News Roundup Wednesday 11th July 2018

NEWS ROUNDUP

TAX NEWS

Pensioners pay £24bn a year in tax

Analysis by Royal London has found that pensioners paid out £24bn a year in tax in the year 2015 to 2016, with pensioners living in England paying £21bn of this. Sir Steve Webb, director of policy at Royal London, commented: “Many people might assume that once you retire you cease to be of interest to the taxman. But these figures show that this is very far from being the truth. The number of taxpaying pensioners has nearly doubled in the last two decades. When planning for retirement it is vital to remember that the tax office will still want a slice of your income, which reinforces the need to put aside enough to secure a decent standard of living.” He also said pensioners should brace themselves to pay even more tax if they have to start paying NI.

City AM, Page: 7 Daily Express, Page: 8 Daily Mirror, Page: 14 Yorkshire Post, Page: 4

New tax making the UK a harder place to do business

City AM looks at how much more complicated the UK tax system has become since the financial crisis. New research from UHY Hacker Young shows that since 2008/9 a total of eight new major new taxes have been levied, including the sugar tax, the diverted profits tax, the bank surcharge and the apprenticeship levy. It’s not just the costs of the taxes but the complexity of the system that should cause concern, the paper says. Darren Grimes of UHY Hacker Young explains: “Every new tax [following] the credit crunch sounds superficially attractive with admirable ends, but every new tax makes the UK a harder place to do business and helps put off inward investment.”

City AM, Page: 2

HMRC doubles fines for money-laundering

HMRC almost doubled the fines it handed down for violations of money-laundering rules in the latest financial year, to £2.3m, but campaigners said more needed to be done to deter facilitators.

Financial Times, Page: 2

Raids reduced as robots make probes more efficient

The increased use of artificial intelligence and the expansion of HMRC’s “Connect” computer program has led to a 30% fall in the number of property raids carried out by the taxman, figures suggest. “An increasing number of investigations have started as a consequence of Connect and AI,” said Steven Porter, a partner at Pinsent Masons. “It’s much more efficient for an officer to sit at a terminal and pull out information than it is to send around the heavies.” HMRC officers raided 471 properties in the 12 months to April, compared with 669 a year earlier.

The Sunday Times, Business, Page: 3

First-time buyer tax break ‘unfair’

Tax experts have branded the Scottish Government’s tax break for first-time home buyers “unfair.” The Association of Tax Technicians said the relief was unfairly unavailable to refugees made homeless “through war, natural disaster or other circumstances,” while the Institute of Chartered Accountants in Scotland said it “questions the need for this relief,” and said the LBTT relief “may well simply increase the price of a first-time purchase by up to £600,” the maximum saving. The Chartered Institute of Taxation also questioned “how effective this relief will be,” saying it represented a “tiny” saving relative to the cost of a home. The comments were made in responses to a government consultation on the tax break.

Sunday Herald

INDUSTRY NEWS

Has the Financial Reporting Council finally got tough?

Rosamund Urwin asks in the Sunday Times whether the Financial Reporting Council has finally found its teeth, after a string of criticisms and now a review by Sir John Kingman into the regulator’s powers, governance and efficacy. With the FRC’s independence under increased scrutiny, industry leaders say a “significant shift in culture” at the top is required to make the regulator more aggressive, with some saying CEO Stephen Haddrill and even chairman Sir Win Bischoff need to go for the FRC to regain credibility. Industry insiders say the Kingman review could lead to either the FRC being broken in two or given more powers and a clearer purpose.

The Sunday Times, Business, Page: 8

Shareholders turn focus on auditors

The Mail’s Alex Hawkes cites figures from Minerva Analytics showing an uptick in protest votes of more than 20% by shareholders of UK companies in the past five years. Hawkes suggests shareholders are increasingly turning their attention to the reappointment of auditors following a recent report from the Financial Reporting Council detailing how Big Four audits had been getting worse. Last week, ISS suggested Premier Foods shareholders sought assurance from the company about how they intend to respond to the FRC’s findings on its auditor KPMG, whose audits had suffered “an unacceptable deterioration in quality.”

