News Roundup Thursday 28th March 2019

NEWS ROUNDUP

TAX NEWS

Lagarde: Corporate tax system is outdated

International Monetary Fund chief Christine Lagarde has called for businesses to pay higher taxes, hitting out at firms that exploit loopholes to avoid taxes and cuts to corporation tax. She said: “The ease with which multinationals seem able to avoid tax, and the three-decade decline in corporate tax rates, undermines faith in the fairness of the overall tax system”. “The international corporate tax architecture is fundamentally out of date,” she added. The Mail notes that under IMF rules, Ms Lagarde pays no tax on her £382,000 salary.

Daily Mail, Page: 69

HMRC targets football agents

HMRC has warned 1,900 football agents that they may face tax investigations after “serious allegations of fraud”. The letter, sent by the Revenue’s deputy director, Kerry Singleton, is part of a probe into transfer activity and the fees that are paid to agents. HMRC says it is analysing tax returns where amounts that are shown as work for clubs or players looks to be unrealistic. The taxman is said to be concerned about agent fees being split in transfers involving multiple intermediaries, with some of the recipients avoiding tax.

The Times, Page: 72

Former ATT chair: Probate charge a stealth tax

In a letter to the Telegraph, Erica Stary, the former president of the Association of Taxation Technicians, says a proposed rise in probate fees would be a stealth tax, suggesting charges above the basic cost of £250 “would be out of all proportion to the work of stamping the probate documents.” She adds that by not utilising a finance Bill-style process, the Government is seeking to circumvent the proper processes and in doing so “will be creating an illegal charge, since it has no current powers in law to use the affirmative statutory instrument process to impose a tax.”

The Daily Telegraph, Page: 19

NHS consultants are turning down shifts over pension bill fears

The FT reports that ministers are under increasing pressure to act after warnings that doctors are turning down extra work over concerns that exceeding the pension savings allowance could result in hefty tax bills.

Financial Times, Page: 2

INDUSTRY NEWS

Many accounting roles under threat from automation

The Office for National Statistics has identified around 710,000 jobs in the City at risk from new automated technology, with around 39% of jobs in the accounting, legal and financial services sectors likely to be automated. It was found that 34% of roles in tax advice could be affected. Some 1.5m jobs are at high risk of having some of their duties and tasks automated in the future and job losses are more likely to impact the female workforce – with 70% of high risk jobs held by women. The Times notes PwC research from last year which suggested that job losses from automation would be offset by jobs created as a result of a larger and wealthier economy made possible by new technologies.

The Times, Page: 2 City AM, Page: 2

CORPORATE NEWS

MPs hit out at ‘corporate greed’

Parliament’s Business, Energy and Industrial Strategy committee has called for large companies to cap salaries for bosses and align them more closely with those of ordinary workers, saying there are “huge differentials” in the pay system. The committee’s report calls on the proposed Audit, Reporting and Governance Authority to be “more robust and proactive in bearing down on excessive executive pay”. The report calls on firms to set a cap on total remuneration for executives. It also criticises “weak” remuneration committees, arguing they wave through “over-generous”, incentive-based executive pay awards. Committee chair Rachel Reeves said: “The roll-call of dishonourable executive pay decisions tells the all-too-familiar tale of corporate greed which is so damaging to the reputation of business.” She adds that, when a remuneration committee falls short, “we need a regulator with the powers and mindset to step in and get tough on businesses who pay out exorbitant sums to their CEOs.”

I, Page: 5 Daily Mail The Scotsman, Page: 17 Yorkshire Post, Page: 7

Autonomy trial hears accounting fraud claims

The largest fraud trial in English legal history has heard claims that founder Mike Lynch cooked Autonomy’s books ahead of an £8.4bn sale to Hewlett Packard (HP). HP, which bought Autonomy for £8.4bn in 2011, is seeking around $5bn in damages from Mr Lynch, arguing that he committed accounting fraud by inflating the value of Autonomy. Mr Lynch’s lawyers argue that that “irregularities” in Autonomy’s books highlighted by HP are down to differences in how the firms applied accounting rules. They also insist accountants at Deloitte never raised any issues with Autonomy’s accounts before the deal was completed.

