News Roundup Tuesday 22nd January 2019

NEWS ROUNDUP

TAX NEWS

HMRC sends late tax return fines before deadline

Blick Rothenberg has revealed that HMRC has sent some self-assessment taxpayers letters accusing them of not filing their returns on time and imposing a £100 penalty, despite a deadline of January 31. The firm’s Robert Pullen said HMRC attributed the matter to a system error affecting tax returns not yet submitted online. He added: “In all cases we are aware of, the penalties have been cancelled when requested without challenge but many taxpayers may be unaware of the timing error.” David Redfern, managing director of tax refund specialist DSR Tax Claims, said: “It is unclear how many taxpayers have been affected by this error, or whether HMRC intend to contact affected taxpayers to inform them that their tax bill is incorrect.” HMRC commented: “Nobody will be charged a penalty or additional interest due to this problem.”

The Times, Page: 2

Curse causes tax return delay

HMRC has revealed some of the stranger reasons people have given for why their self-assessment tax return was filed late. One taxpayer claimed they were delayed by a witch’s curse put on them by their mother-in-law, while another suggested a broken boiler left them too cold to type. One person said they were unable to submit paperwork on time as they had been busier than normal due to issues with their maids, with another saying they were hampered by being too short to reach a post box. The Revenue also detailed some of the more unique expense claims filed, including one for a music subscription so the taxpayer could listen while they work. HMRC’s Angela MacDonald said: “Help will always be provided for those who have a genuine excuse for not submitting their return on time but it’s unfair to the majority of honest taxpayers when others make bogus claims.” Meanwhile, Anne Ashworth in the Times looks at the compl exity of tax rules, saying it has increased “despite pledges that simplification was under way.”

The Daily Telegraph, Page: 2 Financial Times, Money, Page: 2 The Times, Page: 60 Daily Mail, Page: 40 Daily Star, Page: 2 The I, Page: 25 The Sun, Page: 38 Daily Mirror

Investors miss out on VCT tax benefits

The Times says that while investing in start-up businesses is growing in popularity, many investors are missing out on tax breaks available to those investing through Venture Capital Trusts (VCT), noting that those holding a VCT for five years can claim 30% tax relief and any capital gains and income are tax-free. HMRC figures show that 15,120 investors claimed VCT income tax relief in 2015-16, with 41% of claims for investments of £10,000 or less.

The Times, Page: 61

Britain’s richest man: Tax driving a billionaire exodus

Gopichand Hinduja, Britain’s richest man, has warned that the country’s wealthiest business people are leaving for other financial centres due to the UK’s tax policies. He said there “used to be a lot of ease of doing business” in the UK, but: “Now, with changes in tax – doms, non-doms – they have made so many complications that people don’t even know what returns they have to file.” He added that a number of billionaires he knows “have left London and become residents either in Dubai or Singapore or Lebanon.” Mr Hinduja, who told the Sunday Telegraph that his family, which runs the Hinduja Group of more than 50 international companies, has no plans to leave Britain, warned that changes in the personal and corporate tax regime, coupled with Brexit, have created uncertainty. He added: “Nowadays, for global business houses to operate from London, it’s difficult.” On what 2019 may hold, Mr Hinduja told the paper it “will be a very bumpy year economically but there is not going to be a recession.”

The Sunday Telegraph, Business and Money, Page: 1

Share slides can see IHT reclaimed

The Sunday Times’ Holly Black says families may be able to reclaim inheritance tax (IHT) paid on estates if the stock market performs badly, with overpayments potentially occurring if share prices dip before the inheritor has taken ownership. This occurs as IHT is calculated on the value of shares on the day the owner dies but the inheritor does no receive them immediately due to the time it takes for the estate to complete probate. Research by insurer NFU Mutual shows that the number of claims for IHT refunds jumps up in years when the FTSE 100 drops. It is also noted that executors can reclaim inheritance tax if the value of a house has fallen.

The Sunday Times, Business and Money, Page: 13

Taxing times under Corbyn?

The Mail on Sunday’s Jeff Prestridge considers the implications if Jeremy Corbyn’s Labour took power, saying it could deliver a “tax-raising, wealth-soaking government”. He advises that existing tax breaks should be taken advantage of as “generous allowances are unlikely to survive” under Mr Corbyn and John McDonnell. He also expects inheritance tax to become “more draconian” under Labour. Elsewhere, Tommy Stubbington and Benedict George in the Sunday Times say the super-rich are preparing to leave Britain if Jeremy Corbyn gets into power over fears about the tax regime his party may introduce. Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research, comments: “You have to be very careful about scaring off too many of the biggest taxpayers.”

