News Roundup Tuesday 9th July 2019

NEWS ROUNDUP

TAX NEWS

Fines for late self-assessment tax payments rise sharply

Moore Stephens analysis of HMRC figures shows a 14% increase in the number of people fined for paying their self-assessment tax late, with 331,000 people penalised in 2016/17 compared to 291,000 in 2015/16.

Financial Times

Johnson suggests business rate rethink

Boris Johnson has suggested that he would hit large technology firms with a new tax while cutting business rates for high street retailers. The Conservative leadership hopeful said it was unfair that high street businesses are “paying tax through the nose in business rates, corporation tax and everything else” while online rivals such as Amazon and Facebook “are paying virtually nothing.” When asked about business rates during hustings in York, Mr Johnson said: “They are too high and I think you could stimulate economic growth by cutting some taxes. Corporation tax is certainly one. I want to look at business rates.” Separately, Mr Johnson has told the Telegraph he would cut stamp duty to get the “locked-up” housing market moving, saying: “I think particularly in London there is clearly a problem with stamp duty and it needs to be addressed.” He also told the paper: “I believe in cutting taxes wherev er you can, and that is certainly what we’ll do.”

The Times, Page: 6 The Daily Telegraph, Page: 7

Hunt proposes tax breaks for those who look after elderly relatives at home

Conservative leadership candidate Jeremy Hunt has suggested families who are prepared to look after their elderly relatives at home could receive tax breaks. The Foreign Secretary has proposed that families would be able to apply for tax relief if they choose to adapt or extend their homes to accommodate for the needs of relatives.

The Daily Telegraph The Times, Page: 7 The Independent, Page: 10 Daily Mail, Page: 14

Hammond urged to scrap digital tax

The Confederation of British Industry (CBI) has called on Chancellor Philip Hammond to scrap a tax on digital businesses that will see social networks, search engines and online marketplaces hit by a 2% levy on their revenues from April 2020. The business lobby group says the tax is not necessary, risks harming more companies than anticipated, will deter businesses from investing in the UK and make Britain look hostile to cutting-edge technology. The Treasury said the tax is a stop-gap until an international solution is agreed, with the OECD hoping to reach a consensus by the end of next year.

The Daily Telegraph, Business, Page: 1

Bill calls for plastic cutlery tax

A Bill being brought before Parliament proposes a sin tax on single-use cutlery that could lead to a 60% reduction in such items being found on beaches by 2023. The Bill, which calls for new laws to ensure that plastic targets are set and met, has cross-party support from a number of MPs and is backed by Friends of The Earth and the Women’s Institute.

The Daily Telegraph, Page: 5

Opinion: Case for sin taxes ‘overwhelming’

The Times’ Oliver Kamm looks at the use of sin taxes to cut down on unhealthy behaviour, saying that tax system should be perceived as equitable, while a steep tax on cigarettes or sugary drinks is not like a flat-rate tax on other things as it can be avoided by not buying the item in question. He argues that the cost of treating a number of conditions makes the case for such taxes “overwhelming”, saying: “Raise taxes and keep doing it to prohibitive levels.”

The Times, Page: 39

Councils look to take unpaid tax from debtors’ wages

Local authorities could be granted the power to deduct unpaid council tax debts directly from people’s wages, with a trial scheme set to start on July 8.

Financial Times, Page: 3

OTS propose IHT overhaul

The Office of Tax Simplification (OTS) has proposed an overhaul of the inheritance tax system, describing the levy as complex and “uniquely unpopular” and suggesting it should be easier to understand. The OTS proposes that the rule which means tax of up to 40% must be paid if someone dies within seven years of passing on money, property or possessions should be altered, trimming the deadline to five years. HMRC data suggests that as just 7m of the £4.38bn inheritance tax take in 2015/16 came from gifts made more than five years before death, the switch would not hit Government revenue. The proposals also suggest that a number of allowances be scrapped and replaced with a single annual gift allowance, with it suggested taper relief should also be abolished. An overhaul of capital gains tax rules is also recommended, with the OTS saying some people are deterred from passing on assets during their lifetime as there is no capital gains tax paid on death. Kathryn Cearns, who chairs the OTS, said the recommendations “would go some way to achieving the goal of making the tax easier to understand and simpler to comply with.” Rachel de Souza from RSM says the mooted reform will make it easier for high-earning pensioners to regularly give money to children or grandchildren. A Times editorial says simplification of IHT rules is “long overdue,” while the Telegraph’s Sam Brodbeck welcomes the fact that “finally someone has proposed some sensible changes to Britain’s maddening inheritance tax system.”

