News Roundup Monday 20th August 2018
News Roundup Monday 20th August 2018
HMRC wants to know your political allegiance
Tax experts have accused HMRC of embarking on a fishing expedition after sending letters to UK taxpayers living overseas asking for obscure pieces of information such as political allegiances, parents’ marital situation and the location of any children. Britons living and working abroad who maintain ties to the UK face fines of up to 200% from the end of September if they fail to declare any income to the taxman. The rules will apply to both expats and those who are so-called “non-doms”. But Fiona Fernie, of Blick Rothenberg, said HMRC’s letters were “aggressive” while Keith Gordon, a barrister at Temple Tax Chambers, said the requests were “a bit of a fishing expedition.” HMRC said the letters were simply inviting taxpayers to review information already provided. A spokesman added that a taxpayer’s membership of a UK party could signal a future intention to return to Britain.
Innovation will be penalised by levelling the playing field
Calls for tax reform have grown louder after figures from the Office for National Statistics revealed nearly £1 in every £5 spent is now online. Bosses of John Lewis and Marks & Spencer are backing a Daily Mail campaign for a fair tax on internet retailers and reforms of business rates. The move follows reports that Philip Hammond is considering an ‘Amazon tax’ on web retailers in an attempt to level the playing field. But this idea is dismissed by the paper’s Maggie Pagano who says a “transactions tax for everyone” would be a better plan. Writing in the Telegraph, Ryan Bourne, the R Evan Scharf chair for the public understanding of economics at the Cato Institute, agrees and contends that the level playing field ambition is wrong because “politicians should not seek to protect incumbents”. “Introducing special taxes on innovative firms that provide desirable consumer servi ces would merely stifle innovation and hit consumers in the pocket,” he states.
Daily Mail, Page: 21, 73 City AM, Page: 2 The Daily Telegraph, Business, Page: 30 The Daily Telegraph, Business, Page: 31
Tories must cut taxes before it’s too late
Tory MP Robert Halfon says in the Sun that the Conservatives have lost their raison d’être with the party apparently forgetting it should be cutting taxes rather than raising them at every opportunity. Stealth taxes continue to be levied on SMEs and the “just about managing” while big businesses “get away with” paying “risible amounts of tax”. Halfon says unless the Tories rediscover their “moral purpose” they’re doomed.
The Sun, Page: 10
Urgent reform of apprenticeship levy needed
The Government’s apprenticeship levy is failing school leavers, employers say, because fewer young people are getting the training they need than before the scheme came into force. The latest monthly figures show a 31% fall in the number of apprenticeship starts in the ten months between August and May compared with the same period last year. Edwin Morgan, director of policy at the Institute of Directors, said “the Government’s target to have three million apprenticeship starts by 2020 is sinking below the horizon.” Jane Gratton, head of business and skills at the British Chambers of Commerce, said the costs for SMEs of recruiting and training apprentices had risen and was “pricing people out of apprenticeship jobs”. Urgent reform was needed, she added.
Handelsbanken top for business banking service
A Competition and Markets Authority survey of personal and small business customers found that Handelsbanken UK is top among SMEs for satisfaction, with 90% of their SME customers saying they would recommend the bank for relationship management compared with 64% for both Metro and Lloyds. Handelsbanken reported an 84% recommendation score for SME overdrafts and loan service, followed by Santander and Lloyds. Barclays was top for online and mobile banking satisfaction. Royal Bank of Scotland was rated Britain’s worst bank overall, with just 49% of retail customers and 47% of businesses saying they would recommend the bank. First Direct topped the table at 85%, followed by Metro Bank and Nationwide building society. Meanwhile, the CMA is working with the Financial Conduct Authority to make banks release more information to drive up standards. Banks will also be ranked for service and must publish details of how they compare with rivals to allow customers to make better decisions about who to bank with.
Daily Express, Page: 46 The Independent, Page: 58 The Times, Page: 4 The Daily Telegraph, Business, Page: 27 The Guardian, Page: 30
North leads the way as VC investment rises
Venture capitalists invested more than £90m into Northern start-up businesses in the first half of 2018, according to KPMG’s Venture Pulse report. The UK overall has seen a surge in VC activity in the first six months of this year putting it back to the top of the European VC market league table, with AI, FinTech, cyber security and biotech regarded as key investment priorities in the UK. “It’s encouraging to see that continued uncertainty in the macropolitical and macroeconomic environment does not appear to be substantially hampering appetite for investment in UK start-ups, especially in the North, which has had two strong quarters in a row,” said Graham Pearce, KPMG’s head of technology in the North.
SMEs waiting for billions in late payments
Hitachi Capital has found that three in five SMEs have been affected by late payments. More than 75% of companies in the manufacturing, legal and logistics sectors report problems with late payments in contrast to 45% in hospitality and leisure. While 63% of businesses with an annual turnover of less than £1m say they are affected. Non-payment was hitting 20% of SMEs to the tune of a fifth of their invoices. The study revealed companies were waiting for an estimated £50bn in unpaid invoices.
Confidence levels falling for UK SMEs
Research carried out by the Telegraph has found that SMEs are losing confidence in the UK government. The paper tracked twitter posts from 25,000 SMEs and found that tweets were becoming increasingly pessimistic. Of 24,000 tweets posted over a four-week period, 12% were positive and 9% were negative. The rest were ‘neutral’. Many of the negative tweets referenced news that the government expects a significant Brexit dividend to pay for planned NHS funding.
