News Roundup Monday 21st October 2019



G20 finance ministers back OECD push to tax profits of multinationals

The G20 have backed efforts to reform how the profits of multinational companies are taxed, with proposals looking toward a global agreement rather than countries rolling out unilateral measures.

Financial Times

Reflecting on reliefs

The Telegraph looks at tax relief, with the Government last week publishing a document detailing the cost of the 362 reliefs on offer. Analysis shows there are 81 reliefs available on income tax and 27 on inheritance tax. Nimesh Shah of Blick Rothenberg looks at capital gains tax exemptions, highlighting a relief on wine sales, while Iain McCluskey of PwC says the Government is keen to see the marriage allowance used.

The Daily Telegraph, Money, Page: 2

Quirk leaves some taxpayers with 62% rate

The Sunday Telegraph’s Harry Brennan considers the impact of a quirk which is leaving some people with an effective tax rate of more than 60%. He reports that a gradual removal of the £12,500 tax-free personal allowance by £1 for every £2 earned over £100,000 a year is leading to people turning down pay rises or quitting the workforce. With National Insurance contributions factored in, the rate can be as high as 62%, with the issue currently affecting around 360,000 taxpayers. Stuart Adam of the Institute for Fiscal Studies describes the spike in the marginal rate of income tax as “silly” and “bizarre”, adding: “Higher rates of tax put people off work. Relative to flattening the spike we are worse off – it is having a disproportionately negative effect on the economy.” The think-tank has called on the Prime Minister to abolish the tapering of the personal allowance.

The Sunday Telegraph, Business and Money, Page: 11

HMRC targets online sellers over unpaid VAT

HMRC is chasing Amazon, eBay and overseas sellers who use online marketplaces for £585m in unpaid VAT. While some demands have been sent to the large internet firms, in some cases officials have sent VAT bills directly to foreign sellers who market goods to UK buyers. Firms with a turnover of more than £85,000 a year have to register with HMRC and pay VAT of 20% on goods sold online, with rules introduced in 2016 giving the taxman the power to bill online marketplaces if sellers evade tax. The Revenue has contacted sellers over £315m in tax owed, with Amazon and eBay contacted over a further £270m. George Turner, at TaxWatch UK, has called for tougher rules, warning that VAT fraud is “devastating to legitimate British businesses”.

The Mail on Sunday, Page: 110

Considering the cost of a carbon tax

Jeremy Warner in the Sunday Telegraph muses on how the Chancellor might introduce a carbon tax without “destroying his party’s electoral prospects”. He highlights International Monetary Fund analysis suggesting that carbon tax of $75 a ton globally is needed within the next 10 years to contain the rise in temperatures to the two degrees scientists judge manageable. With the UK already having reduced its use of coal for electricity generation to virtually zero, Mr Warner notes, the effect would not be as severe as it would be for some other nations, noting that a $75 carbon tax would raise the UK’s overall tax burden by around 0.7% of GDP.

The Sunday Telegraph, Business and Money, Page: 2


Bonmarché falls into administration

Fashion retailer Bonmarché yesterday went into administration and has drafted in advisers at FRP Advisory to handle the process. The chain’s 318 stores and concessions will remain open while it looks for a buyer. Chief executive Helen Connolly said Bonmarché will work with the administrators “to do all it possibly can to protect as many jobs as possible and secure its future.” FRP’s Tony Wright said the “persistent challenges facing retail have taken their toll,” but added: “There is every sign that we can continue trading while we market Bonmarché for sale and believe that there will be interest to take on the business.” Bonmarché, which is majority owned by retail tycoon Philip Day’s investment vehicle Spectre, reportedly considered a refinancing deal and a CVA.

The Times, Page: 2 The Daily Telegraph, Business, Page: 35 Daily Mail, Page: 97 The Guardian, Page: 6 The Sun, Page: 18 The Scotsman, Page: 1

Watt Brothers shuts up shop

Scottish department store group Watt Brothers has collapsed into administration, with administrators from KPMG now seeking a buyer for the business. Administrators said 229 of the group’s 306 employees were made redundant with immediate effect. Blair Nimmo of KPMG said Watt Brothers had been hit by “trading losses as a result of the well-publicised challenges being experienced across the retail sector.”

The Guardian, Page: 44 The Scotsman, Page: 1

Links lets HQ staff go

Links of London made 38 staff at its head office redundant yesterday. The jewellery seller earlier this month appointed administrators from Deloitte after its owners, the Folli Follie retail group, failed to find a buyer. Deloitte’s Matt Smith commented: “While we continue to talk to interested parties about a sale of the business, the ongoing cash-flow pressures mean the current cost base is not sustainable.”

The Daily Telegraph, Business, Page: 35 Yorkshire Post, Page 24

Wirecard head dismisses call for independent audit

Following reports of inflated sales and profits at fintech firm Wirecard, chairman Wulf Matthias has dismissed calls for an independent forensic audit of its accounts, saying EY “is evaluating the matters sufficiently”.

Financial Times, Page: 13

Conran shops around for investor

Sir Terence Conran has appointed advisers from KPMG to help bring in an investor as he seeks a new financial partner for his Conran Shop furniture business.

The Times, Page: 47

Accessorize remains at risk

Fashion chain Monsoon Accessorize remains at risk despite securing a restructuring deal, with a report from auditors at BDO saying covenants “are expected to be breached” and extra cash to keep the business afloat may not be available.

The I, Page: 68

Administrators appointed at yboo

Quantuma has been appointed as joint administrator of app developer yboo Limited. Simon Bonney, partner at Quantuma, said: “We are currently taking steps to keep the company’s IP and software live in order to seek offers from interested parties.”