The Mail on Sunday, Page: 63 The Sunday Times, Business and Money, Page: 5

CORPORATE NEWS

Banks probed over Patisserie Holdings

The Times reports that the Financial Conduct Authority is investigating HSBC and Barclays over potential governance failings in their monitoring of current accounts and overdraft facilities for Patisserie Holdings. The paper says a report from PwC shows that funds were moved between two current accounts via cheques which would boost the bank balance of the Patisserie account temporarily at the end of the financial year before bouncing. Patisserie Holdings this week said potential fraud linked to accounting irregularities uncovered in October was more extensive than had been thought and that it has hired KPMG to carry out a “review of all options available”. Meanwhile, Patisserie Valerie has been seeking to secure a lifeline from its banks, with a standstill on its banking facilities due to expire last night.

The Times, Page: 49 The Guardian, Page: 33 Financial Times, Page: 17

AAT urges ministers to tackle pay offenders

The Association of Accounting Technicians has urged ministers to stop chasing businesses that inadvertently breach pay rules and concentrate instead on firms deliberately avoiding paying staff the national minimum wage. Phil Hall, the association’s head of public affairs and public policy, has written to Business Secretary Greg Clark saying that “national minimum wage legislation was rightly introduced to eradicate the worst cases of exploitation, but increasingly these technical breaches involve no form of exploitation, yet are being vigorously pursued by HMRC.”

The Times, Page: 53

Green in Arcadia review

Sir Philip Green has launched a review of his Arcadia retail empire, with it reported that advisers from Deloitte have been instructed to explore a plan involving store closures that could potentially see a CVA.

The Daily Telegraph, Page: 35

Patisserie boss’ loan outranks investors

The Sunday Telegraph reports that a £10m rescue loan from boss Luke Johnson will “outrank” Patisserie Valerie shareholders if the chain collapses into administration. The loan from Mr Johnson, made to parent company Patisserie Holdings, came alongside a £15m injection from ordinary shareholders when a £40m accounting black hole was identified in October. The firm, which has hired KPMG to explore “all options”, including an administration, this week reported that the accounting scandal was “significantly worse than first thought”. Chris Boxall, of shareholder Fundamental Asset Management, believes Patisserie Holdings is “now almost certain to go into administration.” The Sunday Times adds that Patisserie Valerie could go bust tomorrow if emergency talks between Mr Johnson and its banks fail.

The Sunday Telegraph, Business and Money, Page: 1 The Sunday Times, Business and Money, Page: 1

Failed firm sued

Failed household power supplier Economy Energy is being sued by three companies, including the National Grid, which says it is owed £12m for 300,000 smart meters. Following the firm’s collapse, administrators Grant Thornton say they are working with Ofgem and Ovo, who took on Economy’s 235,000 customers, to ensure any impact on customers is minimised.

The Mail on Sunday, Page: 27

PROPERTY NEWS

First-timers overtake movers

First-time buyers are dominating Britain’s housing market, as the level of current homeowners moving house fell the most in seven years, according to Lloyds Bank. It found that the number of homemovers fell by 4% last year from 2017, while the number of first-time buyers increased by 3%. It is the first year since 1995 that people buying their first home account for more of the market than homemovers, at 51% and 49% respectively. The cost of moving home is putting pressure on homemovers, said Andrew Mason of Lloyds Bank, with an average deposit now at just below £100,000, while stamp duty cuts and the Help to Buy scheme are helping out new buyers.

The Daily Telegraph

RICS instruction could hit retail sites

The Royal Institution for Chartered Surveyors has advised valuers to be “aware of the potential for significant changes in value” in retail properties, meaning valuations of high street shops and shopping centres could dip. The Sunday Times says the instruction could spur steeper declines in asset values for retail landlords. Reflecting on the climate for brick-and-mortar retailers, the paper notes that more than 20 struggling chains have instructed Deloitte to assess whether they are eligible for a CVA in the past two months.

The Sunday Times, Business and Money, Page: 1

INTERNATIONAL NEWS

Spain takes another step towards ‘Google tax’

The Spanish government has introduced a bill creating new taxes on digital services and financial transactions. The levies, which require parliamentary approval, are expected to bring in €2.05bn annually.

