News Roundup Monday 9th June 2018

NEWS ROUNDUP

TAX NEWS

Treasury clarifies “rent-a-room” relief

Changes to tax rules for short-term lettings will mean that, from April 2019, the annual £7,500 tax break property owners enjoy when renting a room to a lodger, or their whole home for short stays, will be dependent on the owner being present for at least some of the guest’s stay. Homeowners will not be eligible for the tax break if they let out their whole home; instead a new £1,000 trading and property allowance will apply to earnings from the whole property. The changes will see higher taxes for people who use Airbnb and other short-term lettings websites to let out their properties when they are on holiday. “This is a dramatic hike in tax for people who are affected,” said George Bull, senior tax partner at RSM.

The Daily Telegraph, Business, Page: 29 The Times, Page: 17

Define ‘robots’ before thinking about taxing them

Tim Harford makes a distinction between the automation of “jobs” and “tasks” in the FT, arguing that the idea of taxing robots that steal jobs is misguided as they do not and are unlikely to exist.

Financial Times, Page: 11

HMRC unit hunts for ‘hidden’ offshore assets of the wealthy

HMRC’s specialist investigation department, the offshore, corporate and wealthy unit, has opened 839 investigations into UK taxpayers, with assets in offshore tax havens over the past year.

Financial Times

French finance minister pushes for harmonised corporate tax rules

Bruno Le Maire, the French finance minister, has reiterated his desire for EU countries to sign up to a common consolidated corporate tax base (CCCTB). He said he wanted the harmonised corporate tax rules in place by mid-2019. The commission proposed a voluntary CCCTB in 2011, but it ran into opposition from Britain and Ireland. Seamus Coffey, chairman of the Irish Fiscal Advisory Council, said that it was “hard to imagine any reform posing a greater threat” to Ireland’s success in attracting multinationals than the introduction of a shared EU tax base. The European Commission has also proposed introducing a 3% levy on digital company’s revenues, a move that would cost Ireland an estimated €250m in lost tax revenue.

The Times

INDUSTRY NEWS

Financial sector faces ‘Cambridge Analytica moment’, warns FCA

The new chair of the FCA, Charles Randell, has warned that the financial services sector risks a huge public backlash if it uses customer data in the wrong way.

Financial Times, Page: 2

PROPERTY NEWS

Councils give shops just £21m in rates relief a year

Analysis by the Altus Group consultancy reveals that local authorities are failing to use their powers to reduce business rates for struggling local shops. There were only £21m of reductions in this financial year – or 0.08% of the predicted total £24.8bn rates bill in England. Sam Dumitriu, of the Adam Smith Institute, said: “Councils would rather prioritise their chief executives’ salaries over lessening the burden on businesses. There needs to be quite radical reform of rates to support businesses.” Mike Cherry, chairman of the FSB, added: “Local authorities must get to grips with the dire situation currently sweeping the high street and start backing hard-working retailers being hit hard by crippling rates bills.”

Daily Mail, Page: 2

Record levels of buy-to-let loan offers

Despite recent tax and regulatory changes, the number of buy-to-let deals available for first-time landlords has reached a record high, according to financial researchers Moneyfacts. There were 1,268 such loans on the market at the beginning of July, a 13% increase from 1,123 in January. A year ago there were 1,034 loans available.

The Daily Telegraph, Money, Page: 4 The Times, Page: 64

UK Treasury rejects calls from retailers for business rates reform

Chancellor Philip Hammond has conceded that a better way to tax the digital economy needs to be found. In response to the parliament’s Treasury select committee, Mr Hammond said high street retailers were being hit too hard compared to their online competitors, adding that “the Government recognises that business rates can represent a high fixed cost of some businesses.” However, he rejected calls for reform of the rates system stating that a review in 2016 found “no consensus on an alternative base”. Mike Cherry, of the Federation of Small Business, said the Chancellor should “level the playing field” by using tax revenues from internet giants to remove hard-working small firms from the business rates system.

Financial Times, Page: 3 The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 1, 6-7 The Guardian, Page: 35 The Independent, Page: 70

PENSIONS NEWS

Flat-rate relief proposal aims to raise billions for NHS

Treasury officials are considering introducing a flat rate of pension relief at 25p in a move that would penalise well-off savers but reward those on lower incomes. The plan would raise about £4bn a year for the health service and comes after Theresa May gave Philip Hammond a free rein to find ways of funding the Government’s £20bn pledge for the NHS last month. Chris Sanger, head of tax policy at EY, said that an unintended consequence could be that “it deters saving through a pension vehicle”.

The Times, Page: 47

Help! My child’s pension has hit the Lifetime Allowance roadblock

Michael Martin offers some solutions for those wondering how investing in their child’s future pension now could impact their lifetime allowance once they enter gainful employment.

