News Roundup Wednesday 10th October 2018

NEWS ROUNDUP

TAX NEWS

Call for tech tax to fund business rate freeze

A coalition of Britain’s biggest restaurant and pub owners has called on the government to undertake a “root-and-branch reform” of the tax system, including a freeze on business rates and a levy on tech giants. In a letter to the chancellor, hospitality companies including Slug and Lettuce owner Stonegate, Pizza Express and Wagamama call for a tax on internet giants to be included in the Budget. The sector’s major players said the proceeds of a levy on Google and Facebook should be used to fund a freeze on business rate increases to ease the pressure on bricks-and-mortar outlets.

The Daily Telegraph, Business, Page: 1

Pension tax relief cut to pay for NHS

Philip Hammond is expected to announce in the Budget that pension tax relief will be cut to pay for the NHS. Last week the chancellor gave his strongest suggestion to date that he will raise taxes to fund the Government’s £20bn funding boost for the health service. Official figures put the cost of pensions tax relief to the Treasury at £39bn a year. It is understood the tax relief is likely to be amended in one of two ways – either by cutting the tax-free annual allowance, or by lowering the rate of relief.

The Daily Telegraph, Page: 2

PayPal tax bill jumps after review by HMRC

PayPal’s UK subsidiary has agreed to pay an extra £3.1m in tax following a review by HMRC. Newly-filed accounts show total tax at the digital payments firm rose from £181,000 in 2016 to £4.7m last year. In the documents, PayPal says: “HMRC has been reviewing the company’s direct tax position. As a consequence, the company has agreed and settled its outstanding liabilities and as a result is not subject to any current enquiries.”

BBC News

Tax probe adds to pressure on Airbnb

Airbnb has revealed in a filing to Companies House that it has been “contacted” by HMRC “regarding the application of tax laws or regulations impacting the company’s business”.

Financial Times, Page: 20

Hammond urged to act over ‘paltry’ Facebook tax bill

Philip Hammond is facing fresh calls to introduce a digital tax in the Budget this month after it emerged that Facebook paid just £7.4m in corporation tax last year. The company’s revenue hit £1.2bn, an increase of more than a third year-on-year. Meg Hillier, Labour chairwoman of the public accounts committee, commented: “Facebook’s paltry UK tax bill underlines the unfairness of the current tax system, which allows multinational digital giants to use every loophole to reduce their bill while bricks-and-mortar high-street businesses are hit hard.”

The Times, Page: 1 The Daily Telegraph, Business, Page: 5 The Sun, Page: 1 The Guardian, Page: 6 The Independent, Page: 60 Daily Mirror, Page: 6 City AM, Page: 12

Parents give away £227bn to save on IHT

Research from Direct Line reveals a fifth of parents have given money to their children in an attempt to reduce the amount of inheritance tax their families will have to pay when they die. A total of £227bn has been transferred, with the average value of assets given away £32,920. A further 19% of parents have not given their children any money yet, but plan to do so in the future.

Moneywise

Hammond eyes tax swoop to pay for Budget promises

Philip Hammond is considering a range of options to raise money for the NHS, including cutting pensions tax relief, delaying plans to raise income tax thresholds and overhauling VAT rules. However, the Mail reports that some Conservative MPs fear a pensions tax raid in the Budget will hit core Tory voters.

Financial Times, Page: 2 Daily Mail, Page: 2

Cut rates to get growth

The Telegraph’s Matthew Lynn argues that cutting corporation tax to 10% and reducing the standard rate and top rate of tax would boost economic growth and lead to higher interest rates. Elsewhere, the Guardian’s Polly Toynbee expresses doubts that businesses and the super-rich would leave Britain in the event of higher taxes under a Jeremy Corbyn-led government.

The Daily Telegraph, Business, Page: 2 The Guardian, Journal, Page: 3

HMRC benefits from film and TV tax breaks

The UK film and TV industry generated a record £7.9bn in 2016, helped by government tax reliefs. A BFI-commissioned report found that £632m in tax relief prompted additional spending of more than £3bn on the creation of films, high-end television and computer games.