The Mail on Sunday, Page: 51

Financial sector disappointed with Brexit blueprint

Theresa May’s “goods-only” Brexit deal risks a reduction in EU market access for Britain’s financial services companies, industry leaders have warned. Catherine McGuinness, policy chief at the City of London Corporation, said: “We are very concerned it should cover services as well as goods, and include mutual market access and mutual recognition. We want something credible that we can start negotiating on.”

The Sunday Times

HMRC trebles expat tax haul

The Sunday Telegraph’s Sam Meadows warns British expats to ensure that their tax affairs are in order in light of HMRC’s increased efforts to collect tax from those who live overseas. The taxman made 1,006 requests to foreign authorities in 2017, resulting in the recovery of £5.7m in tax. The previous year total receipts were £2m, while in 2013 the taxman recovered just £800,000.

The Sunday Telegraph, Business, Page: 9

PROPERTY NEWS

Cutting business rates is not the solution to high street woes

Paul Johnson, the director of the Institute for Fiscal Studies, says in the Times that abolishing business rates is not the answer to the problems facing high street stores. He suggests that a cut in rates will just lead to an increase in rent, benefitting the biggest landlords in the country. Revaluations need to be more frequent, he continues, and agricultural business should not be exempted from business rates. Taxing the owners of properties rather than the tenants would be a good idea too, he asserts.

The Times, Page: 43

Rates system criminalising firms struggling to cope

Figures from real estate adviser Altus Group show that nearly 200,000 businesses were hauled before magistrates because they were unable to keep up with their business rates payments in 2017-18.

Daily Express, Page: 52

Archaic rates system needs to be addressed

Oliver Shah writes in the Sunday Times that there is no easy solution to the business rates problem, despite it being “clearly unfit for purpose”. He points out that retail space increased by 10% between 2000 and 2016 while online sales went from zero to £60bn – retail bosses were too focused on short-term sales growth. He concludes that reducing business rates “would ease the transition, but the brutal truth is that we have too many shops – and many more are going to close, rates or no rates.” Elsewhere, the Observer’s business leader says the pain on the high street needs to be tackled now and rates cuts could be compensated by increased council tax on high-end property. Another way to help would be to allow local authorities to set and collect property-based taxes, the piece adds.

The Sunday Times, Business, Page: 4 The Observer, Page: 54

WEALTH MANAGEMENT NEWS

Moneybox breaking the wealth management mould

UK micro-investing app, Moneybox, has secured £14m in funding as it aims to develop new products and help the next generation become better investors. The fintech start-up, which allows people to set up a stocks and shares Isa on their phone in minutes, providing they have online banking, a NI number and £1 to get started, has raised a total of £21.3m to date.

The Daily Telegraph, Business, Page: 5

SMEs NEWS

Barclays lifts unsecured lending limits

Barclays has announced that it is to double its cap on unsecured lending to small businesses from £50,000 to £100,000. The bank is also raising the cap on unsecured overdrafts for firms to £50,000, from £25,000.

City AM, Page: 3

Nearly £6bn invested in UK SMEs in 2017

The British Business Bank’s Small Business Equity Tracker report has revealed that £5.9bn of equity was invested in UK SMEs in 2017, an increase of 89% on 2016. Total equity investment is now 50% higher than the previous peak in 2015, though investment declined in 2016. Keith Morgan, CEO at British Business Bank, said: “After a weaker 2016, the UK’s SME equity finance market saw a record year of growth in 2017 with investment amounts soaring to £5.9bn. This is a clear sign of investor confidence in British smaller businesses and their potential for growth.”

Specialist Banking

Bosses welcome Brexit plan, but want to stay in CU

The Mail on Sunday lists a raft of business leaders who welcome the latest Brexit plan, including Barclays UK chairman Sir Ian Cheshire, who called it a “great step forward”, and Lord Rose, chairman of Ocado, who described it as “positive and pragmatic”. But the Observer cites a slew of entrepreneurs, such as the founders of Pret, Waterstones, Zoopla, Net-a-Porter, Domino’s, YO! Sushi and Jack Wills, who said the customs proposal would be costly and bureaucratic for UK firms and MPs should vote for amendments to the Government’s trade and customs bills that would secure full customs union membership.

