News Roundup Monday 11th November 2019
News Roundup Monday 11th November 2019
WEEKEND NEWS ROUNDUP
TAX WEEKEND NEWS ROUNDUP
OECD proposes global minimum corporate tax rate
New proposals from the OECD would see large multinationals pay a global minimum level of corporate taxation, even if other countries have offered them extremely low tax rates. The move forms the second part of a review of global tax policy by the Paris-based organisation – the OECD last month proposed a system whereby countries could tax operations in their jurisdiction even if companies have no physical presence there. The two proposals aim to eliminate base erosion and profit shifting and the incentive for countries to offer low tax rates. The Times’s Simon Duke says a levelling of the playing field would bring gains for us all: “The importance of upholding the integrity of the tax system cannot be overstated. If the likes of Amazon and Uber can enjoy the fruits of publicly funded infrastructure, such as roads, schools and hospitals, while paying minimal taxes, why should the rest of us pay our fair share?”
Wealthy set up safe haven accounts ahead of General Election
The Telegraph’s Harry Brennan says wealth advisers have been dealing with an uptick of inquiries into offshore money transfers ahead of the General Election, with savers fearing a Corbyn-led Labour government would introduce exchange controls following a dramatic fall in the pound should they win. Mr Brennan adds that the exodus of cash would come on top of the loss of billions of pounds in tax revenues from wealthy “non ? doms” and the massive drain on the nation’s finances caused by Labour’s spending policies. The FT runs a similar piece: wealth managers report a shift from equities to cash; clients are bringing forward dividends, bonuses and capital gains and plans to gift cash to children.
Tory tax cut hopes run up against party budget rules
The Institute for Fiscal Studies has said there would be barely any surplus in the current budget, after already-pledged spending increases are accounted for, to enable Boris Johnson to offer tax cuts in the Conservative manifesto. The Times reports that the Tories are poised to abandon proposals to increase the threshold at which people start to pay the 40p income tax rate from £50,000 to £80,000 with the PM instead expected to focus on lifting the threshold at which people start paying national insurance, which is currently £8,632, possibly increasing it to £12,500.
Sajid Javid unveils the “true cost of Corbyn”
The Conservatives claim Labour’s spending pledges will cost £1.2trn over a five-year parliament with the Chancellor, Sajid Javid, describing the calculations as the “true cost of Corbyn”. Taxes, he said, would be set at the “highest level we’ve ever seen in peacetime” while Labour’s “truly frightening” plans would “plunge us back into an economic crisis”. The Tories claim Labour would increase government spending by 30% overall. David Smith suggests in the Sunday Times that the effort the Tories have put into the costings shows a nervousness about how its own spending plans will go down with voters.
Luke Johnson: The UK’s onerous tax code must be simplified
Writing in the Sunday Times, Luke Johnson says amidst claims the EU is to blame for burdensome regulations it is the UK’s own fault that it has a tax code 22,000 pages long. The chairman of Risk Capital Partners who backed Leave in the 2016 referendum points to Hong Kong which has a tax code of just 350 pages, lower taxes and higher GDP per capita. “British politicians and civil servants have added layer upon layer to our tax system to extract more money from citizens through more complex devices. There are too many allowances and reliefs, and areas such as VAT, capital gains tax, national insurance, inheritance tax and the taxation of pensions are fiendishly convoluted.” The Office of Tax Simplification has obviously failed, he adds.
Corbyn’s City raid mastermind a fan of tax havens
Jeremy Corbyn’s financial services policy guru, Professor Avinash Persaud, is revealed by the Sunday Telegraph to be an advocate of tax havens. The shadow chancellor last month indicated that work on a financial transaction tax by Prof Persaud’s consultancy, Intelligence Capital, would act as a blueprint under a Corbyn government. But Prof Persaud has also called attacks on offshore havens “illegitimate” and accused the EU of “gross discriminatory bullying” after it blacklisted countries over tax transparency. He is also a director at Elara Capital, an investment bank that has most of its funds based in Mauritius and Bermuda. The Telegraph suggests Elara’s structures “appear counter to Labour doctrine under Mr Corbyn.”
CORPORATE NEWS ROUNDUP
Budget airlines buy Thomas Cook slots
Easyjet and Jet2.com have bought prime take-off and landing slots at London Gatwick and Manchester airports from Thomas Cook, which was placed into liquidation at the end of September after failing to secure a £1.1bn rescue deal with lenders and shareholders. The Government’s official receiver is running the insolvency with AlixPartners and KPMG assisting.
