News Roundup Tuesday 28th May 2019
News Roundup Tuesday 28th May 2019
Celebrity cases bloody the taxman’s nose
The taxman has received a “bloody nose” in its crackdown on TV celebrities who contract as freelancers instead of employees, having lost tax cases against ITV presenter Lorraine Kelly and Loose Women host Kaye Adams this year. James Hender of Saffery Champness says that while HMRC won a £420,000 case against BBC presenter Christa Ackroyd last year, it has “sought to replicate this success and has received a somewhat bloody nose.” He added that the recent cases show personal services companies can be legitimate where people have multiple contracts. Consultation on reforms that will see IR35 tax rules extended to curb private sector companies who engage staff as contractors so they pay less tax concludes on Tuesday, with reforms to come into force in April 2020.
Sunday Express, Page: 48
Tories talk tax
Dominic Raab, the former Brexit Secretary who has entered the Conservative leadership contest, has promised to deliver tax cuts, saying he intends to take 1p off the basic rate of income tax and raise the threshold for National Insurance to £12,500. The NI reform will save the average full-time worker £464 a year, while the income tax cut will put an extra £180 into pay packets. Mr Raab says a tax cut will deliver a fairer deal for workers. Meanwhile, Chief Secretary to the Treasury Liz Truss has suggested the higher rates of income tax should be cut, telling the Sunday Telegraph: “Of course it’s right to lower the basic rates of income tax where we can – and we’ve done a lot to take people out of the tax system. But I think Conservatives also have to be prepared to make arguments for lowering high rates of tax as well.”
The Sun on Sunday, Page: 13 The Sunday Telegraph, Page: 3
1.4m over-60s near IHT limit
HMRC data shows that around 1.4m people over the age of 60 are on the cusp of being liable for inheritance tax. Analysis by insurer NFU Mutual shows that 9% of over 60s have wealth at or just over the tax-free threshold, warning that 54% of these have little understanding of IHT rules. Sean McCann from NFU Mutual said IHT rules are “fiendishly complex, feared by many and understood by few”.
The Sunday Telegraph, Business and Money, Page: 11
Taxing time for tourists
Analysis by travel search engine Kayak suggests tourist taxes could add £200 to the cost of holidays. The top five most expensive global destinations are all in the US due to its high tax levels, with San Francisco coming out on top with an average of £204.96. Reykjavik leads the way in Europe, averaging £68.64.
The Sun on Sunday, Page: 55
CPS pays out over collapsed tax case
The Crown Prosecution Service (CPS) has been forced to hand over one of its biggest payouts to Zeus Capital founder Richard Hughes, a corporate financier wrongly accused of masterminding a tax fraud. This came after Mr Hughes and nine others were charged with conspiracy to defraud HMRC in 2016, in a case centred on a £134m film investment scheme. The case collapsed when the CPS had to admit “stark errors and omissions”, prompting payouts of more than £3m to the defendants, including £1.4m to Hughes. Lawyers for Mr Hughes have accused several HMRC investigators of witness tampering and perverting the course of justice, with leaked HMRC documents showing that its internal governance division has launched an inquiry after orders from the Independent Office for Police Conduct.
Bank: Fraud claims ‘unfocused’ and ‘hopeless’
HSBC has described legal action bought by 248 investors in controversial tax avoidance schemes as “hopeless”. Investors who were promised tax relief for putting money into film and game productions are seeking to recoup losses after HMRC challenged the legality of the schemes. HSBC said the investors were making “broad” and “unfocused” allegations of fraud “relating to events taking place almost 15 years ago”.
Fraudster caught when secret books were found
Restaurant owner Nazrul Islam has been jailed for three years for a £480,000 tax fraud that was discovered when HMRC investigators uncovered a hidden sales book dating back five years. Mr Islam was also found to have registered a separate card payment machine, which was sending payments into a separate account. HMRC seized £22,170 from his home in April 2017. As well as a prison sentence, he has been disqualified from being a director for seven years.
