News Roundup Monday 28th January 2019
News Roundup Monday 28th January 2019
SELF-ASSESSMENT TAX RETURNS
Only four days left to submit your 2017/18 self-assessment tax return to HM Revenue & Customs. Don’t panic contact us.
Accountants report catalogue of errors in run-up to deadline
HMRC is making some serious errors as taxpayers rush to file their returns before the deadline, the Times reports. Just days after the tax office was forced to apologise to more than 650 people it sent £100 late penalty fines to it has been revealed that HMRC is mixing up English and Scottish taxpayers. The Institute of Chartered Accountants of Scotland along with firms such as BDO and Johnston Carmichael have identified hundreds of cases where people have been wrongly designated. Meanwhile, the ACCA and the ICAEW have received reports of paper returns not being processed accurately and pages being omitted. Chas Roy-Chowdhury, the head of taxation at the ACCA comments: “HMRC is prone to mistakes and we need to level the playing field. A government department should not have a one-way ticket to penalise taxpayers when we can get no recompense when it makes a mistake.”
HMRC hosts VIP hotline for politicians
HMRC runs a secret hotline for politicians and civil servants who call for advice on their tax returns, the Standard reveals. The special line is answered within seconds by officials while ordinary taxpayers are forced to waste up to 30 minutes listening to recorded messages and answering computerised questions. MPs are given a private number that goes to Public Department 1, a special office in Wales, which services four lines for the queries. An HMRC spokesman said: “We ensure the security of all our customer’s information, but a small number are at a heightened level of risk. This includes customers whose personal safety could be compromised. We protect these records by restricting access to a small number of appropriately authorised staff. As only certain staff are authorised to access these records we need to have a separate phone line for handling their queries.”
Evening Standard The Daily Telegraph, Page: 2 Daily Mail, Page: 16 The Sun, Page: 2
HMRC told to delete voice data
Over 160,000 people have told HMRC to delete biometric data it gathered during phone calls. The tax authority has so far captured the voice data of about seven million callers since launching its Voice ID system in 2017, but originally gave people no easy way to opt out. Privacy group Big Brother Watch said people had been “railroaded into a mass ID scheme by the back door”. Big Brother Watch said it had reported HMRC to the Information Commissioner’s Office (ICO), suggesting it had broken data protection law.
Truss makes pitch to young voters
Liz Truss has asserted that Jeremy Corbyn’s appeal to the young is waning as they realise they face high taxes under a Labour government led by him. The chief secretary to the Treasury said 18- to 24-year-olds are “the most self-starting, business-minded generation ever and all Corbyn offers is high taxes and more state control.” Ms Truss added: “It’s Conservatives, not Labour, that will help young people fulfil their ambition and turbocharge the economy as we leave the EU.”
The I, Page: 7 Daily Mail, Page: 10
Living in the shadow of a tax scandal
The FT reports on the anguish faced by contractors battling HMRC over loan-based remuneration schemes, which were targeted by George Osborne in 2016, and have left some facing massive tax bills.
UK’s 50 highest taxpayers revealed
The Sunday Times has drawn up a ranking of the UK’s top taxpayers estimating the tax due on business profits, share sales, dividends, house purchases and personal income. Stephen Rubin – who owns a majority stake in JD Sports – and his family are top of the list paying an estimated £181.6m in tax for the 2017/18 financial year. Denise Coates, the Bet365 boss, with her brother John and father Peter, comes in second paying £156m, followed by Sir James Dyson and family paying £127.8m. According to the Sunday Times, the 50 entries paid nearly £2bn in UK tax last year. The paper said that, when calculating tax liability, it did not include tax paid overseas in its calculations. It added that just 28 of the 145 billionaires and 18 of the 855 millionaires on last year’s Sunday Times Rich List are featured in the tax list.
Fears over Corbyn led Dyson to flee
The Sunday Times alleges that a Dyson insider believes Sir James’ decision to move the company’s HQ to Singapore was partly due to the growing threat of a Jeremy Corbyn-led Labour government. “A general election is not out of the question, nor a Corbyn victory, and James and Jeremy Corbyn have diametrically opposed views on business,” the source said. Elsewhere, the Observer’s Jamie Doward talks to tax expert Richard Murphy about how Dyson could benefit from developing intellectual property for its electric cars in Singapore rather than in Britain, but overall the tax efficiencies of the move are negligible. Murphy goes on to explain how difficult it would be for the UK to emulate Singapore’s tax policies post-Brexit because of the different way revenues are raised. However, he adds that “there is an increased risk that companies will leave for even lower-taxed locations, which we cannot emu late without abandoning the NHS, state pensions or state education.”
