News Roundup Monday 20th May 2019
News Roundup Monday 20th May 2019
Laura Miller looks at expenses claims and legitimate ways to avoid paying tax on a wide range of outgoings. BDO’s Dawn Register says that while people have “the attitude of ‘bung it through the books and it will never get picked up’,” HMRC investigations regularly involve probing dubious claims. She notes that the taxman looks at industry norms, “so if you claim wildly more expenses than others in your sector, expect a phone call.” Ms Register suggests keeping receipts is good practice, saying: “If HMRC checks your tax return it will want to see original documents,” adding: “Credit card and bank statements should also be kept as evidence of expenditure.”
The Daily Telegraph, Money, Page: 8
NHS brain drain is down to punitive pension tax changes
NHS Confederation chief executive Niall Dickson says changes to pension allowances are hitting the NHS workforce, with increasing numbers of senior staff reducing their hours or leaving roles to avoid incurring large tax charges.
Fixing tax inequality would help poor workers
The Sunday Times says a rethink on tax relief on net pay pensions could make 1.7m of the UK’s poorest workers richer, with the paper’s Kate Palmer saying those enrolled in such workplace schemes will miss out on up to £65 in tax relief this year – or a combined £100m. Workers who are given a pension but do not pay tax because they do not earn enough – anyone earning between £10,000 and £12,500 a year – see no tax relief. Sir Steve Webb, director of policy at Royal London and a former Pensions Minister, said it is “truly shocking” that low-paid workers are missing out “simply because of the lottery of the pension arrangement that their employer chose .” The Sunday Times’ James Coney says that the inequality could be fixed “by adjusting the computer systems at HMRC”. Treasury Minister John Glen last month said that it would cost the government £10m to set up a system to allow low-paid workers to claim the relief.
Half of gift-givers unsure over IHT
HMRC figures show that around one in four people aged over 70 have given cash to relatives as a gift, while, in total, 12% of all UK residents have given large financial gifts. The analysis also shows that just 45% of those who have handed out money understood the implications for inheritance tax, with only gifts valued at less than £250 individually and £3,000 in total per tax year exempt.
The Sunday Times, Business and Money, Page: 16
Letters: Rich debate
In a letter to the Sunday Times, signatories including Robert Palmer of Tax Justice UK, say the paper’s Rich List shows that the wealthiest people in the country have boosted their wealth by £48bn in a year at a time when 14m Britons are living in poverty. They call for a fairer tax system “that ensures those most able to afford it pay a bit more, to help fight poverty and fund public services.” Meanwhile, Eamonn Butler, director of the Adam Smith Institute, also comments on the Rich List in a letter to the paper, saying that while it is easy to see the super wealthy as targets for arbitrary envy taxes, “the richest already pay a disproportionate amount of tax.” He also flags the good such people do, including investing in businesses that create income for workers and profits that boost savers’ pensions.
VAT warning over cash in hand tradesman
The Sun looks at the tax affairs of tradesman, warning that some who want to be paid in cash could be doing so to avoid paying tax. The paper cites a poll showing that a quarter of homeowners are put off from doing up their home by the 20% VAT charge, noting that builders must start charging VAT when their turnover exceeds £85,000 a year.
The Sun on Sunday, Page: 38
Six arrested over loan charge schemes
Six people have been arrested in connection with a scheme designed to sidestep the loan charge. Officers from HMRC carried out raids, searching premises in London, Guildford, Stevenage, Stratford-upon-Avon and Kent, before arresting six individuals on suspicion of cheating the public revenue and committing fraud by false representation. The loan charge, which is levied on contractors who used disguised remuneration schemes and could see 50,000 people face bills for unpaid tax, has prompted a number of schemes designed to avoid the bills, which in some cases could exceed £100,000. HMRC said: “We strongly encourage people not to use loan-busting schemes and methods. They clearly don’t work and people run the risk of losing more money and being involved in fraud.”
