News Roundup Thursday 11th July 2019

NEWS ROUNDUP

TAX NEWS

Johnson vows to fix pension cap and tax for online giants

Boris Johnson has promised to “fix” the pension cap that causes 90% tax rates for some high earners, saying: “I have raised it repeatedly with the Treasury and they keep telling me they’ve addressed it but the headlines show it has not been addressed.” The Conservative leadership frontrunner said the current rule was “obviously wrong” and, speaking at a Telegraph hustings event, pledged to address the issue if he becomes Prime Minister. Mr Johnson also suggested that “we should look at what is happening in America with Donald Trump” and his tax reforms, saying that once in Number 10 he would cut corporation tax and business rates. He also vowed to make sure large internet firms are made to pay more tax as it was “fundamentally unjust” that companies like Amazon have paid “virtually nothing on their income” in the UK. Rival leadership conte nder Jeremy Hunt, speaking at the event, reiterated his pledge to cut corporation tax to 12.5%. elsewhere, the Times notes that Mr Hunt has proposed lifting the value of tax breaks offered to businesses investing in new machinery from £1m to £5m.

The Daily Telegraph, Page: 1 The Times, Page: 10

Tax system in poor health?

Health Secretary Matt Hancock has been holding talks with doctors over the growing pensions crisis that has seen GPs and consultants cutting their hours and considering early retirement to avoid large tax bills. The Telegraph says the tax regime “urgently need to be reviewed”, noting that many consultants face a significant tax bill “that makes working overtime a financially punitive exercise.” Dr Rob Harwood, chairman of the British Medical Association’s consultants committee, said: “This Government absolutely has to see sense and agree to a major overhaul of pension taxation before patient care is bereft of high-skilled experienced doctors and lives are lost.”

The Times, Page: 4 The Daily Telegraph, Page: 17 Daily Mail, Page: 4

INDUSTRY NEWS

Loan charge concern

The Yorkshire Post details a letter sent by Sir Ed Davey, the chairman of the All-Party Parliamentary Loan Charge Group, to HMRC chief executive Sir Jonathan Thompson in regard to the loan charge. It says: “We are deeply concerned at the fact, that despite public assurances form HMRC and Ministers, HMRC are telling people they may have to sell their home. In cases we have seen, HMRC are threatening people with bankruptcy.” It also says HMRC are passing tax debts to third party debt collection services who then “aggressively pursue the individuals.” The paper comments: “Sir Jonathan, this is happening on your watch. Just when do you intend to halt this appalling malpractice?”

Yorkshire Post, Page: 1

Warning over HMRC letters triggering tax penalties

HMRC is writing to tens of thousands of people with overseas investments and bank accounts – prompting warnings that returning it signed could leave the recipient open to higher penalties in future – which the letter omits to explain. While HMRC denies a “fishing expedition,” Mark Davies, a chartered accountant at Mark Davies Associates, said: “HMRC are sending out this letter indiscriminately to anyone who has a foreign source of income or gains. Signing the disclosure might prevent a taxpayer from being able to claim an unprompted disclosure of a mistake, which would lead to higher penalties.”

The Daily Telegraph  If you want the best advice about offshore income and disclosures to HMRC you should speak with Paul Southward who has dealt with many such cases.

CORPORATE NEWS

Q2 sees jump in London listings

Figures from EY show that firms have resumed listing in London, saying Q2 provided the “right conditions” after the Brexit deadline was extended. There were 15 IPOs on the London exchange in Q2, according to EY’s latest IPO tracker, triple the number seen in Q1. The total proceeds made from IPOs grew 39% year-on-year in the second quarter, although the total number of listings fell 37%. Scott McCubbin of EY commented: “Although we expect investors to remain discerning with continuing local and global political and economic uncertainty, healthy IPO pipelines suggest this uptick will continue into the third quarter.”

The Daily Telegraph, Business, Page: 4 City AM, Page: 4

Firm delays results over audit

Photo kiosk company Photo-Me International will delay the release of its results for the 2019 financial year, as more time is needed to complete its audit. The firm said the delay gives new auditor Grant Thornton, which took over from KPMG in 2018, more time to complete the audit with “enhanced internal regulatory scrutiny”. Shares in the firm slid almost 7% on news of the delay.