Yorkshire Post, Page: 26

Tax haven concern over firms with state contracts

A report from think-tank Demos shows that almost three-quarters of companies who have been given government contracts in excess of £100m have operations based in tax havens. The analysis shows that 25 of the Government’s 34 strategic suppliers do so, with 19 having jurisdictions included on the EU’s “blacklist” or “greylist” of countries that are considered to be non-compliant with international standards for “good tax behaviour”. The report, Value Added, says the 25 firms account for about a fifth of total central government procurement spend. Demos has called for the National Audit Office to conduct an annual report on procurement transparency. Commenting on the findings, former Public Accounts Committee chair Margaret Hodge said it is “perverse that the Government continues to pay significant sums of taxpayer money to big corporations that practise tax avoidance on an alarming scale”.

The Observer, Page: 18

Business leaders seek Brexit guarantee

Business leaders have called for clarity over Brexit after the latest stalled attempt to secure backing for a deal. Adam Marshall, director general of the British Chambers of Commerce, said the “onus is on the Government to answer the many questions businesses are posing on the Prime Minister’s deal and its potential impact on trade, investment, communities and jobs,” adding a call for an “iron-clad guarantee” that the Government will not seek to take the UK out of the EU without a deal on October 31. Marc Bunch of EY commented: “There’s an audible sigh across many quarters of business. The majority may want to remain in the EU, but they have deadline fatigue … Prolonged uncertainty is damaging bottom lines and investment decisions – businesses need a clear outcome either way.”

The Sunday Times

Tax questions as Amazon gets ahead in the cloud

Harry de Quetteville in the Sunday Telegraph looks at Amazon’s “grip” on UK data, noting that the internet firm holds more than a third of the UK market in storing and processing Government-held information, including tax records. Mr de Quetteville highlights that there have been questions about Amazon’s tax status, although the firm insists it “pays all applicable taxes, due on its profits”. He notes that HMRC switched to using the cloud-storage provider Amazon Web Services in 2015, citing cloud analyst Bill Mew who comments: “You have to question the societal value of HMRC favouring a company with questionable tax arrangements.”

The Sunday Telegraph, Business and Money, Page: 10

Ebury set for first takeover

Banking start-up Ebury, which GP Bullhound named as one of the companies in the UK and Ireland likely to become a billion-dollar firm in the next two years, is set to unveil its first-ever takeover, with a deal for payments outfit Frontierpay expected to be announced this week.

The Sunday Telegraph, Business and Money, Page: 3


Pension value could outstrip property

Analysis by pensions consultancy Hymans Robertson suggests the value of the average final-salary pension is on course to overtake that of a typical property for the first time next year. The study found that the average final-salary pension was worth £216,000 in July this year, compared with £110,000 in July 2008, while the average UK property price is currently £234,835, compared with £176,092 in 2008. Hymans Robertson analysts calculate that, if no Brexit deal is agreed, pension values could rise 15% next year to an average of £248,400 on the back of low interest rates, while property values could slip 7% to an average of £218,396.

The Times, Page: 63


Exports boost SME growth

Analysis by UK Export Finance suggests that small firms which export grow twice as fast as domestic-focused businesses. The report found that while SMEs who do not export tend to grow 8.4% a year, those who do export grow 15.2%. It was also found that around half of the firms who sold overseas saw profits boosted by up to 20%, with 10% seeing profits boosted by more than 20% thanks to exports.

Sunday Express, Page: 44


How the winding up of the fund will hit investors

The FT looks at the impact the of the winding up of the flagship Woodford Equity Income fund, with Tim Stovold of Moore Kingston Smith commenting on capital gains tax-related issues.

Financial Times, Money, Page: 9


Carney: Brexit deal could boost economy

Bank of England governor Mark Carney has welcomed the Brexit deal negotiated between the UK and EU, saying it is likely to boost economic growth, telling Bloomberg TV: “It is good news that there is an agreement. I would expect the economy to pick up from quite a subdued pace.” Mr Carney said it was “important to have a transition to a new relationship” with the EU and “that’s what a deal would deliver if it is adopted”. Welcoming the fact that the deal would deliver a new economic relationship with the bloc, Mr Carney added: “The alternative is a No Deal and an entrenched uncertainty.” However, he said it “remains to be seen” if the deal agreed by Boris Johnson would be as positive for the economy as the deal put forward by his predecessor, Theresa May.

The Guardian Financial Times Daily Mail BBC News

Profit warnings at decade high

Research from EY shows that London-listed companies have issued their highest number of profit warnings since the financial crisis, with firms offering 235 such warnings in the first three quarters of the year. This marks the largest year-to-date figure since 2008. The analysis also shows that there were 77 profit warnings issued in Q3 2019, up from 69 in Q2. In the past 12 months, almost 18% of listed UK companies have made profit warnings, while 29 have issued three or more profit warnings in the period. Of these, nearly a quarter are no longer listed because of an administration, liquidation or sale. The report identifies Brexit uncertainty as a prominent concern for firms which have informed investors that profits would fall short of expectations. Alan Hudson, EY’s head of restructuring for the UK and Ireland, notes the impact political uncertainty and global trade issues can have, adding: “Profit warnings aren’t an absolute measure of performance, but they do track a company’s ability to meet their forecasts, which is clearly more difficult in an uncertain environment.”

The Sunday Times, Business and Money, Page: 2 Sunday Express, Page: 43 The Mail on Sunday


Author writes off citizenship over tax

Author James Fox, who was born in Washington DC but lives in London, has given up US citizenship to avoid being taxed in the States as well as the UK. “They were going to take all my money and property and livelihood away because of tax, so I’ve given up my American passport,” he has revealed.

The Mail on Sunday, Page: 38

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