News Roundup Tuesday 11th September 2018
News Roundup Tuesday 11th September 2018
NICs U-turn hints at tax rises
The chancellor’s decision to scrap a government pledge to abolish Class 2 NICs for millions of self-employed people is a warning of stealth taxes to come, experts have suggested. Andy Chamberlain, of the Association of Independent Professionals and the Self-Employed, said the government appears “intent on squeezing as much revenue out of the self-employed as possible.” Jason Hollands, the managing director of investment manager Tilney, added: “I think that stealth taxes are coming.” Meanwhile, the Sun reports that Philip Hammond is also planning to raise money for the NHS by axing the £31m New Enterprise Allowance that helps people start their own business. The Federation of Small Businesses said that such a move would be “shortsighted”.
The Times, Page: 65 The Sun, Page: 4 The Times, Page: 58
Hopes for higher corporation taxes
Tom Kibasi, Chairman of the IPPR Commission on Economic Justice, writes to the Telegraph to defend the commission’s proposal for an “alternative minimum corporation tax”. He says the proposed measure would help create a level playing field by preventing “irresponsible multinationals” from disguising their true UK profits. Elsewhere, Brian Monteith, director of communications at Global Britain, argues that a no-deal Brexit would boost corporation tax revenue. He says that if the UK leaves the Single Market, then higher tax contributions should inevitably follow as companies would not be allowed to post their UK turnover into other EU jurisdictions.
The Daily Telegraph, Page: 29 Director of Finance
Aim tax perks attract investors
Investors in stocks listed on London’s Alternative Investment Market are set to receive record dividends of £1.2bn this year. Dividend payments from companies quoted on Aim will grow by 20% in 2018 and continue to rise next year, research by Link Asset Services suggests. The Telegraph suggests many retail investors will be attracted to Aim by the generous inheritance tax relief on offer.
The Daily Telegraph, Money, Page: 5
HMRC reluctant to prosecute the rich
HMRC has admitted that it allows the most powerful members of society to escape prosecution for financial crimes. Richard Las, the deputy director of HMRC in charge of organised crime, told an economic crime conference in Cambridge last week that the tax authorities accommodated celebrities’ concerns and settled debts privately to avoid the embarrassment of a public trial. He admitted that “criminal justice” was never a “default option” for HMRC. “We use it where it is necessary and it will have the greatest effect”, he said. Prem Sikka, professor of accounting at Sheffield University, said: “This shows just how far removed the senior leadership of HMRC are from public opinion. This policy provides absolutely no deterrent to tax cheats.”
False employees win most tax cases
New research shows that contractors suspected of being “false employees” win the vast majority of tax tribunal cases brought against them. Analysis of cases relating to “off-payroll” working by Contractor Calculator found that HMRC has won just one of the 10 cases it has brought to tribunal against the self-employed in the past decade. Dave Chaplin of Contractor Calculator said HMRC’s staff needed more training in the complexities of tax law to ensure they did not pursue unwinnable cases and criticised the Revenue’s tendency to pursue highly paid contractors when, by definition, these people were most likely to be genuinely self-employed.
The Sunday Telegraph, Business, Page: 12
Tax changes can help tech firms
Writing in the Sunday Times’ Tech Track supplement, BDO’s Tony Spillett says Britain is well placed to build the next generation of global software firms. He says the government can provide support by setting property taxes at a level that enables smaller, high-growth companies to obtain the premises they need to thrive. He adds that enterprise zones have provided important tax breaks and government support, and their expansion to provide incentives to tech centres could play a role. Mr Spillett also warns that NICs are “a tax on jobs” and the government should think hard before raising them.
The Sunday Times, Tech Track, Page: 4
Support growing for EU tax on global tech firms
France’s finance minister has signalled that support is growing for a European Union plan to tax the revenue of large technology companies. At a meeting of EU finance ministers in Vienna, Bruno Le Maire suggested adding a “sunset’’ clause that would allow the European Commission’s planned revenue tax to be automatically phased out once a global scheme is ready. “Lots of countries have changed their position,” said Le Maire, highlighting what he called “constructive” statements from the UK, the Netherlands and Luxembourg.
