News Roundup Tuesday 13th August 2019
News Roundup Tuesday 13th August 2019
Osborne’s ‘toxic’ tax plan drives exodus of the wealthy
With HMRC figures this week showing that the number of non-doms fell to a record low of 78,300 last year – and that the amount of tax directly contributed by them fell from £9.5bn to £7.5bn – Harry Brennan and Victoria Ward in the Telegraph look at factors which have seen an exodus of the super-rich – and their wealth. They attribute much of the blame to tax policies introduced by former Chancellor George Osborne, with Rebecca Fisher, of solicitors Russell-Cooke, saying a “toxic mix” of changes to stamp duty, inheritance tax and capital gains tax on second properties has played a part.
Taxing times for the ‘evil elite’
The Mail’s Saturday essay sees Dominic Sandbrook explore taxation, looking at statistics released in the last week. He notes an Institute for Fiscal Studies report showing that just 57% of British adults pay income tax and that the richest 1% of people pay 27% of all income tax. He goes on to highlight HMRC figures showing a fall in the number of non-domiciled taxpayers and the £2bn hit their exit meant for tax receipts. Considering both sets of figures, Mr Sandbrook says they point to the contribution of the “most successful people in society,” suggesting that while an “evil elite” are often the target of criticism, their taxes help deliver school and hospitals.
Daily Mail, Page: 20
What’s the future for the pensions tax taper?
The FT looks at the pensions taper, considering its future as criticism of it has prompted a Treasury review, with Baroness Altmann, a former pensions minister, commenting that it is “just not operating effectively or efficiently”. The paper also carries opinion from pensions consultant John Ralfe who proposes a 30% flat rate of pensions tax relief. Elsewhere, the Times’ Carol Lewis calls for the taper to be scrapped, saying it would “cost the Treasury little in the long term, would reduce complexity and help to get public services moving again.”
PM urged to deliver radical tax rethink
Looking at the economy and policy options open to Prime Minister Boris Johnson and his Chancellor, the Telegraph suggests the Government “mustn’t just tinker” with the tax system, it must “radically remodel it.” This, it argues, would help turn Britain into “the thing the Europeans fear the most: a magnet for money and talent.”
Wealth is all relative, IFS study shows
Institute for Fiscal Studies analysis of tax return data shows that earnings of £162,000 would put someone in the top 1% of UK income tax payers but it takes £700,000 to make London’s top 1%.
Reform tax and red tape to invigorate the UK – Bootle
Roger Bootle, the chairman of Capital Economics, writes in the Telegraph on how tax and regulatory reform needs to be at the centre of UK economic policy post-Brexit. Mr Bootle says that the key to economic success is governance, not resources – see Singapore and Hong Kong compared with resource rich countries, including Russia and many countries in Latin America and Africa. Any deal Boris Johnson strikes with the EU, he says, must omit mandatory regulatory alignment so the country can pursue the right policies to invigorate the domestic economy and also establish a platform for export success. The evidence suggests poor governance is to blame for poor performance in Europe over recent decades, says Bootle, adding: “Could this perhaps be something to do with the EU? We may be about to find out.”
Sir Vince calls for review of loan charge policy
Sir Vince Cable has written to the Chancellor demanding an independent judge-led review into the loan charge. The charge was introduced in response to the Treasury’s concerns about “disguised remuneration schemes” which involved individuals being paid through loans, usually via an offshore trust in a low or no tax jurisdiction, which they did not have to repay. But Sir Vince claims the charge is unfair, retrospective and poses a suicide risk.
Yorkshire Post, Business, Page: 15
Funding for British biotech companies hit by Brexit uncertainty
Funding for British biotech firms has dried up this year in contrast to fundraising across Europe. According to data compiled for the Telegraph by Pitchbook, British biotech companies have raised just $107.4m (£89m) across 15 deals so far, compared with $643m across 62 deals in 2018. European biotech companies have attracted $1.6bn in funding this year, exceeding the $1.5bn invested in the whole of 2018. Overall, in the first three months of 2019, the number of venture capital investments into British businesses fell by almost 60%. KPMG’s Tim Kay said investors had expected politicians to have made more progress on Brexit by now. Dr Martin Turner, head of policy at the BioIndustry Association, said financing was expected to pick up in the near future.
MPs call for mandatory climate risk reporting
MPs on the environmental audit committee (EAC) have called for Britain’s biggest companies, investors and pension funds to be required to report on the risks they face from climate change within the next three years. The EAC said it did not believe a voluntary approach would be effective and instead called for climate risk reporting to be mandatory on a “comply or explain” basis.
The Guardian, Page: 31
No-deal guidance “pretty impenetrable” for SMEs, says IoD
The Institute of Directors has warned that half of its members say they could never be prepared for a no-deal Brexit. The IoD said that only 15% of members questioned believed they were “fully prepared” for no-deal and 53% had done “as much preparation as we can but cannot be fully prepared”. A further 14% said they “have more preparation to do” and 15% did not expect Brexit “to impact our organisation”. The IoD’s Edwin Morgan added that guidance needed to be improved; technical notices “were pretty impenetrable for the average small business” and companies found them “too technical, too jargonistic”.
SME bosses risk health by shunning holidays
Small business owners are being urged to take a break after a survey by Simply Business found bosses are going without a holiday for several years. Time pressures and money concerns mean that 9% of SME owners – equivalent to more than half a million – haven’t had a holiday in as long as five years. The business insurance firm said the trend of UK business owners struggling to switch off could lead to mental and physical health issues and dent productivity.