Accountant stole £21k from Ugly Models
Charlotte Harris, an accountant for an alternative modelling agency, has been sentenced to 16 months in prison, suspended for two years, after stealing more than £21,000 by forging her boss’s signature. Ms Harris admitted two counts of fraud by abuse of position, having stolen £21,071 from Ugly Models. Judge Jeffrey Pegden, QC, has ordered her to repay the money in £200 monthly instalments.
Evening Standard Metro
Censured auditor secures CFO role
Steve Denison, the auditor censured after signing off BHS’s accounts prior to its sale by Sir Philip Green, has joined the board of luxury real estate start-up Vontsira. Mr Denison, who left PwC last year, was fined £325,000 by the Financial Reporting Council. His appointment as Vontsira’s chief financial officer does not conflict with the regulator’s requirement that he should not undertake audit work for 15 years. The matter saw PwC fined £10m, which was reduced to £6.5m for early settlement.
Staffline shares fall
Staffline shares fell almost 60% after it said some potential clients had been put off by previous allegations that it may have broken minimum wage rules. PwC found underpayments were made to workers over several years as the time spent putting on work clothes had been excluded from their hours. The recruitment agency says it is working with HMRC and independent adviser KPMG to assess historic data and transactions, “which will then be subject to audit.”
Amazon delivers investment
Amazon has made a large investment in Deliveroo, with the online retailer the biggest investor as the meal delivery company raised £450m to fund its expansion. Julie Palmer, a partner at Begbies Traynor, said: “Despite having failed with its own service, Amazon knows the potential that is still to come from this growing market and has put its money where its mouth is.”
Daily Mail, Page: 24 I, Page: 69
Thomas Cook shares slide
Shares in Thomas Cook were hit after Citigroup issued a sell note on stock, dipping almost 40%. This came on the back of auditor EY noting the “uncertain” outcome of a strategic review of the group’s airline business and a credit facility linked to it, saying it “may cast significant doubt on the company’s ability to continue as a going concern”. The Mail says the auditor concluded that after considering all uncertainties, Thomas Cook should be able to keep its head above water.
The Guardian, Page: 43 Financial Times, Page: 1 The Times, Page: 47 Daily Mail, Page: 101 The Sun, Page: 46
Cheeky Panda plots IPO
Tissue maker The Cheeky Panda is eyeing a stock market listing after raising £1.6m for expansion and has engaged KPMG to work on the process.
Daily Express, Page: 63
Uber takes taxman for a ride?
HMRC is investigating Uber over allegations it owes more than £1bn in unpaid tax. While Uber does not pay 20% VAT on fares because it insists it only acts as a digital intermediary between its self-employed drivers and passengers, the Revenue is investigating whether the ride-hailing app is a transportation company and should therefore pay VAT – or if drivers should be treated as self-employed and not liable for VAT. Tax barrister Jolyon Maugham QC says the firm is liable for VAT and is due to file a legal action against HMRC in the High Court, alleging it has mishandled the VAT case. Working with law firm Irwin Mitchell, Mr Maugham estimates Uber’s potential VAT bill at £260m a year, with the taxman able to claim four years in back payment. Uber said it “fulfils and will continue to fulfil its tax obligations.” An HMRC spokesman commented: “HMRC will always make sure that every business, no matter its size, pays all the taxes due under UK law and we don’t settle for less.”
Payment intermediary to hold onto Thomas Cook money
A payment intermediary is in talks to extend the time it holds on to consumers’ money owed to Thomas Cook and is reportedly seeking to hang on to holidaymakers’ money, which is usually kept for two days, for several weeks. Deloitte has been retained by a number of other providers to advise on their exposure to the business. Shares in Thomas Cook fell 40% on Friday after analysts at Citi said there was zero value to its equity, while EY has warned of “material uncertainties” over the travel firm’s deal to sell its airline.
