News Roundup Monday 3rd September 2018

NEWS ROUNDUP

TAX NEWS

EU’s VAT rules should be left alone after Brexit

Writing in the Telegraph, Ryan Bourne says the UK must resist the temptation to fiddle with VAT rules after Brexit, arguing that Brexiteer demands for carve-outs for various products from the VAT base “will jack up compliance and administrative burdens, distort consumer choices, necessitate higher, more damaging taxes elsewhere and deliver relief for its supposed beneficiaries in a maddeningly inefficient manner”. Bourne, the R Evan Scharf chair for the public understanding of economics at the Cato Institute, argues that a uniform, even if lower rate, would harm the poorest most. Overall, Bourne says: “We Brexiteers might be loath to admit it, but in this area the EU has pushed us towards economic literacy”.

The Daily Telegraph, Business, Page: 34

Panasonic moves HQ to Amsterdam

Electronics giant Panasonic has announced it is moving its European HQ to Amsterdam from London due to Brexit. The move, which will see only about 10 staff moved to the Netherlands, follows rising frustration among Japanese companies over the lack of clarity on Brexit. It is understood that Panasonic’s decision is linked to concerns that Japan could see the UK as a tax haven if it cuts corporation tax to attract businesses post-Brexit. If that was the case, Panasonic could face higher taxes back in Japan.

Daily Mirror Financial Times, Page: 1 The Times, Page: 40 I, Page: 45 City AM, Page: 12

HMRC’s take from tackling avoidance speculative

Analysis of HMRC claims that it had brought in £30.3bn by tackling tax avoidance and evasion in the 2017-18 financial year shows most of this was in fact extrapolations of “revenue losses prevented” in the coming years and “future revenue benefit”, which accountants UHY Hacker Young claim are speculative. According to the firm’s analysis, the amount of cash seized after HMRC’s investigations has fallen from £10.34bn in 2016-17 to £10.33bn in 2017-18, leading to suggestions the taxman may become more aggressive over the rest of the year.

The Times, Page: 60

Plaid challenger proposes 9p income tax cut

Wales should slash income tax rates to the lowest in the UK, according to Adam Price, one of the candidates challenging Leanne Wood for the Plaid Cymru leadership. He said the basic, higher and additional rates could be cut by 9p and business rates and council tax ditched. New land value taxes on residential, commercial and industrial residential land would fund the changes, he added. The Welsh Government is getting more tax powers next April, including partial control of income tax.

BBC News

HMRC sends out thousands of warning letters to taxpayers

Taxpayers with overseas links have received final warnings from HMRC urging them to declare any “overseas income or gains” by the end of September to avoid paying higher tax penalties. Elsewhere in the FT, Claer Barratt reports that informants last year submitted more than 40,000 tip-offs to HMRC about people who might not have paid their taxes.

Financial Times, Money, Page: 3 Financial Times, Money, Page: 2

HMRC cautions against honours for celebrities caught in tax schemes

The Times reports on warnings issued by HMRC to the Cabinet Office regarding nominees for honours. The paper believes warnings about “poor tax behaviour” will have been issued against celebrities who had invested in tax-efficient investment schemes and may be the reason why high-profile personalities such as Gary Lineker, Wayne Rooney and Robbie Williams have not been honoured.

The Times, Page: 1, 2 The Times, Page: 8-9 The Times, Page: 27 The Sun, Page: 14

Budget speculation begins

The Times’ Mark Atherton kicks off speculation about the Budget, with predictions of a cut to CGT relief and pension tax relief for higher and top-rate taxpayers.

The Times, Page: 57

Slow roll-out damages MTD’s benefits

HMRC has admitted that its Making Tax Digital programme will end up costing businesses more than it saves them. Original forecasts said the scheme would save businesses £100m a year from 2021 but its annual report reveals there will be no cost savings and the extra work will end up costing firms £37m a year. HMRC said the change to its forecast was due to the fact that only companies with turnover of more than £85,000 will have to file returns digitally, whereas, initially, it was to include all businesses. Most of the savings from the scheme would have been made by companies below this threshold, HMRC said. Because of the slower roll-out, HMRC also expects MTD to generate £440m less in additional tax revenue by 2020-21 than first predicted. But it claims the scheme will still generate £1bn in additional revenue by 2023.

The Mail on Sunday, Page: 52

Should the honours system be used to police tax grey areas?

Following revelations in the Times that HMRC was influencing Cabinet Office decisions on who should receive honours, several commentators complain that the rules seem to be inconsistently applied. The Times reported that HMRC was red-flagging people deemed to have behaved questionably, but many suspected of being denied honours had innocently invested in legal tax avoidance schemes, while others, such as Sir Philip Green, paid out a £1.2bn dividend to his wife, Tina, who lives in Monaco and pays no UK tax. The Independent on Sunday suggests that rather than the honours system being used to police the grey area of legal but morally questionable behaviour, it would be better if the tax system were simpler and clearer.

