News Roundup Thursday 23rd May 2019

NEWS ROUNDUP

TAX NEWS

Chancellor says tax cuts now an option

Philip Hammond has said the improved state of Britain’s finances means the Government now has the economic flexibility to cut taxes but warned Tory leadership candidates not to wreck the party’s reputation for fiscal responsibility. Mr Hammond told MPs during Treasury questions in the Commons: “We can choose to support additional spending on public services. We can choose to reduce the deficit more quickly. We can choose to invest in Britain’s future. Or we can choose to cut taxes on ordinary working families,” he said. “Having the luxury of choice is something this country hasn’t seen for a decade.” The Chancellor’s comments come after Tory leadership hopeful Dominic Raab pledged to reduce the basic rate of income tax by 5p.

The Daily Telegraph, Page: 3 Financial Times, Page: 3 The Times, Page: 7

CPS: Time for fairer tax system for SMEs

Robert Colvile, director of the Centre for Policy Studies, criticises Britain’s “one-size-fits-all” approach to business tax, regulation and administration, which, he argues, is stifling SMEs. The CPS proposes in a new report a sweeping act of tax and administration simplification, whereby companies with a turnover under £1m would be able to choose between paying all their current taxes, and replacing corporation tax, Employer’s NI, business rates, and VAT with a simple levy on turnover. Modelling by Capital Economics suggests that this would be revenue-neutral for the Treasury, and because this system would be voluntary, no company need lose out. YouGov polling shows that almost three quarters of companies would switch over if it was revenue-neutral.

City AM

Over-60s at risk of complex IHT rules

An HMRC report published last week indicates that more than a million over-60s are at risk of falling into the inheritance tax net but 54% of those have little understanding of IHT rules. NFU Mutual’s Sean McCann said IHT rules were “fiendishly complex, feared by many and understood by few”, and that this lack of knowledge could lead to needless tax bills running into the tens of thousands of pounds. Elsewhere, investment platform AJ Bell says almost half of people who gift money are unaware of inheritance tax rules that could see their estate taxed at 40% if they die within three years. Up to £3,000 can be given away each year tax-free, but 12% of people over the age of 70 are handing out gifts of £20,000 or more. Tax is not paid on larger gifts if you survive for longer than seven years, but just 45% say they understood these rules.

The Daily Telegraph Daily Mail, Page: 45

CORPORATE NEWS

Oliver’s restaurant empire collapses with 1,000 jobs lost

Jamie Oliver’s restaurant chain has collapsed with the loss of 1,000 jobs. KPMG have been appointed as administrators to the group, which includes the Jamie’s Italian chain, Barbecoa and Fifteen. Mr Oliver said he was devastated while unions sought assurances that workers would be paid what they were owed. The Telegraph reports that Oliver made personal guarantees to HSBC and distributor Brakes who could now pursue him for debts. According to Deloitte, 80 bar, restaurant and hotel businesses went into administration in England and Wales last year, with a further 36 resorting to CVAs to restructure. A separate survey by UHY Hacker Young found that almost half the UK’s top 100 restaurant groups were now lossmaking.

The Daily Telegraph, Business, Page: 3 BBC News Financial Times, Page: 14 Daily Mail, Page: 12 The Guardian, Page: 1, 6

British Steel on the brink with thousands of jobs at risk

With British Steel teetering on the brink of collapse the Government has pledged to do all it can to save the company. However, business minister Andrew Stephenson warned that any support available would have to be on commercial terms to avoid falling foul of state aid laws. EY are standing by should a last-ditch rescue deal fail.

The Daily Telegraph, Business, Page: 1 Financial Times The Times, Page: 4 The Guardian, Page: 32 Daily Express, Page: 8

PROPERTY NEWS

Landlords ditch the Tories

Landlords, who have traditionally voted for the Conservatives, are turning their back on the party after a series of policy changes including tighter tax regulation. Almost 70% of National Landlords Association members voted for the Tories in the 2017 general election, but the latest NLA poll found just 16% would do so today. The NLA poll also found 85% would vote against any party that removed section 21 orders, and 89% would vote against parties backing rent controls.

The Daily Telegraph

Property transactions fell in April

Residential property transactions fell 0.3% month-on-month in April, according to data from HMRC, though were still up 0.8% on last year. Transactions for non-residential properties increased 9.5% on a monthly basis and increased 7.1% on April last year – showing demand for commercial real estate remains strong despite the ongoing Brexit uncertainty.

City AM

PENSIONS NEWS

Pensions red tape needs slashing

Tony Hazell complains about complex pensions rules in the Mail and the dramatic fall in allowances. He cites former Pensions Minister Steve Webb who says: “HMRC seems to be far more interested in stopping people putting money into pensions than in encouraging them to save more.” Hazell then goes on to examine the Money Purchase Annual Allowance (MPAA), which is supposed to prevent people taking a large sum from a pension and then reinvesting in a new one to get further tax relief but is also complex. Hazel concludes: “The problem is that these rules are designed by MPs and civil servants who benefit from guaranteed pensions linked to their salaries and subsidised by taxpayers. They have no concept of the difficulties and costs most people face saving for retirement, and then making decisions on how best to take that income.”

Daily Mail, Page: 47

SMEs NEWS

Late payment watchdog criticises G4S

Leading outsourcing group G4S has been accused by the small business commissioner of “persistent late payment” towards one of its suppliers. G4S’s place on the prompt payment code, a voluntary scheme under which large businesses promise to treat suppliers fairly, is being urgently reviewed as a result of Paul Uppal’s intervention.

The Times, Page: 40

INTERNATIONAL NEWS

Heiress faces £13m tax bill

A heiress has paid Italian tax authorities £13m after they concluded her claims to be resident in Britain and Switzerland were false. Anna Maria Ghezzi was found to have been resident in Milan and had evaded tax bills for years.

The Daily Telegraph, Page: 13

ECONOMY NEWS

Scottish PE investment remains steady

Middle-market private equity investment volumes in Scotland stayed steady in the first quarter of this year, according to KPMG, which found deal volume increased marginally from eight deals in the first quarter of 2018 to nine 12 months later, at a value of £970m. James Kergon, head of deal advisory for KPMG in Scotland, said: “The market in Scotland has remained resilient within the wider UK context, where total deal volumes decreased by one-third, from 266 in the first quarter of 2018 to 175 – not surprising as the original Brexit deadline loomed large at the end of the quarter.”

The Scotsman, Page: 39

OECD cautions BoE against raising rates amid Brexit uncertainty

The Bank of England has been warned against raising interest rates amid the Brexit uncertainty. The OECD predicted UK economic growth of just 1.2% this year and 1% next year.

Financial Times

OTHER NEWS

Apprenticeship figures poor

Meg Hillier, the head of the Public Accounts Committee, has hit out that the “poor execution” of the Government’s apprenticeship levy scheme after figures showed the number taking up training fell by a quarter the year after it was introduced.

The Sun, Page: 8

Contact Paul Southward.

Paul Southward