BBC News Financial Times, Page: 3 The Daily Telegraph, Business, Page: 4

INDUSTRY NEWS

Accountants face ban on consultancy work

The Financial Reporting Council could ban accounting firms from providing consultancy work to firms whose books they check as part of a new “strategic plan” to ensure that audit serves the public interest better. As it releases its ‘Developments in Audit’ report, the FRC said it will explore “whether further actions are needed to prevent auditor independence being compromised, including whether all consulting work for bodies they audit should be banned.” Mike Suffield, the FRC’s acting audit head, said the sector was facing a growing challenge to maintain public trust. “The audit expectations gap feels like it’s wider than it’s ever been,” he said. The FRC’s report analysed the impacts of previous reviews by the EU and the now-defunct Competition Commission, which introduced mandatory rotation of auditors for listed firms. It found that although the change had produced significant reduction in overall audit tenures, it had failed to bring about diversification – actually resulting in even more audit contracts ending up with the Big Four.

Daily Mail City AM, Page: 3

Brexit anxiety increases among British businesses

Research by Deloitte shows British businesses are more anxious about Brexit than at any time since the 2016 referendum, with more bosses reining in hiring and investment plans. The firm’s latest survey of CFOs found that only 13% are more optimistic about the prospects for their company than they were three months ago, whereas in July, 24% expected conditions to brighten. Some 79% of finance chiefs say they now expect the long-term business environment to be worse as a result of leaving the EU, up from 75% in the second quarter of 2018. “CFOs have become more pessimistic about the long-term effect of the UK’s departure from the EU,” said Ian Stewart, chief economist at Deloitte.

The Guardian, Page: 31 The Daily Telegraph, Business, Page: 3

CORPORATE NEWS

Ex-Tesco directors on trial

Two former directors at Tesco have gone on trial, accused of manipulating figures that resulted in the firm’s profits being overstated by £250m. Chris Bush, Tesco’s former UK managing director, and ex-UK food commercial director John Scouler are each charged with one count of fraud and false accounting. Former UK finance chief Carl Rogberg, charged with the same offences, is not well enough to stand trial. All three men deny the charges. In opening arguments at Southwark Crown Court, Sasha Wass, QC for the prosecution, described Mr Bush and Mr Scouler as “generals” and claimed that the “foot-soldiers” working below them were “pressurised and coerced” into wrongly including income into Tesco’s financial records to hit targets and make the supermarket look healthier than it was.

Financial Times, Page: 18 The Guardian, Page: 35 The Daily Telegraph, Business, Page; 3 The Times, Page: 39 City AM, Page: 3

Tchenguiz suing Grant Thornton

Lawyers for property tycoon Robert Tchenguiz have accused Grant Thornton of “spoon- feeding” a botched criminal investigation into him by the Serious Fraud Office. Mr Tchenguiz is suing the firm, claiming hundreds of millions of pounds in damages.

The Times Daily Mail, Page: 62 City AM, Page: 1, 5

SMEs NEWS

CBI calls for business rate changes

The CBI has called on Philip Hammond to change rules covering business rates so that companies could immediately benefit from any drop in their property value. In a letter to the chancellor, the group also calls for more tax perks to encourage investment, further reform of the apprenticeship levy, plus funding for a one-stop shop for firms to get Brexit advice.

Daily Mirror, Page: 43 Financial Times, Page: 2

SMEs raise pay to attract workers

Most smaller firms are having to increase pay to attract suitably skilled staff, according to a study by Robert Half. Its survey of 600 chief finance or information officers in SMEs found problems recruiting workers with analysis and digital skills or softer skills such as critical thinking. More than two out of five firms have increased pay in the past three years to boost recruitment.

The I, Page: 40

Advice for enterprising businesses

Adrian Gregory, chief executive of Atos UK & Ireland, says SMEs and microbusinesses could benefit from an enterprise account, containing everything from how to register a business, bookkeeping services, tax liabilities to how to access specific funds as well as mentor and training schemes.