The Independent on Sunday, Page: 6, 7 The Mail on Sunday, Page: 9 The Sunday Times, Page: 9 The Sun on Sunday, Page: 6

SMEs NEWS

Brexit uncertainty holding back investment

A Lloyds Bank survey of more than 1,000 firms has found a fall in confidence in August with firms in the UK’s dominant services industry the least optimistic about the coming year, with Brexit concerns highest in the wholesale, hospitality and leisure and public sectors. Sharon Geoghegan, a Lloyds managing director for small business banking, said: “Economic uncertainty is definitely driving firms to think twice before investing in their businesses, although the manufacturing sector seems to be the most resilient, compared to the services sector which seems to be less confident.”

City AM, Page: 12

Fox: UK SMEs can be “intrepid exporters again”

Writing in the Sun on Sunday, trade secretary Liam Fox says Brexit provides Britain with the opportunity to “make our businesses intrepid exporters again”. He says that everywhere he goes people want to trade with Britain, trust the UK’s laws and financial services, and “envy our universities”. But it is the Brits who are least confident, he says. He cites a deal with China last week which saw the country open up to UK dairy products, which he complains received scant mention in the press. Dr Fox goes on to urge small businesses to seize export opportunities and take advantage of Government support. He says 99% of British businesses are SMEs but 90% do not export, and points to the Government’s network of Export Champions that he says will help successful exporters guide others and aid Britain in becoming a thriving, independent “trading superpower”.

The Sun on Sunday, Page: 12

Young people overlooking SME opportunities

Research by Santander shows that only one third of young people leaving education this year are heading for employment in small businesses. Over half said they saw larger firms offering better job security while 46% said SMEs did not pay as well. A third were concerned over career progression. The bank urges those about to leave education not to discount the “huge range of exciting career opportunities offered by the nation’s SMEs”, adding that the lack of interest may be due to SMEs being less visible at careers fairs, with 33% admitting that they do not engage directly with education providers.

Sunday Express, Page: 55

CORPORATE NEWS

Homebase confirms store closures

Homebase creditors have approved a proposal to close 42 stores as part of a CVA, a move that puts 1,500 jobs at risk. The retailer said over 95% of its creditors and landlords backed the restructuring plan. Insolvency specialist Simon Underwood at Menzies commented: “While the announcement is positive news for Homebase, the negative reception from a number of the retailer’s landlords is no surprise. Whereas many of the company’s creditors will benefit from the arrangement, receiving payment in full, landlords often receive the raw end of the deal, facing significant cuts to rental income or empty properties.”

The Mirror The Daily Telegraph, Business, Page: 34 Daily Mail Financial Times, Page: 15 Daily Express, Page: 66 The Times, Page: 47 The Guardian, Page: 35

Ashley calls for HoF probe

Sports Direct owner Mike Ashley has called for the Insolvency Service to probe House of Fraser’s former directors accusing them of misleading suppliers and XPO, the logistics company that ran its two warehouses. Sports Direct claims XPO and HoF suppliers were strung along by promises of Chinese cash that failed to materialise.

The Sunday Times, Business, Page: 1

PROPERTY NEWS

House price growth at six-year low, Nationwide says

UK house prices suffered their greatest month-on-month fall in August since July 2012, according to new data. Nationwide Building Society’s house price index showed prices fell by 0.5% in the month, as annual house price growth slowed to 2% , down from 2.5% in the previous month. The average price of a house slipped to £214,745 in August, from £217,010 in July.

City AM Daily Mail, Page: 7 The Daily Telegraph Daily Mirror Evening Standard Financial Times

Martin: Tax imbalances need correcting

Tim Martin has called for a “sensible rebalancing” of the business rates system to create a level playing field for high street retailers. The Wetherspoons founder said: “Pubs are key components of successful high streets and they have been closing down in record numbers. If pubs are to survive in the long run they need tax equality with supermarkets. What applies to pubs and supermarkets should also apply to online businesses – somehow everyone should be treated equally.” Alan Hawkins, CEO of the British Independent Retailers Association, backed Martin’s call, saying: “Whatever the long-term future – and there won’t be one for many unless something is done soon – the Government is wedded to property tax and immediate help will be around a quick adjustment to the current system.”

Sunday Express, Page: 20

Help to Buy faces the chop

The Sunday Telegraph reports that the Government is considering axing the Help to Buy scheme amid concerns it is helping wealthier households and pushing up house prices. Ministers are reportedly planning a “fundamental review” of the policy that could see it replaced with a scheme that is “more targeted on those it is meant to be helping.” Research published last week showed that one in five households on HTB have used it to upgrade their homes rather than to get onto the housing ladder.

The Sunday Telegraph

Landlords and tenants penalised by Osborne’s tax changes

Harvey Jones reports on the damage George Osborne’s tax changes are causing to buy-to-let investors and tenants. Osborne’s 3% stamp duty surcharge on second home purchases and cuts to the wear-and-tear allowance and tax relief on mortgage interest repayments have forced landlords to hike rents or sell homes because what were modest profits have turned into losses, meaning loyal tenants are unfairly being forced to move.

