News Roundup Saturday 29th June 2019

NEWS ROUNDUP

TAX NEWS

Hunt’s fiscal plans chided by the IFS as “expensive”

The Institute for Fiscal Studies has warned that Jeremy Hunt’s plans to slash corporation tax and hike defence spending would “exacerbate” pressures on public finances unless other taxes were raised or the public debt was increased. Cutting corporation tax to 12.5% would cost £13bn a year to begin with, the IFS said and although it would bring greater investment in the UK the policy would not pay for itself. The think-tank also suggested Boris Johnson’s pledge to give a tax cut to earners on more than £50,000 would cost around £9bn and mainly benefit the top 10% of earners.

Daily Mail, Page: 10 The Guardian, Page: 10 Financial Times, Page: 3

Jailed ‘spy’ to pay up or face more time

Norfolk tax fraudster Raymond Thomas, who claimed he was a spy in an attempt to cover his tracks, has been ordered to pay £615,000 or face a further five years behind bars. Thomas was jailed for four years and eight months in November 2017, after an HMRC investigation found he had stolen £1.6m. His wife, Susan Weston, who helped to launder the money, has been told to pay £439,551 or face a further four years in prison.

Press Release

Starbucks suffers loss but pays more tax

Starbucks UK has reported its first annual loss since 2013. It made a pre-tax loss of £17.2m compared with a profit the previous year of £4.6m, but paid corporation tax of £4.05m over the period, a 22.9% rise. This was primarily due to £20m of onerous lease provisions and one-off charges related to the renegotiation of other leases, plus the closure of unprofitable stores.

The Times, Page: 39

MP calls for sunscreens to be VAT-free

Chris Bryant has called on the Chancellor to remove VAT on high-factor sunscreen. The Labour MP was recently treated for stage three skin cancer and has received cross-party support for his campaign.

Daily Mail, Page: 33

Corbyn will find there’s no gains to tax

Victoria Blackburn in the Express slams Labour’s plans to charge CGT on the currently exempt family home but manages to find consolation in the threat from Jeremy Corbyn in that, should he get into No 10, house prices will plummet so drastically there will be no capital gains to be taxed at all.

Daily Express, Page: 13

Wealth taxes spur new ways to game the system

Responding to pleas for a wealth tax on the richest Americans, Ira Sohn suggests the US closes the extensive catalogue of tax loopholes that litter the country’s tax code.

Financial Times, Page: 10

CORPORATE NEWS

Carney says illiquid investment funds are “systemic” threat

Speaking with MPs on the Treasury select committee on Wednesday, Mark Carney said investment funds with high levels of illiquid holdings are “built on a lie, which is that you can have daily liquidity for assets that fundamentally aren’t liquid”. His comments follow the suspension of Neil Woodford’s flagship Equity Income Fund earlier this month. The Bank of England Governor added: “This is a big deal. You can see something that could be systemic.” Although globally co-ordinated action was needed to stop such funds offering investors the prospect of instant access, the Bank would co-ordinate with the Financial Conduct Authority in the meantime to ensure redemption terms were better aligned with the actual liquidity of the underlying investment, said Mr Carney.

The Daily Telegraph Reuters Financial Times

Bathstore falls into administration

Bathroom retailer Bathstore has collapsed into administration, leaving hundreds of jobs and around 135 stores vulnerable as administrators look to sell the business. Ryan Grant, BDO Business restructuring partner, said: “Despite significant investment into the business over the past five years, Bathstore has struggled to overcome the well-documented challenges facing the UK retail sector.”

The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 73 Financial Times, Page: 18 The Times, Page: 37 Daily Express, Page: 47 The Guardian, Page: 33

Bonmarché embraces takeover bid

The directors of fashion retailer Bonmarché have changed their minds about a takeover bid from the owner of Edinburgh Woollen Mill after it s sales deteriorated further. The chain recommended shareholders accepted Philip Day’s offer of 11.445p a share, despite previously rejecting a mandatory takeover offer from Spectre Holdings, his Dubai-based bid vehicle, as “inadequate”. Meanwhile, Bonmarché auditor PwC has warned that if trading did not improve, it could go bust.

