News Roundup Thursday 7th March 2019

NEWS ROUNDUP

TAX NEWS

Advisory Fuel Rates from 1st March 2019

The fuel claim rates for employees using a company a company car, were updated from 1st March 2019.  Check out the new rates here: –

Advisory-Fuel-Rates-March-2019

Ingenious appeal puts £1bn at stake for HMRC

Film investment group Ingenious will today launch an appeal against HMRC’s claims the financing company offered illegitimate tax reliefs to investors. If the appeal succeeds it could cost the taxman up to £1bn, the Guardian’s Hilary Osborne reports. Hundreds of wealthy celebrities, sports stars and business leaders invested in a range of schemes and were handed hefty bills by HMRC. Now three law firms, Stewarts Law, Peters & Peters and Mishcon de Reya, are taking claims worth an estimated £220m against Ingenious and other parties involved to recover the money investors have repaid the taxman. Elsewhere, City AM reports that HSBC and Bank of Ireland are being sued by more than 700 investors in Eclipse film partnerships with damages estimated at over £1bn.

The Guardian, Page: 30 City AM, Page: 6

France plans 5% digital tax

French Finance Minister Bruno Le Maire has said the country intends to tax the revenue of internet giants with a levy of as much as 5%, a move that will bring in an estimated €500m per year and ensure what he called “fiscal justice.” Le Maire said the tax would target platform companies that act as intermediaries, such as Amazon, and also the sales of personal data for advertising purposes.

Bloomberg The Daily Telegraph, Business, Page: 8 City AM, Page: 16

Crown dependencies set for transparency clash with Westminster

The chief ministers of Jersey, Guernsey and Isle of Man have warned of a major constitutional clash with the UK if MPs back a plan to introduce public registers of company ownership.

Financial Times, Page: 3

Daimler chief backs higher taxes for commercial diesels

The chief executive of Daimler Trucks, Martin Daum, has called for EU countries to impose higher taxes on commercial diesel vehicles to help drive the switch to electric.

Financial Times, Page: 10

Christian investors to target Exxon, Amazon and Broadcom on tax

Christian investors controlling £21bn of funds have formed a coalition to pressure leaders of Russell 50 and FTSE 350 companies on the transparency of their corporate tax affairs.

Financial Times, FT Fm, Page: 1

SME exits gift £12bn to the Treasury in five years

Entrepreneurs generated more than £12.2bn in capital gains tax for the UK government over the last five years from selling their businesses, according to figures from Boodle Hatfield. Over the period business owners made £108bn form the sale of their ventures.

The Scotsman, Page: 34

Financial Services Bill vote postponed

The Government has delayed its scheduled debate on financial services to stave off a likely defeat over tax havens, with ministers pulling the Financial Services (Implementation of Legislation) Bill – part of a raft of legislation that the Government needs to pass to avoid constitutional disruption in the event of a no deal Brexit. Over 40 MPs had signed an amendment to the Financial Services Bill that would have forced greater tax transparency on the UK’s crown dependencies. MP Margaret Hodge, who tabled the amendment calling for crown dependencies to create public registers of beneficial ownership, said: “Public registers are the next big step for tackling money laundering and tax evasion.” Shadow Chancellor John McDonnell criticised the delaying of the Bill, saying: ” The Government has been a friend to tax avoiders for too long.”

The Times, Page: 8 Daily Mail, Page: 10 The Independent, Page: 5 City AM, Page: 1

Considering the Bill

Izabella Kaminska in the FT looks at the Financial Services Bill, which would see greater tax transparency for crown dependencies. The Telegraph’s Juliet Samuel also looks at the Bill, saying protecting financial stability in the event of no deal “should be a routine piece of Brexit legislation,” suggesting that some MPs “were trying to hijack” the crucial Brexit “housekeeping” legislation with the “irrelevant” amendment on financial regulations in Guernsey, Jersey and the Isle of Man.

