News Roundup Monday 24th September 2018

NEWS ROUNDUP

TAX NEWS

Anger as Starbucks pays just £4.5m tax on £162m profits

Several papers pick up on the news that Starbucks paid an effective UK tax rate of just 2.8% in the year to the end of October 2017 – when the corporation tax rate is 19%. The US coffee chain’s European division paid £4.5m on profits of £162m. However, Starbucks Coffee Company (UK), which has four subsidiaries, said it had paid an effective rate of 25.3%, equal to £13.7m. John O’Connell, chief executive of the TaxPayers’ Alliance said: “Politicians need to stop waffling about tax evasion and simplify the law to make it easier to spot. The only way is radical reform.”

Daily Express, Page: 7, 12 Daily Mail, Page: 6, 16 Daily Mirror, Page: 8
The Sun, Page: 4

Elphicke: Brexit means “Britain can take back control of our tax system”

In a piece for the Daily Express, Tory MP Charlie Elphicke contends that leaving the EU offer Britain the chance to reform taxes for the benefit of the country, not big businesses. He says that after Brexit: “We can stand on our own two feet and build a tax system that works for Britain – a land of opportunity where hard work is rewarded and big businesses pay their fair share of tax.”

Daily Express, Page: 7

KPMG ‘responsible tax’ event boycotted amid criticism

A “festival of tax” held by KPMG on Wednesday was boycotted by tax campaigners and academics over concerns about the firm’s past role in helping large multinationals minimise their tax bills.

Financial Times, Page: 14

EU rules McDonald’s Luxembourg tax arrangements not illegal

EU competition commissioner Margrethe Vestager has ruled that “a mismatch between Luxembourg and US tax laws” was responsible for McDonald’s paying so little tax in the EU, not “state aid”.

Financial Times The Independent The Daily Telegraph, Business, Page: 7

Labour will tax betting firms to pay for gambling care

Labour has announced plans for a £140m-a-year tax raid on all UK betting firms stating that the money raised would help pay for treating problem gamblers.

The Sun, Page: 8

Support for higher taxes and spending doubles since 2010

A new study by the National Centre for Social (NatCen) Research reveals that the proportion of Brits who back increased tax and spending has doubled since 2010, with 60% now in favour. The British Social Attitudes Survey found only 33% were against and just 4% thought both should be cut back. Roger Harding, NatCen’s head of public attitudes, said: “Since 2010 the proportion of people who want more tax and spend has nearly doubled and shows that the country is clearly tiring of austerity. The question for the Government is whether its recent spending announcements have done enough to meet public demand for more public investment, including now from a majority of their own voters.”

Financial Times, Page: 2 The Guardian, Page: 23 Daily Mail, Page: 35 Huff Post The Daily Telegraph, Page: 2 The Times, Page: 2 The Sun, Page: 4

Self-employed warned about dubious schemes

HMRC has issued a further warning to self-employed people not to be duped by umbrella companies offering to boost their take-home pay by limiting their tax liabilities and paying them through loan or investment arrangements. HMRC said: “These types of arrangements are likely to result in you paying additional tax, interest and perhaps penalties, and are never HMRC approved.” Dave Chaplin, of Contractor Calculator, commented: “Aggressive tax planning schemes offering staggeringly high retention of income often rely upon leveraging loopholes within tax laws to gain a competitive advantage.” But Julia Kermode, the chief executive of the Freelancer and Contractor Services Association, complained that the sector was being “tarnished” by the actions of “non-compliant firms that do not provide professional employment services and are simply promoting dubious schemes.”

The Daily Telegraph

Rooney among investors in failed Invicta 43 tax scheme

Wayne Rooney is understood to have been one of 225 investors who put their money into a failed scheme to buy the rights to Hollywood movies, but is yet to receive a bill from HMRC.

FT Adviser

INDUSTRY NEWS

A third of investors say UK more attractive post-Brexit

A survey of deal makers by Stephenson Harwood reveals that 88% of them see the UK as at least as attractive as it was in spring 2016, while 32% say it is more attractive as an investment destination. Just 1% said they were not planning on doing a deal in the UK in the next two years because of Brexit. The UK’s quality of technology and intellectual property, macro-economic stability and a skilled labour force were the top reasons given for the UK remaining an attractive market. Head of corporate finance at Stephenson Harwood Duncan Stiles said: “This report reflects our own experiences and confirms investor confidence in the market. We continue to see strong levels of deal activity despite the uncertainty surrounding Brexit. It’s a really encouraging landscape. The investors that we surveyed clearly see the UK as assisting their growth and talent agendas.”

