News Roundup Thursday 18th July 2019



Hunt’s corporation tax cut will go ahead deal or no deal

Jeremy Hunt has reiterated his pledge to cut corporation tax to 12.5% insisting the move would happen in all circumstances – whether there was a Brexit deal with the EU or not. With no deal there would be a “shock to the economy” from import tariffs, he said, adding that slashing corporation tax would give businesses “more headroom to deal with those changes”. During an interview on the BBC with Andrew Neil, Mr Hunt went on to claim that tax cuts would generate 3% growth providing £20bn more in revenues to spend on public services. In the same programme, Boris Johnson attacked the BBC’s “gloom and negativity” over Brexit and said claims he could not both raise the NI threshold for low earners and raise the threshold for higher rate taxpayers were “nonsense”. Separately, Boris Johnson pledged to scrap the tax on tampons after Brexit when asked by the Conservative Women’s Organisation what his approach woul d be. The Government is currently prevented by EU laws from reducing the VAT rate on sanitary products below 5% – which means they are taxed as a luxury item. Jeremy Hunt declined to make the same immediate commitment.

The Daily Telegraph, Page: 4 The Daily Telegraph, Page: 1, 4 The I, Page: 6

Governments should resist taxing tech revenues

The FT’s Tom Braithwaite says taxing the turnover of big tech companies could have unwanted consequences, such as forcing a lossmaking high-growth firm to raise more capital just to pay its tax bills. Elsewhere, the paper considers the motivations behind France’s digital tax, how such moves are viewed in Silicon Valley and whether international efforts to tax Big Tech are likely to succeed.

Financial Times, Page: 16 Financial Times

Trade expert backs belated free-port plans

Reith Still, who spent more than a decade as international business director at Aberdeen Chamber of Commerce, is a supporter of Boris Johnson’s plans for Singapore-style tax-free zones. But he said he was surprised the idea had taken so long to rise to the surface in Westminster considering he had proposed the move two years in a paper he sent to the Department for International Trade, HMRC and his local MP.

The Press and Journal, Page: 29


Prem Sikka: UK remains weak on audit reform

Prem Sikka responds to the Financial Reporting Council’s latest audit quality inspection reports in a piece for Left Foot Forward. The accounting professor suggests the public would not tolerate the level of failure seen in the auditing industry if it were in the NHS or aircraft maintenance operations. It has persisted for years, he adds, with “puny” sanctions making no difference to performance levels. The Big Four are protected globally by western governments, contends Sikka, who adds that although some countries impose large fines and bans on errant audit firms, the UK takes little effective action.

Left Foot Forward


Hiscox buffeted by storms and accounting errors

Hiscox issued an unscheduled trading statement on Friday saying first-half pre-tax profits would be within the $150m to $170m range. Consensus analyst forecasts had been for about $220m. The insurer warned that claims from natural disasters were higher than expected and that it faces an extra tax bill of $60m because of accounting errors. CEO Bronek Masojada said that the increased tax bill was because some advertising expenditure had been miscategorised as tax-deductible. Mr Masojada said: “It was our fault. Marketing evolved. Unsurprisingly, the accountants didn’t evolve quite as quickly as the marketers.”

The Times, Page: 46 Daily Mail, Page: 105

More Patisserie Valerie stores to close

Causeway Capital has decided to close a further 14 Patisserie Valerie stores after a review of the company’s estate, with up to 100 job losses expected. The Irish private equity firm bought 96 branches from KPMG in February after the administrators had already closed 71 loss-making sites. Patisserie Valerie’s former auditor Grant Thornton is noted to have been the worst performer in the Financial Reporting Council’s annual review of audits with half of audits inspected requiring significant improvement.

World Bakers


Civil partnerships will bring benefits to unmarried couples

Proposed new rules giving unmarried heterosexual couples the right to register a civil partnership will open up a range of tax benefits to couples previously excluded from these additional rights. Cohabiting couples who decide to register a civil partnership will have access to the “marriage allowance” and access to bereavement benefits for working-age couples. The new rules will also pave the way for couples to inherit pension benefits in occupational pension schemes where provision for cohabiting couples has not yet been equalised and they’ll gain access to inheritance tax breaks for married couples, including the ability to pass on money to a partner free of inheritance tax. Steve Webb, director of policy at Royal London, said. “Couples who live together have been second class citizens for far too long when it comes to their treatment by the tax and benefit system.”

The Independent, Page: 73


Ludicrous pension tax rules must be scrapped

The clamour for the Treasury to reform pensions rules is growing louder as crucial public services – from the NHS to the fire service and the judiciary – suffer from senior staff turning down work to avoid accidentally overpaying into pensions, resulting in often massive tax bills. More than 20 organisations have met with officials to try and resolve the problem while former pensions ministers Sir Steve Webb and Baroness Altmann call for the “ludicrous” rules to be scrapped. Meanwhile, Boris Johnson has pledged to review the Lifetime Allowance in response to concerns that the rules are driving NHS doctors to reduce their hours or retire early.

The Daily Telegraph, Money, Page: 1, 2 Financial Times, Money, Page: 3


Flint stands up for Woodford

Former HSBC chairman and KPMG partner Sir Douglas Flint has defended Neil Woodford, describing the embattled fund manager as a “strong supporter” of life sciences start-ups. In an interview with the Times, Sir Douglas hailed Mr Woodford’s “extraordinary” track record and desire to plough cash into promising young ventures based on university research. Sir Douglas is chair of Woodford-backed IP Group, whose mission is to scour academia in the hope of unearthing the next Google.

The Times, Page: 46 The Times, Page: 51


London’s prime housing market shows signs of life

Prices across London’s “prime” districts held firm during the second quarter of 2019 for the first time in almost four years, according to estate agents.

Financial Times, Page: 1


No-deal Brexit could see rates slashed close to zero

A senior Bank of England official has said interest rates could be cut to almost zero if Britain leaves the EU without a deal in October. Gertjan Vlieghe suggested borrowing costs would then stay at rock bottom for a prolonged period as policymakers wait for the economy to adjust to the change. Mr Vlieghe also said the BoE should adopt a more transparent approach by publishing a regular forecast of the likely future path for interest rates.

The Daily Telegraph, Page: 29 The Times, Page: 47 Financial Times, Page: 2 The Guardian, Page: 43


CO2 tax to stay with no-deal Brexit

A tax on CO2 emissions from power stations and factories would begin in November if the UK leaves the EU without a deal on 31st October. The tax, set at £16 per ton for 2019, would replace levies under the European Emissions Trading System, which Britain would automatically leave under a no-deal scenario.

The I, Page: 67

Schwarzenegger calls for Trump to release tax returns

Arnold Schwarzenegger has responded to a tweet from US president Donald Trump, which read: “Arnold Schwarzenegger… You know what? He died… I was there.” The actor said an hour later: “I’m still here. Want to compare tax returns, @realdonaldtrump?” Apparently, Mr Trump had been referring to Schwarzenegger’s TV ratings.

The I, Page: 26
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Paul Southward