The Times, Page: 39 The Independent, Page: 53 I, Page: 42 The Daily Telegraph, Business, Page: 7 Financial Times, Page: 18 Daily Mail, Page: 70 The Sun, Page: 43

KPMG to review Jack Wills

Fashion brand Jack Wills has appointed KPMG as advisers to look at all options for its future, including a potential sale. The retailer, which has seen a downturn in trading, said KPMG has been appointed to carry out a review of the business, adding: “In the meantime, management remains focused on its strategy of new product development, improving margins and driving cost efficiencies, which is already reaping benefits.”

The Guardian, Page: 33

Greybull talks stir British Steel break-up fears

The FT reports that EY has brokered a meeting between Greybull Capital and managers from two British Steel facilities, suggesting the manufacturer may not be sold off as a single going concern.

Financial Times, Page: 18

Debenhams urges Sports Direct to drop legal challenge

Debenhams landlord M&G has confirmed it is dropping a lawsuit against the department store chain over its CVA, which will allow Debenhams to close more than 50 of its 165 stores. Debenhams said yesterday that M&G had dropped its legal challenge after confidential negotiations. Terry Duddy, chairman of Debenhams, urged Sports Direct and Combined Property Control, a property company that owns six Debenhams stores, to follow M&G and drop their separate lawsuit.

The Daily Telegraph, Business, Page: 4 The Times, Page: 41 Daily Mail, Page: 69

REGULATION NEWS

Fines show the system is working

An Evening Standard editorial welcomes a number of tough penalties handed to big firms by regulators, saying that while there have been complaints that the market economy is “rigged against the little guy”, recent punishments are “a sign that the system is working.” The paper highlights the £22.9m fine Serco agreed with the Serious Fraud Office, as well as the £4.2m fine Deloitte was handed by the accounting watchdog for its failure to audit Serco properly.

Evening Standard

SMEs NEWS

Sole traders struggle

Institute for Fiscal Studies (IFS) research, which analysed tax records from HMRC, shows that one in five businesses set up by sole traders closes within a year and six in ten fail by their fifth year. It was also found that median sole trader profits are 7% below pre-recession levels and despite there being 25% more sole traders since 2007, their combined turnover is lower than before the recession. Helen Miller, deputy director of the IFS, said the Government may need to reconsider its policy of encouraging start-ups, saying: “Low and falling incomes among the self-employed and low levels of investment among small business more broadly should lead us to question why we are incentivising people to quit employment and start their own business.”

The Guardian, Page: 33 The Times, Page: 36 Daily Mail, Page: 68  If you want the best advice on starting your own business and making it a success speak to Paul Southward.

ECONOMY NEWS

Sales fall prompts Brexit clarity call

The British Retail Consortium (BRC) has called for urgent clarity over Brexit, saying that uncertainty has contributed to a fall in sales. The BRC’s monthly health check of the sector, conducted with KPMG, shows that total sales fell by 1.3% in June, while the annual rate of growth slowed to 0.6%. These figures are the weakest since the survey was launched in 1996. Helen Dickinson, the BRC’s chief executive, said: “June sales could not compete with last year’s scorching weather and World Cup, leading to the worst June on record.” KPMG’s head of retail Paul Martin said: “Pressure on retailers continues to mount and is seemingly coming from all angles: economic, geopolitical, environmental and behavioural.”

Daily Mail, Page:68 The Guardian, Page: 31 The Times, Page: 34 Daily Mirror, Page: 43 The Sun, Page: 43 Daily Star, Page: 2 I, Page: 41 City AM, Page: 8

Global economic slowdown stabilising

The global economic slowdown could end without a recession, according to a new report by the Organisation for Economic Cooperation and Development (OECD), which suggests that growth is heading for a more stable footing as countries including the UK show signs of stabilising. OECD chief economist Holger Schmieding said: “We do not find serious excesses that would require a cleansing recession in the next two or three years.”

The Daily Telegraph

OTHER NEWS

Thieving accountant must repay £650k

Accountant Jeffrey Bevan, who stole £1.7m of government money, must pay back more than £650,000. Mr Bevan, who had been the payment manager for the Accountant General of Bermuda, was last year jailed for seven years at Cardiff Crown Court. The court has ordered him to pay £654,757 back to Bermuda.

The Sun, Page: 21

Contact Paul Southward (Tax Adviser).

Paul Southward