The Daily Telegraph, Page: 1 The Daily Telegraph, Money, Page: 3 Financial Times, Page: 1 I, Page: 13 The Times, Page: 18 The Times, Page: 29 Daily Mail, Page: 4 The Guardian, Page: 37 The Sun, Page: 12 Yorkshire Post, Page: 8 BBC News

145% increase in landlords declaring unpaid tax

Analysis of HMRC figures by UHY Hacker Young shows that the number of buy-to-let landlords failing to pay what they owe in tax has risen by more than 10,000 in a year. The Revenue saw a 145% increase in the number of landlords coming forward to declare unpaid tax on rental income, with 16,110 doing so in 2018/19 compared to 6,600 in 2017/18. The £42m underpaid last year is double the total recorded the year before. UHY Hacker Young says the increase is partly down to HMRC’s Let Property campaign, which it says “aggressively mailshots buy-to-let landlords that are suspected of avoiding paying tax on their rental income warning them of the consequences of tax evasion”.

The Independent, Page: 44 The Scotsman, Page: 14

Opinion: Britain must lead on tax

Marc Sidwell in the Telegraph says the Conservative Party “seems to have forgotten how to create a low-tax society, or why it matters.” He says that where Britain once led the way on tax cuts, the tax system is now “tangled” and needs to catch up with a number of countries which are “showcasing” newly streamlined, lower levies. Looking at tax pledges made by Tory leadership hopefuls Jeremy Hunt and Boris Johnson, he notes criticism of some of the proposals, suggesting: “It’s easy to understand why few politicians are willing to be truly innovative if every proposed tweak receives such vitriol.” He concludes that Britain must “remember its history of keeping tax simple and fair, learn the latest tricks from the rest of the world – and then start leading again.”

The Daily Telegraph, Page: 19

Would you be prepared to pay more tax if it was voluntary?

Jane Owen looks at calls for wealth taxes, considering an argument for an optional levy and the suggestion that giving taxpayers a choice may “make us feel better about coughing up”.

Financial Times, Money, Page: 6

SMEs NEWS

Barclays warned over small businesses

The Competition and Markets Authority (CMA) has censured Barclays after the bank admitted it had broken rules designed to make it easier for SMEs to switch banks. The competition watchdog said the bank broke the rules on so-called bundling, whereby banks tell businesses they must open or maintain current accounts to access other products. The CMA said that 816 Barclays small business customers were affected over a period dating back to 2010, but the bank did not report the breach until August 2018. The CMA added that Barclays had taken steps to fix the problems and will pay £2,000 to refund customers for “payments they should not have had to make”. A Barclays spokeswoman said: “We’ve been working closely with the CMA and have corrected a mistake we made which affected a small number of business customers. We’ve taken steps to ensure that this does not happen again.”

Financial Times The Times, Page: 38 The Sun, Page: 47 Daily Mail, Page: 78 The Daily Telegraph, Business, Page: 7 Daily Express, Page: 51 City AM, Page: 5 Yorkshire Post, Page: 6

PROPERTY NEWS

UK house prices rise 5.7%

Halifax’s latest house price index has revealed that UK house prices rose by 5.7% on an annual basis month in June, taking the average house price to £237,110. That compares to May’s £237,837, when Halifax recorded an annual growth rate of 5.2% – the best in two years until yesterday’s figures. Russell Galley, managing director of Halifax, said: “Recent industry figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average.” However, he warned that a “major restraining factor” for the UK housing market was the lack of houses up for sale. Howard Archer, chief economic adviser to the EY Item Club, dismissed Halifax’s data as a “complete outlier in annual terms”. The data compares to Nationwide’s annual growth rate of just 0.5% in June and Office for National Statistics data of 1.4% growth for Ap ril.

