News Roundup Thursday 25th July 2019

NEWS ROUNDUP

TAX NEWS

Patel: Tax rethink could prompt an economic revolution

MP Priti Patel says the next Chancellor could deliver an economic revolution with a radical, tax-cutting budget, saying that with a new Prime Minister comes a “once in a generation opportunity to inject a wave of new ideas and a renewed sense of optimism” after years of “economic pessimism anchored in post-crisis low growth rates.” Writing in the Telegraph, she argues that the last quarter of a century has seen politicians ignore the steady growth of a tax burden which has now hit “crisis levels”, pointing at figures showing that Tax Freedom Day – the date where people have earned enough to cover their taxes for the year – is happening later each year and was the latest it has been since 1995 in 2018, falling on May 29. Ms Patel says ministers have “failed to grasp the basic facts” as the country heads toward economic stagnation with taxes – and the cost of compl ying with a “labyrinthine system of taxation” – climbing higher and higher. She urges the Government to be ambitious in breaking away from “the flawed orthodoxies which have dominated economic thinking”.

The Daily Telegraph

CEBR: Boris could deliver a low tax environment

The Independent’s James Moore looks at Boris Johnson’s plans for taxation if he wins the Conservative leadership race, noting that the Centre for Economics & Business Research will today declare that “Britain could again become a low tax environment under Boris” and say the former Foreign Secretary “understands the impact of taxes better than most in public life.” Mr Moore, considering public finances, points to comment from PwC which suggest “an emerging theme of the government borrowing more money in the current 2019/20 fiscal year than in 2018/19″. Elsewhere, writing in the Times, Institute for Fiscal Studies director Paul Johnson urges the next Chancellor to be cautious “over the tax cuts that the new PM has promised.”

The Independent, Page: 51 The Times, Page: 39

Think-tank: Tax moves could ease housing crisis

A report from think-tank Onward has outlined a number of measures it says could tackle the housing crisis, including new taxes on second homes, empty properties and houses bought by foreign investors. It also proposes taking 770,000 properties a year from the stamp duty regime by scrapping the levy on homes priced up to £500,000.

Daily Mirror, Page: 13 The Sun, Page: 14

INDUSTRY NEWS

HMRC awards £22m contracts to tax haven-based AWS

The Daily Mail’s Matt Oliver reveals that HMRC has awarded £22m of contracts to an arm of Amazon based in Luxembourg. With it shown that the Revenue is using Amazon Web Services Emea Sarl to provide IT support until 2021, Mr Oliver says the revelation is an embarrassment for the Government, which has pledged to crack down on Amazon’s tax arrangements. He notes that Amazon Web Services Emea Sarl last year made £1.7bn in revenues and paid £9.2m in tax. George Turner, of Tax Watch UK, comments that tax avoidance “has been central to the Amazon business model for many years” and says the taxman should be working to ensure large multinational companies pay their fair share of tax, rather than “rewarding companies like Amazon with large government contracts”.

Daily Mail, Page: 64

REGULATION NEWS

The FCA and its labyrinthine rulebook need a serious shake-up

Jonathan Ford argues that the Financial Conduct Authority needs a new approach, noting that the regulator has been described as slow, inefficient, high-handed, and lacking a grip on its own rules.

Financial Times

SMEs NEWS

SMEs could see stronger payment protection

Smaller companies could see better protection from late payments through an overhaul of a Government initiative designed to encourage big businesses to pay suppliers on time. Paul Uppal, the Small Business Commissioner, is expected to take over the prompt payment code, under which large companies promise to pay 95% of their invoices within 60 days. While the Chartered Institute of Credit Management, which currently runs the code, has taken a much tougher approach this year, Mr Uppal is reportedly keen to see a more radical approach, with it suggested that he could remove the code’s 2,305 signatories, starting from scratch by making businesses demonstrate stronger evidence of fair treatment of suppliers in order to be included. The Times notes that the Federation of Small Businesses (FSB) believes Chancellor Philip Hammond had been a key ally in driving through late payment reform, with the FSB’s director of external affairs Craig Beaumont calling for reassurances that Mr Hammond’s successor “will be just as strong in implementing the late payment plans.”

The Times Page: 43

EMPLOYMENT NEWS

Fewer employees enjoying job perks

Research from UHY Hacker Young shows that the number of people receiving major job perks has dipped to a 12-year low, with the number of workers given taxable job perks falling to 3.6m last year – down by 600,000 on 2016/17’s total. The analysis suggests that the complexity of the tax system in regard to perks such as company cars, private medical insurance and staff accommodation has made them less popular, adding that confusion over what is exempt from tax has led businesses, especially SMEs, to scrap employee perks altogether. UHY Hacker Young partner Neela Chauhan said: “HMRC has had a tendency to tax every aspect of job perks to a point where they have been falling out of fashion,” adding: “In tougher economic times the cost of the job perk, its tax charge, NI and the paperwork on top of that – is just too much for some employers.”

