, he asserted that the CMA would work with the BEIS Committee to continue to urge the Government to deliver reform, adding: “We have both go to press vigorously in order to secure a favourable response. I do persist and we will persist.”

City AM

CORPORATE NEWS

Arcadia postpones CVA vote

Arcadia Group and its advisors at Deloitte have postponed a meeting of suppliers, landlords and other creditors voting on seven CVAs until 12 June, amid reports that landlords at Aviva, M&G and Intu voted against the restructuring plans. The Telegraph reports that landlords felt aggrieved that Arcadia’s pension fund was receiving an extra £25m in cash but landlords were only being offered security over Arcadia’s existing assets and a stake in an unlisted business that was difficult to value. Creditors were asked to vote on seven separate proposals, each requiring a 75% majority to pass, although it is understood the CVAs that did secure enough backing will not require another vote. Arcadia’s plan includes closing 23 stores and cutting rents on another 194 and the company claims it risks going into administration if the restructuring does not go through.

The Times, Page: 33 The Guardian, Page: 29 Daily Mail, Page: 77 Financial Times, Page: 15 The Daily Telegraph, Business, Page: 1 Daily Mirror, Page: 17 BBC News

France backs Renault lawsuit

Renault is beginning legal proceedings after an internal audit by Mazars at Renault and Nissan identified €11m of questionable expenses at Renault-Nissan BV, a subsidiary set up by Carlos Ghosn, former boss of both Renault and Nissan. French finance minister Bruno Le Maire said the state, which holds a 15% stake in Renault, was supporting legal action against Mr Ghosn.

The Times, Business, Page: 43

Deadline for British Steel bids extended

The FT reports that the official receiver has pushed back the deadline for bids for British Steel from June 12 to June 30, giving prospective buyers more time to prepare offers.

Financial Times, Page: 20

Metalysis in administration

Tech firm Metalysis has gone into administration after financial difficulties, with Eddie Williams and Chris Petts of Grant Thornton appointed joint administrators.

Yorkshire Post, Business, Page: 3

Aviva CFO to depart

Aviva’s chief financial officer Tom Stoddard is to depart in the latest shake up under new boss Maurice Tulloch. He will be replaced on an interim basis by Jason Windsor, who is currently the CFO of the UK insurer’s UK arm.

The Times, Page: 41 City AM

FINANCIAL SERVICES NEWS

Regional jobs being created in financial services

A new report from TheCityUK has found that tens of thousands of jobs have been created away from London as part of a big shift since 2016. The trade body says the number of people employed in the financial services sector in Wales has jumped by more than a fifth – or 11,000. There has also been a 10,000 rise in the West Midlands, 12,000 in the East of England, and 24,000 in Yorkshire and Humber. In contrast, the number of financial workers in London has dropped by 10,000 since 2016, and by 32,000 across the South East of England. The research also revealed that there has been a 6,000 drop in financial services jobs in Scotland.

Daily Mirror, Page: 48 Yorkshire Post, Page: 1 The Scotsman, Page: 36

PROPERTY NEWS

One in five struggle with rent or mortgage

A report for the Affordable Housing Commission suggests that a fifth of households are struggling to afford their rent or mortgage. This equates to 4.8m households – marking an increase of more than 500,000 since 2010.

The Sun, Page: 26

ECONOMY NEWS

UK economy ‘close to stagnation’

The UK service sector hit a three-month high in May, 51.0 from 50.4 in April, according to IHS Markit and the Chartered Institute of Procurement & Supply, who cautioned that Brexit and the global slowdown are dragging on growth. The index came in at 50.9 once the manufacturing and construction industries were added in. Chris Williamson, chief business economist at IHS Markit, said: “The PMI surveys collectively indicated that the UK economy remained close to stagnation midway through the second quarter.” Analysts believe the economy will grow by 0.2% in the second quarter of the year, notes the Telegraph, down from 0.5% in the first quarter.

The Times, Page: 36 Financial Times, Page: 2 The Daily Telegraph, Business, Page: 3 City AM, Page: 6

‘Bad bank’ repays loan

UK Asset Resolution (UKAR), which runs loans granted by Northern Rock and Bradford & Bingley before their financial crisis bailouts, has repaid its £48.7bn taxpayer loan. UKAR had not expected to repay the crisis-era loan until the mid-2020s but has been able to do so more quickly by selling off packages of loans to private equity buyers.

BBC News The Times, Page: 41 The Daily Telegraph, Business, Page: 1 Yorkshire Post, Page: 4 The Sun, Page: 49 Daily Mail, Page: 77

OTHER NEWS

£10bn entertainment boom forecast

PwC has forecast that the demand for video streaming will drive a £10bn growth in the UK’s entertainment and media sector over the next five years, saying it will be worth £80bn in 2023, up from the £70bn projected for this year. PwC estimates that VR films and TV could earn the UK entertainment industry £300m by 2023, with the firm’s Mark Maitland saying: “Sales of VR units in the UK are currently modest but growing, with 2m in total sold in 2018”, adding that this is expected to rise to 3.5m units in 2023.

Daily Star, Page: 22 City AM, Page: 10

Thinking about 5G

The Telegraph’s Natasha Bernal looks at the impact 5G technology could have, citing insight from Paul Lee, global head of research for the technology, media, and telecommunications industry at Deloitte.

The Daily Telegraph, Business, Page: 5

Contact Paul Southward.

Paul Southward