Scrap IHT, don’t replace it
The Sunday Telegraph’s Dia Chakravarty says the Commission on Economic Justice is right to call for the abolition of inheritance tax. However, unlike the Commission, she says the levy should not be replaced by ‘a lifetime gift tax’ which she predicts would have “exactly the same flaws” and “loopholes” as the current IHT system.
The Sunday Telegraph, Page: 16
Archbishop’s tax call condemned
The Archbishop of Canterbury’s suggestion that wealthy families should pay more tax is met with derision by Karren Brady in the Sun, Peter Hitchens in the Mail on Sunday and Nick Ferrari in the Sunday Express. Brady points out that because it is a charity, the Church of England itself pays no tax, while Hitchens says higher taxes will result in people giving less money to charity.
Sunday Express, Page: 27 The Sun, Page: 29 The Mail on Sunday, Page: 25
Tax rules blamed for longer NHS queues
NHS patients are suffering longer waiting times because of tax rules that prompt consultants to refuse overtime, it has been claimed. Dr John Miller said his peers had recently given up doing extra clinics, dropped patient sessions and refused overtime because of changes to annual pension contribution limits.
The Sunday Telegraph, Business, Page: 12
Tax tips for expat employees
The Sunday Times highlights the tax implications of working abroad, after ONS figures revealed more than 50,000 Britons are expected to move overseas this year to take up a new job.
Boris Johnson calls for tax cuts to boost economy
Boris Johnson has used his Telegraph column to argue that income tax, stamp duty and CGT should be cut to boost the economy. The former foreign secretary calls on Theresa May to promise that “tax henceforward will not go up. That’s it. No new taxes and no increase in rates” under a Conservative Government. He also questions the PM’s commitment to cutting rates, writing: “Do we send out that signal, here in this country? I am not so sure.”
BBC presenter fights HMRC ruling
Former BBC presenter Christa Ackroyd, who lost a tribunal case against HMRC, has appealed against the ruling. There are two potential grounds for appeal: the first challenges the tribunal’s acceptance of HMRC’s argument that because Ackroyd was bound by the corporation’s editorial guidelines, she was in effect a BBC employee. The second centres on whether Ackroyd had a direct contractual relationship with the BBC. She is being represented by tax expert Jolyon Maugham, QC.
Tax gap unfair on employed workers
The Independent’s Ben Chu argues that there is a strong case for making the self-employed pay more tax. He says had the Treasury not scrapped a planned National Insurance tax relief for this group of workers last week, it would have increased the overall tax gap between the self-employed and the employed still further. “If less tax comes from the self-employed, there’s a strong likelihood that, with public services clearly in need of a funding boost, ministers will end up increasing the income-tax burden on the employed,” says Chu.
The Independent, Page: 30
John Lewis boss rejects ‘Amazon tax’ call
John Lewis chairman Sir Charlie Mayfield has rejected growing calls for online retailers to be hit with a so-called “Amazon tax”. Writing in the Telegraph, Sir Charlie said he “struggled” with the belief that internet companies should be penalised because they have managed to carve out a leaner business model.
The Daily Telegraph, Page: 1 The Daily Telegraph, Business, Page: 6
Lewis: Retail being bled dry
Dave Lewis, the chief executive of Tesco, has warned that if the Government does not reform business rates soon it will have contributed to the decline of high streets across Britain. Back in 2015, Mr Lewis said that retailers faced a “lethal cocktail” of rising taxes and costs at a time of falling profits. Yesterday he said that distress on the high street showed his prediction was coming true. He added: “A decision not to reform business rates by the government will be a statement of policy. It will be a deliberate decision not to support the retail industry … We believe businesses should pay taxes, as it is the responsible thing to do, but should the government be laying a heavier burden on a shrinking industry?”
