News Roundup Wednesday 12th June 2019

NEWS ROUNDUP

TAX NEWS

Chancellor in global tax call

The Chancellor will today call on world leaders to work together to ensure global tax rules keep up with the times. Speaking at the G20 gathering in Fukuoka, Japan, Philip Hammond will warn that the international corporate tax system is outdated. He will also urge finance ministers and central bank governors to ensure plans are in place to tackle the way multinational tech firms are taxed. The Chancellor said: “I will reaffirm the need for global reform of the international corporate tax framework.”

The Times, Page: 48 The Sun, Page: 2

Hancock pledges tax cut for small retailers

In an interview with The Telegraph, Health Secretary and Conservative leadership hopeful Matt Hancock vowed to scrap business rates for hundreds of thousands of small retailers, which would be funded by an increase to the new digital services tax, dubbed the “Amazon tax”, a levy against social media platforms, internet marketplaces and search engines. Speaking as part of his leadership campaign, Mr Hancock said business rates are a “twentieth century tax” which needs a “21st century replacement” – and makes the system unfairly skewed against bricks and mortar businesses.

The Daily Telegraph, Page: 10

IFS: Higher taxes needed to fund social care

Paul Johnson, director of the Institute for Fiscal Studies, has warned that there is a need for higher taxes or radical reforms to care for the ageing population, warning that the care system leaves people facing the “catastrophic risk” of losing their assets.

The Independent, Page: 18

Looking at land taxes

The Times’ Philip Collins looks at a report on land commissioned by the Labour Party, saying it raises the question of taxing land. Noting that land accounts for 51% of Britain’s net worth, Mr Collins suggests that land taxation “could transform British fiscal policy”. He adds that with the 60m acres of land in Britain holding a total value of “something approaching” £5trn, a tax of 1% would raise £5bn. He argues that “if we were brave enough to levy a tax on land at 2% we could abolish council tax, stamp duty and business rates.”

The Times, Page: 25

INDUSTRY NEWS

HMRC wipes 6k child benefit penalty fines

HMRC has wiped the penalty fines for 6,000 families who fell victim to a child benefits loophole following a review into 35,000 High Income Child Benefit Charge cases where a ‘Failure to Notify’ penalty was issued. The fines were issued to customers who had not completed a self-assessment to repay the child benefit they had over-claimed due to their earnings threshold. The Revenue said the fines were wiped after it “changed its view of when some customers may have a reasonable excuse for failing to notify liability,” with this coming following complaints that people were not made aware of the change in law introduced in 2012. A total of £1.8m has been refunded.

Daily Mail, Page: 32 Daily Mirror

Brexit consultants cost £97m

A National Audit Office report shows that £97m has been paid to consultants helping Whitehall plan for Brexit, with Deloitte, PwC, EY, PA Consulting, Bain & Company and Boston Consulting have shared 96% of the work. Public Accounts Committee chair Meg Hillier said: “The lack of transparency around Brexit preparations that my Committee has become all too familiar with applies to the use of these consultants.”

Daily Mirror, Page: 10 Daily Express, Page: 19

CORPORATE NEWS

Administrators warn over LCF conflicts

Administrators at Smith & Williamson, who are in charge of winding down London Capital & Finance (LCF), have applied to the High Court to force the removal of the independent company set up to guard the interests of LCF’s bondholders. In a letter to people owed money by LCF, the administrators said Global Security Trustees (GST) “is in a position of conflict and its duty of undivided loyalty to bondholders is compromised,” pointing to links between the four former bosses of LCF and GST’s directors and lawyers, claiming they are connected through third-party companies. A document filed at the High Court said that GST was “riddled with conflicts”.

The Times, Page: 42

Arcadia ‘likely to be plotting plan B’

The Guardian’s Sarah Butler look at Arcadia Group’s planned rescue restructure as it seeks to avoid the firm’s collapse, saying it is “complex” as it involves seven interlinked CVAs. She says that if the plan fails, Arcadia and its advisers at Deloitte “are already likely to be considering plan B,” saying this could include filing a legal notice to appoint administrators, giving the company at least 10 days to organise a pre-pack administration. The FT also looks at Arcadia’s rescue plan, looking at the measures needed to secure landlords’ approval of the CVAs.

The Guardian, Page: 33 Financial Times, Page: 17

Monsoon holds back rescue plan

Peter Simon, the owner of the Monsoon and Accessorize retail chains, has delayed plans for a CVA after landlords failed to back a similar plan for Arcadia. The CVA, led the by Deloitte, could have been launched today but is now not expected to go ahead until next week at the earliest.

The Guardian, Page: 33

Sir Peter hits out over Amazon’s tax

Sir Peter Wood, founder of Direct Line, Esure and Go Compare, has hit out over tax avoidance, questioning the conduct of Amazon and Apple, saying they take advantage of tax havens. He told the Mail: “That’s disgraceful. They are wiping out the High Street. Amazon’s a great company and I have bought shares. But it should be paying up.” Sir Peter, who paid £62m in capital gains tax when selling his Esure stake, said: “I have no problem paying my taxes,” noting that he recalls “83% tax, 98% for some people.”

Daily Mail, Page: 84

Firms urged to act over IR35

Employment law specialist Claire Scott says the introduction of IR35 tax reforms by HMRC “has the potential to cause increased costs and risks to businesses.” Although changes come into effect from April 2020, Ms Scott advises businesses to “act now, don’t delay.” She says firms “would be wise” to conduct an audit to establish how many contractors are engaged through Personal Service Companies and whether they are engaged directly or through an agency or other intermediary.

