News Roundup Thursday 24th January 2019
News Roundup Thursday 24th January 2019
More footballers facing tax avoidance investigations
Increasing numbers of footballers are under investigation for tax avoidance by HMRC. The Revenue is now looking into the financial affairs of 173 players, 40 clubs and 38 agents, as it claws back £355m from the sport. The latest figures show an increase in the number of players and agents under investigation but fewer clubs. In October, HMRC was investigating 171 players, 44 clubs and 31 agents. The Financial Secretary to the Treasury, Mel Stride MP, said: “HMRC is clear that everyone must pay what they owe under the law – regardless of their wealth or status. The department’s work in the football industry is the latest demonstration of this ongoing effort and we look forward to continued co-operation with clubs and players throughout 2019.”
ITV News Daily Mail, Page: 72
HMRC apologises for late-payment errors
Tax officials have apologised for two mistakes over late-payment fines. Last weekend HMRC denied fining taxpayers for failing to submit their self-assessment returns online – even though the deadline is still almost two weeks away. But on Monday the taxman admitted that some people have been wrongly charged. It has promised to cancel the penalty charges and apologised for the error. Some 653 people who submitted their tax returns by the start of January were hit by the bogus late-payment penalty charges. They received letters from HMRC telling them they’d missed the deadline and so had to pay a penalty of £100, even though many had submitted returns almost a month ahead of the 31 January deadline.
HMRC’s digital agenda challenged
Sam Brodbeck, the Telegraph’s deputy personal finance editor, cautions against the government’s Making Tax Digital roll out, suggesting that “time and again” he has spotted “glaring errors” on HMRC guidance – notably for the notoriously complex stamp duty rules. This week, he adds, the Office of Tax Simplification even cautioned that an increased use of technology could cause taxpayers to “disengage from their responsibilities”.
CEO pessimism grows
A PwC survey has revealed pessimism among chief executives has risen sharply in the past 12 months in light of rising protectionism and the deteriorating relationship between the US and China. The survey, marking the start of the World Economic Forum in Davos, showed a six-fold increase to 30% in the number of CEOs expecting global growth to slow during 2019. The percentage of UK business leaders expecting a global economic decline over the next 12 months has risen from 12% in 2018 to 34%. However, Britain’s CEOs showed little impact of being affected by Brexit uncertainty, with 61% of UK business leaders saying they expected to increase headcount in 2019. That was up from 54% last year and compared with 53% of CEOs globally. UK business executives were also optimistic about their organisation’s growth over the next 12 months, with 82% confident about their revenue prospects, in line with global responses.
Patisserie Valerie lenders could be wiped out
Lenders to Patisserie Valerie fear multimillion-pound loans will be almost completely wiped out by the potential collapse of the bakery chain. The Telegraph reports that HSBC and Barclays have no security over Patisserie Valerie’s assets, meaning that if is forced into insolvency, loans of almost £10m will rank no higher than suppliers and other creditors. As of yesterday, the chain was still locked in discussions with its lenders to extend a freeze on its debts which expired last week.
Time for gender pay reporting to cover partners
In a letter to the FT, Deloitte’s Emma Codd calls on more firms to publish their mean and median “total earnings gap” – including the earnings of equity partners.
Patisserie Valerie enters administration
Patisserie Valerie has entered administration after the failure of rescue talks with banks. The café chain said it did not have enough money to meet its debts. Administrators from KPMG said 70 stores will close immediately, meaning a “significant number of redundancies”. KPMG’s administrators Blair Nimmo and David Costley-Wood said about 121 stores would continue to trade while a buyer is sought. In October, Patisserie Valerie uncovered “significant, and potentially fraudulent, accounting irregularities”. Last week, the company admitted its finances were in even worse shape than it had previously thought. It said forensic accountants had found “thousands of false entries into the company’s ledgers”. In a statement to the stock market yesterday, Patisserie Holdings said that as a “direct result of the significant fraud”, it had been unable to renew its bank facilities and “therefore regrettably, the business does not have sufficient funding to meet its liabilities”.
Financial Times, Page; 1 The Daily Telegraph, Business, Page: 1 The Times, Page: 2 The Times, Page: 35 Daily Mail, Page: 57 The Guardian, Page: 4 Sky News The Independent City AM, Page: 1, 3 Daily Express, Page: 47 Daily Mirror, Page: 38 The Scotsman, Page: 20 Yorkshire Post, Page: 6
FRC opens second investigation into KPMG’s Carillion audit
The Financial Reporting Council has opened a second investigation into how KPMG audited the books of collapsed construction company Carillion. The FRC said that KPMG “self-reported” additional material related to Carillion’s audit for year-end 2016. The audit for that year was one of 160 company audits in the FRC’s routine annual quality review. The watchdog said last year that it was investigating KPMG’s audits of Carillion for 2014-2017 and the conduct of two former finance directors, Richard Adam and Zafar Khan. Frank Field MP, chairman of the work and pensions committee, said that accusations of wrongdoing in the collapse of Carillion were “sadly no longer news” as he accused KPMG of “egregious wrongdoing at every stop on this gravy train.”