The Times, Page: 51
SMEs still struggle to find finance
The Sunday Times says companies looking for finance are still struggling to secure loans, despite big banks insisting they are committed to lending to small businesses. Figures from UK Finance show the outstanding balance of loans and overdrafts to small businesses by major lenders fell by 6.9% to £87.2bn across the country between the final quarters of 2015 and 2017, with small business lending in parts of Yorkshire falling by 27.5% in just two years.
Government plans to open invoice finance access
Small business minister Kelly Tolhurst has put forward new laws aimed at allowing small businesses to access invoice finance. The proposals, part of the government’s industrial strategy initiative, will allow companies to raise money from unpaid invoices. Tolhurst said: “These new laws will give small businesses more access to the finance they need to succeed and will help ensure they have a level playing field from which to set fair contracts with the businesses they supply.” The changes are intended to come into effect at the end of the year, at which point restrictions on invoice finance will become null.
Rise in women leading UK businesses
Research by Moore Stephens shows a record number of women are leading UK businesses. The total number of females in directorships at SMEs now stands at an all-time high of 201,900, although there are still more than twice as many men (429,038) at the top of SMEs in the UK.
The Daily Telegraph, Page: 13
Barclays signs up to fair business lobby group
Barclays has signed up to the SME Alliance – a group that lobbies for fair treatment by banks and advisers. The bank will hold quarterly meetings with the lobby group in what is expected to kick-start a raft of meetings with British lenders.
The I, Page; 38 Daily Express, Page; 44
Mixed-use property buyers advised to challenge HMRC
Homebuyers who have been told by HMRC that they were wrong to have paid the lower “mixed-use” tax rate that is designated for property or land with a joint commercial and residential use have been advised to challenge the taxman. The Revenue believes some wealthy property owners are exploiting the mixed-use definition by insisting that parcels of commercial land are bundled on to the sale of multimillion-pound properties to lessen stamp duty. However, David Hannah, founder of Cornerstone Tax, says HMRC is trying to “exploit the ignorance of the taxpayer” to increase its tax take. “HMRC is attempting to alter the definitions that have been long understood – specifically as to what does and does not constitute residential land – to suit its own purposes,” he says.
The Times, Page: 64-65
CIIA calls for private firms to have tougher standards
Ian Peters, chief executive of the Chartered Institute of Internal Auditors (CIIA), has called for bigger private companies to be held to the same corporate governance standards as firms listed on the stock market to prevent a repeat of scandals like the collapse of BHS. The Financial Reporting Council is consulting on six tenets for private firms, including balanced and accountable boards and sustainable pay policies. However, the CIIA has called for the FRC to go further, with moves such as a separation of chief executive and chairman roles as recommended for public companies.
Air Partner bolsters board after accounting troubles
Air Partner has appointed Joanne Estell as CFO following an accounting scandal at the private jet charter and air freight business. When it reported full-year figures in June, Air Partner said the accounting problem was limited to £4.4m, adding that while it was “disappointing… no customer, operator or supplier was disadvantaged.”
The Daily Telegraph The Times, Page: 58 The Independent, Page: 44 The Scotsman, Page: 31
Tesla chief accountant resigns after a month
Tesla’s chief accounting officer has stepped down after less than one month in the role. Dave Morton, who joined Tesla on 6 August, resigned on 4 September, according to documents filed with the SEC.
House of Fraser supplier backs call for probe
A House of Fraser supplier has backed the new owner’s call for an Insolvency Service investigation into its former directors. Ehab Shouly of the Tea Terrace claimed that Frank Slevin, the department store’s former chairman, and Alex Williamson, the former chief executive, failed to disclose the extent of the chain’s financial problems.
Inquiry into Bell Pottinger
The Insolvency Service is investigating partners of the disgraced PR firm Bell Pottinger over “potential breaches of duties or other misconduct”. The investigation concerns Bell Pottinger’s work for the Guptas, an Indian-born family in South Africa, which led to the firm being accused of stirring up racial tensions.