Financial Times

PENSIONS NEWS

Top civil servants have £907k pension pots

Analysis by the TaxPayers’ Alliance (TPA) shows that the most senior Government civil servants have an average pension pot of £907,273, a figure almost three time times the average private sector equivalent. Sir Simon McDonald, head of the Foreign and Commonwealth Office, has the largest pot among the 22 leaders of Government departments, at £1,858,000. John O’Connell, the chief executive of the TPA, said: “With the enormous liabilities for public sector pensions kept off the official debt figures, they must be reformed to make them more sustainable in the long-term, otherwise future generations will be footing the bill.”

The Sunday Telegraph, Page: 8

ECONOMY NEWS

December decline for goods sold

Figures from the Office for National Statistics show that consumers pulled back on spending in December, with Black Friday deals in November seeing some shoppers bring forward their Christmas spending. The quantity of goods bought last month fell by 0.9% compared with November, with all sectors except food and petrol declining. Figures for the three months to December showed that the quantity of goods bought dropped by 0.2%. Over the whole year, sales grew by 2.7% in 2018 – exceeding the 2% growth recorded over 2017. Howard Archer, chief economic adviser at the EY Item Club, said that the drop in December “pointed to Black Friday-related promotions primarily bringing retail purchases forward to November from December rather than lifting sales overall.” Ian Geddes of Deloitte, considering sales around the festive period, said December’s figures “clearly show some of the effects of heavy discounti ng from retailers.”

The Guardian, Page: 35 The Times, Page: 52

Profit warnings hit 17% of firms

A report from EY shows that 225 of companies on the London Stock Exchange and the AIM issued a total of 287 profit warnings among them last year. The total, which equals 16.8% of listed firms, is the second highest since 2009, when 232 firms issued a combined 281 profit alerts, with 2015 seeing 240 firms put out a total of 313 warnings. The analysis shows that of those issuing profit warnings in Q4 2018, 74% were doing so for the first time in 12 months – compared to 52% in Q1 2018. EY also found that when firms issued warnings during 2018’s fourth quarter, their shares fell by a record average of 22.6%. EY restructuring head Alan Hudson commented: “Investors, like many businesses, are positioning for the worst. Recent events have created further political and economic uncertainty and there is no let-up in the pace of structural change.”

The Observer, Page: 52 The Sunday Times, Business and Money, Page: 1 The Sunday Telegraph, Business and Money, Page: 1 Sunday Express, Page: 55 The Mail on Sunday, Page: 98

OTHER NEWS

Footballers face penalties

Footballers Cristiano Ronaldo and Xabi Alonso will both face trial in Madrid’s Provincial Court on Tuesday, with the former Real Madrid players accused of fiscal fraud. Ronaldo has already agreed a deal with Spanish authorities that will see him pay £16.9m and accept a two-year prison sentence over tax fraud – which will be served on probation. Prosecutors are calling for a five-year prison sentence and a £3.5m fine for Alonso.

Daily Mirror

Burke settles £565k tax bill

Singer Alexandra Burke has settled a £565,000 tax bill, with liquidators settling an “agreed liability” with HMRC over income tax and NI at her company Miss Contagious Limited.

The Sun, Page: 61

MoJ did not assess probate costs before fee increase

The Government took no steps to assess the cost of administering probate applications for high-value estates as it proposed increasing the cost of applying for probate by 3,770%, it has been revealed. MP Laurence Robertson asked what recent assessment of costs had been made, prompting Lucy Frazer, parliamentary under-secretary of state at the Ministry of Justice, to reveal: “While current probate fees are determined based on an assessment of unit costing at a service level, the Ministry of Justice has not made any assessment specifically on the costs to HM Courts and Tribunals Service of administering an application for probate.”

The Sunday Telegraph, Business and Money, Page: 10

Thinktank: Axe the DWP

Thinktank Demos has called on ministers to consider abolishing the Department for Work and Pensions. Its report suggests the DWP has struggled to help ill and disabled people out of poverty and calls for its responsibilities to be divided across other bodies, including HMRC taking on benefits and pensions. A DWP spokesperson described the report as “completely misguided.”

The Observer, Page: 20

Contact Paul Southward if you have any queries.

Paul Southward