News Roundup Monday 30th July 2018

NEWS ROUNDUP

TAX NEWS

HMRC escapes £5bn in tax refunds

HMRC could avoid paying up to £5bn in interest on tax refunds following the conclusion of a legal battle with insurer Prudential. The Supreme Court ruled against applying compound interest to the bulk of the refunds due to the insurer on tax – paid to HMRC over nearly two decades – that was later judged unlawful. The Revenue had estimated the cost of paying compound interest on all these claims at up to £5bn. Separately, bookmakers are in line for a £1bn tax rebate after a tribunal ruled they were wrongly charged VAT on revenue from fixed-odds betting terminals. The case was brought against HMRC by the high street bookmaker Betfred. If HMRC does not seek to overturn the ruling, the rebate for the whole of the bookmaking sector is expected to be at least £1bn.

Citywire The Guardian, Page: 2

Labour ‘not radical enough’ on tax

The Times’ Philip Collins argues that the Labour party should be setting out more ambitious plans for higher taxation on wealth and property, as well as pushing “innovative” policies such as a tax on land. He says the value of British land is in the order of £5trn, and a tax of 2% would raise £100bn.

The Times, Page: 21

What if a firm leaves Aim?

The Telegraph’s Questor column advises investors on the rules regarding business relief if a company delists or moves from Aim to the main market.

The Daily Telegraph, Business, Page: 34

Gig worker tax proposal could create more complexity

A proposal from the Office of Tax Simplification for gig economy workers to pay income tax could create confusion around employer status, experts have warned. Dave Chaplin, CEO of ContractorCalculator, said the proposal would likely introduce yet more complexity into the current tax system.

Recruiter

London councillor calls for devolved tax powers

Joy Morrissey, a London councillor shortlisted for the Conservatives’ candidate for London mayor, argues that London should have devolved powers to determine income tax rates.

City AM, Page: 18

SMEs NEWS

Coutts hunting for entrepreneurs

A programme launched by private bank Coutts is looking to connect clients with handpicked UK companies seeking early-stage funding. The invitation-only investment club is believed to be the first programme of its kind in European private banking. The price of admission is an initial investment of £250,000. Mohammed Kamal Syed, Coutts managing director, comments: “We have entrepreneurially minded clients who want to invest in private companies, but they don’t have a lot of time to source deals. We filter deals for them.”

Bloomberg The Independent, Page: 68

Review to examine digital shift

A review has been commissioned into how the shift from cash to digital payments is affecting small businesses and consumers. The Access to Cash Review, funded by Link, will look at the impact of new technology, including contactless cards, over the next five to 15 years and examine future needs. It will be chaired by the former head of the Financial Ombudsman Service, Natalie Ceeney.

The Times, Page: 40s Yorkshire Post, Page: 5

Business rates send more retailers to the wall

The Telegraph’s latest store closure tracker indicates 1,334 shops have shut, or been earmarked for closure, since January, with analysts citing the rise in business rates as a dominant factor. The Telegraph also profiles London-based company Trouva, which is hoping to reverse the fortunes of the British high street with its online marketplace, which brings together more than 450 bricks and mortar boutiques from across the UK. Co-founder Mandeep Singh comments: “I ndependents are incredibly vulnerable to business rates. Any small change can make them unprofitable. We are helping by opening these businesses up to audiences across the world”. A separate study by the British Retail Consortium reveals Britain has lost nearly 90,000 retail jobs in the past year.

The Guardian, Page: 31 The Daily Telegraph, Business, Page: 33 Daily Mail, Page: 38

SMEs say government investment favours London

More than half of UK SMEs believe government investment is too London-centric, according to research by Bibby Financial Services. The latest SME Confidence Tracker from BFS found that 56% of UK SMEs believe that government investment is unevenly spread in favour of London. It also found that awareness of the Northern Powerhouse grew by 13% in the past year to 70% of SMEs, although more than half (54%) are unaware of the Midlands Engine initiative.

Insider Media

PENSIONS NEWS

Chancellor urged to cut tax relief on pensions contributions

The Treasury select committee has suggested scaling back tax relief for contributions to pensions, arguing it is “not an effective or well targeted way of incentivising saving.” The committee’s report also proposes the abolition of the Lifetime Isa (Lisa), introduced in March last year. MPs said that it was overly complicated, had a poor take-up and actively discouraged saving in pensions.

The Times, Page: 36 The Guardian, Page: 29 Financial Times, Page: 2

PROPERTY NEWS

Tax change could leave commercial property owners with £8bn bill

Catax has warned that commercial property owners could be forced to pay more than £8.6bn if they fail to revalue ahead of a major tax change. From April 2019, UK commercial property held offshore will be subject to capital gains when it is sold.

