News Roundup Thursday 20th September 2018

NEWS ROUNDUP

TAX NEWS

IMF: Tax rises needed to pay for NHS

Christine Lagarde, the IMF’s managing director, has said there would be no Brexit dividend to pay for increased NHS funding and that taxes would need to rise to pay for the Government’s £20bn health spending plans. The IMF said the UK would need to bring down its national debt and recommended a raft of tax changes, including aligning the treatment of the employed and self-employed, “scaling back preferential VAT rates”, moving from stamp duty to a land value tax and removing the “tax bias towards debt” in interest relief. Savings could be made by eliminating the “triple lock” on pensions, the IMF added.

The Times, Page: 38

Big Pharma accused of systematically avoiding tax

A report published by Oxfam claims that four of the world’s largest pharmaceutical companies “systematically hide their profits in overseas tax havens”. The charity named Abbott, Johnson and Johnson, Merck, and Pfizer and said they could be depriving the British Government of around £124m each year. The companies appear to be avoiding an estimated £2.9bn a year in taxes in nine advanced economies, the report claims.

The Times, Page: 38 I, Page: 11

Spain demands Gibraltar tax clampdown

Michel Barnier met Spanish leaders yesterday to discuss demands for a “protocol” on Gibraltar to be included in Britain’s exit treaty from the EU. Spain wants a special deal with Gibraltar over tax evasion, smuggling and cross-border workers as part of the Brexit deal.

Financial Times, Page: 4 The Times

Brexit offers opportunity for major tax reform

Writing in the Mail, Peter Hargreaves, the founder of Hargreaves Lansdown, rails against Unilever’s decision to ditch its headquarters in London in favour of a single base in Rotterdam, blaming principally the decision by the Netherlands to cut taxation of shareholders’ dividends. The Government should respond by abolishing corporation tax altogether after Brexit, says Hargreaves, and watch employment and investment soar “instead of seeing companies making plans to leave Britain”. Although it may be too late to save Unilever, “Brexit offers a golden opportunity for a major reset on our national approach to taxation and enterprise,” he says.

Daily Mail, Page: 16

Cable: Amazon, Facebook and Google are “world-class tax dodgers”

Sir Vince Cable told the Lib Dem party conference yesterday that tech giants that fail to pay their fair share of taxes were ruining the high street. He proposed increasing CGT, supporting housebuilding by local councils and replacing business rates with a land value tax. He raised concerns about substandard jobs and described Amazon, Facebook and Google as “world-class tax dodgers”. Meanwhile, Starbucks paid an effective UK tax rate of just 2.8% in the year to the end of October 2017 with the bill reduced partly by tax breaks related to employees being paid in shares.

Financial Times Daily Mirror, Page: 7 Financial Times, Page: 2

Ireland collects Apple’s bumper tax bill

Ireland’s finance minister Paschal Donohoe has confirmed that the country has finally collected the €13.1bn (£11.7bn) owed to it by Apple in unpaid taxes – plus €1.2bn in interest. The European Commission ordered Apple to repay the funds in August 2016 after ruling that the tech giant had effectively benefited from illegal state aid. Meanwhile, Leo Varadkar has said that Ireland is well on its way to becoming Europe’s tech capital and will continue to offer a stable and strong corporation tax regime for tech companies despite Brexit.

Financial Times, Page: 2 City AM, Page: 8 Daily Mail The Times, Page: 49

Watch out for estate growth after death

Experts are warning that large estates could be subject to a “hidden death tax” if they contain investments which continue to grow after death. Richard Morley, a partner at BDO, points out that income accrued by the deceased’s estate during the administration period remains taxable, with executors held personally liable for the unpaid tax if they fail to account for the dividends on any tax returns.

The Daily Telegraph

Balanced and fair tax rises needed to fund the NHS, says May

Theresa May has said Britons should expect “balanced and fair” tax rises to help fund the £20bn increase in NHS funding the Government has pledged over the next five years.

Daily Express, Page: 4

Brussels threatens legal action against UK over customs fraud

The European Commission has stepped up its legal threats against the British government for failing to collect €2bn in lost customs duties.

Financial Times

SMEs NEWS

Self-employed workers could lose up to £3k under universal credit reforms

The Association of Independent Professionals and the Self-Employed (IPSE) has warned that the universal credit system will make self-employed workers up to £3,000 worse off each year because it does not take into account of the fact their income can vary “hugely” from month to month. The Federation of Small Businesses, the Royal Society of Arts and the Trussell Trust warned last week that the reform would damage entrepreneurship.

The Independent

SMEs offer cure for UK brain drain

Santander CEO Nathan Bostock writes in the Scotsman on how SMEs can help fix the UK’s “brain drain”. Young people need to be better informed on how “global corporations in major cities do not have a monopoly on the best prospects – and they may not need to travel far from where they grew up or were educated to find rewarding and fulfilling careers.”

The Scotsman, Page: 38

Firms not ready for Brexit

According to the Federation of Small Businesses, only one in seven small firms have begun any planning for a no deal Brexit – despite 41% believing crashing out of the EU without a deal will hit their company. A further 10% said that a no deal scenario next March would benefit them. Mike Cherry, the FSB’s national chairman, said: “It is deeply troubling that the prospect of no deal is seeing many small firms shelving business decisions, pausing investment and, more drastically, thinking about cutting staff.”

