News Roundup Monday 13th August 2018
News Roundup Monday 13th August 2018
Hammond considers ‘Amazon tax’ for online retailers
Philip Hammond is considering introducing a so-called “Amazon tax” that would impose charges on online retailers in an attempt to save Britain’s struggling high street. He revealed the plans on the day that House of Fraser became the latest British retailer to collapse into administration. The chancellor said: “We want to ensure… that taxation is fair between businesses doing business the traditional way, and those doing business online. We may have to look at temporary tax measures to rebalance the playing field until we can get international agreements sorted out.” Mr Hammond added that the EU had discussed plans to tax online platform businesses based on the value they generate. “That’s certainly something we’d be prepared to consider,” he said. Amazon paid just £4.5m in corporation tax in 2017, despite soaring UK sales of close to £2bn. However, John O’Connell, of the TaxPayers’ Alliance, said: “The notion of a level playing field is merely a fig leaf. It’s ludicrous to think that the answer to this problem is more taxes.”
The Times, Page: 1, 4 Financial Times, Page: 2 The Daily Telegraph, Page: 1 Daily Mail, Page: 4 The Guardian, Page: 1 Daily Express, Page: 8-9 The Independent, Page: 16 The I, Page: 1 Daily Mirror, Page: 1 The Sun, Page: 6
Tax rules ‘impossible to fathom’
Solicitors and accountants have warned that the rules covering stamp duty and inheritance tax have become so complicated that increasing numbers of people are paying too much or too little tax. Christina Blacklaws, the president of the Law Society of England and Wales, says: “Solicitors have been frank that guidance is overly convoluted and ambiguous. Exemptions have been introduced in an effort to make these taxes fairer, but HMRC’s own figures show that the approach is not working.” David Hannah, founder of Cornerstone Tax, comments: “Instances of stamp duty miscalculation by property buyers and their advisers continue to appear at an alarming rate.” Meanwhile, Kieran Bowe, a partner at Russell-Cooke Solicitors, suggests: “The role of an executor has become increasingly complex and burdensome. They will need to navigate their way through the estate’s tax obligations. It will be clear to many that inheritance tax may be payable, but often executors do not consider whether the estate should be registered with HMRC under its new reporting rules.”
Time to overhaul tax for the 21st century
An Economist leader argues that global tax systems need to be reshaped so that they are fit for the 21st century. It says windfall gains in property should be an obvious source of revenue, yet property taxes have stayed roughly constant at 6% of government revenues in rich countries. Tax systems have also failed to adapt to technological change, according to the paper. It says the rising importance of intellectual property means that it is almost impossible to pin down where a multinational really makes money, with tech giants paying too little tax as a result. It concludes that all countries should tax both property and inheritance more: “A conservative first step would be to roll back recent cuts to inheritance tax. A more radical approach would be to introduce a land-value tax”.
Freelance tax feud continues
The continuing dispute between freelance workers, MPs and HMRC has continued to deepen after a tax expert questioned the Revenue’s grasp of its own rules over payments to workers accused of using tax avoidance schemes. HMRC is chasing £1bn in unpaid tax from freelance workers who had their wages paid to schemes such as employee benefits trusts which then paid them via “non-repayable loans”. However, Andy Wood, founder of Enterprise Tax Consultants, who is representing 50 freelance workers, has said that the loans are genuine loans, not income, and therefore not taxable.
Expats warned of increased fines
British expats who maintain ties to the UK say they have been sent “overtly aggressive” letters by HMRC, warning that they face fines of up to 200% from October 1st if they fail to declare any income.
The Daily Telegraph, Money, Page: 1
SNP wants inheritance tax control
The Treasury is facing calls to transfer control over IHT to Holyrood in an effort to crack down on tax avoidance and evasion. SNP Treasury spokeswoman Alison Thewliss said the current system was “not fit for purpose” pointing to wealthy individuals, who exploit loopholes. HMRC figures show that the inheritance tax gap between the amount expected and the amount received has grown to £600m in 2016/17 – a 50% increase from £400m in 2012/13.