CVA document reveals Arcadia woes
The Sunday Telegraph reveals details of a 312-page document sent to Arcadia’s landlords which reveals that earnings at Sir Philip Green’s retail empire have dipped from £215m to £30m in the last five years. The document claims Arcadia’s £170m annual rent bill is, based on market rates, 30% higher than it ought to be. The report, which says the firm is “highly likely” to fall into administration if CVAs are not secured across its chains, also reveals that Deloitte, which is advising Arcadia, is in line for fees worth around £585,000.
Oliver rejected rescue deal over loans
Oliver Gill in the Sunday Telegraph reports that Jamie Oliver rejected an offer from specialist turnaround fund Aurelius that would have rescued his restaurant empire. The firm’s offer called for Mr Oliver to write off around £13m of loans, with it understood that HSBC was prepared to write off almost all its loans, totalling £37m. The restaurant group elected to enter into administration instead, with a source telling the paper that executives at Jamie Oliver Group believed the rescue deal was not a sufficient guarantee of the long-term future of the chains. Mr Gill notes that the restaurants earlier this year hired BDO and Alix Partners in a bid to attract new capital.
Tycoon plots £34m Monsoon boost
The Sunday Times reports that fashion tycoon Peter Simon is close to launching a CVA, with the Monsoon Accessorize owner pledging to pump up to £34m into the chain in return for rent cuts from landlords. The paper says Mr Simon wants to cut rents on about two-thirds of the chain’s 271 stores, with it understood that there are no immediate closures planned. Monsoon is working with Deloitte to assess options.
British Steel faces break-up
British Steel, which collapsed into liquidation after owner Greybull Capital failed to convince the Government to inject further cash, is likely to be broken up and sold off bit by bit if a buyer for the whole business is not found. Ministers have given a two-week deadline for securing a new owner, saying the Government will remove the indemnity it is offering if the steelmaker is not rescued in that time.
KPMG to deliver Domino’s report
The Domino’s Franchise Association, which represents about 90% of the pizza chain’s 67 operators in the UK and Ireland, has recruited KPMG to study its “national advertising fund”, which is invested on their behalf. The franchisees, who pay 4% of their sales into the fund, want to see how the money is used.
Investors tackle executive pensions but progress ‘is glacial’
The FT looks at executive pensions, saying it is a “hot-button topic” for investors, with PwC’s Fiona Camenzuli saying the revamped corporate governance code has empowered investors and firms to address the matter.
Fox: SMEs the future of the economy
With the Sunday Times carrying its SME Export Track 100, Secretary of State for International Trade Liam Fox says it marks a “great opportunity” to celebrate the international success of British SMEs. He says that small, dynamic companies “are the future of the UK economy” and export growth. Dr Fox adds: “There is a market out there for every business, no matter its size or sector, but it is crucial that companies are given the support and confidence they need to grow, in order to unlock their economic potential.”
The Sunday Times, SME Export Track 100, Page: 1
FSB in mental health partnership
Heads Together, a project run by the Royal Foundation, is to partner with the Federation of Small Businesses (FSB) in a tie up designed to raise awareness about mental health in small companies. Analysis suggests that more than a third of founders feel that running a business affects their mental health. Mike Cherry, the FSB’s chairman, said his father’s ability to run a business was affected by mental health problems, commenting: “His struggle made me aware of the impact that poor mental health can have on owners and employees”.
Freedom hope for mortgage prisoners
So-called mortgage prisoners who had loans with now -defunct banks and had them sold on could soon be free to shop for better deals, with MPs and regulators looking into the matter. The Financial Conduct Authority (FCA) is looking at changing the rules around such loans, freeing people to switch lenders, while a group of MPs are conducting an inquiry into the sale of the loans by the Government, who picked them up when Northern Rock and Bradford & Bingley collapsed during the financial crisis. The FCA estimates that around 150,000 borrowers are unable to move from their mortgage deal, despite having kept up with repayments. The regulator has detailed plans designed to address the matter, saying banks, building societies and other lenders will be allowed to modify affordability checks.
Contact Paul Southward