The Daily Telegraph, Business, Page: 2 Financial Times, Page: 10

Harra: HMRC misses loan charge time limit

HMRC deputy chief executive Jim Harra has suggested it could be too late to force those facing the loan charge to settle, telling the Treasury Select Committee that in many cases the time limit had passed. In a letter to committee chair Nicky Morgan, Mr Harra said: “In cases where complete information was provided by the taxpayer and HMRC did not act within the statutory assessing time limits, HMRC is out of time to make those assessments.” He added: “If a taxpayer settles for these years they are doing so voluntarily.” Meanwhile, Ruth Stanier, the director-general of HMRC, has told a cross-party group of MPs that neither Treasury Minister Mel Stride nor any HMRC or Treasury officials will attend a parliamentary hearing on the loan charge.

The Daily Telegraph Financial Times, Page: 2

Fraudsters cheating HMRC via eBay

A report for the Commons Public Accounts Committee suggests that a number of Chinese firms are selling counterfeit products on eBay and evading VAT. The firms are passing themselves off as British companies by providing fake VAT numbers, with HMRC estimating that the fraud, across all online sites, could be losing the taxpayer more than a billion pounds a year.

The Times, Page: 6

Investment firm in HMRC appeal

Investment firm Ingenious Media has launched a £1bn appeal against HMRC and is seeking to overturn a ruling that its film investment schemes should not lead to tax relief for its investors.

City AM, Page: 5

Benn’s archive donation cuts IHT bill

Tony Benn’s archive of documents and recordings worth more than £500,000 has been donated to the British Library under the Acceptance in Lieu scheme. The donation means the politician’s family saved £210,000 on its inheritance tax bill.

The Daily Telegraph, Page: 1 The Sun, Page: 8

HMRC payroll reform questioned

Concerns have been voiced over HMRC’s plans to extend off-payroll measures to the private sector, with reforms set to make firms responsible for determining the status of their freelancers. The measures would apply to private companies with more than 50 employees or turnover exceeding £10.2m a year. Considering the move, which leaves firms to decide whether a contractor should be taxed as an employee or as a self-employed worker, experts have told the Telegraph that firms could see tax charges as high as 56% of the cost of hiring a freelancer if the taxman successfully challenges their decision on employment status – with this including interests and penalties. The Telegraph notes that the reform could see self-employed workers pay higher tax without gaining basic employment rights and benefits like holiday and sick pay. The Institute of Directors’ Edwin Morgan commented: “The tax system should be as transparent and fair as possible, but the IR35 extension is going to be a big headache for contractors and firms.”

The Daily Telegraph, Business, Page: 3 The Daily Telegraph Financial Times, Page: 3

Dividend tax trap warning

The Telegraph’s Harry Brennan warns that income investors are at greater risk of falling into a tax trap as the amount of money that can be earned from dividends outside of an Isa has fallen by almost £90,000 in a year. With the Government cutting the dividend tax allowance from £5,000 to £2,000 and dividend yields hitting record highs, the amount that can be held outside of an Isa before being taxed has decreased by two thirds. Rachel de Souza of tax consultancy RSM UK said many people would be unaware the change had happened and could find themselves caught out, adding that it is “normally the accountant who spots it when totting up everything at the end of the tax year, by which time it is too late to do anything.”

The Daily Telegraph, ISA Special Report, Page: 1

Spring into action on tax breaks

Tony Hazell in the Mail says that with a month to go until the end of the tax year, people should consider spring cleaning their finances, noting that most tax-breaks are “of the one-off use it or lose it variety”. He looks at tax breaks including pensions, ISAs and the £3,000 annual gift allowance which falls “outside the grip of inheritance tax.”

Daily Mail, Page: 42

SMEs NEWS

FSB claims SMEs face £3.3bn bill for MTD

The Government’ Making Tax Digital programme could see small businesses spend £3.3bn on advice, fees and new software enabling them to file the VAT returns online. The Federation of Small Businesses says the average company is expected to be landed with a £2,770 bill for the changes. An HMRC spokesman called the FSB figure “child’s maths”, saying the true sum was closer to £37m, or an average of £31 a year for each business.

Daily Mail, Page: 28

Small business owners demand banking tribunal

A poll of members of the Institute of Directors shows 70% of small businesses want a new tribunal service to be created to help them to resolve disputes with their lenders. The institute said that business owners were unconvinced that a forthcoming expansion to the ability of companies to access the Financial Ombudsman Service would be enough to level the playing field with banks.

