News Roundup Monday 6th August 2018

NEWS ROUNDUP

TAX NEWS

Amazon slashes UK tax bill by £17.5m with share awards

The use of share-based awards allowed Amazon’s UK subsidiary to pay just £4.6m in tax on profits of more than £79m last year, down from £7.4m the previous year on profit of £26m. Paying the UK’s standard rate of corporation tax would have cost the company £13.9m. The web giant’s UK sales were £2bn in 2017. The Telegraph notes that a Government paper in March alluded to the possibility of taxing tech giants on UK revenues rather than profits. The paper said: “The current misalignment between where digital businesses are taxed and where they create value threatens to undermine the fairness, sustainability and public acceptability of the corporate tax system.”

Financial Times, Page: 17 The Daily Telegraph, Page: 37 Daily Mail, Page: 1, 2 Daily Mirror, Page: 4 The Guardian, Page: 35 The Times, Page: 2 City AM, Page: 5

Diverted profits tax yields £388m for HMRC

Ken Almand, partner and transfer pricing specialist at Moore Stephens, says that HMRC’s record diverted profits tax yield of £388m in 2017-18 indicates that the government’s crackdown on tax avoidance by multinationals is paying dividends. George Osborne introduced the tax in 2015, to prevent companies minimising their tax liabilities by using contrived tax arrangements. However, Mr Almand was concerned that fewer companies – just 16 last year – came forward to engage in advance profit agreements (APAs) with the revenue due to the length of time they reportedly take to process.

Economia

Law firm says new anti-tax evasion measures infringe privacy and data protection rights

Mishcon de Reya has filed a legal complaint against HMRC and the Common Reporting Standard arguing that new anti-tax evasion measures infringe privacy and data protection rights. The complaint was filed on behalf of an unnamed EU citizen domiciled in Italy and previously resident in the UK. The complaint claims that sharing her information with overseas tax authorities would subject her to a risk of her data being hacked, and would infringe European data protection and human rights laws.

The Guardian, Page: 19

HMRC urges taxpayers to declare foreign income

HM Revenue and Customs is urging UK taxpayers, through the new ‘requirement to correct’ legislation, to declare foreign income or profits on offshore assets to avoid penalties. Non-doms paid almost £9.4bn in tax in 2016/17, according to HMRC, the highest on record since figures started to be recorded in 2007/08, according to Blick Rothenberg.

FT Advisor

Barclays facing £184m tax bill

The Mail reports that Barclays is facing a £184m bill for unpaid VAT after HMRC probed how lenders use overseas branches.

Daily Mail, Page: 71

HMRC’s contractor tax testing tool misleading

An investigation by advice website Contractor Calculator has found that HMRC’s “check employment status for tax” (CEST) tool is routinely misleading contractors and the self-employed. The online tool is supposed to provide clarity over employment status but in nearly half of cases it is falsely indicating that self-employed people fall inside IR35 rules. A FoI request by Contractor Calculator found HMRC had assessed only 24 tribunal cases as part of CEST testing. CEO Dave Chaplin commented: “HMRC is failing in its duty of care to make sure the right amount of tax is collected. It seems HMRC is trying to get the most amount of tax rather than the right amount. These people are being forced into false employment.”

The Daily Telegraph

Labour’s latest free money pledge slammed

A Labour pledge to include plans for a Universal Basic Income (UBI) in its next manifesto has been widely derided in the press. The Express’ Leo McKinstry says the move, which would see the Government scrap all traditional means-tested benefits and replace them with a single, unconditional flat-rate payment to all citizens, would mean the basic rate of income tax would have to soar from 20 to 48%, while the top rate would go up from 45 to 73%. Writing in the Telegraph, Nick Timothy says UBI is favoured by the left in the age of robot workers because with it they could realise their Marxist dream of “fully automated luxury communism”. The Mail points out that UBI schemes run by Finland and Canada have been scrapped because they were ruinously expensive and failed to reduce poverty rates.

Daily Express, Page: 12 The Sun, Page: 2 Daily Mail, Page: 12 The Daily Telegraph, Page: 17 The Daily Telegraph The Times, Page: 10

SMEs NEWS

Barclays and Santander announce fintech tie-ups

Barclays has acquired a significant minority stake in fintech firm Marketinvoice. The deal means the bank will be able to utilise Europe’s largest online invoice financing platform to provide £1bn in capital for the UK’s small businesses. Meanwhile, Santander has also announced a fintech partnership – with London start-up Moneybox – marking its first Open Banking integration.

City AM, Page: 8

Credit unaffordable, say SMEs

Four in ten firms say getting new credit is unaffordable, according to a survey by the Federation of Small Businesses, which is urging the Bank of England to be cautious about raising interest rates.

Daily Mail, Page: 35 The Times, Page: 35

PENSIONS NEWS

FTSE 100 pension schemes hit £3bn surplus

FTSE 100 pension schemes are in surplus for the first time in a decade, according to JLT Employee Benefits. The amount of assets in the pension schemes totalled £676bn, while liabilities came to £673bn.

City AM

ECONOMY NEWS

WTO will turn UK into an economic powerhouse after Brexit

Using World Trade Organisation (WTO) rules instead of making a deal with the EU will turn Britain into an economic powerhouse, a new study has claimed. The research carried out by former Harvard economist and entrepreneur Michael Burrage reveals that countries which do not have a trade deal with the EU and rely on WTO rules strongly outperform their rivals. It follows work by Economists for Free Trade which showed that the Treasury would collect £80bn a year based on the revenue created by moving on to the World Trade Deal on WTO rules.

Daily Express

Manufacturing PMI slips despite surge in export demand

IHS Markit’s UK purchasing managers’ index (PMI) fell to a three-month low of 54.0 in July with output and new orders struggling to keep up. However, the PMI remains above the long-run average of 51.8. Noting increased new export demand, Duncan Johnston, UK manufacturing industry leader at Deloitte, said: “UK manufacturers remain positive about the outlook for their business and, as a result, employment in the sector increased in July, marking two years of continuous job creation.”

City AM The Times, Page: 36

OTHER NEWS

Local government must ‘transform’ to meet funding pressures

CIPFA and the Charted Institute of Management Accountants have issued a report urging local government to “transform, innovate and work together” to better meet the increased need for services amid less central government funding. “Finance professionals are acting as catalysts to guide organisations and colleagues to timely and controlled transformation initiatives, rather than risk reactive change as a consequence of financial pressures,” the professional bodies said. The report comes as Northamptonshire County Council faces financial collapse after what the Guardian describes as “a reckless half-decade when it refused to raise council tax” and “preferring to patch budget holes with accounting ruses and inappropriate use of financial reserves.”

Public Finance The Guardian, Page: 11 Daily Mail, Page: 14

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Paul Southward