Daily Express, Page: 49 The Scotsman, Page: 32
Johnson needs to support firms hit by late payments
The small business commissioner has called on Boris Johnson to prove his business credentials by giving small businesses greater support over late and delayed payments. Paul Uppal said: “My message to the Prime Minister is that small businesses have heard themselves be described as the backbone of the economy, so I want him to walk the walk and ensure they are supported.”
Daily Express, Page: 49
Landlords face tax hit as they exit the sector
The Telegraph’s Adam Williams says that property investors being driven out of the sector by “punishing tax” reforms are taking a further tax hit as they look to sell their additional properties. He says that some landlords hit by a restriction on relief offered on mortgage interest are facing large capital gains and inheritance tax bills as they pull out of the rental sector. David Smith of the Residential Landlords Association comments: “It is completely illogical to have a tax system which encourages investors to pull their money from the sector but then hits them with a massive tax penalty when they do.”
The Daily Telegraph, Money, Page: 1
Tesco CFO pushes for rates reform
Tesco finance chief Alan Stewart has been trying to drum up support from rival retailers to pressure the Government into reforming business rates. Mr Stewart wants the UK’s biggest supermarkets to publicly support a 20% cut to rates and a 2% levy on online retail sales.
The I, Page: 38 Daily Express, Page: 49
New accounting standards are not a big improvement
Michael L Gullette of the American Bankers Association supports a delay to implementing the current expected credit losses (CECL) accounting standard, advocating a re-examination of the rules by the FASB.
Opening of China markets puts spotlight on auditors
China is under pressure to clean up its accounting industry following a series of billion-dollar corporate scandals and a probe into Ruihua Certified Public Accountants.
Firm offered steel deal
The Department for Business, Energy and Industrial Strategy has reportedly agreed a deal with Ataer, which controls Turkish steel company Erdemir, that would see it receive incentives and support from the Government if it buys British Steel. It is understood the support package could be worth up to £300m. British Steel was taken over by the Official Receiver and placed in compulsory liquidation after failing to secure a £30m taxpayer bailout. A taxpayer-backed indemnity is keeping the manufacturer running while the Official Receiver and EY seek a sale.
The Daily Telegraph, Page: 31 The Guardian, Page: 35 The Times, Page: 50 Daily Express, Page: 5 Daily Mirror, Page: 2
Hargreaves loses tax case appeal
Hargreaves Lansdown has lost a long-running court battle with HMRC regarding loyalty bonuses. The two sides had been locked in a dispute over whether investors should pay income tax on fund discounts they receive in the form of loyalty bonuses. HMRC’s victory means that loyalty bonuses will be now be taxed as income. Hargreaves Lansdown chief executive Chris Hill commented: “We challenged this tax on behalf of clients as we always felt it was an unnecessary and unwarranted attack.” An HMRC spokesperson said the ruling “supports the published view of HMRC that these payments to investors are taxable.”
Rugby club CVA backed
Rugby club Yorkshire Carnegie have avoided a points deduction after satisfying conditions set out by the game’s board for entering into a CVA, with Begbies Traynor confirming that 100% of the club’s creditors have either agreed to the terms of the CVA or been paid in full by third parties.
Yorkshire Post, Sport, Page: 6
BDO Northern Ireland says several potential bidders have expressed an interest in buying Belfast shipyard Harland and Wolff. It has agreed a “temporary” unpaid lay-off of the workforce so as to explore the opportunities.
I, Page: 70 Yorkshire Post, Sport, Page: 12
Economy shrinks 0.2%
Data from the Office for National Statistics shows that the economy shrank by 0.2% between April and June, marking the first contraction since 2012. Consensus among analysts had seen a forecast of 0% growth in Q2. The 0.2% dip in GDP follows growth of 0.5% in the first three months of the year, with Q1 boosted by stockpiling ahead of the original Brexit deadline of March 29. This contributed to Q2’s fall, with buying reduced as companies utilised the stockpiled goods and materials. Analysis of Q2 performance shows that import levels were down 13% quarter-on-quarter, exports fell 1.5%, manufacturing output was down 2.3% and business investment was 0.5% lower. PwC economist Mike Jakeman warned that the possibility of a recession – defined as two consecutive quarters where the economy shrinks – “is now very real”. He commented: “Monthly data for June showed no growth at all, which suggests that the economy is entering the third quarter with no momentum.” Tej Parikh, chief economist at the Institute of Directors, said the economy is “facing a bumpy ride going into the third quarter”. Chancellor Sajid Javid offered that while we are in a “challenging period across the global economy … the fundamentals of the British economy are strong”.
Job vacancies fall by 4%
The number of job vacancies has fallen by 4% since the start of the year as firms contend with rising wages and a sluggish economy, according to BDO. The firm’s Peter Hemington said: “This could be the beginning of the end of the strong employment market in the UK. Businesses are facing upwards pressure on wages even while the economy lags, so hiring plans are taking a hit.”
Daily Mirror, Page: 2 Daily Star, Page: 11
Shop vacancy rate worst since 2015
The number of empty shops in town centres is at its highest for four years, according to a British Retail Consortium and Springboard survey. The vacancy rate was 10.3% in July, its highest level since January 2015, while footfall also fell by 1.9% in July, the worst July performance for seven years.
Contact Paul Southward.