City AM

LEGAL NEWS

Fraudster to repay £494k

Shopkeeper Karim Heabah, who was jailed for three years in 2017 after HMRC found that he had imported, stored and sold thousands of illegal cigarettes, has been ordered to repay more than £490,000 he made from his crimes, or spend a further four-and-a-half years behind bars.

Press Release

CORPORATE NEWS

William Hill to close 700 betting shops

William Hill has confirmed plans to close nearly 700 high street betting shops, putting 4,500 jobs at risk, following the Government’s decision in April to reduce the maximum stake on fixed-odds betting terminals to £2. The bookmaker said that since the decision it had seen “a significant fall” in gaming machine revenues. A KPMG report in 2017 had predicted that a cut to a £2 stake could force half the country’s 8,700 betting shops to close with the loss of 15,000 to 20,000 jobs.

The Times, Page: 35 The Guardian, Page: 2

Financier’s firms put into administration

Financier Gavin Woodhouse has lost control of three of his companies after High Court judge Sally Barber ruled that his business model appeared to be “thoroughly dishonest” and a “shameful abuse of the privileges of limited liability trading”. Mr Woodhouse’s MBI Clifton Moor, and MBI Hawthorn and Afan Valley were placed into interim administration. His powers as a director were immediately removed and administrators from Duff & Phelps will take over running the companies until a full hearing.

The Guardian, Page: 19

Manufacturer collapses

The UK arm of German manufacturer Loewe Technologies has gone into administration, with Matt Henderson of Johnston Carmichael appointed administrator of Loewe UK Limited.

The Scotsman, Page: 33

EMPLOYMENT NEWS

Hiring slow

Research by KPMG and the Recruitment and Employment Confederation shows that the number of people placed in permanent jobs by recruitment agencies has fallen for four months in a row, while growth in vacancies for temporary jobs is “subdued”. There were also fewer candidates for jobs last month. James Stewart of KPMG said: “Brexit stagnation continues to seize up the jobs market as the slowdown in recruitment activity continues.”

I, Page: 50 The Scotsman, Page: 30

Pay rule petition

More than 15,000 people have backed a campaign to stop changes to IR35 contractor pay rules which come into force next April and will widely impact the North Sea energy sector. Brian Rudkin at Johnston Carmichael said the petition comes at a “late stage”, but added that the legislation will affect thousands of North Sea contractors.

The Press and Journal, Page: 31

ECONOMY NEWS

Sales fall in June

Figures from BDO show that the high street last month saw same-store sales fall 0.8% from June 2018, with the analysis showing that sales have fallen in 16 of the past 17 months. Sophie Michael, head of retail and wholesale at BDO, said: “Retailers are stuck between a rock and a hard place. They want to invest and adapt but they don’t have the funds or confidence to do so. At the same time, shoppers are holding back as consumer confidence falls and discretionary spend slips away.”

The Times, Page: 45 Daily Express, Page: 51 I, Page: 49 Daily Mail, Page: 77 City AM, Page: 5

Productivity dips for third consecutive quarter

Office for National Statistics data show that productivity fell in Q1, marking the third consecutive quarter of decline and the joint sharpest fall since the end of 2015. Output per hour worked fell 0.2% compared to Q1 2018 and follows a 0.1% slide seen in Q4 2018. The manufacturing sector saw productivity decline by 0.9%, while in the services sector a 0.2% increase was recorded. According to the Resolution Foundation productivity is now 28% below averages seen before the financial crisis a decade ago. Howard Archer, chief economic adviser to the EY Item Club , commented: “Part of the UK’s recent poor labour productivity performance has undoubtedly been that low wage growth has increased the attractiveness of employment for companies.”

The Times, Page: 50 The Guardian Financial Times BBC News City AM

Contact Paul Southward

Paul Southward