Mamas & Papas bought back in pre-pack deal
Bluegem Capital has bought back the assets of Mamas & Papas through a pre-pack administration deal after the maternity chain failed. Six unprofitable stores will be closed affecting 73 staff while operations at its Huddersfield head office are set to be reviewed. Its remaining 21 stores will continue to trade as normal. The administration is being conducted by Deloitte.
The Daily Telegraph, Business, Page: 37 The Sun, Page: 48 The Guardian, Page: 44 The Scotsman, Page: 9
Clintons to close one in five stores
Greetings card chain Clintons has told landlords that 66 out of 332 sites have been earmarked for closure, while it will attempt to negotiate cheaper rent on more than 200 of the remainder. Clintons also hopes to renegotiate key supplier contracts and creditors, including suppliers, are expected to vote on the proposals early next month. Restructuring documents seen by the Sunday Telegraph said: “Approximately 90 of the company’s stores are currently loss-making with the business forecasting that sales will continue to decline.” A Clintons spokesman said: “Discussions are continuing with our landlords but no decisions have been made.”
Harland and Wolff saved
InfraStrata, an AIM-listed company that has agreed to buy the historic shipyard Harland and Wolff, will tap investors for the money on Monday via a share placing. It is understood to have signed a conditional contract to buy Harland and Wolff from administrator BDO in a £6m deal.
SMEs WEEKEND NEWS ROUNDUP
Bank switching incentives rejected
The Treasury could intervene in the process to shift small businesses away from Royal Bank of Scotland after the scheme saw a slump in interest from small business customers to switch to rival lenders. RBS was ordered to transfer 120,000 small business customers by the European Commission after receiving a £46bn taxpayer funded bailout in 2008 and 2009. Small banks including Metro, Starling, Santander, Co-operative and TSB, have signed up to the switching scheme but many say their efforts have been met with apathy, owing to the bureaucracy involved in changing bank and the incentives not being strong enough.
Corporates persuaded to work with SMEs to improve Britain’s productivity
A project run by government-funded productivity programme Be the Business hopes to sign up 100 large corporates to a scheme designed to boost the output of Britain’s workforce. Large companies including Amazon, Google, BAE Systems and Rolls-Royce will promise to boost the UK’s productivity by encouraging greater adoption of tech skills among their suppliers and offering mentoring programmes for managers. Sir Charlie Mayfield, chairman of the retailer John Lewis and Be the Business, said: “Years of political uncertainty cannot be allowed to stall the economic growth we’re seeing across the country. While the government has an important role to play in improving productivity, it can’t be done by government for business. We can’t outsource it. Businesses really need to step up.”
Funding Circle diverting borrowers to rivals
Funding Circle is referring borrowers seeking £500,000 or more to rivals such as Iwoca and MarketInvoice as well as traditional banks including BNP Paribas. A source close to the peer-to-peer lender said the decision was made as a way to help those borrowers instead of turning them away.
PROPERTY WEEKEND NEWS ROUNDUP
Common sense victory over the taxman
A seller who took HMRC to court after being hit with a £60,000 CGT bill covering a period before the property was built has won his case. Desmond Higgins bought the two-bedroom flat in 2004, moved in when it was completed in 2010, and sold it in 2012. HMRC said that Higgins had not been eligible for private residence tax relief because he did not live there from 2004 to 2010 but Higgins argued that he could not have lived there before 2010 because it did not exist. In the Court of Appeal verdict Lord Justice Newey upheld Higgins’s appeal and ruled that the taxman should only be allowed to register a “gain” from the time a new-build sale was completed. Tim Stovold of Moore Kingston Smith, said: “This ruling restores common sense to this aspect of the tax system.”
Landlords could get tax breaks to sell to tenants
The Conservatives are considering exempting landlords from capital gains tax if they sell homes to existing tenants, the Telegraph reports. Boris Johnson’s team have been weighing the possible manifesto pledge designed to help private renters onto the property ladder.
PENSIONS WEEKEND NEWS ROUNDUP
Emergency tax reclaimed hits record high
The amount of “emergency tax” reclaimed by savers withdrawing money from their pensions totalled £54m in the three months to September 30, the highest quarterly figure since pension freedoms were introduced in 2015. Royal London director of policy Steve Webb said HMRC has snubbed calls for an overhaul from the Office of Tax Simplification: “It cannot be right that tens of thousands of people each year have too much tax taken out of their pension and then have the hassle of filling in a form to get back money that is rightfully theirs.”
