News Roundup Monday 2nd July 2018
News Roundup Monday 2nd July 2018
Civil partnership verdict could have tax impact
A heterosexual couple have won their legal bid for the right to have a civil partnership instead of a marriage, in a verdict which could have a significant impact on the government’s pension costs and tax income. The Supreme Court agreed that the Civil Partnership Act 2004 – which only applies to same-sex couples – is incompatible with the European Convention on Human Rights. Civil partners are entitled to the same legal treatment in terms of tax, inheritance and pensions, whereas cohabiting couples face inheritance tax at 40% and cannot claim tax allowance.
Digital sales tax won’t level playing field
The I’s Jim Armitage argues that imposing sales taxes on online companies such as Netflix will do little to level the playing field with brick-and-mortar businesses. He says that to stop digital companies shifting content ownership to low-tax destinations, politicians must work internationally to make rates of tax the same everywhere.
The I, Page: 37
Business hits out at tech firms’ low tax bills
Business leaders have suggested American technology giants have escaped having to pay their fair share of tax. ITV chief executive Dame Carolyn McCall told the Times CEO Summit that the low amount of tax Facebook paid in the UK was “quite odd” considering the large revenues it generated. Another panellist at the event, RSA chief executive Matthew Taylor, agreed that the tax system needed to be looked at. David Tyler, the chairman of J Sainsbury, also said that taxes paid by tech companies needed to be “looked at very carefully” by government.
The Times, Page: 38 Daily Mail, Page: 64
Tax cuts for high earners cost £11bn
Cutting the top rate of income tax from 50p to 45p six years ago has cost the Treasury £11bn, analysis by union Unison found. George Osborne’s cuts mean people earning more than £1m a year had reduced their tax bill by more than £650,000 on average over the period. Unison said the income tax cut would have paid for an extra 30,000 nurses, 15,000 police officers, 20,000 teachers and 10,000 police community support officers. Unison general secretary Dave Prentis said: “The claim that there’s no money for public services has a hollow ring given the revenue the Government could have raised. That is if ministers hadn’t been more interested in giving the country’s millionaires a huge tax cut.”
Daily Mirror, Page: 14 Daily Express, Page: 43 Daily Star, Page: 7 Yorkshire Post, Page: 4 The Scotsman, Page: 10
Think-tank calls for end to buy-to-let tax break
The first report from a new Conservative thinktank, Onward, recommends ending or severely curtailing tax breaks for buy-to-let and private landlords, alleging they have put home ownership beyond the reach of at least 2m families.
Scots willing to pay more taxes for NHS
A poll by the Sunday Times Scotland survey found that 52% of Scots would be willing to pay more in tax to better fund the health service, with less than a third (29%) opposed to a tax hike and 18% unsure.
The Press and Journal, Page: 12 The Scotsman, Page: 2
HMRC sets sights on overseas income
HMRC is targeting people with homes or bank accounts abroad it suspects of hiding income or capital gains. New penalties for avoiding tax come into force at the end of the September and will see those failing to declare tax due on offshore interests facing substantially increased fines and back taxes. The new rules apply to all income, such as interest on savings or rental earnings overseas before April 6, 2017, in addition to capital gains. Income earned or capital gains made after this date can be filed by the January 2019 deadline as usual. Under the new rules, people will face penalties of 200% of the tax owed on undeclared overseas income. Lucy Brennan of Saffery Champness, said HMRC “are nudging people that they suspect may be confused by the rules, or simply forgot.”
Note: If you are concerned that you may have overseas income that has not been declared, or you have been contacted by HMRC, we can help you mitigate your position with the taxman. We have a have proven expertise in handling tax disclosures having helped many clients bring their tax affairs up to date and giving them peace of mind. Contact Paul Southward to arrange a no obligation consultation on 01582 651000.
Taxman stores over 5m voiceprints
HMRC has been accused of breaking GDPR after it was revealed the taxman had been secretly recording millions of people’s unique ‘voiceprints’ in a controversial ID scheme. Callers to tax hotlines are told they can avoid standard security questions as they use the Voice ID scheme, but privacy campaigners are alarmed that there is no opportunity to opt out. An HMRC spokesman said: “Our Voice ID data storage meets the highest Government and industry standards for security.” Because the technology is also used by high street banks, campaigners fear a data breach could see voice IDs used to hack into private bank accounts.