Sunday Express, Page: 57

PENSIONS NEWS

Pensions tax relief only enriches the wealthy

Phillip Inman says in the Observer that the Chancellor could save £10bn a year easily by cutting pensions tax relief for high earners in his autumn budget. He asserts that around 40% of the £38bn spent on subsidising pension saving goes to the top 10% of earners and amounts to “a massive bung to the better off”.

The Observer, Page: 55

PERSONAL FINANCE NEWS

Popularity of Isas drops to 18-year UK low

Record low interest rates have driven down the popularity of cash Isas to an 18-year low, according to HMRC data, while demand for stocks and shares Isas has risen.

Financial Times

ECONOMY NEWS

Foreign investors ditch UK bonds at record pace

Foreign investors are turning away from UK Government bonds at a record pace as concerns grow over Brexit negotiations. Foreign investors sold a net £17.2bn of gilts in July, the biggest monthly outflow since 1982.

The Daily Telegraph

Hays revenues top £1bn

Recruitment company Hays has reported a 12% rise in group revenues, hitting £1.1bn for the first time. Hays, which specialises in work such as accountancy, IT and healthcare, saw stronger growth in its overseas offices compared with the UK, where Brexit uncertainty has slowed UK hiring activity.

The Times, Page: 45 The Independent, Page: 66

Consumer loans see slowest growth in three years

Bank of England figures show that unsecured consumer credit grew by 8.5% in July, down from 8.8% in July. This marks the slowest growth rate in nearly three years. July saw the net amount of new consumer borrowing decline to around £800m, from £1.5bn the month before.

The Guardian

UK statistics glitch could mask Brexit disruption to services

ONS statistics appear to vastly underestimate Britain’s services imports, with data from other nations showing services exports to Britain often many times that reported by the UK.

Financial Times, Page: 2

Summer boost will lead to Autumn growth slowdown

The CBI’s latest Growth Indicator, which covers companies in the distribution, manufacturing and service industries, shows an increase in private sector companies reporting growth in output in the three months to August. The proportion of businesses reporting expansion was 19 percentage points greater than the share saying things had got worse, with retail expanding at its fastest rate for more than a year. However, respondents predicted a slowdown in growth in the coming quarter. The CBI’s chief economist, Rain Newton-Smith, said: “As the boost from the hot summer fades, we expect to see a return to more subdued growth for retailers as consumer incomes struggle.”

The Sunday Times, Business, Page: 2 The Mail on Sunday, Page: 56

Post-Brexit dividend there for the taking

Writing in the Sunday Telegraph, Nigel Wilson, CEO of Legal & General, says further devolution and targeted investment are two ways the Government can boost Britain’s economy post-Brexit. He says Britain has “created an almost perfect economic background for patient and inclusive capital investment; low interest rates, competitive exchange rate, low wage costs, low inflation, an abundance of start-up companies, £300bn infrastructure deficit, brilliant science and energetic entrepreneurs,” but the Government needs to address years of structural under-investment to take advantage of this.

The Sunday Telegraph, Business, Page: 2

REPORTING NEWS

Auditors should pay for pension underfunding

A letter to the Sunday Times calls for a change in company law so salaries over £50k and shareholder dividends can only be paid if a company pension scheme is fully funded. Todd Wells says auditors should be criminally liable if they sign off accounts when this is not the case and be made to make up any pension gap with their own money.

The Sunday Times, Business, Page: 10

OTHER NEWS

Serial fraudster admits raiding Grenfell Tower funds

The finance manager at Kensington and Chelsea Council has admitted defrauding around £60,000 from the Grenfell Tower victim fund. Jenny McDonagh used pre-paid credit cards intended for the survivors to go out for dinner, gamble online, and pay for trips to Dubai and Los Angeles. McDonagh is also under investigation for suspected frauds against former employers – the Medway NHS Trust in Kent, and the Victoria and Albert Museum in London.

The Daily Telegraph, Page: 11 The Times, Page: 21 Daily Mail, Page: 5 The Guardian, Page: 22 Daily Mirror, Page: 4 The Sun, Page: 11

Nobel laureate who studied economic incentives

The FT carries an obituary of James Mirrlees, the British economist who won the Nobel Prize in Economics in 1996 for his work on economic incentives, where information is imperfect.

Financial Times, Page: 3

August shutdown favoured by 28% of UK firms

Nearly 30% of British businesses support a summer shutdown, saying it would improve productivity and staff well-being. Research by Hitachi Capital Invoice Finance found 28% think an extended break, similar to those enjoyed by their European counterparts, would be a good idea.

Sunday Express, Page; 56

Can the corrupt global super-rich be stopped?

John Arlidge reviews Oliver Bullough’s Moneyland: Why Thieves and Crooks Now Rule the World and How to Take It Back for the Sunday Times. Bullough “takes us on a virtual bus tour of the world’s worst kleptocrats who have looted states for their own ends,” says Arlidge, and “provides detailed insight into how London estate agents, lawyers, accountants and PR firms help robber barons first to clean their dirty cash and then begin to use “billanthropy” to “de-embarrass” themselves and eventually become minor public figures.”

The Sunday Times, Culture, Page: 37
Contact Paul Southward if you have any queries.

Paul Southward