The Daily Telegraph, Business, Page: 1 The Times, Page: 43 Financial Times, Page: 13 Daily Mail, Page: 69 The Guardian, Page: 33 City AM, Page: 1

Council receives third auditor warning

Birmingham City Council has received its third auditor warning in four years under the Local Audit and Accountability Act. Conservative group leader Rob Alden said: “This isn’t just some dull piece of accountancy practice from obscure legislation, it is a serious warning about inadequacies in the way the council is looking after the billions of pounds of money entrusted to it by taxpayers.”

Birmingham Post

Taxing times after PPI hit

Shop Direct, the UK’s second biggest online-only firm, paid around £700,000 in corporation tax last year despite generating almost £2bn in sales. This came as compensation for customers previously mis-sold payments protection insurance policies saw profit fall from almost £25m to a £24.7m loss.

Daily Mirror Page: 43

Firm rescued

Voyage Decoration, a maker and distributor of soft furnishings and furniture, has been bought out of administration by Ashley Wilde Designs. This comes after Deloitte were appointed administrators at the end of last week.

The Scotsman, Page: 34

PROPERTY NEWS

Housing demand hits six-year low amid Brexit uncertainty

Demand for housing has slumped to its lowest level in almost six years, according to data from the National Association of Estate Agents (NAEA), which shows that sales to first-time buyers, who are taking full advantage, have risen to a seven-month high. The number of buyers registered per estate agent branch dropped by 15% to 252 in February, the lowest number since July 2013. Mark Hayward, chief executive of NAEA Propertymark, said house hunters are delaying their plans until the impact of Brexit is clearer.

City AM

PERSONAL FINANCE NEWS

Fee fears over debt firms

The Times reports that borrowers considering an Individual Voluntary Agreement (IVA) are being exploited by debt management companies that are charging for worthless services. The Insolvency Service has “significant concerns” about the fees being charged. In a report, the body says: “There is limited evidence that many of the disbursements provide real value to either debtors or creditors. In most cases it is not clear whether they are required at all.” The Insolvency Practitioners Association said: “Without ‘large’ IVA providers, fees could be higher. We’re aware of concerns about introducer firms and early exit loans and have implemented measures to strengthen monitoring.”

The Times, Page: 18

ECONOMY NEWS

Economic growth set to fall

KPMG has downgraded its short term expectations for the UK economy due to the lack of clarity around Brexit and global headwinds. The firm believes that the UK economy will grow by 1.2% in 2019, assuming that a Brexit deal is reached. The previous forecast, published back in December, had predicted growth of 1.6% in 2019. “The lack of clarity around Brexit, the disappointing data in the Eurozone, the waning stimulus in the US and a slowdown in China are making for a challenging environment,” said Yael Selfin, chief economist at KPMG.

City AM

OTHER NEWS

London hotels face marginal growth

A report from PwC suggests London hoteliers will be hit by a slowdown in global economic spending and ongoing Brexit uncertainty, saying that while occupancy levels should remain high, occupancy growth over 2019 could hit around 0.3%. David Trunkfield, head of hospitality and leisure at PwC, said: “While new supply grew by 2% in 2018, it is forecast to increase by a further 4% in London this year and with uncertain demand, weaker corporate travel trends and no blockbuster events scheduled this year, this could dampen hotel performance. ” PwC’s UK Hotels Forecast Update shows that, across the UK, average daily revenue saw growth of 1.7% last year.

City AM, Page: 7 The Scotsman, Page: 31 Yorkshire Post, Business, Page: 1

Tips are tops

A poll by Perrys Chartered Accountants shows that almost eight in ten people do not think it is fair to pay a restaurant service charge and would prefer to tip individual members of staff. The firm’s Alex Skinner commented: “Many prefer to pay cash tips as they believe they are more likely to go to waiting staff than if they paid them electronically.”

Daily Star, Page: 23

Contact Paul Southward.

Paul Southward