News Roundup Thursday 3rd May 2018
News Roundup Thursday 3rd May 2018
Tax avoidance clampdown could bankrupt thousands
HMRC’s clampdown on tax avoidance by freelance workers could result in thousands facing bankruptcy, with the Revenue demanding sums of up to £900,000. HMRC is seeking money owed by almost 100,000 contractors who used “disguised remuneration” and similar schemes that avoided paying NI or income tax. The contractors, most of whom work in IT or healthcare, claim they were duped into believing that the schemes were within the law. However, their arguments have cut no ice with HMRC, which is adding hefty penalty charges and interest rates to the amounts owed – often more than doubling the value of the debt. Graham Webber, director of tax at WTT Consulting, who is representing 2,000 contractors facing retrospective demands, estimates that 40% of his clients will go bankrupt. An HMRC spokesperson commented: “These schemes are, and were always, tax avoidance. They used contrived transactions to bend the rules of the tax system to gain a tax advantage that parliament never intended.”
Consultation offers chance to reshape IHT
The Office of Tax Simplification (OTS) launched its review of IHT yesterday, offering the general public and professional advisers the chance to have their say about whether the current system is fit for purpose. It comes amid reports from the OECD and the Resolution Foundation proposing that IHT can be used to reduce wealth inequality and redistribute between the generations. However, the Guardian notes that IHT faces entrenched hostility, with a 2015 opinion poll showing 59% opposed it, making it the UK’s least popular tax. Meanwhile, the Times reports that relatives who have lost loved ones could be missing out on thousands of pounds because they mistakenly think the new residential nil-rate band applies only to those inheriting property. “We think that people are missing out on the new nil-rate band because they don’t realise that you can get it even if the deceased sold the house or downsized before they died,” said Sean McCann of NFU Mutual.
Footballers out of pocket in £25m tax scam
Police have launched a criminal investigation into a company which provided tax avoidance advice to Premiership footballers, after many received huge bills from HMRC. Victims are said to have lost more than £25m in total after investing in a wide range of supposedly high-yield investments and tax avoidance schemes on the advice of Kingsbridge Asset Management. Officers have arrested three people as part of the criminal probe.
The Times, Page: 10 Daily Express, Page: 8 Daily Mail Evening Standard The Scotsman, Page: 30 Yorkshire Post, Page: 2
Small Business Commissioner needs more powers
The Forum of Private Business is calling on the government to extend the powers of the Small Business Commissioner. It follows Commissioner Paul Uppal’s evidence to the Business, Energy and Industrial Strategy Select Committee this week, in which he spoke about the potential of introducing fines for late payers. Forum MD Ian Cass said Mr Uppal “needs greater investigative powers in a format small business will trust and respond to… and in those instances where his directions and advice are ignored be given the ability to apply penalties.”
FSB condemns RBS branch closures
The Federation of Small Businesses has warned that Royal Bank of Scotland’s ongoing programme of branch closures will hurt small firms and vulnerable customers. The bank reported first-quarter profits of £792m yesterday. Mike Cherry, the FSB national chairman, commented: “With RBS’s finances improving, it’s disappointing to see the majority taxpayer-owned bank continuing to reduce in-person support for the public.”
Daily Mail, Page: 20 The Guardian, Page: 42
Pension freedoms withdrawals pass £17bn
HMRC figures show that almost £17.5bn has been flexibly withdrawn from UK-based pensions since freedoms were launched in April 2015. The Financial Conduct Authority is currently undertaking its Retirement Outcomes Review, which is likely to focus on sustainability of withdrawals under the pension freedoms regime. The FCA’s interim report revealed that more than half of fully withdrawn pension pots were not spent, but were moved into other savings and investments, with the Association of British Insurers warning that some consumers could therefore be paying too much tax.
Fears over workers ‘nudged into self-employment’
Royal London’s Sir Steve Webb has called on HMRC to investigate whether employers are nudging workers into self-employment to save on costs.
Second finance chief departs Brewin Dolphin
Brewin Dolphin has announced the departure of finance director Andrew Westenberger, only two months after the firm’s head of finance was poached by a rival.
The Times, Page: 54 The I, Page: 68-69 The Scotsman, Page: 30
Swiss reports of suspected money-laundering hit record high
Reports to Switzerland’s money-laundering watchdog hit record levels last year. The Money Laundering Reporting Office Switzerland said it handled nearly 4,700 cases of suspicious activity worth more than 16.4bn francs in all, once again led by suspected bribery.
Insolvencies hit six-year high
Official figures show personal insolvencies have hit a near six-year high, while underlying corporate failures are at their highest level since the first quarter of 2014. Experts said weak Christmas trading, bad weather, slow wage growth and rising prices were behind the trend. The Insolvency Service said that the number of businesses closing in the first three months of the year rose by 13% compared with the previous quarter, and 0.6% on the same period last year. The ICAEW has predicted that corporate insolvencies would continue to rise this year. It said that retailers had suffered as consumers cut back on spending in the new year, while there had also been an increase in manufacturers announcing cutbacks and redundancies.
The Times, Page: 53 The Sun, Page: 46
UK economy slows
The ONS has reported that the UK economy grew at its slowest rate since 2012 in the first quarter of the year. GDP growth was 0.1%, down from 0.4% in the previous quarter, driven by a 3.3% fall in construction output and a 0.2% drop in the manufacturing sector. Consumer-facing industries, including retail, were also down amid an ongoing spending squeeze caused by higher inflation and slow wage growth. Rob Kent-Smith, head of national accounts at the ONS, said: “Our initial estimate shows the UK economy growing at its slowest pace in more than five years with weaker manufacturing growth, subdued consumer-facing industries and construction output falling significantly.” He added that the recent extreme weather had a “relatively small” impact.
Royal wedding could prove taxing
Tax experts have said that aspects of Meghan Markle’s wedding to Prince Harry could be construed as a taxable benefit in the US, leaving the former actress open to a showdown with the IRS. Generally, loans or gifts of more than $100,000 a year to US citizens from foreigners need to be disclosed to the IRS. The cost of the royal wedding has been put at as much as £30m.
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