City AM

Global standard for cryptocurrency anti-money laundering to be agreed

Marshall Billingslea, president of the Financial Action Task Force, has indicated that the body is close to establishing a governing set of standards to apply to virtual currencies.

Financial Times

Financial services firms need to do more to combat “motherhood penalty”

The Association of British Insurers has said motherhood is the biggest hurdle facing women as they try to reach senior roles in business and financial services companies. In its Tackling the Gender Seniority Gap report, the trade body recommended making more senior jobs part-time, making job-shares easier, and increasing the chances of promotion for mothers who return to work. The ABI conducted the study in response to data that showed there are 60% fewer women at board level than at entry level in financial services companies.

The Times

Labour considers breaking up big four accounting firms

Shadow chancellor John McDonnell has pledged a major overhaul of the accountancy sector should Labour gain power, with a Big Four break-up and market share plans among the options being considered.

Financial Times

SMEs NEWS

Tax admin biggest barrier in way of business growth

Costs coming from taxation and the associated administration are the biggest barrier to innovation for local firms, according to new research by the Greater Birmingham Chambers of Commerce and the University of Birmingham’s research institute City-REDI. Other barriers cited include too much competition in the market (64%), lack of skilled employees within their enterprise (59%) and lack of internal finance for innovation (49%). Henrietta Brealey, director of policy and strategic relationships at the chambers, said: “When we surveyed businesses across the West Midlands region earlier this year, we found that 76% of firms had experienced an increase in the overall burden of tax admin and compliance compared to five years ago. And, with the recent introduction of the apprenticeship levy, pension auto-enrolment and rising business rates for a significant number of firms, it’s no wonder why.”

The Birmingham Post, Page: 61

Pessimism grows among small firms

Small firms around the UK are increasingly pessimistic about their prospects, with confidence among the self-employed “plummeting”, according to the Federation of Small Businesses (FSB). Fewer than one in three (29%) of small firms expect their performance will improve over the next quarter. The UK SBI confidence measure stands at -1.7 in Q3 2018, down from +12.9 in Q2 2018 while confidence among the self-employed was falling to an all-time low of -18.4. Meanwhile, 27%of small exporters reported falling international sales in Q3 2018, up from 19% in Q3 2017.

Yorkshire Post, Page: 4 The Scotsman, Page: 36 The Press and Journal, Page: 32

Report to highlight barriers facing women in business

Alison Rose, head of commercial and private banking at RBS, has been hired by the Government to report on the challenges facing women in business amid concerns that just a third of entrepreneurs in the UK are female. Robert Jenrick, Exchequer Secretary to the Treasury, who launched the review, said women looking to start a business face unfair barriers. Mr Jenrick also asserts that Britain could be missing out on more than one million new enterprises and billions of pounds of economic activity by not addressing the issues.

Financial Times, Page: 2 This is Money The Daily Telegraph, Page: 2

Web sales and rate rises hit high streets

Figures from the Office for National Statistics show a net 1,772 stores disappeared from the UK’s town centres last year as shops face crippling business rates and customers shopping online instead. Mike Cherry, of the Federation of Small Businesses, called for a complete overhaul of the business rates system.

Daily Mail, Page: 22 Daily Mirror, Page: 17

REPORTING NEWS

New accounting standards make banking safer

Hans Hoogervorst, the chair of the IASB, denies that accounting standards are bias towards delaying the recognition of losses at banks, citing IFRS9, which requires quicker recognition of losses than of gains.

