News Roundup Tuesday 25th September 2018

NEWS ROUNDUP

TAX NEWS

HMRC contractor secures holiday payout

An HMRC contractor has successfully claimed for holiday pay after the tax office deemed her to be an employee. HMRC and a number of intermediary companies have agreed to settle a claim for more than £4,000 in holiday pay to Susan Winchester, who spent more than a year working on marketing projects for the Revenue as a freelancer. She achieved the settlement after challenging HMRC on its application of employment law after the terms of her contract with the government body were changed. Ms Winchester’s case is believed to be the first pursued by someone working for HMRC since the April 2017 rule change.

The Daily Telegraph, Money, Page: 4

Corbyn condemns water giants’ tax arrangements

Jeremy Corbyn has condemned water companies for paying millions to shareholders based in offshore tax havens as he pledged to nationalise the industry. Labour said businesses based in such places as Luxembourg, Bermuda and Jersey, owned £14.5bn in shares in six firms – Anglian, Northumbrian, South West, Southern, Thames and Yorkshire – and got £246m in dividends last year.

The Sun, Page: 6 Daily Mirror, Page: 4

Wealth advisers expect CGT hike

Wealth advisers are telling their clients to consider selling off assets in anticipation of a potential increase in capital gains tax in the autumn Budget. Some are concerned that historically low rates of CGT are ripe for review as the Government seeks extra sources of funding for public services. Wealth advice firm James Hambro has written to customers with long-standing investments “pregnant with gains” following years of growth to urge them to weigh up the possibility of taking a tax hit now while rates are low. It is also concerned that people’s reluctance to pay CGT could make their portfolios unbalanced and hence more risky. Edward Park of Brooks Macdonald, another wealth manager, also advised investors to consider their options. The company has used the forthcoming Budget as a reason to prompt its customers, but said it expected CGT to be subject to review at some point, even if not by the current government. However, Danby Bloch, of Helm Godfrey, said that thanks to the relatively generous annual allowance most people would not need to worry about CGT. He said he doubted that the tax would be increased, although he did not rule it out.

The Sunday Telegraph, Business, Page: 9

Starbucks’ tax bill is hard to swallow

The Sunday Times’ James Coney calls for new legislation to make businesses with conspicuously low rates pay more tax. He points to figures showing that Starbucks’ European business in effect paid a UK tax rate of just 2.8% last year. Separately, the Sun reports that ticketing site Viagogo made £11m in the UK last year but paid just £135,000 in corporation tax.

The Sunday Times, Business, Page: 14 The Sun, Page: 9

Tories no longer the party of low taxation

The Sun’s Tony Parsons says the Conservatives are no longer the party of working-class aspiration and low taxation, after a report by the TaxPayers’ Alliance found the tax burden in the UK is now at its highest for nearly 50 years.

The Sun, Page: 11

INDUSTRY NEWS

Workers underpaid by £15.6m

A record £15.6m worth of underpayment to UK workers has been discovered by the government in the past year. In total, 200,000 workers missed out on being paid at least the minimum wage rate – the highest number since the statutory rate was introduced in 1999. Social care, commercial warehousing and the gig economy were the sectors most likely to underpay staff, HMRC said. In total, the firms found to have underpaid workers were fined £14m as well as having to reimburse their staff.

BBC News The Guardian, Page: 43

UK accountants: no plaudits for audit

The FT says a Labour-commissioned review of the audit industry may conclude that splitting firms’ consultancy and audit arms is necessary to address the dominance of the Big Four.

Financial Times, Page; 26

CORPORATE NEWS

Chappell loses pensions conviction appeal

Former BHS owner Dominic Chappell has lost an appeal against his court conviction for failing to provide information to The Pensions Regulator. Mr Chappell was ordered to pay £87,000 in January, including £37,000 in costs. Judge Christine Henson QC reinforced the view of the trial court that convicted him in January, as she criticised Mr Chappell in court for being “evasive and unbelievable”.

The Guardian, Page: 45 The Times, Page; 48 Sky News The Daily Telegraph, Business, Page; 39 Daily Mail, Page: 109 Financial Times, Page: 2

Russian money laundering investigation ‘was ordered to stop’

The former head of the National Crime Agency’s international corruption unit has revealed that he was ordered to halt an inquiry into Russian money laundering. Jon Benton said a more senior official linked to the Foreign Office told him to drop his inquiry into allegations made by British financier Bill Browder.

The Sunday Telegraph, Page: 1-2

SMEs NEWS

Peer-to-peer lenders await recession test

Restructuring specialists are eyeing the peer-to-peer lending sector for signs of weakness, as speculation mounts about how the platforms will cope when the next recession hits. The sector will lend more than £7.5bn to consumers and small businesses this year, according to estimates from AltFi. About 75% of the total comes from the three biggest companies – Funding Circle, RateSetter and Zopa. However, some experts fear that sharp losses at one platform could spread across the industry and drain confidence.

