News Roundup Monday 23rd September 2019

NEWS ROUNDUP

TAX NEWS

McDonnell: No more nom-doms under Labour

Shadow Chancellor John McDonnell has vowed to end the “spurious scam” of non-dom tax status, saying Labour would strip the status from 80,000 super-rich individuals who benefit from a regime which is offensive to “ordinary people”. Mr McDonnell told the Times that he was “trying to establish a fair taxation system, basically”. He continued: “People of all levels of income are going to work and they pay their taxes. And people may not be overjoyed about paying taxes but they know what it goes for – public services – and some people are proud of the contribution that they make. Why should the super-rich get away with it on a spurious scam like this?”

The Daily Telegraph, Page: 4 The Times, Page: 12

Taxing time for accidental landlords

The Times’ Jessie Hewitson explores the impact upcoming changes to capital gains tax (CGT) will have, highlighting that homeowners who rent out a property they used to live in face bigger tax bills when they sell up. Rules that come into force in April 2020 that bring changes to private residence relief will mean separating couples, people who have bought a second home before selling their first one and accidental landlords could face unexpected tax bills. Analysis by Moore shows that an accidental landlord who owns a property that gained in value by £350,000 over nine years will pay £20,000 more if they sell after the changes, while a couple with a property that that gone up by £2m over 10 years will pay £76,000 more. Lettings relief is also set for reform, with Stefanie Tremain, a director at Blick Rothenberg, saying it has “essentially been ended because it’s now limited to people who rent out a room in their home, which is a very small fraction of the market”.

The Times, Page: 58

Tax warning for contractors

Contractors and freelancers have been advised to review their paycheques after three television presenters who worked for the BBC “off payroll” through a personal service company were ordered to pay bills linked to tax avoidance. HMRC has seen a number of similar cases go to court, with the Revenue claiming that freelance workers have breached IR35 tax avoidance legislation aimed at contractors working for a single company, who are employees in all but name. Julia Kermode, the chief executive of the Freelancer and Contractor Services Association, says the cases “may deter businesses from engaging people who work for themselves and may deprive companies of the vital skills they need.”

The Times, Page: 58

Labour would use higher taxes to boost GP numbers

Labour’s health spokesman Jonathan Ashworth says the party will guarantee patients a GP appointment within 48 hours by using tax rises on higher earners to fund a recruitment drive that would see an extra 1,500 GPs a year trained. He said doing so would cost an extra £272.6m a year, with this coming from increasing income tax for high earners on more than £80,000 a year and raising corporation tax for businesses.

Daily Mail, Page: 15

Gift Aid donations hit record

Data from the Office for National Statistics shows that taxpayers made record-breaking gift-aided donations of more than £5.4bn to charity last year, to which HMRC added £1.35bn. The Times offers advice on how to make the most of Gift Aid and the other tax-efficient gifting schemes.

The Times, Page: 59

Typical IHT bill up 57%

Figures from HMRC show that the average inheritance tax bill has climbed 57% in five years, hitting £180,000 and delivering the taxman a record IHT take of £5.4bn in the year to April. Meanwhile, James Bartholomew in the Sunday Telegraph muses on IHT, saying that some argue that it is unfair, with the levy taking “a big chunk” of money that people have earned and has been taxed already.

The Sunday Times, Business and Money, Page: 20 The Sunday Telegraph, Page: 16

Spotlight on Labour’s tax plan

Sean Farrell in the Observer looks at Labour’s strategy for industry, noting several tax-related proposals the party would look to deliver if elected, questioning whether they are as extreme as some commentators have suggested. He says that there will be a tax on financial transactions and corporation tax will increase from 19% to 26% – noting that this would restore it to the 2011 rate. Elsewhere, an item in the Mail on Sunday says the Conservatives have dubbed Labour’s polices ‘Back to the 1970s’. The piece points to a £9bn “raid” on inheritance tax achieved by reducing the tax-free threshold to £125,000 and notes plans for a top 45p tax rate on salaries of £80,000 and above – down from current £150,000.

The Observer, Page: 59 The Mail on Sunday, Page: 19

PERSONAL FINANCE NEWS

Low rates see savers take risks

David Byers in the Times says poor low interest rates are driving some savers to switch their cash to risky investment schemes, citing UK Peer-to-Peer Finance Association analysis which shows that the amount deposited in Innovative Finance Isas, which allow a person to invest in peer-to-peer lending, has almost doubled in a year, from £300m in July 2018 to £588m this July. Mr Byers notes high-profile peer-to-peer lender failures, such as Collateral – where administrator BDO is expecting investor claims worth £17.5m.

The Times, Page: 55

PENSIONS NEWS

Tax fears over fixed protection compensation

The FT reports that an issue with rules designed to make the pensions system fairer could see pension savers with fixed protection arrangements hit with six-figure tax bills.

