News Roundup Monday 24th June 2019
News Roundup Monday 24th June 2019
Conservative candidates talk tax at hustings
The first Conservative leadership hustings has seen Boris Johnson defend his proposals to raise the 40p rate of income tax from £50,000 to £80,000, insisting it would form “part of a package” that would also benefit low-paid workers. He also said Conservatives should not be “at all shy” of reducing the tax burden on middle incomes. Mr Johnson also warned that Labour leader Jeremy Corbyn and Shadow Chancellor John McDonnell would send the economy into a “death spiral” with a “deranged £300bn programme of re-nationalisation,” claiming they would “whack up taxes, corporation tax, financial transactions tax, inheritance tax, income tax, up to 50%.” Meanwhile, rival Jeremy Hunt used the event to confirm a plan to cut corporation tax to 12.5%, saying such a move would “land an economic jumbo jet on” on Europe’s doorstep. James Ashton in the Sunday Telegraph looks at some of the financial pl edges made by the leadership candidates, focusing on how they look to appeal to the business sector. On the tax plans put forward, Mr Ashton says “the business community will never turn its nose up at tax cuts,” but says Conservative Stephen Crabb “is right to caution against turning this race into some sort of fiscal bidding war.” Elsewhere in the same paper, Laura Miller compares Mr Johnson and Mr Hunt’s tax pledges, citing Nimesh Shah of Blick Rothenberg who highlights that under Mr Johnson’s mooted tax reform, someone earning £80,000 would pay £6,000 less income tax a year.
The Sunday Telegraph, Page: 4 Sunday Express The Sunday Telegraph, Business and Money, Page: 2
Hunt pledges wider business rates exemptions
Jeremy Hunt has said that if he becomes Prime Minister he will exempt hundreds of thousands of firms from business rates, scrapping taxes for nine out of ten high street shops. This, he says, will “give a new lease of life to the British high street”. Mr Hunt said his administration would reform the current Retail Discount rate so that businesses which qualified for the discount would see their entire business rate bill cancelled, whereas currently those with a rateable value below £51,000 are eligible only for a 33% reduction. “Too many small businesses are being put out of business by tax bills they can’t afford to pay,” Mr Hunt commented.
The Sunday Telegraph, Page: 6 The Sun on Sunday, Page: 2
Homeowners could be hit by CGT plan
The Mail on Sunday’s Glen Owen reports that Labour leader Jeremy Corbyn could deliver reforms that would see homeowners taxed on the increase in the value of their home. A plan set out in the Labour-commissioned Land For The Many report would abolish the Capital Gains Tax exemption on main homes, meaning owners would pay income tax on any profits when they move home. Conservative leadership frontrunner Boris Johnson has hit out at the proposals, saying: “This mad ‘tax on all your houses’ would cripple every Brit who owns or wants to own their own home.” Jeff Prestridge in the Mail questions the proposals in the report, describing the possibility of capital gains tax being applied to all home sales as “a horrifying prospect”.
The Mail on Sunday, Page: 16, 17
1.3m miss out on tax relief
Government figures show that a million women are losing tax relief on their pension savings due to rules relating to net-pay schemes. A total of 1.3m low earners receiving less than the personal allowance missed out on a 20% top-up to their work pension in 2016/17.
The Sunday Times, Page: 16
SFO makes arrests in Patisserie Valerie probe
The Serious Fraud Office has revealed that it arrested and questioned five people over issues related to the collapse of cafe chain Patisserie Valerie. This follows the arrest in October of former finance director Chris Marsh. Those arrested do not include former executive chairman Luke Johnson, nor non-executive directors Lee Ginsberg and James Horler, who are understood to have been interviewed as witnesses and not suspects. Patisserie Valerie suffered a blow last year when a £40m hole was discovered in its books. A PwC report pointed to areas of concern including inflated revenues, the manipulation of costs, and unpaid business rates and VAT bills. The Financial Reporting Council is looking into Grant Thornton’s role as auditor at Patisserie Valerie.
Comet directors face legal action
Liquidators to the failed electricals chain Comet are exploring legal action against several former directors, with FRP Advisory filing notice of possible court proceedings against former Dixons boss John Clare, who helped private equity firm OpCapita buy Comet in 2011; Carl Cowling, Comet’s COO; Bob Darke, its CEO; and Hailey Acquisitions, set up by OpCapita founder Henry Jackson for the deal. The Sunday Times cites a source who says the possible legal action could be related to a decision to accept secured financing from OpCapita, which meant the owner ranked ahead of other creditors for repayment.