The Sunday Times, Business and Money, Page: 3 City AM
CVA plans reveal Arcadia sales fall
The Sunday Times says documents posted as part of Sir Phillip Green’s plan to cut rents and close stores shows the climate for his Arcadia retail empire. Proposals sent to landlords ahead of a CVA which, if approved, could see 57 stores close, show sales fell 10.5% in the year to last August, dipping to £1.7bn.
PwC advises British Steel
British Steel is looking to shore up its finances, with PwC advising the manufacturer on fundraising options.
Sunday Express, Page: 43
Gersh set for new role
Alex Gersh, the former finance chief of Paddy Power Betfair is set to join a second-hand car start-up Cazoo, taking on the CFO role at the firm led by Zoopla founder Alex Chesterman. Mr Gersh, an accountant by training, started his career at EY.
The Sunday Times, Business and Money, Page: 3
Travel firm goes bust
Online travel firm Hotel Voucher Shop has collapsed owing £2.3m. Leonard Curtis said the firm had been running at a loss and was unable to meet contractual obligations.
PERSONAL FINANCE NEWS
Grandparents miss out on perk
Figures show that while more than 10,000 grandparents have made use of a scheme designed to assist those who look after their grandchildren to help their children get back to work, there are still many more who have not. Steve Webb, director of policy at Royal London, says that while it is great news that thousands of grandparents had used the “specified adult childcare credits” initiative to receive national insurance credits, “the numbers are still a drop in the ocean out of all those who could claim” the credits, which are worth around £250 a year during retirement. While the 10,000 claimants is a steep rise on the 1,300 recorded in 2016, analysis suggests 1m or more could be eligible.
The Guardian, Page: 52 Daily Mail, Page: 25
How should we plan financially for our autistic daughter?
Philip Lansberry of Kreston Reeves offers advice to FT readers over what provisions they need to consider for their severely autistic daughter who will never be financially independent.
Business investment may be stronger than thought
A senior Bank of England official has suggested levels of business investment in Britain could be stronger than they appear, because official measures underestimate spending on intangible assets such as software, data and branding. Jonathan Haskel, an external member of the Bank’s monetary policy committee, said that although a slowdown in business investment in the UK has been linked to Brexit uncertainty, weaknesses began to appear before the referendum and “intangibles appear to be part of the story.”
Pound slides to four-month low
With cross-party Brexit talks between the Conservatives and Labour ending with no agreement, the pound slid to a four-month low against the dollar. Friday evening saw the pound 0.52% lower against the dollar at $1.273, having seen its worst week in a year. Against the euro, the pound fell 0.46% to €1.140. Eimear Daly, a foreign exchange strategist at Macquarie Bank, said: “While talks with Labour were ongoing, the market was slightly more reassured that an EU customs union or something similar to the status quo would be the outcome.”
ONS figures due out on Wednesday are expected to show inflation has climbed back above the Bank of England’s 2% target, paving the way for a potential interest rate hike. Economists expect inflation to have jumped from 1.9% to 2.2% in April due to an increase in the energy price cap.
The Sunday Times, Business, Page: 2 The Mail on Sunday, Page: 102
Dads detail work pressures
A poll sponsored by Deloitte has revealed the pressures faced by millennial fathers seeking to juggle parenting with work. The study of 2,002 dads aged 25 to 40 has found that nearly nine out of 10 are closely involved in day-to-day parenting. Of these, a third say they have changed jobs since becoming a father, with many citing flexibility as a reason, while a further third said they were actively looking for a new job. Some 37% said their mental health is affected somewhat or very negatively by having to manage work and parental responsibilities.
The Sunday Times, Page: 11
FOBT and bookies’ job losses
The Observer looks at the impact restrictions on fixed odds betting terminals have had on bookmakers, with the largest firms predicting job losses at about half the level warned of in a KPMG report which suggested up to 21,000 jobs could go.
The Observer, Page: 58
Contact Paul Southward [Tax Consultant]