Steinhoff boss pleads ignorance over accounting scandal
The former chief executive of Steinhoff has claimed ignorance over the accounting woes that almost sank South Africa’s biggest retail group. Appearing before a joint sitting of four parliamentary committees in Cape Town last week, Markus Jooste insisted that when he left Steinhoff last December, “I was not aware of any accounting irregularities”. His statement conflicted with the evidence already provided to parliament by the company’s former chairman Christo Wiese and its finance director Ben la Grange.
Public pensions shortfall threatens £4bn in cuts
The Treasury is expected to demand an extra £4bn from school, hospital, police and armed forces budgets in order to fill a shortfall in public sector pensions.
Financial Times, Page: 1
House prices pick up
UK house prices picked up last month, rising at the fastest annual rate since November, according to the Halifax. In the three months to August, prices climbed by 3.7% from a year earlier, up from 3.3% annual growth in July. However, the monthly change was just 0.1%, leaving the average cost of a house little changed at £229,958. Russell Galley, managing director of the Halifax, said low interest rates and a “constrained” supply of homes for sale were supporting prices. He added that household finances were being helped by “a low unemployment rate and a gradual pick-up in wage growth”.
The Times The Daily Telegraph
Britain ‘better prepared’ for financial crisis
PwC has said that Britain is better prepared for a future financial crisis than it was when Lehman Brothers collapsed 10 years ago. Speaking ahead of the 10th anniversary of the bank’s failure, PwC partner and joint Lehman administrator Russell Downs suggested it was unlikely that Britain will ever see another business failure as large: “I’m pleased to say that we are not operating in a world where financial collapses happen that often, but we are better prepared and can mobilise quickly,” he said.
Sunday Express, Page: 55
Squeeze on incomes expected
Official figures this week are expected to put the average pay increase at just 2.4% in the year to July – less than the inflation rate – confirming that a squeeze on real incomes has returned. Separate numbers from the ONS are forecast to show that GDP growth edged up slightly in July, to an annual rate of 1.4% from 1.3%.
Growth forecast to be slowest in a decade
The economy will take a significant short-term hit if Britain leaves the EU without a deal, according to research by KPMG. Its quarterly economic outlook report forecasts that GDP will grow by 1.4% next year in the event of a good deal, but by only 0.6% in a no-deal scenario. It says that with GDP growth expected to be 1.3% this year, even a friction-free Brexit would lead to the lowest rate of growth for a decade. A separate report from BDO says that business confidence is at its lowest level for 15 months. Peter Hemington, a partner at BDO, said lack of progress on a trade deal with the EU was now testing companies’ resilience. Elsewhere, PwC’s Andrew Sentance writes in the Times that sterling is likely to weaken further in the short term, as the prospects for a Brexit deal hang in the balance over the autumn. He adds that the uncertainty caused by Brexit will not be resolved quickly and could well persist into the 2020s.
The power of offshore wealth
The Guardian and the Times each review Moneyland: Why Thieves & Crooks Now Rule the World and How to Take It Back by Oliver Bullough. The Times’ James Bloodworth describes the book as “an unflinching account of the power of offshore wealth” that is both gripping and dispiriting.
The Guardian, Review, Page: 14-15 The Times, Saturday Review, Page: 16
Britons left £2.85bn to charity in wills last year
Britons left a record £2.85bn to charity via gifts in wills last year. Health and cancer charities were the biggest beneficiaries with Cancer Research UK, Macmillan Cancer Support and the British Heart Foundation in the top five. The data, secured from research conducted by Smee & Ford, is released to coincide with Remember A Charity in Your Will Week, which runs from September 10-16.
The Sun Daily Mirror
Number of £1m earners rises by 25%
The number of people in the UK earning more than £1m a year rose to 18,700 in 2015-16, according to research by law firm Wilsons. More than a third of all the £1m earners live in London, with more than 2,000 in Kensington & Chelsea, and 1,400 in the City of Westminster.
The Daily Telegraph, Page: 2 The Sun, Page: 23 Daily Express, Page: 44 Daily Mail, Page: 21 The Guardian, Page: 28
Contact Paul Southward if you have any queries.