The Times The Daily Telegraph, Business, Page: 3 Daily Express, Page: 47

SMEs NEWS

Veterans need more help to become entrepreneurs

A new report from the Federation of Small Businesses says former military personnel are not being given the financial support and training needed to become entrepreneurs. FSB chairman Mike Cherry said: “For those seeking employment, small businesses can often be better than bigger ones at spotting and nurturing talent, rather than discard a service leaver’s job application because some of their skills and qualifications aren’t necessarily from an academic route. But there is room for greater support and advice to service leavers on the options of self-employment or finding work within an existing smaller business, and there should be more of a focus on the key skills needed to succeed in enterprise.”

The Daily Telegraph, Business, Page: 6

Hunt: Start a business and I’ll clear your student loan bill

Tory leadership hopeful Jeremy Hunt has promised to wipe student debt for young entrepreneurs who launch their own business after leaving university. The Foreign Secretary wants to increase the proportion of graduates starting their own business – currently just 1% do so – as part of efforts to “turbocharge” the British economy after Brexit. Mr Hunt’s team said the cost to the taxpayer in waiving the debt would be offset by an increase in tax revenues. He has also promised to slash corporation tax and exempt thousands of small companies from business rates.

The Daily Telegraph, Page: 6 The I, Page: 7

FSB concerned over rates pressure

The Federation of Small Businesses has said it is concerned at the large amount of money being collected from small firms after it was revealed that receipts from business rates increased by £900m last year to £25.3bn.

Yorkshire Post, Page: 10

LEGAL NEWS

Lynch denies misleading investors

Mike Lynch, founder of software firm Autonomy, has made his first statements to the High Court as he fights a $5bn claim brought by Hewlett-Packard over the sale of his company to the US giant. He said former HP CEO Meg Whitman was “out of her depth” and denied misleading investors, auditors and the market about Autonomy’s value. He told the court that Autonomy was “one of the most successful companies England has ever produced” adding that the majority of the transactions disputed by HP “generally occurred below my level”. He said he relied on accountants Deloitte adding that: “I do not believe that there was anything materially wrong with Autonomy’s accounts.”

Financial Times, Page: 13 The Times, Page: 32 City AM, Page: 3

BREXIT NEWS

Brexit bill for UK financial services reaches £4bn

EY ’s quarterly Brexit tracker shows UK financial services companies have spent £4bn preparing to shift people and capital to the EU since Britain voted to leave three years ago. After a pause in no-deal planning following the extension to the UK’s original 29 March departure date, UK banks have restarted their preparations for a no-deal Brexit, EY said, with activity for a no-deal expected to increase markedly throughout the summer.

Financial Times City AM

ECONOMY NEWS

Foreign investment into UK falls to lowest level in six years

The number of foreign investment projects into the UK has fallen to its lowest number for almost six years, according to the Department for International Trade, as Brexit fears linger. Elsewhere, Stephen Barclay has told the Times that businesses across the UK would “pay the price” of Government inertia unless the cabinet stepped up preparations for no deal. Finally, in its latest quarterly economic outlook report, KPMG predicts that GDP will grow by only 1.3% in 2020, down from a previous forecast of 1.5% due to the risks of a global slowdown and the damage of Brexit uncertainty. It kept its 2019 forecast unchanged at 1.4%.

Financial Times The Times, Page: 7 The Times, Page: 34 The I, Page: 40 City AM, Page: 2

Carney hints at interest rate cut

Mark Carney told MPs yesterday that there would be no automatic response in the event the UK left the EU without a deal but there would likely be some stimulus to support the transition in the event of a no-deal Brexit. “It would depend on demand and supply and where the exchange rate went,” Mr Carney said. The Bank of England Governor told MPs on the Treasury Select Committee: “Expectations of no deal have gone up in markets, that uncertainty is still there for business and that is affecting the short-term economic performance.”

The Times, Page: 7 The Daily Telegraph City AM

Johnson eyes public spending spree with Javid as chancellor

Boris Johnson plans to install Sajid Javid as Chancellor and turn on the spending taps if he becomes PM, with the home secretary said to share Mr Johnson’s enthusiasm for large scale public investment.

Financial Times, Page: 3

OTHER NEWS

Accountants need to be numerate, not mathematicians

Among a series of letters responding to Times columnist Alice Thomson’s piece on math in education a certain Andrew Horner says she “overestimates the math required of accountants.” Ms Thomson suggested the study of advanced mathematics should only be for would-be accountants and other mathematical professionals, says Horner, but in his 20 years’ experience he has “never had a problem that couldn’t be solved with GCSE math.” “Accountants need to be numerate, not mathematicians.”

The Times The Times, Page: 22

Contact Paul Southward.

Paul Southward