Daily Mirror, Page: 21 City AM

PENSIONS NEWS

Altmann calls for pension scammers register

Former Pensions Minister Baroness Altmann has called for a register of scammers to fight pensions mis-selling which could be costing savers up to £4bn a year. She says that a website run by the Financial Conduct Authority which offers some data is “behind the curve”, suggesting that there should be “much more data sharing between the police, the regulators, private companies and the consumers to help combat this problem.” Baroness Altmann, who alongside industry groups, is working to deliver an easy-to-use database of companies suspected of mis-selling, said: “A carefully co-ordinated early warning system, hosted on a centralised database and regularly updated, should be produced and widely publicised.” Alexi Mostrous in the Times says that while HMRC and pension providers have private lists of firms, they are not widely shared, with confidentiality an issue.

The Times, Page: 16

CORPORATE NEWS

Insolvencies fall in Q2

Analysis from KPMG shows that fewer companies in England and Wales went bust in the second quarter than in the first three months of 2019, with 14% fewer firms going into administration. Blair Nimmo, head of restructuring for KPMG UK, said: “You could be forgiven for thinking there had been a dramatic increase in corporate insolvencies.” “Prolonged uncertainty around Brexit has perhaps further delayed a ‘moment of truth’ for companies in those sectors which are more vulnerable to economic volatility. Our advice to companies is to maximise reserves – Always plan for a worst case scenario,” he added.

City AM, Page: 7

Rejected drug destroyed

The Times reports that stock of a drug capable of treating an estimated quarter of a million patients for a year has been destroyed after Astrazeneca rejected the offer to take it for nothing by administrator David Rubin & Partners after the collapse of the Avlon manufacturing site. The paper says Andrew Burn at KPMG, an adviser to Astra, said Astra had reviewed the offer but “do not wish to take receipt of this material”.

The Times, Page: 36

Sports Direct stands firm on CVA suit

Sports Direct says it has “no intention of withdrawing” a lawsuit against Debenhams over the department store chain’s plan to close 50 shops as part of a CVA. The CVA was approved in May after Debenhams entered a pre-pack administration, hitting the value of shareholders’ interests, with Sports Direct – which holds a 29% stake in the retailer – estimated to have lost £150m.

The Times, Page: 36

PERSONAL FINANCE NEWS

Young women opting to keep finances separate

A survey by Netwealth of nearly 4,000 British women has found that of those aged between 16 and 34, nearly a third, 31%, opted against sharing financial assets with their significant other. Meanwhile, only around a quarter of those aged over 55 (26%) opted not to share their wealth. Charlotte Ransom, CEO of Netwealth, said the shift had been prompted by “the backdrop of later-in-life marriages, higher divorce rates and increased financial earnings”. Separate analysis suggests that more than 60% of the UK’s wealth is expected to be in the hands of women by 2025.

The Daily Telegraph, Page: 8

INVESTMENT NEWS

Alcentra and BlueBay raise €11.5bn in direct lending funds

An FT item on lending to European businesses cites Deloitte analysis showing that direct lenders have taken part in more than 1,750 deals across Europe in the past six years.

Financial Times, FT Fm, Page: 1

ECONOMY NEWS

Consumer confidence dips

A report from Deloitte shows that consumer confidence dipped in Q2, slipping by four percentage points to -8% compared with Q2 2018 – although the figure remained the same as that seen in this year’s first quarter. Consumers’ confidence in their disposable income fell by five percentage points compared with a year earlier, while confidence about job security slipped by 1%. Deloitte’s chief economist , Ian Stewart , said: “Consumers’ finances are in good shape thanks to a long boom in jobs and strong wage growth. That said, uncertainties about Brexit and growth are weighing on consumer sentiment and their spending plans.”

The Times, Page: 40

OTHER NEWS

Migration rethink call

Keith Barr, chief executive of InterContinental Hotels Group, backs calls for a “fresh look” at how the UK’s immigration system will operate after Brexit. Writing in the Telegraph, he cites a KPMG forecast that the UK hospitality sector needs 62,000 new EU migrants per year in order to maintain its current activities and grow.

The Daily Telegraph, Page: 28

Contact Paul Southward.

Paul Southward