Daily Mirror, Page: 42 The Independent The Times, Page: 47 I, Page: 39

HSBC launches a £12bn SME fund

HSBC has today launched a £12bn UK-wide fund for SMEs which includes £1bn for UK businesses to expand overseas, a £300m pot for agricultural firms. Firms will need to pay a £100 arrangement fee for loans up to £25,000.

Daily Express, Page: 41 The Sun, Page: 43 The Daily Telegraph, Business, Page: 1

A third of small businesses unsure how to get finance

A poll by the British Business Bank reveals that a third of British small business owners would like to expand but do not know how to go about securing finance. Only 5% considered bringing in a business angel and 7% thought about crowdfunding. Over half those surveyed said they expect their business to grow over the next 12 months. A separate survey for Hitachi’s financing arm found two-thirds of small businesses plan to expand in the next three years.

The Sun, Page: 43

INDUSTRY NEWS

Senior politicians hold ‘unprecedented’ meeting with audit firms

Firms including Mazars, BDO and Grant Thornton, along with the ICAEW, met with senior politicians in Westminster last week over concerns that the “Big Four” have become too powerful.

Financial Times, Page: 2

France seeking to lure UK fintech jobs

Delphine Gény-Stephann, the French junior economy and finance minister, has launched a new government-backed tech incubator to lure thousands of UK financial technology jobs to France. The incubator offers companies support with funding and strategies, and also offers foreign companies “relocation packages”.

The Daily Telegraph, Business, Page: 5

Good auditing does not require external experts

A letter to the FT argues that the claim from EY’s Mark Weinberger that experts from other disciplines are essential to a quality audit “stretches credibility”.

Financial Times, Page: 10

ECONOMY NEWS

IMF warns over Brexit hits to UK economy

The IMF has warned that all of the UK’s Brexit plans, including the Chequers blueprint, threaten to damage Britain’s economy – and that a potential “no deal” scenario would be worst of all. Brexiteers have labelled IMF warnings about Brexit as “political” and hit out at the Chancellor for endorsing the IMF’s evaluation of the UK economy. Philip Hammond said in a speech that a no deal Brexit would set the UK back 10 years. He said: “Despite the contingency actions we are taking, leaving without a deal would put at risk the substantial progress the British people have made over the last 10 years.” A spokesperson for the PM added that she believed that the UK’s “best days are ahead of us” and that the country “would succeed in all scenarios”.

Evening Standard Financial Times, Page: 1 The Daily Telegraph, Business, Page: 1 The Independent Daily Mail, Page: 6 The Times, Page: 8 Daily Express, Page: 5

EU migrants pay more in taxes than they receive, MAC report says

The government must make it easier for high-skilled workers to come to the UK, according to reforms proposed by the Migration Advisory Committee (MAC), which include abolishing caps on tier 2 visas for high-and medium-skilled workers and streamlining the application system. The tier 2 scheme would be extended to EU citizens, ending free movement. Other findings include European migrants paying significantly more in taxes than they receive in benefits, – with migrants from the first 13 member states benefiting HMRC more than those from newer member states.

City AM The Sun, Page: 8 The Times, Page: 8 Daily Mail, Page: 4

CORPORATE NEWS

Chappell attacks ‘avalanche’ of demands

Former BHS owner Dominic Chappell has said he was swamped by an “avalanche of documentation” that had been requested by the Pensions Regulator following the collapse of BHS and that he and his team had done everything they could to comply with TPR’s demands. Mr Chappell is appealing his conviction for failing to comply with the regulator’s requests.

The Daily Telegraph, Business, Page: 3 The Times, Page: 43

Burdett hired as Meggitt CFO

Meggitt has appointed Louisa Burdett as its new CFO, succeeding Doug Webb, who will retire from the aerospace engineering group at the end of the year.

The Daily Telegraph, Business, Page: 7

PROPERTY NEWS

Out-of-town supplement should be scrapped, CBI says

CBI Scotland has joined calls for Scottish Government plans for an “Amazon tax” to be abandoned. Proposals that would allow councils to levy a new charge on out-of-town stores and online retailer warehouses would deter investment and damage the economy, the CBI said. “An additional levy would hit a range of local businesses across Scotland,” CBI Scotland director Tracy Black said.

The Daily Telegraph

Rics calls for property tax overhaul

The Royal Institution of Chartered Surveyors (Rics) argued a housing tax overhaul, including ending stamp duty on certain properties, could rebalance the market and “reignite activity”. It said the Government should look at what changes are needed to create a more vibrant property sector with a full-scale review of the stamp duty system.

I, Page: 43 Yorkshire Post, Page: 9

OTHER NEWS

Katie Hopkins applies to avoid bankruptcy

Katie Hopkins has applied for an insolvency agreement to avoid bankruptcy after losing a libel case to poverty campaigner Jack Monroe. The right-wing commentator was ordered to pay Monroe £24,000 in damages and legal costs of £107,000 in March last year over defamatory Twitter remarks.

The Independent

Archbishop a hypocrite and evil, says Edmunds

Noel Edmunds has described Justin Welby as the “reincarnation of evil” and a hypocrite for repeatedly refusing to meet the former presenter and other alleged victims of the HBOS Reading fraud and financial crimes. He was speaking at the annual meeting of small business group SME Alliance in London. Lloyds rescued HBOS at the height of the financial crisis and the Church of England is one of its biggest investors. Edmunds is seeking £64m in damages claiming his former business Unique Group was destroyed as a result of the fraud.

Sky News Daily Star, Page: 4

Contact Paul Southward if you have any queries.

Paul Southward