The Scotsman, Page: 34

Entrepreneur: Fundraising ‘not the goal’

The Times’ Emily Gosden reports that EY’s Sam Johnson interrupted an interview with Jen Rubio, the founder of luggage start-up Away, to invite the audience at an entrepreneurs’ get-together in Monaco to applaud the fact Away has achieved unicorn status. She adds that Ms Rubio commented: “We’re in a culture where fundraising gets celebrated. It’s not the goal. For every headline about fundraising there’s another headline that isn’t written about a [venture-funded] company shutting down.”

The Times, Page: 42

CEO appointed

John Menzies has appointed Giles Wilson chief executive. Mr Wilson is a chartered accountant who qualified at PwC.

The Times, Page: 42

PROPERTY NEWS

Javid pledges to cut stamp duty

Home Secretary Sajid Javid has pledged to slash stamp duty on the most expensive homes if he becomes Prime Minister, saying the levy has “led to a stalling of the market” at the higher end. “There are families I know from being Housing Secretary whose kids have moved on, they want to downsize. So it is good for the community that that house is made available for younger families,” he said, adding: “I would look sensibly at tax changes – I am interested in what works.”

The Daily Telegraph, Page: 10

Next PM to home in on property taxes?

Anne Ashworth in the Times considers debate over property taxation, saying suspicion is growing that, whoever is the next occupant of 10 Downing Street, “raising more money from property taxes will be on the table.” She also notes calls for the abolition of stamp duty, highlighting that Capital Economics has questioned how the lost revenue would be replaced, with stamp duty raising £8.55bn last year.

The Times, Bricks and Mortar, Page: 4

LEGAL NEWS

HP’s Whitman ‘shot first’ over Autonomy claims

Former Hewlett Packard (HP) boss Meg Whitman “shot first and asked questions later” when she accused Autonomy founder Mike Lynch and finance director Sushovan Hussain of accounting fraud in 2012, a court has heard. In a case in which HP is suing the men for $5m over claims they inflated Autonomy’s revenues and profits before selling it, Robert Miles, QC, said HP had failed to conduct a “proper” valuation exercise to determine its losses from the alleged accounting improprieties before going public with allegations. Ms Whitman said she holds Deloitte, the firm that audited Autonomy’s books, “accountable” for the matter.

The Times, Page: 38

Deutsche Bank investment banking boss targeted in tax probe

Prosecutors in Cologne have launched a criminal investigation into current and former Deutsche Bank employees, including investment banking boss Garth Ritchie, over their links to allegedly illicit tax transactions.

Financial Times, Page: 14

Weir failed to pay £50k tax

Paralympic champion David Weir has been banned from being a company director for four years after failing to pay nearly £50,000 in tax. This comes after a probe by the Insolvency Service. It was found that Mr Weir received £400,000 from David Weir Ltd in its five years of trading, but paid just £30,000 corporation tax.

The Daily Telegraph, Page: 12 Daily Mirror, Page: 17

Shakira in court over tax

Colombian singer Shakira has appeared in a Spanish court to testify over allegations that she avoided paying £13m in taxes.

The Times, Page: 32 The Guardian, Page: 26

ECONOMY NEWS

One in ten go cashless

The latest UK Payment Markets report from UK Finance shows that one in 10 adults are living a largely cashless life, with this climbing to 17% among those aged 25 to 34. Last year, four in 10 payments in the UK were made by debit card, reflecting the popularity of contactless cards. It was also found that almost half of UK adults used mobile banking in 2018, up from 41% the previous year. At the same time, the number of bank payments made using online or mobile banking in 2018 grew to 2bn, up from 1.6bn in 2017. Additionally, an estimated 8.5m people were registered to buy goods and services using mobile payment services such as Google Pay, Apple Pay and Samsung Pay. A total of 39bn transactions were made in the UK last year by businesses and individuals, the report said, with 34.9bn by consumers and 29.7bn of these spontaneous, rather than scheduled payments.

BBC News The Guardian Daily Mail, Page: 26 City AM

Sales dip 3.3% in May

Figures from BDO show that sales fell 3.3% year-on-year in May, marking the worst May performance since the firm’s sales tracker was set up in 2006 – although online firms saw sales climb 19.8%. Sophie Michael of BDO said: “Our high streets are creaking at the seams. Retailers know they need to respond quickly to consumer behaviour but they are in investment paralysis as Brexit uncertainty drags on.” “It is vital that the ambivalence with which the high street is currently being treated is replaced with concerted action, or the results could be catastrophic,” she added.

The Times, Page: 48 Daily Mail, Page: 33 I, Page: 48 Daily Star, Page: 2 The Independent, Page: 24 Daily Mirror, Page: 41 Daily Express, Page: 51 City AM, Page: 2 Yorkshire Post, Page: 18

OTHER NEWS

Permanent placements dip

An employment survey by KPMG and the Recruitment and Employment Confederation shows a fall in permanent staff placements in May, as well as the slowest increase in temporary roles in over six years. Vacancy rates stayed at an 80-month low, while starting salaries for permanent staff grew at their slowest rate in 25 months – although temp wages increased at the quickest pace for six months. KPMG vice-chairman James Stewart commented: “Uncertainty is feeding through to weaker growth in job vacancies, while the supply of candidates fell sharply as people became more risk averse with regards to switching roles.”

The Times, Page: 47 City AM, Page: 7

Drones to deliver?

Matthew Field in the Telegraph considers Amazon’s plans to deliver items using drones, noting PwC research showing that just 31% of the public feel positively about the impact of drones. “If we are going to use drones in urban environments, as a society we are going to want a level of assurance they are not going to fall out of the sky on top of us,” says Elaine Whyte, head of drones at PwC.

The Daily Telegraph, Business, Page: 5

Contact Paul Southward

Paul Southward