News Roundup Thursday 19th July 2018

NEWS ROUNDUP

TAX NEWS

HMRC to be given new powers to trawl bank accounts

The Mail reports that HMRC is to be handed new powers to trawl bank accounts without holders being told. Under existing rules, financial institutions are permitted to notify their customers if tax officials demand access to their bank statements and other financial information. But in future the Revenue will be able to draw a “veil of secrecy” over its investigations. Critics have condemned the move, saying it is a breach of privacy. James Daley, managing director of Fairer Finance, said: “The system we have got contains essential protections for taxpayers’ privacy and rights. The idea that HMRC can request information from people’s bank, from state agents and other third parties without notifying the individual is shocking.” The proposals will also limit judicial oversight. Currently, if HMRC asks a taxpayer if they can access financial information and the taxpayer refuses, officials need permission from a tribunal to go ahead. In future, such probes will be signed off in house in cases which are not kept secret. However, a judge will have to sign off information orders used in secret.

Daily Mail, Page: 10

Tax rise call to support social care

New analysis has suggested that two major tax hikes are needed to raise an extra £12.5bn needed to make social care sustainable. To meet a Government pledge to cap the amount that wealthier individuals spend on personal care and to raise the threshold for the value of assets people can hold before they have to pay for care, the basic rate of income tax would have to go up by 1% and NICs by 0.5%, according to Grant Thornton projections for Independent Age. The charity also said several other tax options would yield far too little, such as a 3% rise in business rates or council tax.

The Times, Page: 4

Austria steps up push for EU-wide digital tax

Austria is moving ahead with plans for an EU-wide digital tax on big tech companies, despite opposition from within the bloc.

Financial Times, Page: 4

SMEs NEWS

Business rates here to stay

The Sunday Telegraph’s Jack Torrance says business rates are unlikely to be scrapped anytime soon, despite increasing calls for the system to be overhauled or replaced with a flat tax on sales. In a letter to the Treasury select committee earlier this month, Philip Hammond acknowledged the “high fixed costs” some businesses have to bear because of rates. But he defended the system on the grounds that property taxes are “easy to collect, hard to avoid [and] relatively stable compared to other taxes”. PwC’s Phil Vernon notes that the system has been made all the more complex as successive chancellors have tinkered with it to lighten the load on certain businesses. “The Government constantly introduces relief and exemptions to the rating system as a substitute for reforming it,” he says. Meanwhile, Iceland founder Malcolm Walker has warned that Britain’s high streets will be left with just “coffee shops and nail bars” unless the Government eases the tax burden on retailers. He also said plans to tax online businesses to help level the playing field could result in high street firms being double taxed.

The Sunday Telegraph, Business, Page 4 Sunday Express, Page: 16

GDPR compliance costs firms thousands

The Sun reports that small business owners are being quoted up to £6,000 to ensure they are complying with GDPR. The volume of work created by the regulation has forced some small business owners to turn to costly advisers who can charge thousands at a time. Mike Cherry, national chairman at the FSB, said: “It is concerning that the burden and scale of the reforms have proven too much to handle for some of these businesses and there is now a need for tailored support.”

The Sun, Page: 38

PROPERTY NEWS

Landlords take least taxing route to renting

The UK has seen a record rise in the number of homes being let out by small companies, as more landlords place their properties into corporate vehicles to avoid higher taxes. In the first six months of 2018, about 18% of all rented properties in the UK were being let out by companies rather than individuals, according to analysis by estate agent Hamptons International. By contrast, the figure was only 4% a year earlier. This trend follows changes to the relief that landlords can claim on their mortgage interest costs.

The Times, Page: 41

HMRC cracks down on second home sales

HMRC is writing to 1,500 people who have sold a second home or buy-to-let property in the 2015-16 tax year but not declared a profit on which capital gains tax would potentially be liable. The letters, the wording of which is still being finalised, will ask recipients to explain why they have not paid the tax that HMRC’s computer models indicate they owe. Chas Roy-Chowdhury of the ACCA said the HMRC initiative should serve as a “wake-up call” to existing and former landlords or owners of second homes, some of whom may not realise they owe tax.