Sunday Express, Page: 46
Doctors dismiss pensions sticking plaster
A plan to offer NHS doctors flexible pension contributions has been poorly received with only 13% of members of the Hospital Consultants and Specialists Association saying they would take advantage of the scheme. Claudia Paoloni, HCSA’s president, said that without more radical pension reform “these well-meaning proposals are set to fail”. Elsewhere, the Association of Specialist Medical Accountants recently told ministers that flexibilities amounted to “uninformed tinkering”.
The Observer, Page: 32
PERSONAL FINANCE WEEKEND NEWS ROUNDUP
Top 100 Financial Advisers
Quilter made it to the top spot of FT‘s Top 100 Financial Advisers list for 2019, jumping five places since last year. The other firms to make the top 10 were Close Brothers Asset Management, Grant Thornton, Wilfred T Fry, Mazars Financial Planning, Charles Stanley, Progeny Wealth, St James’s Place Wealth Management, Tenet and LEBC Group. The FT carries pieces on finding financial advisers you can trust; how to get the most out of them and the pros and cons of using financial advice services which rely on artificial intelligence.
ECONOMY WEEKEND NEWS ROUNDUP
Moody’s lowers UK credit outlook to negative on Brexit ‘paralysis’
Moody’s has lowered the UK’s credit outlook to negative, arguing that the gridlock over Brexit had diminished the UK’s institutional framework. “It would be optimistic to assume that the previously cohesive, predictable approach to legislation and policymaking in the UK will return once Brexit is no longer a contentious issue, however that is achieved,” the ratings agency said.
July rescues UK from recession
The Office for National Statistics is expected to say on Monday that third quarter GDP grew by 0.4% dispelling fears Britain was about to sink into recession for the first time since 2008. Howard Archer, chief economic adviser to the EY ITEM Club, said: “The UK economy likely returned to clear growth in the third quarter […] However this will overstate the underlying strength of the economy and was highly dependent on a spike in activity in July. Activity eased back in August and the economy seemed to have a difficult September, thereby carrying little momentum into the fourth quarter.” On Tuesday, the ONS is expected to say the jobs market is slowing, with the number in work falling by 90,000 over the three months to the end of September; but the unemployment rate is expected to stay at 3.9%.
Sunday Express, Page: 43
OTHER WEEKEND NEWS ROUNDUP
Britain’s billionaires take £16bn hit
A report from UBS and PwC reveals Britain’s 54 billionaires have seen more than £16bn wiped off their fortune, after a strong dollar and volatile stock markets caused the wealth of the world’s richest people to shrink for the first time in five years. The report shows the fortunes of the world’s richest 2,101 people dropped by more than £300bn, or 4%, to £6.6trn in 2018 as the number of billionaires fell by 57. Josef Stadler, head of the ultra-high net worth unit at UBS, defended billionaires, saying they outperform other corporate leaders and that the media is bias against them.
Labour’s socialism would take Britain back to 1970s
The Express talks to Duncan Simpson of the TaxPayers’ Alliance again, who this time warns of a return to the suffering of the 1970s if a Corbyn-led Labour government came to power. Mr Simpson warned that Labour’s plans to enlarge the state and beef up the unions would lead to rubbish piling up and the country held to ransom. Mr Simpson talks about the group’s Stand Against Socialism campaign which seeks to make the case that it’s generally up to individuals and not the state to make decisions.
Corbyn will trigger wealth exodus
Nigel Green, chief executive of the deVere Group, one of the world’s largest independent financial advisory organisations, has said that a Jeremy Corbyn government would lead to an “exodus of the country’s most successful and wealthiest individuals”. He adds: “Soaking the rich doesn’t work because these people, typically, have the resources to move to lower tax jurisdictions if the tax burden in the UK becomes too great. They are internationally mobile.” Mr Green said Labour should instead incentivise top achievers who prop up the economy. “However, I suspect that implementing this economically-sound philosophy would be political suicide for Jeremy Corbyn,” Mr Green concluded.
Dodd never liked paying taxes
An extract from Louis Barfe’s biography of comedian Ken Dodd recounts his encounters with accountants and the taxman. Dodd was accused in the 80s of being a common-law cheat and of false accounting with his defence arguing that Grant Thornton, which had carried out an audit of his finances, had failed to warn Dodd about the danger of a criminal prosecution if he failed to declare all his assets. Dodd was eventually cleared. Barfe notes that Dodd beat his old foe again on his deathbed by marrying Anne Jones, meaning not one penny of his vast fortune, revealed in February this year to be £27.7m, would go to the taxman.
The Mail on Sunday, Page: 32-34
Contact Paul Southward