Firms eye British Steel
French engineering firm Systra is reportedly in talks to buy part of British Steel, with it said to be considering a bid for wholly-owned subsidiary TSP Projects. Evraz, a steel and mining group owned by Russian billionaire Roman Abramovic, is said to be considering a bid for British Steel’s French business. British Steel is under control of the official receiver after it went into insolvency last month. EY, which is advising the Government on a potential sale, has called for bidders to table offers by the end of June, with it believed to be in favour of a sell off that does not carve up the collapsed company.
Energy firm faces bills claims
HMRC has filed winding-up petitions against four of energy supplier Solarplicity’s subsidiaries over allegedly unpaid bills. The firm says a number of the bills were disputed and one petition had been paid.
The Sunday Times, Business and Money, Page: 2
BrewDog and the brewery boom
The Sunday Times looks at craft brewery BrewDog, noting that a number of independent breweries have sprung up across the UK in recent years, with analysis from UHY Hacker Young showing that 179 opened in 2016 alone.
The Sunday Times, Business and Money, Page: 7
Big Four ride high, with robots yet to rise
James Ashton says BBC drama Years and Years, which is set in the near future, “ended with a dystopian imagining to strike fear into white-collar workers” – with an accountant saying her profession no longer existed as a computer programme had rendered the sector’s human staff obsolete. Mr Ashton says the present is “not so bleak,” with the Big Four “riding high” despite regulatory scrutiny. He notes that David Sproul has stepped down at Deloitte having lifted revenues in each of his eight years, while “the likes of EY and KPMG need more bright people to tackle the threat of cybercrime” rather than “an army” of robot accountants. He also cites PwC’s Kevin Ellis, who recalls the industry’s last big technological change, when PCs were introduced, noting that staff numbers “went up then too.& rdquo;
The Sunday Telegraph, Business and Money, Page: 2
Late-payers to be frozen out of public sector contracts
As of September, firms that do not pay 95% of subcontractors within 60 days risk being frozen out of public sector procurement. The new rules force companies to report their payment data every six months to a national database overseen by the business department, with the measures part of efforts to tackle late payments to small businesses. The Federation of Small Businesses (FSB) estimates that problems linked to delayed payments see 50,000 companies shut every year. FSB chairman Mike Cherry comments: “The crackdown on big business suppliers who don’t pay promptly is welcome; those who fail to comply … should be in no doubt of the consequences.” Martin Traynor, the small business crown representative, said those who fail to pay up in a timely fashion may see themselves taken out of the running for public sector contracts. “If you can’t satisfy the people you are procuring, then you won’t be bidding for it,” he sai d.
Property transactions dip
HMRC figures show that property transactions dropped by 6.4% between April and May, and by 11.3% year-on-year. Mike Scott of Yopa said that other indicators, such as the number of mortgage approvals, “are still showing a healthy level of activity.” He added that it is expected that the number of homes sold in 2019 as a whole is expected to total around 1.2m, the same as in each of the previous five years. Jeremy Leaf, former RICS residential chairman, said that while the figures “reflect weakness in the market at a time when we might have expected more strength”, the seasonal nature of the market “makes spotting short-term trends difficult”.
Tech can drive productivity and prosperity
The Sunday Times’ David Smith considers what might lift the economy from the “doldrums” of weak growth and flat-lining productivity. He notes a survey of economists by Consensus Economics which shows an average expectation of just 1.35% growth this year and next if a Brexit agreement is secured, while a no-deal would see growth drop below 0.5% next year. Mr Smith says technology “can and should be an important driver of productivity, and thus prosperity,” pointing to KPMG’s Economic Outlook, due to be published on Thursday, which will state: “Investment in innovation and technological change can drive a step-change in trade and an acceleration of trade growth in post-Brexit Britain.”
Young female leaders
The Sunday Telegraph carries a feature highlighting young female business leaders. These include Crystal Eisinger, Google’s strategy & operations lead, who started her career with a fully-paid gap-year placement with Deloitte; Acosta Europe COO Charlene Friend, who started out in consulting with PwC; and Ana Herranz, head of customer & commercial strategy at Telefonica UK, who previously worked as a management consultant at PwC.
The Sunday Telegraph, Business and Money, Page: 6
Contact Paul Southward.