Mortgage Introducer

UK mortgage approvals on the up

British banks approved lending for 40,541 house purchases in June, the highest since September last year, according to UK Finance, which also said value of approved loans for house purchases had risen to o ver £8bn for the first time since February.

City AM The Times

PERSONAL FINANCE NEWS

FCA mulling basic savings rate

The Financial Conduct Authority is considering imposing a basic savings rate requirement on banks, for customers with accounts open for a set period of time, over concerns that loyal customers are get ting lower rates than those who shop around. Sarah Isted, financial services risk and regulation leader at PwC, said the proposal “would most benefit those who are either unwilling or unable to engage in switching, such as potentially vulnerable customers”.

City AM, Page: 4 Financial Times, Page: 2 The Guardian, Page: 29 The Times, Page: 36 The Daily Telegraph, Page: 8

CORPORATE NEWS

Money laundering at law firms up sharply

The Solicitors Regulation Authority (SRA) has warned that reports of money laundering and cybercrime are all increasing. Money laundering reports from law firms are up 67% in 15 months, it said, alongside £47.5m of reported losses related to dubious investment schemes since 2015.

City AM

ECONOMY NEWS

Household debt situation worst on record

ONS data shows British households spent around £900 more on average than they received in income last year, pushing their finances into deficit for the first time since the credit boom of the 1980s. The shortfall amounted to nearly £25bn, with the overspend mostly paid for with borrowed money, although savings were also eaten into. Anti-poverty charities warned that low income households were the worst affected. The ONS figures showed the poorest 10% of households spent two and a half times their disposable income, on average, while the richest 10% spent less than half of their available income.

The Guardian The Daily Telegraph, Page: 31 The Times, Page: 2 Daily Mail, Page: 1-2 The Independent, Page: 20

Low earners’ wage growth outstrips the rich

Inequality has fallen since the financial crisis, as incomes for the bottom 40% of earners have risen faster than for those earning the average amount. In the past five years incomes for the bottom 40% rose by an annual average of 2.5%, compared with 1.9% for the average household, the ONS said.

The Daily Telegraph

Insolvencies up in Scotland

The number of Scottish companies falling into insolvency has risen compared with last year. Figures from the Accountant in Bankruptcy (AiB) showed 245 registered Scottish companies became insolvent from April to June, a rise of 23% from 200 for the same period in 2017. Data for the financial year showed corporate insolvencies increased from 846 in 2016-17 to 884 in 2017-18. The number of personal insolvencies in Scotland also rose between April and June. The AiB reported 3,208 bankruptcies and protected trust deeds in the first quarter of 2018-19 – up 11.8% from 2,869 the previous year.

The Scotsman, Page: 2, 36

Pensioners’ income growth outstrips wage rises

Figures from the ONS show Britain’s pensioners enjoyed a faster rate of growth in their disposable incomes last year than working-age adults, after guaranteed state pension increases outstripped wage rises. The median disposable income for retired households increased by £300 (1.4%) after benefits, taxes and inflation were taken into account, in the year to April, whereas non-retired households experienced a 0.6% rise over the same period.

The Guardian

OTHER NEWS

Ronaldo agrees €18.9m tax fraud settlement

Cristiano Ronaldo has come to an agreement with Spain’s finance ministry in a tax fraud case, which will see him pay €18.9m and accept a two-year suspended jail sentence.

Financial Times

‘Love Island’ is more lucrative option than Oxbridge

Analysis by Frontier Economics has concluded that appearing on Love Island is likely to net you more money over the course of your life than an Oxbridge degree would do.

Financial Times

Regional cities could be hit hard by Brexit

A report from the City of London Corporation has claimed that Brexit-supporting cities with a high dependence on financial services could lose more from leaving the EU than the City of London. The report suggests that Cardiff, Northampton and Leeds could be hit hardest by Brexit, with financial services making up about three quarters of their services exports. “London is well-placed to bounce back from any post-Brexit downturn thanks to its vast labour market and business base,” Andrew Carter, chief executive of Centre for Cities, said. “The worry is that many other cities, especially those outside the southeast, will struggle to adapt to the shocks that might lie ahead.”

The Times, Page: 40 Financial Times, Page: 2

Employees’ rights in hot weather

Amid predictions that temperatures could top 36C tomorrow, the Telegraph looks at the law regarding employees’ rights in hot weather. Regulations place a legal obligation on employers to provide a “reasonable” temperature in the workplace, but while there is a minimum working temperature, there is no statutory upper limit.

The Daily Telegraph

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Paul Southward