The Mail on Sunday The Observer The Sunday Times

PENSIONS NEWS

Pension transfer advice to get more expensive

Ali Hussain says the cost of financial advice for those seeking to transfer their defined benefit pension is going up as advisers quit the market due to increased indemnity costs and regulatory complexities. Financial Conduct Authority figures show the first fall in the number of financial advice firms authorised to give such advice since pension freedoms were introduced in April 2015.

The Sunday Times, Business, Page: 14

CORPORATE NEWS

Arron Banks to move his offshore company to pay tax in UK

Arron Banks has registered a firm in the UK ahead of plans to float his ICS Risk Solutions business, which is currently based on the Isle of Man. The company owns the Go Skippy car cover brand which has more than 500,000 UK customers. Banks said: “We are moving the UK establishment for the purpose of paying UK tax on the business in readiness for corporate developments.”

The Mail on Sunday, Page: 51

INTERNATIONAL NEWS

BlackRock and Citigroup to expand in Paris

BlackRock and Citigroup will expand their Paris operations before Britain leaves the EU, after French president Emmanuel Macron promised to cut taxes and red tape for financial services companies.

Financial Times

ECONOMY NEWS

 Falling business confidence keeps growth sluggish

The British Chambers of Commerce’s second-quarter survey indicates only a modest pick-up in activity, with confidence falling along with investment intentions. The poll showed that the balance of firms enjoying increased sales picked up slightly in the second quarter, with a balance of 23% of services firms selling more, but forward-looking indicators were weaker, t he BCC said. Director-general Adam Marshall commented: “Amid growing international uncertainty, from escalating trade disputes to oil price rises, the UK economy continues to grow at a sluggish rate. Brexit is a key factor, but longstanding structural issues are also holding companies’ growth back.”

The Times, Page: 41 City AM, Page: 2

Expert dismisses Treasury’s Brexit forecasts

Professor David Blake of Cass Business School has identified some serious errors in the Treasury’s official forecast of the costs of leaving the EU without a deal. He says the Treasury’s model predicts a 7.7% reduction in Britain’s GDP if the UK maintains the existing tariffs with the rest of the world and is subjected to non-tariff barriers (NTBs) by the EU, after March 2019. But NTBs are illegal under WTO rules so “almost 90% of the projected reduction in GDP” comes from a scenario that will not transpire. Blake also attacked the assumptions on border costs and the single market. He said: “By leaving both the single market with its regulatory excesses and the customs union with its high tariffs on imported goods, UK GDP would increase by 6% – in marked contrast to the Treasury’s dire and exaggerated predictions of a 7.7% reduction in GDP.”

Sunday Express

Halligan: The time for emergency measures is over

Liam Halligan says in the Sunday Telegraph that with solid growth in the UK economy Britain has “disproved and defied […] the ridiculously pessimistic projections of Project Fear”. With inflation at 2.4% and expectations rising to 3.3% last month, it is time to raise interest rates, he asserts. There is no longer any justification for keeping rates at emergency levels – the policy harms savers who end up seeking out riskier assets while “zombie” businesses are needlessly propped up, Halligan adds.

The Sunday Telegraph, Business, Page: 2

OTHER NEWS

Beware the Yes Men

The Independent’s Chris Blackhurst considers what led to the downfall of Sir Philip Green and concludes that he probably surrounded himself with too many “yes men” – advisers who aimed to please rather than help. Blackhurst says PR advisers, accountants and lawyers have failed to adapt to modern truths about reputation and its fragility: “Instant communication means we can form a view that no amount of expert, often expensive, advice can dislodge.”

The Independent, Page: 47

Tax officials drafted in to check passports at Heathrow

The Border Force has had to borrow staff from HMRC to check passports at Heathrow as the organisation faces a staffing crisis and queues at the airport reach unacceptable levels. Revenue staff receive about 10 days’ training but are not allowed to check the passports of non-European passengers, sources say.

The Sunday Times, Page: 12

Contact Paul Southward if you have any queries.

Paul Southward