The Scotsman, Page: 1, 6
gs up potential PAYE inaccuracies
ICAEW has flagged up early reports of incorrect P800 tax calculations and incorrect PA302 simple assessments as part of the annual reconciliation of taxpayers’ PAYE records for 2017/18. One issue being reported relates to the use of estimated figures where actual figures are not available. These include interest income of less than £10,000; dividend income of less than £10,000; rental or other income of less than £2,500; gift aid; pension contributions; and employment expenses of less than £2,500.
Accountants implicated in disappearance of defined schemes
John Stittle in the Independent says the disappearance of final salary pensions in Britain can be partly blamed on “misguided accountants and ultra-cautious actuaries” He explains that in the late 1990s, the introduction of new accounting rules (now termed IAS19 and FRS102) required companies to recognise pension fund deficits in their own balance sheets – which soon resulted in multibillion pound financial black holes appearing in many company balance sheets. “Employees received little sympathy from accounting regulators – even though accountants should have been fully aware the reporting changes would likely finally sign the death warrant for defined benefit schemes,” argues Stittle.
The Independent, Page: 63
Tips on pension tax relief across the generations
The Telegraph highlights a little-used tax relief that allows children under 18 to save toward a pension, with the help of generous parents or grandparents. It says the maximum contribution to a childhood pension with tax relief is £2,880 a year, and the tax relief available is 20%, meaning that the government will top up a maximum contribution to £3,600 a year. Separately the FT reminds over-55s who dip into their pension pots while continuing to benefit from workplace pension contributions that they could face charges to claw back any excess tax relief.
The Daily Telegraph, Money, Page: 2 Financial Times, Money, Page: 5
Pension firms profit from slowdown in life expectancy growth
Annuity providers could make over £1bn as a result of longevity not rising as expected. Pension companies have sold annuities to around 5m people at retirement on the basis of assumptions about rising longevity. But as gains in life expectancy have failed to materialise, reserves to cover these guarantees are now being returned to shareholders or reinvested.
The Guardian, Page: 33
Co-op Bank loses third finance chief in three years
The Co-op Bank’s chief financial and restructuring officer, Tom Wood, is to stand down. Mr Wood took up the job last September, replacing John Worth, who himself had only been in the role for a year.
The Daily Telegraph The Times, Page: 54
Raising stamp duty means more dysfunction
The Times’ Anne Ashworth warns that raising the stamp duty rate on rental homes again would exacerbate the already dysfunctional state of the market.
Economy picks up speed
Economic growth in the UK picked up in the three months to June as construction and services were lifted by the warmer weather, according to the ONS. The economy grew by 0.4% in the period, compared with a rate of 0.2% in the first quarter of the year. The services sector grew by 0.5%, its strongest performance since the end of 2016. Construction also rebounded, with growth of 0.9%.
Interest rate will remain low for 20 years
Ian McCafferty, a Bank of England policymaker, has said that the era of low interest rates will last for at least another 20 years, despite official borrowing costs rising gently in the coming years. Mr McCafferty, who is leaving the MPC at the end of the month, said structural changes in the global economy meant UK borrowers and savers should get used to interest rates being “significantly” below the 5% they averaged in the 10 years leading up to the financial crisis in 2008.
The Guardian, Page: 1, 6
Personal insolvency rates soar across the South West
Statistics reporting trends from 2000 up to 2017 recently published by The Insolvency Service that look into individual insolvencies show that the South West came out with the second highest total of bankruptcies in England and Wales last year. Figures show 3.9 per 10,000 adults becoming bankrupt in 2017, above the national average of 3.3.
Ratcliffe under fire for Monaco move
Sir Jim Ratcliffe, Britain’s richest man, has come in for criticism after it emerged he is planning to move to Monaco. Lib Dem leader Sir Vince Cable commented: “It’s strange for someone who presents themselves as highly patriotic and has been given honours to move to a notorious tax haven.” Elsewwhere, the Mail’s Maggie Pagano says Sir Jim’s decision “is certainly not a vote of confidence in the future of the UK economy at a time when self-belief is needed more than ever.” However, she also suggests it is time to look at cutting top tax rates so that it is no longer attractive for the very rich to move wealth overseas.
The Times, Page: 11 Daily Mail, Page: 75
Accountant unmasked as cricket spoilsport
Accountant Declan Redwood, 28, has unmasked himself as the unsporting bowler who made headlines after he denied a young cricketer his maiden century by bowling a deliberate no-ball.
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