The Mail on Sunday, Page: 46
Larger, older companies pay less tax
Research by Sage of more than 3,000 companies across 11 countries found there was a negative correlation between a company’s size and age, and the amount of tax they paid. The report found smaller and younger businesses paid more tax on their profits. Sage CEO Stephen Kelly said this was partly explained by the capacity of big companies for tax planning, which can reduce their bill, compared with smaller firms. The research also found that smaller companies spend more time on tax administration, with filing their returns taking up to 21 days of work at a cost of up to €30,000 for some.
Managements hate to admit they overpaid for a business
A letter to the FT highlights the importance of goodwill impairment – or the lack of it – as one of the litmus tests of credible accounting and rigorous auditing.
Call for R&D tax relief consultants to be better regulated
Mark Pryce, a Glasgow-based partner at Campbell Dallas, has warned that R&D tax relief consultants are not subject to any form of regulation or governance and that firms were being caught out by “overly enthusiastic salespeople and cold-callers” exaggerating what can be considered as true R&D “within the spirit of the scheme”. Pryce said: “We need to see more protection being offered to companies to ensure they will be dealing with experienced R&D tax credits consultancy firms who are well equipped with technical and professional competence, as well as high ethical standards, in this complex area of tax.” Scotland on Sunday notes that companies now facing a much greater risk of more in-depth HMRC investigation and potentially significant penalties if they have been party to the submission of incorrect R&D tax relief claims.
Scotland on Sunday
Here at KSK we are already regulated by our professional body and pride ourselves in delivering the highest standards of service to our clients. We have a 100% track record of successfully claiming R&D tax reliefs for our clients. Contact Paul Southward for a no obligation consultation in respect of your R&D queries.
Tech firms more likely to be Brexit-ready
Technology companies are more likely to be positive about the impact of Brexit on their businesses on average compared to other sectors, according to a study from PwC. It found more than a quarter of tech firms have already completed some preparations ahead of the final countdown. “Technology companies are used to facing disruption, and are arguably more agile than most and less affected by new barriers to physical trade, so it may come as no surprise that they feel more positive than other industries about their Brexit preparedness,” said Jass Sarai, PwC’s UK technology industry leader. Elsewhere, the ICAEW has warned that a fifth of companies have still not considered the impact Brexit will have on them. Separately, RSM ‘s latest Brexit Monitor index shows mid-sized businesses in Scotland are the most upbeat about the long-term effects of Brexit on the UK economy.
City AM, Page: 12 Daily Mirror, Page: 4 The Scotsman, Page: 36
SME confidence improving
Confidence among small UK businesses about their future has risen in the past three months, according to the Federation of Small Businesses’ latest small business index. About a third of small businesses expect their performance to improve over the next three months and the number of small firms seeing steady or increasing profits is at a 12-month high, the FSB found. Writing in the Telegraph, FSB chairman Mike Cherry says the government must pay attention to the views of SMEs if Brexit is to be a success.
The Times, Page: 46 The Daily Telegraph, Business, Page: 2
SMEs in the dark on VAT
The British Chambers of Commerce has said rules to force firms to file their VAT returns online should be delayed until April 2020. A survey by the organisation found a quarter of businesses are unaware of the new VAT rules, leading to fears that small companies will lack the software to file their tax returns.
The Times, Page: 42 Daily Mail, Page: 61
The advantages of making your business employee-owned
The Times’ James Hurley considers why so few business owners give shares in their company to staff. The Employee Ownership Association will on Wednesday publish a report exploring why relatively few British companies are employee-owned. Baroness Bowles of Berkhamsted, who chaired a year-long inquiry into employee ownership on which the new report is based, says not enough advisers inform business owners about how employee ownership could give their company a better chance of survival after their exit. The employee-ownership approach can “pay off at three levels: for individual workers, for businesses, and – most critically – for the wider economy” the report claims.
Self-employed pensions crisis imminent, IPSE warns
Self-employed people not saving for their retirement is a “ticking time bomb”, trade body IPSE has warned, after its survey found that just 31% of freelancers are currently paying into a pension. Financial advice firm LEBC says policymakers should consider reversing the 2006 decision to block the self-employed from offsetting pension contributions against the previous year’s profits.
Fears as transfers from final-salary schemes rocket
Tom McPhail, the head of retirement policy at Hargreaves Lansdown, says Britain is on the brink of a pensions mis-selling scandal after figures this week showed that £36.8bn was transferred from final-salary schemes last year. Transfers hit £10.6bn in the first three months of the year. Tom Selby, a senior analyst at AJ Bell, said a survey by the FCA found transfer advice was wrong in 17% of cases. Financial advisers fear large numbers of clients could return in future years to query the decision to transfer a pension. The FT reports that the FCA and the Pensions Regulator have alerted the trustees of company pension plans, including Lloyds Banking Group and J Sainsbury, that unscrupulous advisers may try to persuade their members to transfer out.
