News Roundup Tuesday 4th June 2019
News Roundup Tuesday 4th June 2019
Wealthy families dominate use of UK inheritance tax breaks
Tax Justice has called for a review of IHT after finding the UK’s wealthiest families were taking the lion’s share of business and agricultural reliefs designed to help small businesses and landowners. In 2015-16, 234 families with more than £1m in business assets shared £458m in relief, representing almost 80% of the total given in the financial year. The study also found that 261 families owning more than £1m in agricultural property shared £208m in tax relief in 2015-16 – 62% of the year’s total. Tax Justice claims the situation is fuelling property inflation, with investors increasingly seeing opportunities such as agricultural property as a tax-efficient target. James Hender, partner at Saffery Champness, disagreed with the suggestion that wealthy people were abusing the reliefs. “Without such reliefs,” he said, “the asset in question might have to be sold by the family so that the IHT bill could be funded, with the unintended consequence that large companies could end up owning an ever-greater share of the farms and businesses concerned.”
Financial Times The Guardian, Page: 33 Daily Mirror, Page: 19
HMRC increasingly holding finance directors to account
The number of senior finance directors fined by HMRC for accounting failings rose from 46 individuals in 2012-13 to 125 in 2017-18. The figure for the year to 31 March hit 152 – an increase of 22%. Senior accounting officers can be fined up to £5,000 if they fail to properly account for their business’ income and expenditure for tax purposes. Jason Collins, head of tax at Pinsent Masons which compiled the figures, said: “HMRC is on a mission to hold the most executives that they can to account and C-suites should take the high number of fines issued last year as a warning.” He added: “Considering the pace of actions by HMRC against CFOs and FDs, businesses may need to invest more money in controls in this area.”
Banks reject 70% of small businesses
A report from Smith & Williamson reveals that 70% of small businesses fail to secure finance at the first attempt while two in five companies said that they had been turned down for funding more than three times. One in ten had made five or more unsuccessful attempts and nearly half said weak management was the reason given for the refusal. Inadequate business models and poor financial controls were also key reasons for losing out. Smith & Williamson said fast-growing companies with a concise business plan and an understanding of how much money they need were more successful than other small businesses but still found fundraising difficult. Elsewhere, research by Moore Stephens indicates directors of construction companies had to lend £550m to their own businesses last year because of the knock-on effects of Brexit – £22m higher than the previous year.
The Times, Page: 41 The I, Page: 41 The Press and Journal, Page: 28
Amazon launches pop-up project
Amazon will today launch a programme to put small businesses on the high street with a series of pop-up shops. The online retailer’s Clicks and Mortar initiative will open ten stores across the UK in which 100 small online businesses will trade on the high street for the first time. Amazon, Direct Line for Business and mobile payments company Square are funding Enterprise Nation to run the logistics behind the project. Emma Jones, founder of Enterprise Nation, said: “We’ve secured the shops, recruited the sellers and are fitting out the shops. The reason Amazon is backing the campaign is it wants its online sellers to have an opportunity to test physical retail.”
The Guardian, Page: 3 The Sun, Page: 26 The Times, Page: 41
More cybersecurity startups join government-backed scheme
A scheme to provide support to cybersecurity startups has signed up 15 new members. The London Office for Rapid Cybersecurity Advancement (Lorca) opened last year with £13.5m in funding from the Department for Digital, Culture, Media & Sport. Lorca gives start-ups access to experts from Deloitte and the Centre for Secure Information Technologies at Queen’s University Belfast.
The Daily Telegraph, Business, Page: 4
Young people should use pensions to buy first home
Housing minister James Brokenshire is expected to propose that young people be allowed to dip into their pension pots to help them fund a deposit for a new home. Mr Brokenshire will suggest changing the rules on pensions to “empower” those trying to take their first step on the property ladder. Mr Brokenshire will call on the next Prime Minister to reform pensions to allow young people to “make the choice for themselves” if they want to spend them on property instead. “We should be changing the necessary regulations to allow this to happen, protecting the integrity of pension investments but allowing lenders to innovate and design new products to bring this opportunity to consumers,” he said. However, former pensions minister Sir Steve Webb has warned that this would push up house prices and “ruin” retirement for young people, forcing them to work in their “seventies and beyond”.
Tories stop shaming companies who refuse to pay the minimum wage
Conservative ministers have admitted they are no longer naming and shaming companies who illegally fail to pay workers the minimum wage. The government revealed it was reviewing the practice over Christmas and has now confirmed that it will not name any employers caught breaking the law while that review is ongoing. In April this year, the Low Pay Commission called on the government to resume ‘naming and shaming’ as part of a package to crack down on bad bosses, warning that over 400,000 workers were illegally underpaid last year. Barnsley Labour MP Stephanie Peacock said: “This admission makes clear the Tories are soft on rogue bosses.”