The Sunday Times, Business, Page: 11

PENSIONS NEWS

Savers lose out in pensions ‘Wild West’

The Sunday Times says savers are losing hundreds of thousands of pounds after being abandoned to a “Wild West” of pension rules that exposes them to unscrupulous financial advisers. The paper accuses advisers of exploiting a toxic combination of outdated laws and loopholes to lure investors into high-risk products that offer no protection. Almost £19bn was moved out of pension schemes in the first six months of this year, after a record £34.2bn was transferred last year. In 2014, just £5.4bn was moved out.

The Sunday Times, Business, Page: 13-14

Payouts on annuities rise by a fifth

Payouts on annuities have increased by almost a fifth since their post-referendum slump. A 65-year-old with a £100,000 pension pot can now get a fixed annual income of £5,341 whereas the same annuity would have paid just £4,495 a year if taken on September 15, 2016.

The Sunday Times, Business, Page: 17

WEALTH MANAGEMENT NEWS

Duo plan merchant bank for mega-rich millennials

The FT profiles technology-focused merchant bank Lepe, which aims to attract rich millennials who prefer to take a more active role in managing their money.

Financial Times, Page: 18

PROPERTY NEWS

Scrapping stamp duty would be cost neutral, says former Tory treasurer

A former Tory treasurer has suggested that scrapping stamp duty would be cost neutral, as homeowners would spend more on home improvements. Lord Stanley Fink said that high stamp duty bills are prohibiting even wealthy home movers from spending money on furniture, home decor and extensions.

The Sunday Telegraph, Page; 5

ECONOMY NEWS

Government borrowing jumps in August

Government borrowing rose by more than expected last month following subdued tax receipts and an increase in expenditure. Borrowing jumped to £6.75bn last month from £4.35bn a year earlier, the ONS said. It was the first year-on-year rise in borrowing in August for three years. However, borrowing for the year to date is 30.5% lower at £17.8bn, potentially giving Chancellor Philip Hammond room for manoeuvre in the Budget. Economists had expected borrowing to be about £3.4bn last month. Tax receipts rose by 1.6% last month from a year ago, while spending rose 5.4%. “Despite some successes in reducing borrowing and a smaller deficit, there have been no inroads made yet into the debt and, if the economy does face a downturn following Brexit, it is likely that borrowing will have to increase again,” said Ross Campbell at the ICAEW.

The Times, Page; 51 The Daily Telegraph, Business, Page: 39 Financial Times, Page: 2 Daily Mail, Page: 107 The Independent, Page: 41

Pound falls after May’s Brexit statement

The pound’s fall against the dollar and the euro has deepened following Theresa May’s assertion after an EU summit that “no deal is better than a bad deal”. Sterling was already trading lower after had EU leaders warned the UK must make compromises on trade and the Irish border to secure a Brexit trade deal. After the Prime Minister said the UK and EU were at an “impasse” the pound dropped from 1% to 1.5% lower against the dollar to $1.3068.

Financial Times BBC News

Lawson puzzled by doom and gloom forecasts

Former chancellor Lord Lawson says it is “puzzling” that the Treasury’s Brexit forecasts envisage “doom and gloom” when separate analyses insist the UK economy will benefit from “strong positive growth”. He said that Whitehall forecasts use “the same model” as pro-Leave economists but come up with “wildly different results”.

The Sunday Telegraph, Page: 5

INTERNATIONAL NEWS

Few women lead audits of S&P 500 companies

A review of audit engagement partner data by the CFA Institute reveals women oversaw the audits of 15% of S&P 500 companies and just 11% of those in the S&P 100 in 2017. The data also shows that more women lead the audits of S&P 500 companies at Deloitte than any other Big Four firm. Twenty-one percent of the S&P 500 audits were led by women at Deloitte, 16% at PwC, and 13% at EY. Women ran just 10% of KPMG’s largest audit engagements, the review found.

Bloomberg

OTHER NEWS

Is your voiceprint really as safe as it sounds?

The Guardian’s Rupert Jones questions whether ‘voice biometrics’ are as secure as they are claimed to be. It emerged this week that HMRC has so far signed up about 6.7m people to its voice identification service. However, in June this year, the campaign group Big Brother Watch claimed HMRC had been collecting voiceprints without consent, and that this basically amounted to “a mass ID scheme”.

The Guardian, Page; 49-50

Modric strikes plea deal

Real Madrid’s Luka Modric has accepted an eight-month suspended prison sentence after admitting two counts of tax fraud. El Mundo said the former Spurs star struck a plea bargain with prosecutors over his £2.97m bill.

The Sun, Page: 66

Contact Paul Southward if you have any queries.

Paul Southward