News Roundup Tuesday 19th March 2019
News Roundup Tuesday 19th March 2019
HMRC wins battle over £1bn Lehman tax bill
PwC have lost an appeal against a £1bn tax bill levied on interest payments made to the creditors of the European arm of Lehman Brothers, the investment bank that collapsed in 2008. Creditors were repaid in full as the business had a large surplus when it was wound down but HMRC and administrators from PwC have been fighting a three-year legal battle over whether the interest payment is subject to withholding tax of 20%. A spokesman for PwC said: “We are pleased that the Supreme Court has handed down this important decision on a technical tax issue. Consideration must now be given by HMRC as to how much of the £1bn is repayable to creditors because of double taxation treaty claims or other reasons … A large number of double taxation treaty claims have already been made.”
Tax burden at 50-year high
The tax burden in Britain is at the highest level for 50 years with the OBR saying it will hover at around 34.6% until 2023-24. The Exchequer is expected to take in £737.4bn of tax revenue in 2018-19, up from £699.7bn last year, driven by surging employment. Matt Kilcoyne, of the free market Adam Smith Institute, commented: “The Chancellor is picking the pockets of ordinary workers to fund his deficit reduction targets. His pledge to end public sector austerity will only be welcomed if it doesn’t force workers to impose their own personal austerity at home because of high taxes.”
Daily Mail, Page: 83
The return of HMRC preference short-sighted
Eleanor Temple, the chair of R3 in Yorkshire, objects in a piece for the Yorkshire Post to the Government’s move to put HMRC at the front of the queue in corporate insolvency procedures. She says the “cash grab” will come at the expense of “long-term damage to the UK’s enterprise and business rescue culture, as well as businesses’ access to finance.” The Government’s plan is to restore HMRC’s preferential status for some tax debts (including PAYE, employee NICs, and VAT), putting it ahead of unsecured creditors and shareholders. Ms Temple continues: “Looking at the bigger picture, while the move may result in the Treasury seeing some extra money coming back to it in the short term, this needs to be set against the tax income and added tax losses it is likely to miss out on in later years. What’s more, tighter access to finance for business means more business insolvency , fewer growing businesses to generate tax receipts, and higher redundancy pay outs for the Government to cover.”
Yorkshire Post, Business, Page: 6
Bid to reduce carbon emissions and energy bills for SMEs
SMEs will receive extra Government help to cut energy use under a drive to tackle carbon emissions, the Chancellor has announced. The UK’s 5.7m SMEs account for more than 50% of business energy use and are typically vulnerable to high energy costs. Improving energy efficiency could prove to be one of the most cost-effective mechanisms for businesses to reduce energy bills, while also reducing their carbon emissions, according to the Government consultation.
The Daily Telegraph, Business, Page: 7
Hammond to review minimum wage as pay growth rises
Wage growth has gathered pace, driving up tax receipts and reducing pressure on stretched households, according to the OBR. The continuing strength of the jobs market will see pay grow by 3% a year while opportunities for workers are expected to rise further, with 600,000 new jobs forecast by 2022-23, supporting more wage growth. The figures were published as Philip Hammond announced a review into the national living wage. The Treasury has said the review, to be led by Professor Arindrajit Dube from the University of Massachusetts, will have a particular focus on “innovative and ambitious minimum wage models” although it will not attempt to consider the minimum wage rates in the UK “nor the causes of low wage employment”.
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