Pensions platform fined for unacceptable failings
The trustees of Smart Pension, a master trust and fintech business hailed as a model of efficiency and a crusading force in the government’s auto-enrolment regime, have been fined £15,000 by the Pensions Regulator for failing to tell members that their employers had not made their promised pension contributions.
Mortgage approvals rising amid cautious market
The number of bank-approved mortgages hit its highest level for four months in May, at 39,200, according to trade body UK Finance, with the average size of a mortgage passing the £200,000 mark for the first time. Estimated gross mortgage lending last month was 8% higher than the same period in 2017 at £22.2bn. Howard Archer, chief economic advisor to the EY ITEM Club said: “There seems little evidence that cutting stamp duty for first-time buyers in the Budget has yet provided a noticeable boost to housing market activity.”
City AM The Times
Sluggish housing market sends stamp duty receipts plummeting
Tax revenues from stamp duty have fallen sharply following a slowdown in the housing market. The ONS said Treasury income is down 7% in this financial year so far, compared to the same period of 2017 and if it continues on this trajectory it will bring in £12.2bn this year, down from £13.1bn the previous year and £700m below its forecast level. Oliver Knight, a researcher at Knight Frank, said: “Historically London property has accounted for a large percentage of stamp duty receipts, so any fallback or slip there will have an impact.”
Open Banking is £7.2bn revenue opportunity
Rules to open up the UK banking market could lead to new services for more than 32m people and 4.8m small businesses within five years, according to a PwC study. Reforms that force lenders to share information with tech firms at a customer’s request came into effect earlier this year, and PwC estimates companies involved in the industry could generate £7.2bn of revenue a year by 2022.
The Scotsman, Page: 18
Pound raises cost of living in London
London has become a more expensive place for expatriate workers following the pound’s recovery, with the capital jumping ten places to 19th in Mercer’s annual cost of living survey. Hong Kong was named the most expensive expat destination in the world.
Becker blocks memorabilia sale
A planned auction of Boris Becker’s trophies and memorabilia has been put on hold ahead of a High Court action over his bankruptcy. His legal team applied for an injunction, saying it would have stripped their client of his “personal dignity” as it was “deliberately timed to coincide with the start of Wimbledon.”
How to get away with financial fraud
The Guardian publishes an extract from Lying for Money: How Fraud Makes the World Go Round by Dan Davies, which will be published in July. The book argues that bad auditors are gravitationally drawn into auditing bad companies, but the vast majority of auditors are both honest and competent.
The Guardian, Journal, Page: 9-11
Brexit boost for traders
A poll by stockbroker The Share Centre found only one in four investors say Brexit has hurt their finances, despite nine in ten fearing the worst when the referendum took place two years ago. Three quarters say the result has had a positive impact, or made no difference to their trading. CEO Richard Stone said: “For most, rising markets since have driven portfolio values up.” Philip Smeaton, chief investment officer at Sanlam UK, said although markets are still no clearer over the Brexit deal, the economy is not as bleak as many predicted. Yael Selfin, chief economist at KPMG in the UK, agreed the gloom has been overdone: “The economy was hit by the snow and this figure may even be revised upwards when figures are released on Friday.” However, a longer-term threat could come from talk of a global trade war, PwC’s John Hawksworth said.
The Sun Sunday Express, Page: 61
Hunt’s company ‘breached law’
The Guardian reveals that a company co-founded by Jeremy Hunt breached company law before carrying out a restructuring designed to reduce the health secretary’s tax bill by up to £100,000. Hotcourses, which was at the time majority owned by Hunt, failed to file crucial documents with Companies House for more than three years. It was reported in 2012 that Mr Hunt reduced his potential tax bill by around £100,000 by moving an office building out of the company before a change to the dividend rate.
The Guardian, Page: 6
HMRC in breach of data protection laws over ‘voice IDs’
The Information Commissioner’s Office (ICO) is now investigating after data watchdog Big Brother Watch accused HMRC of breaching data protection laws by taking the “voice IDs”, for security purposes, of millions of people without their consent. HMRC has not disclosed which other government departments the recordings have been shared with, or how they are stored and used, or if it is possible to delete a voice ID.
City AM Financial Times, Page: 2
Military historian jailed for tax fraud
Howard Tuck, the military historian who presented BBC documentaries including Battle of Britain, has been jailed for 27 months after failing to pay tax on more than £1m over six years.
The Sunday Times, Page: 4
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