Financial Times

FTSE 350 reporting improves ahead of new code

Analysis by EY suggests FTSE 350 companies are already starting to provide additional information that will be required under the Financial Reporting Council’s updated Corporate Governance Code ahead of the January 2019 deadline. Ken Williamson, EY’s UK head of corporate governance, said: “The political and regulatory focus on how companies engage with their stakeholders has had a noticeable impact on annual reports this year, and we’re also seeing companies providing better disclosures around their purpose, social impact and corporate culture. However there’s still much more to do. In order to comply with new corporate governance code and section 172 requirements, companies will need to place greater emphasis on how the board listens and responds to the views of employees and other stakeholders. They will also need to explain how these interactions have impacted their decision making as a result.”

Accountancy Daily

PROPERTY NEWS

Businesses face £819m hike in rates

Businesses in England face an £819m increase to their business rates if the 2.7% rise in inflation for August remains unchanged this month, according to consultancy Altus Group. Retailers would face a £210m hike in their bills

City AM Daily Mail, Page: 2

ECONOMY NEWS

Inflation hits six-month high

Increases in the prices of petrol and package holidays have taken inflation to its fastest rise in six months in the year to August. The consumer price index (CPI) tracking inflation rose by 2.7% compared to last year, according to the Office for National Statistics, its highest rate since February. Ian Stewart, chief economist at Deloitte, said: “The Bank of England’s decision to raise rates in August looks eerily prescient given the surge in inflation and growth over the summer.” But chief economic adviser to the EY ITEM Club, Howard Archer, said considering the inflation rise was fuelled by the “volatile” recreational and cultural sector meant it was likely to be temporary. Elsewhere, Mike Jakeman, senior economist at PwC, said: “A faster rate of inflation is likely to reduce the narrow gap between wages and inflation further, meaning that the rise in living standards for workers is likely to have been only marginal.”

City AM, Page: 2 Financial Times, Page: 1 The Daily Telegraph Daily Express, Page: 5 The Guardian, Page: 29

Growth in hotel industry predicted

PwC is forecasting a total deal volume for the UK hotel sector of around £6.8bn by the end of the year, a 40% increase from 2017. However, it predicts hotel trading growth will flatten in 2019 due to economic uncertainty, weak business travel demand and an influx of new rooms.

The Scotsman, Page: 36 The Press and Journal, Page: 36 Yorkshire Post, Business, Page: 3

Retail sales rise

Retail sales volumes rose 0.3% in August, according to fresh figures from the Office for National Statistics, up 3.3% on August last year on the back of increases across all sectors except food, clothing and petrol. “Retailers will be encouraged . . . this is consistent with a strengthening in overall consumer spending growth,” said Ian Geddes, head of retail at Deloitte.

City AM Financial Times Daily Mail

Manufacturers desperate for a deal

One in six manufacturing companies in Britain say their businesses would be “untenable” in a no-del Brexit scenario. A study by ComRes for trade association EEF said 16% of companies would have to close or relocate out of the UK if they faced WTO levies and border checks on goods. Stephen Phipson, EEF chief executive, said companies are “desperate” for the Government to negotiate an exit deal.

The Daily Telegraph, Business, Page: 3

OTHER NEWS

Bank of England warns of danger of echo chambers

The Bank of England has warned that the economy could be destabilised by rumours spread on social media where echo chambers amplify “groupthink” and lead to negative collective decisions. In a speech in Estonia, Andy Haldane, the Bank’s chief economist said increased digital connectivity had “also increased the chances of self-reinforcing and self-referential waves of collective irrationality taking hold.”

The Daily Telegraph

Ross Campbell: The case for free trade needs to be made again

Writing in City AM, Ross Campbell, public sector director at ICAEW, says Britain will not be able to escape from the US-China trade war and that with British exporters looking beyond the EU for trade opportunities, it is “crucial that the global accord in favour of free trade does not crumble.” Trade barriers hurt everyone and more needs to be done to advocate for freer trade, Campbell asserts.

City AM, Page: 22

Sir Bruce has last laugh at the taxman’s expense

Sir Bruce Forsyth left his entire £11.7m estate to his wife Lady Wilnelia, who took over control of Bruce Forsyth Promotions a month before he died. The move meant 40% IHT did not need to be paid. He left nothing to his children but his wife is now free to give away £650,000 without paying extra in tax. The legendary TV presenter was outspoken about IHT, saying once that he thought it was “over the top”.

Daily Star, Page: 7 Daily Express, Page: 3

Contact Paul Southward if you have any queries.

Paul Southward