River Island calls for business rates reform
Clive Lewis, the chairman of River Island, has urged the government to reform the discredited business rates system, claiming it is “completely out of sync” with reality. Although business rates are meant to be based on the market rents that retailers pay on their premises, they have not fallen in tandem with decreasing rents because properties are normally only revalued once every five years. The latest revaluation happened in 2015. Mr Lewis claimed a so-called “transitional relief” scheme, which is supposed to protect retailers by smoothing out big changes in their rates bills, does not work quickly enough. Mr Lewis added: “In many places rents are 30 to 40% off their peak. Rates should reflect that and they should reflect that quickly.”
Daily Mail, Page: 70
No sector is immune to toxic workplaces
A piece in the Economist considers how a report into Amnesty International’s work environment illustrates how managers need to seriously consider the views of staff or risk natural work pressures developing into toxic stresses that infect the organisation. Nearly 40% of the human-rights charity’s employees developed mental or physical health issues as a result of their work; exacerbated by their belief in the mission. The article mentions the two female partners at KPMG who recently left out of concern at the behaviour of a male colleague. Power is seductive, the author states, and dictatorial bosses who punish people who articulate different views are complicit in creating a toxic culture. Amy Edmondson of Harvard Business School suggests the ideal organisation creates an atmosphere of “psychological safety”, where managers learn the art of “respectful inquiry” so workers can speak their minds to attentive bosses.
PERSONAL FINANCE NEWS
Calls mount for Scandinavian-style pay disclosures
A survey by YouGov for the jobs website Indeed reveals that 56% of workers support the use of pay transparency measures to tackle inequality in Britain. The move would make personal information, such as monthly income and tax returns, publicly available. Pawel Adrjan, UK economist at Indeed, said reticence over financial matters was being challenged. “Perhaps that is in part due to the huge interest that gender pay gap reporting has gathered,” he said. “But perhaps more so thanks to the new generation of younger workers with different views on money and the workplace.”
The Guardian, Page: 30
France claims jurisdiction in Hallyday inheritance dispute
The late French singer and actor Johnny Hallyday spent much of his time in Los Angeles and frequently argued with French authorities over his claims to be exempt from French taxes as an expatriate, the Telegraph reports. Hallyday’s will, drafted in English in California, cut out his son and daughter, leaving everything to his wife. However, in France it is illegal for parents to disinherit their children and a court has now agreed with Hallyday’s children that Instagram posts provide enough evidence that the singer’s true home was France. His widow will appeal. The ruling means the French state also gets a slice of the estate. The star told French reporters in 2014, the year when he obtained his green card and made his will: “I’ll come back to live in France if the tax laws are changed.” France had a 75% supertax on annual earnings above €1m at the time.
Brexit uncertainty paralyses manufacturing
Uncertainty surrounding the date of Britain’s departure from the EU has led to a collapse in investment and export orders, according to Make UK. The trade body added that the boost to figures from companies stockpiling is now unwinding, with investment down sharply, along with hiring, while export orders have fallen dramatically. Make UK is now forecasting manufacturing growth of just 0.2% in 2018 and of 0.8% in 2020. Tom Lawton, head of manufacturing at BDO, which helped conduct the research, said: “Official data shows a consistently downward trend in investment intentions since the EU referendum. The impact is severe, with UK manufacturing at risk of investment paralysis as the uncertainty of Brexit drags on.”
Scots believe Brexit will increase the cost of living
Three-quarters of Scots believe Brexit will increase the cost of living, according to new research by PwC. The firm also found the number of people in Scotland who believe they will be better off over the coming year has fallen. Separately, continuing uncertainty over Brexit and growing concerns about regulatory requirements have kept business confidence in Scotland in negative territory for the third successive quarter, according to the ICAEW.
The Press and Journal, Page: 27, 30
Thieving Deep Purple accountant jailed for six years
The former accountant who siphoned off funds from rock group Deep Purple was jailed for six years two months ago. The band estimates their record sales would have translated into £1.2bn in the UK economy. “We’ve seen very little of that,” they said. Dipak Rao stole more than £2m from the band but the group believe they have been victims to more crooks over their 50-year career. Drummer Ian Paice said: “We’re not the first and we won’t be the last to be mis-served by the people we trusted to look after things.” ‘Any Fule Kno That’.
Daily Mirror, Page: 20
Contact Paul Southward.