The Sunday Times, Business, Page: 1 The Observer, Page: 14
Investors sue HSBC’s private bank over Ingenious investments
Hundreds of high-profile investors in Ingenious Media are suing HSBC’s private bank claiming it knew cash borrowed from the bank by Ingenious to top up investments was not really being invested in film schemes. The schemes promised investors tax relief by putting their money into British film and video game productions, with losses written off against their tax bills, but HMRC deemed them illegal. The claimants say HSBC “dishonestly assisted” Ingenious.
Time to stop taxing elderly workers, says Parsons
Veteran BBC Radio presenter Nicholas Parsons has said people over 85 who are still working should not have to pay tax on their pension income. In an interview for the Sunday Times Mr Parsons says: “I am not saying at age 65. But once you get to 85 or 90 they should say: ‘Well, you have been paying into the system for years. From now on, we won’t tax you.'”
Labour plan “excessive pay levy”
A Parliamentary debate on FTSE100 company pay ratios heard how Labour plans to introduce an “excessive pay levy” on those who earn £330,000 a year or more. The warning from shadow business minister Laura Pidcock came after a Mail on Sunday investigation revealed last weekend that top chief executives are being paid as much as 1,000 times more than the average wage of their employees.
The Mail on Sunday, Page: 100
Barclays chiefs ‘laid misleading trail’
The trial of four senior Barclays executives has heard that the defendants allegedly laid a “misleading audit trail” when sealing a deal with Qatar during the financial crisis to avoid being “rumbled” and ending up in jail. The Serious Fraud Office alleges that four defendants, including John Varley, the bank’s chief executive at the time, secretly paid £322m to Qatar in return for its investment in two capital calls. The SFO says that “advisory services agreements”, or ASAs, struck with Qatar at the time were just a “smokescreen” to funnel extra money to the Gulf state.
Patisserie Valerie report talks of fake invoices and ledgers
A report by PwC commissioned by the board of Patisserie Valerie has identified several finance staff and a supplier who were involved in the fraud that brought the company to its knees. Elsewhere, the Times’ Alistair Osborne says Luke Johnson has questions to answer over how he managed to miss the problems, which may have become apparent had he investigated unrealistic margins and suspicious sales figures.
Did Grant Thornton examine Patisserie Valerie’s accounting journals?
The Sunday Times picks up on a report from PwC into the accounting irregularities at Patisserie Valerie and notes how a source believes the café chain’s auditor at the time, Grant Thornton, may have failed to examine the company’s accounting journals – which show the names, dates and amounts of transactions for each shop. According to the Financial Times, the PwC review contains details of how the staff adjusted the ledgers to ensure turnover and margin remained constant. Meanwhile, Geoff Ho in the Sunday Express reveals that sources close to KPMG, the administrator for Patisserie Valerie, say creditors are unlikely to get back all of their money, even if the business is rescued. He notes that the Financial Reporting Council is investigating Grant Thornton over the issue and cites Phil Harris, portfolio manager at EdenTree Investment Management, who states: “A thorough investigation is required into how this listed, and recently floated company, could have passed a detailed audit process.”
The Sunday Times, Business, Page: 3 Sunday Express, Page: 53
Councils’ property investments breaching Cipfa code
The Observer carries a feature looking at councils’ investment in retail property. The amount spent by English local authorities on investment properties increased from £76.4m in 2014-15 to £1.8bn in 2017-18. With concerns about the state of the property sector as Brexit approaches, Lord Oakeshott, chair of Olim Property, warned: “The whole thing is a mess. Councils are being loaned vast amounts of money by Government, which is being invested in property. It’s a hell of a gamble that these councils are taking, and this is not what councils should be doing”. The Chartered Institute of Public Finance and Accountancy (Cipfa) has warned councils not to expose public funds to “unnecessary or unquantified risk” when borrowing to invest in commercial property. “Where the scale of commercial investments including property are not proportionate to the resources of the authority, this is unlikely to be consistent with the requirements of ‘the Cipfa prudential code’,” it said.
The Observer, Page: 52
Pension freedoms enjoyed by 1m
Over a million people have embraced pension freedoms since the 2015 reforms, accessing savings of over £23bn, according to new figures. Aviva said despite initial fears of a “dash for cash”, withdrawal payments have consistently been averaging less than £4,000. Elsewhere, Steven Cameron, pensions director at Aegon, said: “The freedoms have changed the way people think about retirement and are enabling the rise of a more flexible transition into retirement whereby people start accessing some retirement savings to support a reduced working pattern.”
The I, Page: 65 The Sun, Page: 11 The Scotsman, Page: 3 Yorkshire Post, Page: 5
Doctors unfairly hit by pension allowances, says BMA
The British Medical Association is urging the government to lift the annual pensions allowance for thousands of its members, arguing that medics are unfairly hit by cuts to tax relief.
Pension firms face massive compensation claims
Thousands of complaints have been lodged with law firms and the Financial Ombudsman Service over self-invested personal pensions (Sipps), the Sunday Times reports. Pension firms are facing claims for compensation totalling hundreds of millions of pounds from savers who invested in high-risk schemes that went wrong. Law firms Hugh James and Wixted are jointly representing 176 claimants against one firm with claims totalling £8m-£9m while APJ Solicitors says it is dealing with over 1,400 complaints worth more than £50m against pension firms.