The Sunday Times, Business, Page: 11-12

CORPORATE NEWS

Bosses face ban on selling shares

Senior executives could be forced to hold onto shares for up to five years after they retire under new corporate governance rules to be unveiled next week. The Financial Reporting Council’s revamped Corporate Governance Code is expected to impose a new provision for remuneration committees to consider whether executives should be required to continue to hold shares for a period after their employment ends. The move comes after a series of scandals, including the dramatic collapse of Carillion. It will come alongside other new measures on remuneration, including extending the recommended minimum vesting and post-vesting holding period for executive share awards from three to five years.

The Sunday Telegraph, Business, Page: 3 Sky News

Tchenguiz looks forward to court case

The Mail on Sunday interviews property tycoon Robert Tchenguiz, whose £600m-plus claim against Grant Thornton will reach trial in October. The claim relates to Grant Thornton’s role as liquidator of collapsed Icelandic bank Kaupthing. Tchenguiz’s assets in the family trust have been frozen since the collapse of the bank in 2008, which led to him and his older brother Vincent being arrested for suspected fraud in 2011.

The Mail on Sunday, Page: 49

INTERNATIONAL NEWS

Some Deloitte staff don’t want to work with ICE

Deloitte employees have raised “moral objections” to the firm’s consulting for Immigration and Customs Enforcement (ICE) and are circulating a petition among workers that by Thursday afternoon had more than 750 names. Their complaint comes in the wake of McKinsey stopping its work for ICE following questions from employees who are unhappy that the management consultancy had done more than $20m in work for the government agency, which has come under sustained criticism for its role in carrying out federal immigration policies.

New York Times

ECONOMY NEWS

in London and across the UK has hit its highest point since before the EU referendum two years ago, according to data from Lloyds Bank. Its index tracking the outlook of more than 1,500 firms from across the country rose further above the long-term average to a reading of 25% in the second quarter.

City AM, Page: 5

Decline in immigration costing UK billions

Analysis by the thinktank Global Future suggests the fall in immigration since Brexit is already costing the UK more than £1bn a year. It also forecasts that meeting the government’s immigration target of “tens of thousands” will cost Britain £12bn a year by 2023.

The Independent, Page: 13

Inflation hits 2.6%

The official inflation rate for June is expected to be 2.6%, compared with 2.4% in May. The consultancy Capital Economics said fuel and oil price rises are behind the increase, which will be revealed on Wednesday.

The Mail on Sunday, Page: 46

OTHER NEWS

Home Office refuses to back down over tax ‘error’

A Nigerian engineer has been forbidden to work and ordered to leave the UK, despite the Home Office’s own lawyers advising that his case be dropped. Andrew Farotade’s lawyer, Adam Reid, says the Home Office made errors by comparing part of Mr Farotade’s gross earnings with his net earnings, then accused Mr Farotade of deceit when the different periods resulted in different incomes. The Home Office also claimed Mr Farotade had been dishonest by amending his tax records when he discovered an error, despite his accountant writing to the Home Office to admit liability. Mr Reid said: “We have been dealing with a lot of these types of cases. The Home Office seems to regard any discrepancy with an individual’s tax records to be dishonest behaviour worthy of refusal under 322(5).”

The Guardian, Page: 15

Ultra-wealthy apply for more UK visas

The number of super-rich individuals prepared to invest £2m for the privilege of visas to live and work in the UK rose by 46% last year. More than 400 very wealthy overseas people applied for tier 1 investor visas in the year to the end of March, despite the government introducing tighter rules in 2015 requiring applicants to prove the source of their wealth. There are particular concerns about corrupt Russian money entering the UK, but Moore Stephens’ Stuart Daltrey warned the visa crackdown could harm the economy if Russians with legitimate UK businesses decided to relocate as a result.

The Guardian, Page: 24 The Independent, Page: 55

Gender pay gap to endure for decades

Official forecasts suggest the best-paid male graduates will earn up to £38,000 a year more than their female counterparts by the time they pay off their student loans in 30 years’ time. The top 10% will earn an average of £82,000, against £44,000 for women. Sam Smethers, head of the Fawcett Society, described the forecasts as “shocking” and said: “Women remain underpaid and undervalued.”

The Sunday Times

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Paul Southward