The Times, Page: 40

MTD could boost SME revenues

A new study suggests that Making Tax Digital (MTD) could lead to a boost for revenues and net gains in turnover for small firms. The Productivity Payout: UK Small Businesses and the Digital Economy report, by economic consultancy Volterra Partners and Intuit QuickBooks, suggests that MTD could deliver small businesses a £57bn productivity payout over five years by boosting productivity and freeing up time for activities such as sales, marketing and training. For sole traders, the predicted average net gain in annual revenue is £1,900, while a small business with 10-49 employees is forecast to see an average increase of £18,000.

Start Up Donut

Regulation overwhelms SME bosses

A poll from software maker Xero has found that nearly nine in ten bosses at small businesses feel overwhelmed by regulation when starting up their company. It was also found that around three-quarters said early growth had been hit by the time and cost it took to keep on top of financial issues. With Making Tax Digital coming into force on April 1, the research found that more than three-quarters of business owners had never submitted a tax return before starting up, and two-thirds have been hit with tax return fines of between £300 and £400. The study said that mistakes including submitting the wrong amount of taxable income or lost paperwork have led to fines, with this attributed in part to the fact that the most common way small firms manage their finances is to write down expenses in a notepad and keep receipts in a bag. Gary Turner, co-founder and managing director at Xero, said that while many bosses fear Making Tax Digital will be “another thorn in their side”, research shows that “once business owners get on top of their finances, these businesses often prosper more quickly.”

Daily Mirror, Page: 37

40% of SMEs make no plan for no-deal

A survey by HMRC saw four in ten SMEs that trade internationally say they have no intention of making contingency plans for a no-deal Brexit. Jim Harra, second permanent secretary at HMRC, told MPs on the Public Accounts Committee that these companies were unlikely to make preparations for a no-deal exit from the EU because of the “continued uncertainty over whether that is a good use of their time and money”. Analysis shows that as of last Friday HMRC had received fewer than 47,000 applications for an economic operator registration and identification number out of an estimated 240,000 firms that need one. The Federation of Small Businesses said that HMRC should have automatically issued numbers to companies that needed them.

The Times, Page: 45

CORPORATE NEWS

Giraffe and Ed’s Diner CVA to see branches close

The Boparan Restaurant Group (BRG) has entered a company voluntary arrangement that will close down a third of its 87 Giraffe and Ed’s Diner restaurants. Around 20 Giraffe and seven Ed’s Easy Diner sites have been earmarked for closure, with 13 others to ask for rent reductions. If agreed by creditors, the restructuring will pave the way for a £10m cash injection led by Ranjit Boparan, BRG’s owner. BRG chief executive Tom Crowley said the CVA is “the only option to protect the company”. Advisers from KPMG will oversee the process.

The Daily Telegraph, Business, Page: 1 The Times, Page: 45 Financial Times, Page: 18 I, Page: 41 The Independent, Page: 54 The Sun, Page: 43 The Scotsman, Page: 19 City AM

Paperchase plans closures

Stationery chain Paperchase is working with KPMG on a company voluntary arrangement as it looks to close “a small number of loss-making stores” and to renegotiate rents.

The Times, Page: 34 Financial Times, Page: 18 The Daily Telegraph, Business, Page: 1 City AM, Page: 2

Auditor was sacked after questioning dam safety

Leaked documents from an official investigation suggests that Vale, owner of a mine in Brazil where a dam collapsed and killed more than 180 people, sacked an auditor that had refused to sign off the dam as safe.

The Times, Page: 41

Insolvencies climb

UK company insolvencies rose 19.3% in Q3 2018, data from the Insolvency Service shows. A total of 4,308 businesses entered insolvency between July and September, with the construction industry seeing the highest number across all sectors. Moore Stephens’ Duncan Swift commented: “The recent slowdown in the economy is now leading to more business closures rather than just business restructuring.” He added that many small firms are “struggling to stay in operation as they are unable to cover what might only be short term gaps in their order books.”