PERSONAL FINANCE NEWS
Keep online pension project, Royal London boss urges
Royal London chief executive Phil Loney has urged the Government not to drop the online dashboard project, warning that it’s a “key ingredient” to the new pensions landscape. “We’re not looking for the Government to pay for it, but we need a commitment that they’ll put the state pension details into the dashboard and we need them to compel all pension providers to take part,” he said.
Mortgage lenders target ‘silver borrowers’
The surge in retirement interest-only or “Rio” mortgages, following Financial Conduct Authority approval in March, is being led by building societies Bath and Tipton, Leeds Building Society and Hodge Lifetime.
Call for business rates rethink
In an opinion piece for the Evening Standard, Rohan Silva describes the current business rates tax as “the all-time most stupid” levy in British history. He notes that they cost a typical micro-business in the capital around £17,000 per annum, and that they still have to pay the same rate as an established, profitable business. He calls for a reform of the system, replacing the tax with a fairer charge that also creates a level playing field between digital companies such as Amazon and ones that have a shop or physical premises.
Sluggish market hurting estate agents
In a piece examining the reasons for a shortfall in property on the market, Jessie Hewitson in the Times notes that Moore Stephens found that a quarter of estate agencies are in financial distress.
UK’s house price growth sluggish
Data from the Office for National Statistics (ONS) show that house prices in London dropped 0.7% in the year to June, the lowest annual growth rate since September 2009 when they fell 3.2%. Annual house-price growth across the country slowed to its lowest level in nearly five years with average property values increasing by 3%, down from 3.5% in May. Slow wage growth, rising mortgage rates and tougher rules on borrowing are constraining buyers, experts say. Chief economic adviser to the EY Item Club, Howard Archer, said: “Housing market activity is still relatively lacklustre, and we expect it to remain so as the extended squeeze on consumer purchasing power only gradually eases, consumer confidence is relatively fragile and appreciable caution persists over engaging in major transactions.”
City AM, Page: 2 The Times, Page: 38 Daily Mail, Page: 1, 2
Chancellor under pressure as inflation brings rates hike
Philip Hammond is facing fresh calls to freeze business rates after inflation rose 2.5% last month. Analysis by industry experts Altus Group shows this will mean businesses in England will see a £758m surge in their rates bills next year.
Daily Mirror, Page: 13
Towcester racecourse on verge of collapse
The owners of Towcester racecourse are calling in administrators from KPMG after “experiencing trading difficulties”. The racecourse said in statement: “The directors remain hopeful that despite the current situation, given the significant history of horseracing and more recently greyhound racing at Towcester, there will be significant interest from potential acquirers.”
Relief for retailers as sales rise
ONS figures show the recent heatwave and the World Cup boosted consumer spending last month pushing up retail sales by 0.7%. Sales volumes increased by 3.5% for the year. Sterling rose on the news. Ian Geddes, head of retail at Deloitte, said: “The year-on-year boost to both volumes and values should reassure the sector. July’s sizzling weather, combined with the England team’s successful run in the World Cup, was welcome.”
UK faces rising chance of disorderly Brexit, Fitch warns
Ratings agency Fitch warned in an update on the UK economy yesterday that an “acrimonious and disruptive” no deal Brexit is a “material and growing possibility”. Fitch said an agreed transitional deal is now no more likely than no deal, in which the UK defaults to WTO tariffs and trade rules. Fitch added that the opinion did not constitute an official rating action.
City AM, Page: 2 Financial Times
Super-rich patronage helps drive innovation
Writing in the Telegraph, Dr Andy Palmer, the president and chief executive of Aston Martin Lagonda, says the continued rise of high-net worth individuals (HNWIs) across the globe and their spending in the luxury market is driving technological progress. Companies serving the market “spend heavily on specialist skills and craftsmanship and reinvest in technologies that have applications for the wider industrial sectors in which they operate,” he said.
UK inflation rate rises
UK inflation rose to 2.5% in July, after holding steady at 2.4% in the previous three months as the cost of transport and computer games increased. It was the first jump in the Consumer Prices Index (CPI) measure since November and was in line with forecasts. Meanwhile, the Retail Prices Index (RPI) measure of inflation fell to 3.2%. Tej Parikh, senior economist at the Institute of Directors, said the rise in inflation showed the cost of living squeeze was not yet a thing of the past. Elsewhere, John Hawksworth of PwC, said inflation is likely to remain “sticky” at close to 2.5%, keeping real wage growth to a minimum.
Action Fraud warns of iTunes fraudsters
Consumers have been warned to beware of scammers posing as HMRC after one man was reportedly conned out of £1,000. Fraudsters tricked a Bristol resident into buying 10 £100 iTunes vouchers from a local Sainsbury’s store or face being arrested. Action Fraud says that between the start of 2016 and August 2017 there were over 1,500 reports of this type of scam, with victims suffering an average financial loss of £1,150.
Taxman jailed for nine years
A former Inland Revenue worker who fled the UK after masterminding a conspiracy to steal nearly £7m from construction workers has been jailed for nine years. Mike Hughes used a string of UK and offshore companies and bank accounts to steal £6.9m in taxes deducted from workers’ wages, through fraudulent payroll schemes. His three co-conspirators were also jailed.
Daily Mail, Page: 72 Daily Express, Page: 23
Business lenders need greater regulation and transparency
Amid an explosion of business lenders in the UK, Jennifer Tankard, CEO of Responsible Finance, argues that many are not regulated and there is a lack of transparency about their offers. She concludes that creating a level playing field for business lending with more transparency and a focus on supporting borrower choice rather than maximising the number of lenders in the sector is good for productivity and good for the economy.
Contact Paul Southward if you have any queries.