News Roundup Monday 29th April 2019
News Roundup Monday 29th April 2019
Criminals to wear wire for SFO in return for reduced jail time
Lisa Osofsky intends to bring US crime-fighting tactics to the UK as the former FBI agent seeks to tackle corporate criminality. The new head of the Serious Fraud Office said she intends to work with HMRC to bring tax evaders to justice by offering offenders reduced jail time in return for wearing a wire. “I see huge potential out there if you have got folks who have committed criminal acts possibly being willing to work with law enforcement. It’s got to make sense,” Ms Osofsky said.
Connect system paying off for HMRC
HMRC’s sophisticated Connect system is being used increasingly to identify cases of tax evasion, according to Blick Rothenberg. Connect has led to the collection of more than £3bn in extra tax and a large reduction in investigation costs and prevented the loss of over £4bn through additional criminal investigations and convictions. The Times’ Anne Ashworth says Connect may be “welcome news to those who abhor tax avoidance” but HMRC must be accountable and its “crusade to boost the tax take cannot be accompanied by more complexity.”
Yorkshire Post, Page: 23 The Times, Page: 62
Loan charge pair devise workaround
Former HMRC investigator Phil Manley and leading tax lawyer Robert Venables, QC, have been identified as being involved in an alleged tax avoidance scheme in Cyprus. The pair have been promoting a scheme which claims to help those caught out by the loan charge. Both Mr Manley, a partner at Dow Schofield Watts tax resolution in Warrington, and Mr Venables, of Old Square Tax Chambers in London, have been leading advisers for the freelancers in their battle against HMRC, the Times notes. HMRC says it is investigating the scheme.
Rise in number of people being paid below minimum wage
A new study by the Low Pay Commission has found a “worrying” rise in workers being paid less than the minimum wage, with 439,000 people in the UK paid less than the legal minimum in April 2018 – up 30,000 on the year before. The commission said thanks to improved funding, HMRC had identified a record number of workers as underpaid, with fines against employers also up but the number of cases resolved was flat year-on-year.
The Independent, Page: 40
HMRC to bring in online complaints process for the first time
Taxpayers will be able to log complaints online about HMRC with the Adjudicator’s Office for the first time from the autumn after pressure from Treasury select committee chair Nicky Morgan.
Forcing billionaires abroad will make Britain worse off
Phones 4U founder John Caudwell says in a piece for the Sunday Telegraph that Jeremy Corbyn’s tax policies risk driving not only the rich but anyone with “a little extra money in the bank” out of the country. Philip Hammond isn’t much better, Caudwell adds, with his promise that taxes will need to rise for years to cover social care costs also fiscally irresponsible. Mr Caudwell states that he has paid over £300m in taxes but it is those who shirk their duty to pay their way who should be targeted with existing tax laws. He adds that 70% of the wealth that he intends to give away would be severely eroded by a Corbyn government. What the likes of Jeremy Corbyn need to understand, Caudwell concludes, is that, “we cannot possibly make our country a better, more prosperous place with a tax system that pushes the wealthiest in society to leave the country.”
Mortgages at nine-month high
Mortgage loans hit a nine-month high in March, industry data from the UK Finance showed. High Street banks approved 39,980 mortgages in the month, up 6% on a year ago and 2% ahead of the previous month. “It may well be that housing market activity has gained some support from recent improved consumer purchasing power and robust employment growth,” commented the EY Item Club’s Howard Archer. However Capital Economics property economist Hansen Lu said: “Looking ahead, the delay to Brexit suggest that demand and sentiment in the housing market will stay subdued for at least the next few months.”
Stamp duty receipts fall by £1bn as attacks on landlords continue
Sam Meadows details in the Sunday Telegraph how stamp duty receipts have been decimated by a series of attacks on buy-to-let investors. Figures published last week by HMRC show the tax take from stamp duty fell to £11.9bn in 2018-19 from £12.9bn the previous year after a decade of almost constant increases. As a result of the squeeze on landlords, the number of mortgages taken out by buy-to-let investors has fallen by 7.7% year-on-year, according to figures from UK Finance, while David Smith of the Residential Landlords Association fears fatal damage to the private rented sector with tenants also suffering. George Bull of RSM points out that the devolution of stamp duty to Wales in April last year had also had an impact on receipts.