The Daily Telegraph, Business, Page: 2

PROPERTY NEWS

Ministers mull tax break for landlords selling to tenants

The government is considering plans to give landlords tax breaks for selling property to long-term tenants. Ministers are looking at offering 100% relief from CGT when owners of buy-to-let homes sell to tenants who have lived there for at least three years. Meanwhile, figures from the Institute for Fiscal Studies reveal barriers to homeownership are now so high that even with a 10% deposit only 60% of people aged 25 to 34 could borrow enough money to buy the cheapest home in their area.

The Times, Page: 2 Daily Mail, Page: 29 The Sun, Page: 2

Overhaul property tax, says think tank

The Institute for Public Policy Research (IPPR) has proposed scrapping council tax and stamp duty in favour of a new 0.5% levy on the value of people’s homes.

Yorkshire Post, Page: 4

PENSIONS NEWS

Insurers warn of rising pension costs post-Brexit

Insurance industry leaders have warned pension costs could increase significantly after Brexit if European countries change the rules on how much capital insurers must hold. It is feared that future changes to the Solvency II regime, which governs capital requirements, could leave UK insurers at a disadvantage, pushing up the cost of serving customers.

The Times

ECONOMY NEWS

Economy ‘stuck in a rut’ warns BCC

The UK economy is “stuck in a rut” because of uncertainty over Brexit and weaker confidence, according to the British Chambers of Commerce. Its third quarter economic survey of 5,600 firms found that companies in the services sector, which represents 76% of UK GDP, had “given up” hiring staff. It said of those firms who did try to find new staff, 72% reported difficulties. It also said that the UK manufacturing industry had seen exports slow. However, BDO’s latest Business Trends Report suggests that “resilient” manufacturing growth is propping up business output, with September’s business growth slowly picking up despite “persisting political and economic uncertainty”.

The Times, Page: 37 Financial Times, Page: 2 The Scotsman, Page: 6, 37 City AM, Page: 13

London floats to the top

London Stock Exchange has been named the most attractive market for newly listed companies in Europe after hosting 16 IPOs in the third quarter of the year. The activity raised £1.7bn – 49% of the total across Europe – and included four of the five largest IPOs. Lucy Tarleton, a director at PwC, said: “With Brexit around the corner, it is promising to see a number of international issuers in the IPO pipeline continuing to see London as a key financial centre.” However, EY research shows that the volume of stockmarket flotations still fell by 47% in the third quarter, while the value of proceeds raised from London listings was also down by 71%.

Daily Mail, Page: 70 The Times, Page: 38-39

Bankruptcies rise after steel job losses

Three steel-producing areas hit by jobs cuts have topped a list of places where bankruptcy rates are soaring. The survey by UHY Hacker Young reveals Stockton-on-Tees, and Torfaen and Neath Port Talbot in South Wales all saw personal insolvencies rise by over a fifth.

The Sun, Page: 15 The I, Page: 40

IMF urges UK to lift public spending

The IMF has advised Philip Hammond to loosen the purse strings on public spending and taxation to cushion the expected economic fallout of a hard Brexit. The organisation said the reduction in the deficit – from a record £153bn in 2009-10 to £39.9bn last year – has given the chancellor space to ease austerity measures to boost the economy.

Financial Times, Page: 1 Daily Mail, Page: 62 City AM, Page: 2

Consumers’ faith in economy dips

Consumer faith in the British economy fell in the second quarter of 2018, to a level of -28.4, according to the ONS. The organisation’s index records a neutral feeling about the economy as zero. Consumers were more sanguine about the state of their own personal finances, but still recorded a negative sentiment of -1.2 in June. A separate survey by Barclaycard shows nearly two thirds of Britons still lack confidence in the UK economy ten years on from the financial crisis.

The Daily Telegraph The Sun, Page: 43

Retail growth down in September

Figures from the British Retail Consortium and KPMG show retail sales fell by 0.2% in September on a like-for-like basis compared with the same period last year.

The Times, Page: 40 The Independent, Page: 64 City AM, Page: 11

OTHER NEWS

Pop star feeling blue over bankruptcy

Former pop star Lee Ryan [ex of British Boy Band “Blue”] has revealed that he lost his fortune after investing in a supposed tax avoidance scheme which ultimately landed him with a huge bill from HMRC.

The Sun Daily Star

Contact Paul Southward if you have any queries.

Paul Southward