Financial Times, Money, Page: 20

HMRC rejects tax rule-change for pension lump sums

HMRC will not change rules which have led to over-55s without an up-to-date tax code being taxed at emergency rates when they take money out of their pensions. After reviewing the current system regarding flexible pension drawdown access, HMRC has concluded “any changes at the current time would not significantly improve the tax position for the majority of recipients.” HMRC decided “the existing PAYE treatment of flexible pension drawdowns remains the most effective method of deducting tax in these cases and it reduces the risk of underpayments of tax arising.”

Financial Times Citywire

REPORTING NEWS

Going concern regular issue in audit failures

Frank Field, the chairman of the Work and Pensions Committee, has accused auditors of appearing to rubber-stamp going concern statements without seriously challenging companies’ management about them. He has also asked the Financial Reporting Council what more can be done to ensure that auditors are “properly challenging the appropriateness” of these statements. In a statement, the FRC reiterated that it would consider the detailed judgment before it published the report and that it hoped to do so “as soon as possible in the public interest”. “We will reply to Frank Field in due course,” it added.

Economia

CORPORATE NEWS

Cybersecurity is a matter for the boardroom

Bernard Brown, vice chair of KPMG UK, writes that cybersecurity is firmly a business issue, not a technology one, and that the matter must be dealt with in the boardroom rather than by IT departments. He suggests that boards develop a cybersecurity policy that the leadership team can understand, take seriously, and enforce through accountable management. Cyber threats should also be discussed in board meetings, which will allow the business to develop a robust approach to ensuring the organisation’s digital security. He also points out that there is a shortage of skills and says those in senior positions need to educate themselves, and overcome their fear of cyber.

City AM

Southern on Ocado board

Former Porsche and Virgin Atlantic FD Julie Southern has been hired by Ocado chairman Lord Rose to join the online supermarket’s board as a non-executive director.

Daily Mail, Page: 83 The Times, Page: 42

500 more jobs to go at Calvetron

All remaining Jacques Vert and Precis fashion shops are to close, with the loss of 500 jobs, after administrators at Duff & Phelps were unable to find a buyer.

Daily Express

Matthew Clark Bibendum ‘stabilising’

C&C Group has indicated that wholesale drinks business Matthew Clark Bibendum, formerly owned by the collapsed Conviviality, is stabilising after it installed a senior management team.

City AM

ECONOMY NEWS

Bank of England boss upbeat on economy

Bank of England governor Mark Carney has expressed renewed confidence in the UK economy, affirming that household spending and sentiment had “bounced back strongly”. Speaking at the Northern Powerhouse Summit in Newcastle, he said: “Overall, recent domestic data suggest the economy is evolving largely in line with the May Inflation Report projections, which see demand growing at rates slightly above those of supply and domestic cost pressures building.” Howard Archer, chief economic adviser to the EY Item Club, said Mr Carney’s latest note of optimism is “very notable” and adds to the probability the Bank will raise rates in August.

BBC News City AM, Page: 1

High street sales fall for fifth month in a row

UK high street sales fell 1.7% year-on-year in June, the fifth consecutive month of falling sales, according to data released by BDO. The firm said it was the first time in at least 12 years that in-store growth had not topped 1% in a single month for the first half of a calendar year. Sophie Michael of BDO said: “The bleak and crippling start to the year shows no sign of abating, with deep discounting set to eat into margins that are already being stretched paper-thin by poor sales and rising costs, including the much-discussed issue of unfair business rates on high street retailers.”

The Guardian, Page: 35 The Times, Page: 40 City AM, Page: 5

OTHER NEWS

Nawaz Sharif found guilty of corruption

The former president of Pakistan, Nawaz Sharif, has been sentenced to 10 years in jail for corruption over four luxury flats in London. His daughter and son-in-law were also convicted of channelling funds through offshore companies to buy foreign assets. A Pakistani tribunal concluded Sharif and his family had failed to disclose the source of funds they used to buy the properties and did not report the purchases to tax authorities. Sharif, who is currently in London, said the case was politically motivated and that he would return to Pakistan “to continue my struggle”.

Daily Mirror, Page: 29 Aberdeen Press and Journal, Page: 26

Ten professional sports clubs, the Odeon cinema chain and the Navy, Army and Air Force Institute have been named and shamed by HMRC as being among more than 200 employers who have failed to pay workers the “national living wage”.

The Guardian, Page: 25

Church seeks ban on cathedral fire sales

The parlous state of Church finances means the Church of England may have to sell off one of its cathedrals, the Mail reports. But questions have been raised over how the statutory insolvency regime applies to cathedrals, with Church leaders fearing bankruptcy courts could order the firesale of a cathedral if its dean and chapter reach the point where they cannot pay their bills.

Daily Mail, Page: 16

Contact Paul Southward if you have any queries.

Paul Southward