Financial Times, Money, Page: 4

PROPERTY NEWS

Landlords urged to sell BTL properties before tax changes

Landlords have been told to consider selling their buy-to-let properties now before new rules due to come into effect in April 2020 hit their incomes. Tax advisers say the scrapping of tax reliefs will mean landlords face higher charges when they eventually sell so it may be wise to sell up now while the relief remains in place. Bridget Culverwell of Moore has advised a number of landlords that they will be at least £20,000 worse off if they delay selling their properties until after April, when their capital gains tax protections will be reduced, with reforms to include a change that will see private residence relief halved.

The Sunday Telegraph, Business and Money, Page: 9

LEGAL NEWS

Judge wipes £112k IHT bill

High Court judge Julia Clarke has reversed a decision that left the three children of a deceased widow with an inheritance tax bill of £112,000, after the family received mistaken advice from two professionals on how to avoid the duty. She said the family had “asked the right questions of the right person, but got the wrong answer,” adding: “It would be unconscionable to leave the mistake uncorrected.”

The Daily Telegraph, Money, Page: 2

INDUSTRY NEWS

MP voices concern over loan charge probe

MP Stephen Lloyd has called the independence of a Government-commissioned review into the loan charge into question. He has voiced concerns over the independence of Sir Amyas Morse, the man appointed by Chancellor Sajid Javid to investigate HMRC’s conduct over the tax avoidance crackdown. Mr Lloyd warned Sir Amyas – formerly chief of the National Audit Office – could not be impartial if there were “secret internal channels” between him and HMRC. In a letter seen by the Telegraph the MP said there may be concerns that the Treasury is trying to “evade robust and real scrutiny”.

The Daily Telegraph, Money, Page: 2

CORPORATE NEWS

Accounting issue leaves sour taste for sweetener firm

Sweetener maker Pure Circle has disclosed accounting issues and has begun an investigation that it expects to take several weeks after a discovery by PwC, its auditor. The firm reported a an issue with the classification and value of “certain inventory items”. It added that at this stage it is “unable to determine whether or not the potential issue is material or whether it is limited to the year ended June 30, 2019.” Pure Circle said while the extent of the issue is not yet clear, it “believes the aggregate amount of the potential issue could be up to $30m.”

The Times, Page: 48

 ‘Perfect storm’ hits Thomas Cook

David Shand in the Express looks at the potential collapse of Thomas Cook, citing Frank Ofonagoro, director at Quantuma, who has described the challenges to its business model, such as increasing competition from low cost airlines, as “a perfect storm”.

Daily Express, Page: 4

Wrightbus bidders pull out

The future of bus maker Wrightbus is in the balance after two major bidders withdrew from a rescue process, with Chinese engineering firm Weichai and Jo Bamford, the son of JCB chairman Lord Bamford, both dropping out yesterday. Deloitte is running the sales auction.

The Daily Telegraph, Page: 33

DeltaDNA bought by US firm

Gaming analytics company DeltaDNA has been bought by US firm Unity Technologies for an undisclosed sum. GP Bullhound acted as financial advisor to DeltaDNA on the sale.

The Scotsman, Page: 30

Investors saw £16m payout before chain ran out of money

Sabah Meddings in the Sunday Times reports that investors shared in a £16m dividend from bowling alleys chain All Star Lanes 16 months before it ran out of money. The firm was last week sold to Risk Capital Partners in a pre-pack administration for about £3m, a deal Ms Meddings says will hit the company’s creditors, including HMRC – which had issued a winding-up petition. All Star Lanes is thought to have appointed BDO to find a buyer last year, although it could not agree a deal. BDO handled the firm’s sale to Risk Capital

The Sunday Times, Business and Money, Page: 1

What’s in store for Debenhams

The Observer reflects on what the future holds for Debenhams, saying the first thing on CEO Stefaan Vansteenkiste’s agenda is the CVA announced earlier this year. Considering the climate for retailers, the paper notes PwC research showing that half of those who opt for a CVA still go on to fail.

The Observer, Page: 62

Climate emphasis changes board focus

Robert Watts in the Sunday Times looks at climate change and the impact on businesses, citing Simon Virley, a partner at KPMG who advises energy companies, who says: “We are seeing a pronounced shift in consumer and investor attitudes to climate change across the world … Decarbonisation is on every boardroom agenda.”

The Sunday Times, Business and Money, Page: 5

Talking Tchenguiz

A look at the business of property tycoon Robert Tchenguiz notes that in 2011 he was arrested by the Serious Fraud Office (SFO) as part of a probe into Kaupthing Bank’s collapse, with the fallout seeing him and his brother secure a £4.5m damages payout. Lucy Burton in the Telegraph says Mr Tchenguiz “had also gone after” Grant Thornton for its part in the collapsed SFO investigation, but withdrew the claim when he reached a settlement with Kaupthing.