Pension limits – the benefits of opting out or taking a hit
New analysis from Royal London suggests it is still worth paying into a pension even if savers are exceeding the limits and facing high tax charges for doing so. Annual and lifetime limits on tax-efficient retirement savings have been reduced in recent years and many savers exit or stop contributing to their scheme to avoid charges. However, opting out can sometimes mean members no longer qualify for any life insurance included in a scheme while dependants may be eligible to receive a pension if a saver dies while a member. Clare Moffat from Royal London said: “There is nothing inherently wrong in paying one of these charges. Be aware of the potential impact leaving a scheme might have on your long-term retirement planning.”
The Sunday Telegraph, Business, Page: 10 The Mail on Sunday, Page: 61
Juncker under fire over crime blind spot freeport
Jean-Claude Juncker is being urged to act on accusations that the Luxembourg freeport set up under his leadership of the country is a conduit for illicit funds, tax evasion or the proceeds of criminal activity. The facility acts as a holding pen for valuables but is exempt from Luxembourg’s usual tax and customs requirements. In a letter to Mr Juncker seen by the Telegraph, Dr Wolf Klinz, a German MEP, warned that Le Freeport Luxembourg represented a “blind spot” of the EU’s efforts to boost financial transparency and tackle crime. Dr Klinz, a member of the EU Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance, also raised concerns about the “dubious and highly problematic reputational profiles of Le Freeport’s private shareholders”.
PERSONAL FINANCE NEWS
How the sandwich generation can beat financial struggle
The Telegraph examines how the “sandwich” generation – those in their 50s and 60s with elderly parents and children both needing financial support – might be able to alleviate some of the pressures. A recent study by the ONS showed that 1.3m people have a financial and care responsibility for both children and ageing parents and tax experts are now calling for more relief to help those struggling to realise the funds. The paper carries advice from experts on the most tax efficient ways to pass wealth down the generations and ensure grandparents are supported.
TSB could triple business with £120m award
TSB is aiming to triple its share of the small business banking market if it wins a £120m grant from Royal Bank of Scotland to promote competition. TSB already has 2% of the small business market, equating to about 100,000 customers, and hopes to add about 200,000.
MTD strains nerves of small firms
Peter Evans reports on the confusion around the Government’s Making Tax Digital programme in the Sunday Times. The policy has been beset by delays and complications and small businesses say it has coincided with a raft of other cost pressures. The ICAEW found in October that 40% of firms had no idea the change was coming while others criticise the timing – alongside high business rates, the apprenticeship levy, late payments and rises to the minimum wage, not to mention Brexit. Although some deadlines have been postponed, the requirement for companies to submit their VAT returns online (using government-approved software) from the start of April remain. Anita Monteith, of the ICAEW’s tax faculty, said the government had been heavy-handed in enforcing its new policy. “The problem is not so much the deadline as making it mandatory,” she added. “It should be something that businesses come to in time.”
Sterling up on hope no-deal will be avoided
The pound rose yesterday hitting a 13-month high against the euro as the City upped its bets that a no-deal Brexit would be avoided. However, the improved strength of sterling prevented the FTSE 100 from joining in a global stocks rally.
The Daily Telegraph, Page: 30 The Scotsman, Page: 36
UK growth eclipses eurozone
Official figures out this week are set to show the eurozone trailing behind Britain’s economy. City forecasters have pencilled in growth of 0.3% in the final quarter of 2018 for the UK, with the currency bloc’s economy growing by just 0.2%.
Accountant stole £600k from singer
The accountant for X Factor winner James Arthur has been jailed for four years after swindling the singer out of £600,000. Mark Livermore, who worked at MGM Accountancy, stole the money to finance a gambling addiction. Livermore will now be banned by the Financial Reporting Council from future employment as an accountant, the Mail reports.
Daily Mail Evening Standard
UK firms ramp up no-deal preparations
The British Chambers of Commerce claims that UK companies are ramping up no-deal preparations with a handful even activating plans to move operations out of the country. Matt Griffith, director of policy at the BCC’s west of England branch, said: “Since the defeat for the prime minister’s deal, we have seen a sharp increase in companies taking actions to try and protect themselves from the worst effects of a no-deal Brexit. No deal has gone from being one of several possible scenarios to a firm date in the diary.”
The Observer, Page: 1, 7
Brexit costing £17bn a year, think tank asserts
Research from the Centre for European Reform estimates the UK economy is 2.3% smaller than it would have been had Britain voted to remain in the EU back in 2016. The think tank calculated that the reduced GDP was costing the UK’s public finances £17bn a year.
The Independent, Page: 1, 3
Contact Paul Southward if you have any queries.