News Roundup Saturday 21st September 2019

NEWS ROUNDUP

TAX NEWS

HMRC sees record £5.4bn IHT take

HMRC pulled in a record £5.4bn in inheritance tax (IHT) in 2018/19, marking a £166m – or 3% – increase on the previous year. Rising property prices and an unchanged tax-free allowance has meant more people are paying IHT than ever before. More than 28,000 estates were subject to the death duty in 2016/17 – a 15% increase on the year before – according to the latest HMRC figures. While 4.2% of UK deaths resulted in an inheritance tax bill in 2015/16, 4.6% did in 2016/17, with the Revenue noting that this falls short of the historic high of 5.9% in 2006/07. Estates valued at £1m or more accounted for 72% of the total inheritance tax paid in 2016/17 and represented 3% of estates requiring probate while estates valued at less than £1m accounted for £1.4bn of inheritance tax and around 97% of all estates requiring probate. Experts have said the inheritance tax boom is likely to continue, despite new protections that allow families to pass on more of their property wealth without incurring tax.

The Daily Telegraph, Page: 8 Financial Times Daily Mail, Page: 4

HMRC director defends loan charge

In a letter to City AM, HMRC director of counter avoidance Mary Aiston counters claims made in regard to the loan charge, saying HMRC “doesn’t want to make anybody bankrupt, and insolvency is only ever considered as a last resort.” She adds that the loan charge is not retrospective, commenting: “It doesn’t change the tax position of any previous year, or the outcome of any open compliance checks.” She notes that HMRC has “undertaken extensive compliance activity against disguised remuneration schemes since they were first used.” Ms Aiston advises that if a scheme looks too good to be true, “it almost certainly is.”

City AM, Page: 20

FINANCIAL SERVICES NEWS

Banks only move 1,000 jobs despite Brexit exodus fears

Analysis by EY shows that large investment banks have so far relocated fewer than 1,000 jobs out of Britain despite fears that Brexit would see an exodus from the City. The reports says firms “still have significant work to do” before the scheduled Brexit date, with it suggested that around 7,000 jobs could shift from London to Europe “in the near future”. Previous long-term projections for job losses in financial services pointed to a worst-case scenario where up to 75,000 UK jobs were lost. Of 222 companies monitored by EY’s Brexit tracker, 92 have at some point suggested they were considering moving or had already moved operations or staff. Dublin is the most popular destination, followed by Luxembourg and Frankfurt.

The Daily Telegraph, Business, Page: 1 Financial Times, Page: 14 The Times, Page: 2

Smith & Williamson agrees Tilney merger

Investment group Tilney and professional services firm Smith & Williamson have agreed a merger that will create a combined business – Tilney Smith & Williamson – with an enterprise value of £1.8bn, revenue of around £500m and profit of around £150m. The combined firm will be responsible for £45bn in client funds – 80% of which is in discretionary mandates or funds.

The Times, Page: 42 Financial Times City AM, Page: 16

INDUSTRY NEWS

Consultancy roles see longest application process

Analysis from jobs website Glassdoor shows that jobseekers can spend nearly two months in an interview process after making an application, with those seeking a role in consulting facing the longest average wait, at 55 days. Jo Cresswell, of Glassdoor, said: “The consulting industry, in particular the Big Four – EY, Deloitte, KPMG, PwC – are notorious for their challenging recruitment processes.”

The Sun, Page: 32 Yorkshire Post, Page; 8

CORPORATE NEWS

Debenhams wins legal challenge over restructuring

Debenhams has won a High Court battle with a group of landlords who had challenged the restructuring process that followed the company’s purchase by creditors this year. The only aspect of the CVA that the judge required to be adjusted was a technical provision relating to landlord forfeiture provisions. Simon Underwood of Menzies commented: “This is the most significant legal challenge to date for the CVA rescue model.” He added that the ruling means landlords must “start viewing CVA plans as a ‘market correction’ on the way to a fairer and more flexible rental system.”

The Times, Page: 47 The Guardian, Page: 49 Daily Express Financial Times, Page: 20 Daily Mirror, Page: 52 The Sun, Page: 51 Daily Star, Page: 2 Daily Express, Page: 51 City AM Evening Standard

PENSIONS NEWS

Pensions compensation payouts could trigger six-figure tax bills

Wealthy pension savers who have used fixed protection arrangements to shelter their pension pots run the risk of being hit with six-figure tax bills due to a quirk in rules designed to make the pensions system fairer.

Financial Times

ECONOMY NEWS

Bank of England holds interest rates

The Bank of England’s monetary policy committee has unanimously held interest rates at 0.75% amid continuing Brexit uncertainty. In a statement, the Bank underlined the intensifying trade war between the United States and China for stifling global growth, and warned of the “increased uncertainty about the nature of European Union withdrawal,” which it said meant “the economy could follow a wide range of paths over coming years”. Ian Stewart, chief economist at Deloitte, said: “The pace of the slowdown in the euro area and the US has surprised policymakers and triggered rate cuts. In Britain, despite Brexit uncertainties and softening corporate activity, the Bank of England thinks policy is about right.” Howard Archer, chief economic advisor to EY Item Club, said: “Even if the UK does leave the EU with a deal on 31 October, we believe it is now most likely that the Bank of England will keep interest rates at 0.75% through to 2021.”

The Guardian: Page: 49 Daily Mail, Page: 83 Financial Times The Scotsman, Page: 34 City AM BBC News

Retail sales drop unexpectedly in August

UK retail sales fell in August as British shoppers bought fewer goods than in July, defying expectations of zero growth in a worrying sign for the UK economy. The volume of sales dropped 0.2% compared with the previous month, the Office for National Statistics said on Thursday. Economists polled by Reuters had forecast no change. Year-on-year, sales grew 2.7% in August, down from 3.7% in July. In the three months to the end of August, they were 0.6% compared to the previous quarter. August’s fall in retail sales “tempers third-quarter growth prospects given that consumers have been the strongest sector of the economy”, said EY Item Club’s chief economic adviser, Howard Archer.

The Daily Telegraph The Times, Page: 45 Financial Times, Page: 2 City AM

OECD blames trade war for poor global growth

The Organisation for Economic Co-operation and Development (OECD) has urged a “collective effort” to halt the global trade war, as it cut growth prospects for almost all the world’s major economies for this year and next. The global outlook for 2020 is now 0.4 percentage points below its estimates four months ago, while in the UK, where the prospect of a no-deal Brexit remains a “serious downside risk”, the OECD cut growth estimates from 1.2% to 1% this year and to just 0.9% in 2020.

The Daily Telegraph The Times, Page: 44

OTHER NEWS

Accountants appeal

A poll of 2,500 people by website Illicit Encounters saw 80% say accountancy is the sexiest profession, giving it top spot.

City AM, Page: 9

Contact Paul Southward

Paul Southward