City AM, Page: 12

Staff in limbo

The Times reports that Patisserie Valerie Ireland is not part of Patisserie Holdings and therefore has not gone into administration with the rest of the business, with KPMG saying that Patisserie Valerie Ireland remains in the legal control of directors Chris Marsh and Paul May – the former finance director and chief executive of Patisserie Holdings, respectively. The paper says employees in Dublin have been left in limbo and are unable to claim for any arrears for wages, redundancy, notice or holiday pay.

The Times, Page: 40

Trying time for rugby club

Following an investigation that raised questions over whether rugby club Saracens has complied with salary cap rules, the Mail reports that a rival club has hired forensic accountants to investigate the club, with a particular focus on overseas assets and tax havens.

Daily Mail, Page: 66

Crypto wallets empty

Cryptocurrency exchange Quadriga, which was unable to access founder Gerald Cotton’s crypto wallets when he died, has discovered the wallets to be empty. The wallets were expected to contain the cryptocurrency of the exchange’s 115,000 customers. EY, which was appointed by Quadriga after the exchange filed for creditor protection in Canada last month, said its investigation into the accounts is “at a preliminary stage”.

City AM, Page: 15 BBC News

PROPERTY NEWS

HMRC targets estate agents

HMRC has launched a crackdown on money laundering in the property industry which has seen a number of estate agent branches targeted in unannounced inspections. Those which have been found to be failing to comply with regulations could face fines or criminal proceedings. The crackdown saw Countywide fined £215,000 for “failing to ensure policies, controls and procedures at group level; and for failures in conducting due diligence; timing of verification and proper record keeping”. Tepilo, which went into administration in December, was handed a £68,595 fine. Simon York, director of HMRC’s Fraud Investigation Service, said: “These inspections are a wake-up call that if you continue to trade illegally we will come knocking.”

The Times, Page: 33 Financial Times, Page: 18 The Daily Telegraph, Business, Page: 7 City AM, Page: 5

Increase in remortgage approvals

Research by Moneyfacts has found that lenders are responding to an increase in remortgage approvals with increasingly competitive rates. Bank of England data shows that remortgage approvals were up from 48,900 in November to 50,400 December 2018. In response, the average two-year fixed rate now stands at 2.49%, down from 2.53% in November last year but still above the low of 2.39% seen in March 2018.

The Daily Telegraph

INTERNATIONAL NEWS

EU lengthens tax haven blacklist

EU states have added 10 jurisdictions to a draft tax haven blacklist, tripling the number of listed countries. EU envoys are set to agree on the new list today, with it to be formally adopted by EU finance ministers in a meeting on 12 March.

City AM, Page: 10

ECONOMY NEWS

European investors double investment in Britain

Companies on the continent have embarked on a major deal spree in the UK over the last three years, despite Brexit, reports the Telegraph. S&P Capital IQ data shows 553 purchases of companies, property and stakes in fast-growing firms totalled $31.1bn over the past 12 months, up from $21.2bn over 497 purchases in the previous 12 months, and $13.6bn on 454 transactions in the same period of 2016-17. “A lot of Europe has been at or near recession. There haven’t been as good opportunities to invest in Europe as there have been in the UK, which has been performing well,” said Nick George at PwC. “Interest rates have been very low so people have had to invest rather than putting it into banks or government bonds. The eurozone hasn’t necessarily been [an] obvious [choice].”

The Daily Telegraph, Business, Page: 1

Manufacturers see drop in exports

A new study by Make UK and BDO has revealed that exports have fallen behind domestic orders for manufacturing firms for the first time since 2016. Make UK said employment plans have picked up, indicating that manufacturers could be opting to hire a flexible workforce in the short-term rather than make long-term investments. Chief executive Stephen Phipson said: “Manufacturing needs certainty over Brexit to boost orders and exports and to protect jobs.”

Daily Express, Page: 43 The Times, Page: 33, 35

Services sector struggling amid Brexit uncertainty

The UK services sector is set for its weakest quarter since 2012, according to the IHS Markit / CIPS purchasing managers’ index (PMI), after new work fell for a second consecutive month amid the continuing Brexit uncertainty. The index showed a reading of 51.3 in February, up from a two-and-a-half-year low of 50.1 recorded in January. Employment numbers declined at the fastest pace since November 2011, as businesses continued to delay hiring staff amid concerns over the UK’s economic outlook. Chris Williamson, chief business economist at IHS Markit, said the findings indicate that the economy “remained close to stagnation in February, despite a flurry of activity in many sectors ahead of the UK’s scheduled departure from the EU.” “The data suggest the economy is on course to grow by just 0.1% in the first quarter,” he added.

