News Roundup Thursday 28th February 2019
News Roundup Thursday 28th February 2019
SAS doctor wins tax battle
SAS veteran Richard Villar has won his latest battle, this time an £800,000 demand from HMRC. The orthopaedic surgeon claimed entrepreneur’s relief and other allowances when he sold a practice to Spire for £1m, meaning he paid a tax bill of just over £80,700. HMRC claimed the transaction was simply an advance paid by Spire to secure the surgeon’s services and that it should have been taxed as income but this was rejected by the First-tier Tax Tribunal at the Old Bailey. Andrew Robins at RSM said the case was unlikely to be the last of its kind to be brought by the taxman. “It’s worth their while. It’s a lot of money and HMRC feels it has a responsibility in cases like this to test the facts,” he said.
Two jailed for £60m fraudulent HIV cure tax fraud
Two fraudsters, who attempted to steal more than £60m through a fraudulent tax avoidance scheme claiming to invest in HIV research and conservation, have been jailed for a total of 14 and a half years. Antony Blakey and John Banyard enticed wealthy people to invest in the scheme, aided by world renowned conservation scientist Professor Ian Swingland. Investors were able to claim tax rebates on the losses that the businesses apparently generated, or lower their tax bills, by offsetting losses against £160m of income, attempting to avoid £60m in tax. The majority of repayments claimed were withheld by HMRC. Professor Swingland received a two-year sentence, suspended for 18 months.
Press Release The Times, Page: 20
Number of new tech start-ups jumps 14%
Data from Companies House shows there were 11,864 tech firms incorporated in 2018, up from 10,394 the year before. The number of tech firms grew across every UK region except Scotland where numbers fell 4%, while in the north east numbers remained flat. David Blacher, of RSM which compiled the figures, said: “Given the current economic uncertainty, it’s fantastic to see that tech start-ups have continued their upward trajectory […] the numbers show that entrepreneurs are continuing to innovate and venture capital, private equity and traditional funders are still lining up to commit funds to the right projects.”
City AM, Page: 5
Brexit survival guide issued
UK Finance has issued an online guide for small businesses on how to prepare for Brexit. Backed by the Federation of Small Businesses, the British Chambers of Commerce and the Confederation of British Industry, the guidance says banks have the capacity to support firms “whatever the outcome” and urges businesses to capitalise on the opportunities of Brexit to maximise growth.
City AM, Page: 11
Fintech joins with Sage to offer SME finance tool
Business payments disrupter Modulr has teamed up with software firm Sage to create an accounting service to support SMEs. The Sage Salary and Supplier Payments tool, powered by Modulr, allows users to securely process payments directly from cloud accounting products.
The Scotsman, Page: 37
MTD could unlock billions in productivity benefits
Small companies across the UK could benefit to the tune of hundreds of millions of pounds from a productivity boost as a result of upcoming tax digitalisation, new research suggests. A study by economic consultancy Volterra Partners and accounting software firm Intuit QuickBooks calculates that the immediate impact of Making Tax Digital (MTD) will bring a £6.9bn benefit nationally. MTD will require every VAT-registered business earning above the £85,000 threshold to file their tax digitally. The report estimates this could unlock up to £46bn in turnover over the next five years for the UK’s SMEs. Integrating Open Banking principles into financial management software could see the productivity payout rise to £57bn.
The Scotsman, Page: 34 Yorkshire Post, Business, Page: 5
Consumers to be ‘at heart’ of competition law reforms
Lord Andrew Tyrie, chair of the Competition and Markets Authority (CMA), has indicated that consumers will be “at the heart” of a new competition law regime. The CMA plans to make the economic interests of consumers and their protection from detriment “paramount” and Lord Tyrie has asked for new powers to impose “interim measures” on parties and the power to levy fines if its requests or orders are flouted, along with a new duty to respect parties’ right of defence. Lord Tyrie added his backing for small businesses stating that they needed the chance to compete against companies which abused their dominance.
City AM Financial Times, Page: 3
Rise in pension deductions will not lead to mass opt-outs
A report from Royal London predicts that an increase in employee contributions to pensions from April will not result in a rise in opt-outs from auto-enrolment schemes. Minimum employee contributions will rise from 3% of pay to 5% but Royal London says the rise in the income tax personal allowance and the rise in the threshold at which workers begin to pay national insurance will soften the blow even for workers who do not get a pay rise this year. The rise in the national living wage will also help offset the rise for some workers.
UK life insurers brace for hit from pension superfunds
UK life insurance companies are facing a new threat from so-called pension superfunds which are looking to cut prices by 50% for defined benefit schemes.