City AM, Page: 12 The Times, Page: 38 Daily Mail, Page: 58 The Sun, Page: 43 The I, Page: 38 The Scotsman, Page: 2 Yorkshire Post, Page: 5
Fastest growing firms ‘hoovering up’ jobs from rivals
A report by the Enterprise Research Centre suggests Britain’s fastest-growing businesses could be contributing to job losses. A study of the performance of more than six million companies over a period of 17 years found that companies with the fastest employment growth tended to grow by “hoovering up” jobs from slower-growing businesses in the same region, in what the researchers called a “crowding-out competition effect”.
Small business lender secures £56m backing
Small business lender Marketinvoice has secured £56m in backing from investors in order to expand its platform. The firm raised £26m in equity from Barclays and Santander Innoventures, the venture capital division of the Spanish bank.
Hammond calls for tough disputes scheme
Chancellor Philip Hammond has called for a proposed redress scheme for small businesses to be toughened, saying the dispute service proposed by UK Finance must include a broad range of interests and not impose a compensation cap. In a letter to UK Finance chief executive Stephen Jones, Mr Hammond emphasised a need for a steering group put together to determine the details of the scheme to have “balanced representation” from banks and business representatives, saying it is “vital” that different perspectives are heard to ensure any schemes are “regarded as truly robust and independent.” Separately, shadow city minister Jonathan Reynolds writes in the Times that an independent tribunal would be a critical step towards creating a level playing field between small businesses and their banks.
Daily Mail The Times
Former banker convicted for selling tax data
A former UBS banker accused of selling information about wealthy tax evaders to German authorities has been convicted of economic espionage. The Swiss Federal Criminal Court sentenced the man to 40 months in prison on charges including money laundering, although he was acquitted of breaking banking secrecy laws. Prosecutors say that while working for UBS between 2002 and 2012, the banker illegally collected data about German account holders and sold the information for €1.15m.
Tax changes burst buy-to-let bubble
The Mail reports that tax changes and an uncertain market have seen tens of thousands abandon the buy-to-let industry, with the number of new landlords getting mortgages plummeting by 60% in the past decade. The introduction of an extra 3% stamp duty charge for anyone buying a property that was not their main home from April 2016 means that instead of paying £5,000 in tax on a £300,000 home, new landlords now have to pay £14,000. Separately, data analysis by Moneyfacts has found stamp duty is fuelling a boom in 10-year mortgages as families are choosing to stay put instead of taking the financial hit to move to bigger homes.
Daily Mail, Page: 33-34 The Daily Telegraph, Page: 6
MoJ has not assessed new probate costs
The Ministry of Justice (MoJ) has admitted that it has not carried out any assessments on the cost of administering probate for high value estates ahead of a change to the charging system. Lucy Frazer, the parliamentary under-secretary of state at the MoJ, and the MP in charge of pushing the proposals through Parliament, has admitted that the MoJ took no steps to work out how much it costs the courts to grant probate to estates valued at either £5,000, £50,000 or £2m.
No-deal Brexit amongst biggest threats to growth
The IMF has warned that a no-deal Brexit and a sharper slowdown in China are the biggest risks to growth in the global economy in 2019. In a new report on the world economic outlook, the organisation also warns escalating trade tensions could undermine global economic growth. For the world economy, the IMF is now predicting growth of 3.5% in 2019. In October, it forecast 3.7%. The report predicts the UK’s GDP will grow by 1.5% this year, should it secure an agreement to leave the EU, and 1.6% in 2020.
Shrinkflation affects more than 200 products
Hundreds of products on supermarket shelves have been hit by shrinkflation, whereby a product shrinks in size but its price doesn’t. The ONS studied the price of 17,000 items between September 2015 and June 2017 and found 206 products in all categories had shrunk in size, while just 79 increased.
Employment highs could support rate rise
Employment rose to a record high (75.8%) in the three months to November, according to the ONS, which also revealed that wage growth had hit a 10-year peak – up 3.3% on last year to £527 per week. Samuel Tombs, chief economist at Pantheon Macroeconomics, said the rise in wages strengthens the case for an interest rate rise “even if the Brexit outlook remains uncertain”. Yael Selfin, chief economist at KPMG UK, cautioned: “The UK labour market could enter a perfect storm of declining worker availability and a tight domestic labour market.”
UK tops Europe for foreign direct investment
Analysis by Deloitte reveals the UK topped Europe for foreign direct investment (FDI) between 2015 and 2018. Around $140bn (£108bn) in capital was brought in across nearly 4,000 inward investment projects, more than second and third-placed Germany and France combined.
City AM, Page: 10
Ronaldo agrees to €19m tax fine
Cristiano Ronaldo has agreed to a fine of almost £17m, and a suspended jail sentence, after being convicted of tax fraud in Spain. The Portugal international avoids prison as, under Spanish law, a first offender can serve anything less than a two-year sentence under probation.
Gen Z fretting over finances
Generation Z are far more concerned about their finances this year compared to 2018, according to a study by NatWest. The bank’s research shows nearly half of 18-24 year olds expect tough financial times ahead with 44% saying the rising costs of essentials such as food and travel is the biggest financial concern.
Contact Paul Southward if you have any queries.