The Sunday Telegraph, Business and Money, Page: 3

Singer leaves role as M&S’s finance director

Marks & Spencer has reported that its finance director Humphrey Singer has decided to resign from his role for personal reasons. According to people familiar with the situation, M&S has already held talks with a number of possible successors to Mr Singer, although their identities remain unclear.

The Observer Sky News Financial Times The Mail on Sunday, Page: 95

Accountancy alumni get travel bug

The Sunday Times profiles the three founders of luxury travel agency Black Tomato, noting that two of them – Tom Marchant and James Merrett – previously held roles at EY and Deloitte, respectively.

The Sunday Times, Business and Money, Page: 13

INTERNATIONAL NEWS

India slashes corporate taxes to give a boost to economy

India has unveiled a $20bn package of corporate tax cuts, with Finance Minister Nirmala Sitharaman cutting cut the basic corporate tax rate from 30% to 22%.

Financial Times

ECONOMY NEWS

Majority of Britons still live in the ‘age of austerity’

A study by Microsoft Rewards suggests that a majority of Britons are still living in the ‘age of austerity’, opting for frugal measures such as shopping in reduced sections, buying non-branded foods, travelling off-peak, using price comparison sites and withdrawing cash in a bid to keep track of spending. The poll found more than a quarter of people think they have more disposable income now than a decade ago, with 28% attributing this to there now being more ways to save money. The study of 2,000 adults found that 38% say they get a better deal online, with the average adult scouting the internet for discount codes online more than once a week, while 86% are signed up to an average of five different reward cards or loyalty schemes.

The I

Confidence ‘as low as in credit crunch’

Economic consultancy Fathom Financial Consulting says business and consumer confidence is at its lowest level since the global financial crisis. Its economic sentiment indicator for the UK dropped to -0.2% in August – the lowest point since September 2009, when Britain was starting to move out of recession. The Sunday Times looks at sentiment measured by other sources, with IHS Markit, which compiles purchasing managers’ surveys, saying that the average reading for its composite index over the past three months is at its weakest since mid-2009. The Organisation for Economic Co-operation and Development has revised down its growth forecast for Britain’s economy to 1% this year and 0.9% in 2020. KPMG says that leaving the EU without a deal would see a recessionary drop of 1.5% in Britain’s GDP next year, compared with a 1.5% rise if a Brexit deal is secured.

The Sunday Times, Business and Money, Page: 2

Student debt to hit borrowing target

Public finance figures out this week are expected to show that the government borrowed £7.2bn in August, £1.3bn more than in August 2018. If the forecasts prove accurate, borrowing this year would be almost 50% higher than had been expected by the Office for Budget Responsibility. The figures add a portion of outstanding student loans to the national debt pile for the first time, with the Office for National Statistics saying has become increasingly clear that billions of pounds of student loans will never be repaid and will have to be written off. Paul Dales at Capital Economics said the spending figures “will be the last nail in the coffin” for Chancellor Sajid Javid’s aim of cutting borrowing to less than 2% of GDP by 2020/21, adding: “If he raises the target to 2.6%, he might just sneak that.”

The Sunday Times, Business and Money, Page: 2

FINANCIAL SERVICES NEWS

Are asset managers ready to take responsibility?

The FT considers the potential impact of SMCR, with Mark Turner of Duff & Phelps suggesting that it will make those working in financial services take greater accountability when things go wrong.

Financial Times

SJP charges more for near-identical funds

The Sunday Times reports that St James’s Place customers are paying significantly more to invest with fund managers who run cheaper but almost identical portfolios elsewhere. The paper notes that the firm provides clients with a document produced by Grant Thornton comparing its fees with those of 19 of its competitors.

The Sunday Times, Business and Money, Page: 16

OTHER NEWS

Wind energy price falls

A new wave of offshore wind farms will generate power more cheaply than burning coal and for the first time will not require any subsidy. The cost of power from offshore wind has fallen 30% in two years. Simon Virley, UK head of energy and natural resources at KPMG, said the latest price of renewable generation is “truly extraordinary”.

The Independent, Page: 38

HMRC warns universities over tax scams aimed at students

HMRC has warned that students could be the target of tax scams and has written to universities advising them to warn new students about scams designed to steal money and personal details. HMRC received reports of more than 620,000 tax-related email scams last year, an increase of 20,000 on the previous year. The Revenue warned that thousands of these targeted students, with methods including fake tax refund emails sent from seemingly legitimate university email addresses.

Daily Mail, Page: 46 Daily Star, Page: 11 The Sun, Page: 16 The I, Page: 73 Yorkshire Post, Page: 2

Contact Paul Southward.

Paul Southward