The Guardian, Page: 33 Financial Times The Times, Page: 36 The Sun, Page: 45 Daily Mail City AM, Page: 6

M&A deal value at decade high

Domestic M&A value hit a ten-year high in 2018 despite Brexit uncertainty, according to research from the Office for National Statistics. Acquisitions of UK companies by other UK firms rose from £18.8bn in 2017 to £26.5bn last year, the highest value since deals reached £36.5bn in 2008. The value of takeovers of UK companies by foreign firms last year was £71.1bn, compared to £35.2bn in 2017, and was driven by Comcast’s £30bn acquisition of Sky.

City AM

OTHER NEWS

May pledges £1.6bn fund for Labour towns in bid to win Brexit support

The PM will outline plans today for a £1.6bn investment fund to boost Britain’s “left behind” areas as in a move that has left Theresa May accused of attempting to buy Labour support for her Brexit deal. The “Stronger Towns Fund” will be used to create jobs, train local people and boost investment, ministers said. Labour says it is a bribe to influence MPs in Leave-supporting areas to back Mrs May’s Brexit deal.

Financial Times BBC News The Daily Telegraph The Times The Guardian The Independent

UK public finances set for windfall in spring statement

The Chancellor has promised to increase public spending if MPs approve Theresa May’s withdrawal treaty claiming he won’t have to spend earlier windfalls on the fallout of a no-deal Brexit.

Financial Times, Page: 1

Sales and spending dip in February

Figures from KPMG and the British Retail Consortium (BRC) shows that UK retail sales fell 0.1% on a like-for-like basis in February – compared to a 0.6% rise in the same period in the previous year. BRC chief executive Helen Dickinson said: “Uncertainty surrounding the UK’s imminent exit from the EU has hit consumer spending.” Meanwhile, analysis from Barclaycard shows that consumer spending growth dropped to 1.2% year-on-year in February, down from 3.8% in the previous 12 months.

The Guardian, Page: 33 The Times, Page: 36 Daily Express, Page: 45 City AM, Page: 2

UK construction activity drops

UK construction activity fell in February for the first time in eleven months, according to the IHS Markit / CIPS Construction purchasing managers’ index, to 49.5, led by a drop in commercial building work and civil engineering work. Residential construction continued to grow, for the 13th consecutive month, though IHS Markit said firms had cited Brexit uncertainty as a factor in slowed decision-making and subdued client demand.

Financial Times The Times, Page: 36 The Daily Telegraph, Business, Page: 4 The Guardian, Page: 33 The Sun, Page: 43 The Scotsman, Page: 37 Daily Express, Page: 45 City AM

Study: UK 13th in gender equality rankings

A report from PwC shows that the UK ranks 13th out of 33 in a league table measuring gender equality in the workplace in countries that are members of the Organisation for Economic Co-operation and Development. The UK’s ranking is up from 17th at the turn of the century, 18th in 2013 and 14th last year. The Women In Work Index, which is based on five indicators including gender pay equality, saw Iceland, Sweden and New Zealand take the top three spots while South Korea was at the bottom.

The Times, Page: 40 I, Page: 43 Yorkshire Post, Page: 5 The Scotsman, Page: 20

One in six parents plot kids’ careers

A survey of 2,000 parents shows that a sixth already had a career in mind for their child, with accountancy among the professions fathers favoured for their offspring. More than half of those polled by Siemens said they encourage their children to take certain subjects at school in a bid to lead them towards their career of choice.

The Independent Daily Mirror
Arts degrees cost the taxpayer more

Creative arts degrees cost taxpayers 30% more on average than engineering degrees. A report from the Institute for Fiscal Studies says creative arts students typically earn less and pay less of their loans back. Three-quarters of loans given to those on creative arts courses are picked up by the taxpayer.

The Daily Telegraph, Page: 1 Daily Mail, Page: 37 The Times, Page: 18 The Independent, Page: 22
Contact Paul Southward if you have any queries.

Paul Southward