News Roundup Tuesday 25th June 2019



Tax Watch: Tax gap claim ‘laughable’

Considering HMRC figures which show £35bn in tax has been lost through avoidance, evasion, omission and error, George Turner of Tax Watch notes that it marks the biggest tax gap in cash terms since figures were first published in 2008. Analysing the figures in the Independent, he details how profit shifting by multinational companies is not accounted for, while schemes that take advantage of legal loopholes are not pooled in with the total, including cases where the Revenue has declared something to be a tax avoidance scheme but have then lost a case in the courts. Looking abroad, Mr Turner says countries which publish more comprehensive estimates “often use very different methodological approaches which are known to produce higher estimates of tax losses than the approach deployed by HMRC”. He also points to European Commission data showing that, when expressed as the percentage loss of total potential VAT revenues, the UK has the 11th highest VAT gap out of the 28 member countries. He argues that by “leaving out large and important areas of tax avoidance” ministers can claim that the UK has one of the world’s lowest tax gaps at 5.6%, describing the claim as “laughable”. It may be time, he suggests, for the Government to “stop hiding behind HMRC’s flawed figures, and face up to the challenge of tax avoidance.” Elsewhere, Kate Hughes in the Independent looks at the tax gap, noting that figures do not include the so-called hidden economy, highlighting that “ghosts” who do not declare any of their income and “moonlighters” who only own up to some of it cost the economy £ 1.9bn a year. The FT also looks at the tax gap, with James Hender of Saffery Champness saying it is “interesting” that HMRC cites legal interpretation as a growing contributor to the tax gap.

The Independent, Page: 47 Financial Times, Money, Page: 4

Tory hopefuls talk tax

Oliver Wright in the Times crunches the numbers on some of the “expensive promises” the two Conservative leadership candidates have made while on the campaign trail. On Boris Johnson’s pledge to raise the income tax threshold for the 40p rate and upper earnings limit for National Insurance from £50,000 to £80,000, Mr Wright cites experts who note such a change “would overwhelmingly help the better-off.” Jeremy Hunt says he would look to reduce corporation tax, which is set to dip from 19% to 17% next April, to 12.5%. HMRC estimates that cutting it further could cost the Treasury at least £12bn, while Mr Wright offers that a lower rate could act as an incentive for companies to set up in the UK, “thereby increasing the total tax take”.

The Times, Page: 7


Buyers paying over the odds in stamp duty

Research by the Daily Telegraph suggests homeowners are being forced to pay excessive levels of stamp duty and then wait weeks for refunds. A Freedom of Information request submitted to HMRC shows that 43,187 people applied for a stamp duty refund in the 2018/19 tax year, with almost £400m handed back to those who paid too much in the period. The paper’s Adam Williams says the complexity of the system means many buyers may be failing to make claims for overpayments. A separate Freedom of Information request revealed that of the 43,187 refund requests, just 34,599 were processed within HMRC’s 15 working day target. Paula Higgins of lobby group the HomeOwners Alliance describes the stamp duty system as a “mess”, saying thousands of people are “being caught out, even though they have done nothing wrong.”

The Daily Telegraph, Money, Page: 1


HMRC urged to rethink TTP wording

The Adjudicator’s Office has suggested HMRC should review the wording of Time to Pay (TTP) repayment plans to make it clear to taxpayers exactly how a deal could fall through, with the Revenue able to cancel such deals if new facts come to light that suggest they are no longer appropriate. Figures show that 700,000 such deals, which can be agreed with HMRC when a taxpayer cannot immediately pay back money owed, were made in 2018/19 – with 90% completed successfully. Paul Spenceley of law firm Irwin Mitchell suggests HMRC has become increasingly aggressive, pointing to the loan charge which levies a tax on people who used avoidance schemes, as an example of its hard-line approach.

The Daily Telegraph, Money, Page: 3


Ashley takes a shot at Goals

Mike Ashley’s Sports Direct has confirmed it will vote against the reappointment of the entire Goals Soccer Centres’ board at its annual general meeting. Sports Direct, which holds a 18.9% stake in Goals, says there has been a “lack of transparency” over historical accounting errors and unpaid tax. It has called on Goals to appoint new advisers to investigate the accounting issues, calling for corporate investigator Kroll to carry out an independent review into Goals’ accounts, pledging that the results would be available to all shareholders. Goals, which has described Sports Direct’s position as “disruptive”, has recently hired forensic accountants from BDO to look at its books and appointed Deloitte to assess future options, as well as drafting in RSM Tenon and a specialist VAT consultant.

The Daily Telegraph, Page: 33 The Times, Page: 54 Financial Times, Page: 17 Daily Express, Page: 63 The Independent, Page: 46 Daily Mail, Page: 105 The Sun, Page: 46 The Scotsman, Page: 28 Yorkshire Post, Page: 23

Hilco eyes Bathstore

Restructuring fund Hilco is reportedly considering a move for retailer Bathstore, which is set to appoint BDO to lead an insolvency process. Sky News says Hilco is one of a number of firms interested in continuing to run Bathstore, albeit on a much smaller scale.

City AM Sky News

Phone firms face collusion claims

Mobile phone networks EE, O2 and Vodafone face allegations of price-fixing and collusion as part of a £1bn High Court claim over the collapse of Phones4u. The Times notes that networks cut ties with the retailer shortly before its demise and administrator PwC found Phones4u was “not viable” without their support.

The Times, Page: 55


Small firms short changed by coin stance

Analysis suggests that up to one in ten branches of major banks refuse to accept or offer coins, with the Mail’s Amelia Murray describing this as a “blow” to small businesses that rely on bank branches for change. Mike Cherry, of the Federation of Small Businesses, comments: “Small business owners with cash takings need to be able to deposit all those takings, not just notes.”

Daily Mail, Page: 4


Budget deficit grows

Public borrowing rose by £1bn to £5.1bn last month compared to May 2018, figures from the Office for National Statistics show. Tax receipts rose by £1.9bn, with revenue from income tax and national insurance up by a combined £1.3bn. Britain’s deficit has reached £11.9bn for the financial year so far, with this total £1.8bn – or 18% – higher than it was for the same period (April-May) last year. The figures also show that the Government has spent net cash of £9.2bn this financial year so far. This is £8bn more than last year. Howard Archer, chief economic adviser to the EY Item Club, comments that public finances remain on course to meet their target for 2019/20 of £29.3bn, adding: “Much will depend on whether the economy can shrug off its current weakness as well as on Brexit developments.” PwC’s Mike Jakeman said the figures show the public coffers are in a state of “relative health”, saying: “Given that the budget deficit is estimated at around 1% of GDP in 2018/19 and interest rates remain very low, we do not consider a mild increase in borrowing to pose any risk to the health of the government’s finances.”

The Times, Page: 52 The Daily Telegraph, Page: 33 Daily Mail, Page: 105 I, Page: 72 City AM


The era of carefree expense-padding is well and truly over

Tom Braithwaite explores issues around expenses, noting that a Deloitte accountant was handed a suspended sentence after submitting duplicate subscriptions to the Institute of Chartered Accountants, as well as bogus taxi receipts.

Financial Times, Page: 14

Contact Paul Southward.

Paul Southward