The Sunday Telegraph, Business, Page: 10
Self-employed face old age of destitution
New research shows nearly two-thirds of self-employed workers have no savings at all for old age and changes to pension rules mean business owners and sole traders face getting burdened with high tax bills if they try to contribute too much when they have a good year or sell their business. A new survey by Fidelity reveals that 62% of self-employed people have no pension, compared with 32% of employed workers. The Sunday Times’ Kate Palmer adds that not only are the self-employed at risk of being caught out by the pension rules, they are also excluded from auto-enrolment
Pension limits could leave us all feeling sick
The Sunday Telegraph’s Laura Miller reports on how the Chancellor last week defended high penalties for wealthy savers, declaring the 55% tax on those who breach limits on pension contributions is “part of a deliberate strategy” to make the wealthiest bear more of the tax burden. His comments come as senior NHS doctors threaten to leave the health service to avoid the tax charges. Commenting on the loss of doctors over pension restrictions, James Comey says in the Sunday Times: “These pension caps need lifting – not just for doctors but for everyone – before this crisis in the NHS leaves us all feeling sick.”
The Sunday Telegraph, Business, Page: 14 The Sunday Times, Page: 12
WEALTH MANAGEMENT NEWS
Families warned over unregulated trust providers
The Sunday Telegraph reports on heightened concerns over unregulated trust providers going bust leaving families out of pocket and at risk of losing control of their assets. The paper cites several cases where people who put properties into trusts to help pay for future care or for inheritance purposes have struggled to regain control of their assets when the provider goes into administration or gets taken over. Katie Robertshaw of Nelsons said she had seen more inquiries following firm closures or changes in provider. Richard Bates of Cognitive Law also warns that increases in probate fees could be used as a “cynical justification to sell more trust arrangements” people did not necessarily need.
The Sunday Telegraph, Business, Page: 9
Chancellor decides against being a penny-pincher
The Government has decided not the scrap the 1p coin following a consultation launched by the Chancellor last year. There were fears that the penny would be taken out of circulation after the Treasury decided to look at the use of low-value coins. The decision was welcomed by Mike Cherry, of the Federation of Small Businesses, who said: “Keeping these coins in circulation is the right call. While growing numbers of transactions are electronic, cash is still a key part of the mix for small businesses.”
Sunday Express, Page: 23
Probate backlog puts property deals at risk
A rise in the number of probate applications ahead of a rise in charges has led to delays in grants being issued putting thousands of property transactions at risk. Andrew Wilkinson of Lime Solicitors said: “A glut of applications has inevitably slowed down the process, meaning that grants are taking months to be issued, rather than weeks. At the same time, the probate system is moving online and physical probate registries are closing down, with staff being gradually replaced by computers.” Samantha Neagle of Clarke Willmott said the system had descended into “mayhem”, while Josh Lewison, a barrister at Radcliffe Chambers , said the prospect of property deals falling through was “significant” and delays could see sellers losing their buyers.
Brexit delays are damaging productivity
Analysts at Goldman Sachs have suggested that delays to Brexit will put more pressure on the British economy because a lack of business investment will act as a drag on productivity. Adrian Paul, Goldman’s European economist, said: “Since the referendum, firms have opted to hire workers rather than invest in capital and the misallocation of resources looks to have deepened.” The analysts added that Britain was still likely to leave with a deal and predicted that there would be “minimal macroeconomic disruption” once Brexit does happen. Separately, billionaire investor Warren Buffett has told the FT he is “ready to buy something in the UK tomorrow” regardless of whether the UK left the EU, because he can trust the country’s laws and culture.
Factories stockpiling goods at record rate
A quarterly survey from the CBI has found that British factories are stockpiling goods at the fastest pace since records began in the 1950s as they prepare for Brexit. The survey showed that output growth sped up slightly in the three months but remained “modest” overall. CBI chief economist Rain Newton-Smith said the Brexit extension has been “encouraging”, but “does not give the longer-term certainty that [manufacturers] desperately need to invest in their businesses”.
Daily Mail, Page: 107 The Times, Page: 50
Contact Paul Southward.