Watchstone investors take legal action over losses
Shareholders who lost money when Watchstone revised its 2013 accounts are preparing legal action against the insurance group. Law firm Harcus Sinclair said the specialist litigation investor Terium was lined up to back the action. Watchstone, formerly known as Quindell, saw its shares plummet when US short seller Gotham City alleged that as much as 80% of its profits were “suspect” in 2014. It remains under investigation by the Serious Fraud Office and also faces a £637m lawsuit from Australian law firm Slater & Gordon over its acquisition of Quindell’s professional services unit in 2015.
Gender pay data has little merit
Mark Littlewood considers the deficiencies in gender pay gap reporting in the Times, noting how companies can be shamed in the media over increasing median pay gaps while the schemes for employees that skew the figures are not made public. He gives the example of Npower, which offered its workers a salary sacrifice benefits package which attracted a higher take-up from female employees, increasing its pay gap. Mr Littlewood says the data collected on pay “falls well short of imparting the actual information we would need if we wanted properly to analyse where sexism or misogyny exists and how we can tackle it.”
Eyes on Metro after accounting error
Metro Bank is due to reveal its full-year results on Wednesday, just weeks after the bank admitted it had miscalculated the risk weighting of certain loans. Metro’s CEO Craig Donaldson is expected to be investigated over the incident when the results are announced.
The I, Page: 37
Only one fraud in 50 leads to prosecution
Research by BDO shows that fraudsters stole at least £750m from businesses in Britain last year but only one fraud in 50 leads to prosecution. The firm’s head of fraud, Kaley Crossthwaite, said the 525 reported fraud cases last year were “the tip of the iceberg,” adding: “Given the amount of frauds we see out there, the amount of prosecutions at a corporate and individual level is tiny.” BDO’s survey only includes frauds of above £50,000 and the firm estimates that the true cost of fraud for UK companies could be up to £37.5bn a year, with many high-value complex fraud cases dealt with outside the judicial system so companies can avoid reputational damage.
Insolvencies cost taxpayers £298m in 2018
The bill for last year’s wave of insolvencies, which was largely driven by a downturn on the High Street, cost British taxpayers £298m, a 31% rise on the previous year. The number of insolvencies in the retail sector jumped by 9.5% in 2018, while insolvencies at restaurants, pubs and bars were up by 17.9%, according to Altus Group figures.
Daily Mail, Page: 61 Daily Express, Page: 42 The I, Page: 38 Yorkshire Post, Page: 17
Sunrise Records paid £883,000 for HMV
Sunrise Records has paid £883,000 for HMV’s business and assets, according to its administrator KPMG. HMV entered administration just after Christmas with debts of over £53m.
Financial Times, Page: 20 The Sun, Page: 12
Service sector optimism falls
The service sector saw a sharp drop in optimism in the three months to February, while business volumes and profitability continued to fall, according to a Confederation of British Industry (CBI) survey. The quarterly report revealed that in the business and professional services sector, which includes accountancy, legal and marketing firms, optimism fell at the fastest pace since the financial crisis. In the consumer services sector sentiment deteriorated at the fastest pace since August 2016.
City AM, Page: 1 Yorkshire Post, Page: 17
Be patient – the benefits of Brexit are back-loaded
Roger Bootle writes in the Telegraph that 2020 could be a boom year for the UK economy as the adverse effects of Brexit recede. He predicts it will be less than a year after Britain leaves the EU until the economy is in “recovery mode” with this phase followed by delayed investment coming “on stream”, possibly making the UK the fastest growing economy in the G7.
UK and US agree post-Brexit derivatives trading deal
Financial regulators in the US and the UK have agreed a pact to cut disruption to the world’s largest derivatives markets following Brexit. The Bank of England, Financial Conduct Authority and US Commodity Futures Trading Commission have reassured banks, investors and other firms in both jurisdictions that they will still be able to access the other’s derivatives markets and services. The governor of the Bank of England, Mark Carney, said: “Market participants can be confident that the clearing and trading of derivatives between the UK and the US will maintain the high standards of today when the UK leaves the EU.”
Brexit hardship fund planned
A leaked Government document has revealed plans for a “hardship fund” for Britons impoverished by a no-deal Brexit, with a focus on an expected increase in the number of unemployed people. The Cabinet’s EU exit and trade (preparedness) committee is also considering using “tax and benefits policy” to offset rises in the cost of living, protection for parts of the country “geographically vulnerable” to food shortages and sourcing alternative food for schools, prisons and hospitals.
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