News Roundup Wednesday 13th March 2019

NEWS ROUNDUP

TAX NEWS

Think tank calls for tax allowance rethink

The New Economics Foundation think tank has called for the tax-free personal allowance to be replaced with a flat payment of £48.08 a week. The plan would see a “weekly national allowance” amounting to about £2,500 a year given to every worker over the age of 18 earning less than £125,000 a year. Shadow Chancellor John McDonnell and Green MP Caroline Lucas have welcomed the proposal which would mean that up to 88% of adults would see their post-tax income rise or stay the same.

The Guardian, Page: 30

Brexit will loom large over Hammond’s Spring Statement

Chris Giles looks ahead to the Spring Statement, saying Philip Hammond is determined to keep it free from tax changes, adding that the Chancellor may consider cutting taxes if a Brexit deal is agreed. Elsewhere, the FT says the Chancellor needs to address the UK’s post-Brexit finances, “start a conversation” on taxation and “abandon further cuts in corporation tax planned for next year.”

Financial Times, Page: 2 Financial Times, Page: 20

Reform would be little more than additional VAT

In a letter to the FT, signatories suggest reform of corporation tax systems, offering that firms’ global profits should be apportioned based on where their sales, employment and assets are located.

Financial Times, Page: 20

 ‘Nostalgia tax’ must be fair

Matthew Moulding, chief executive of The Hut Group, has rejected calls for a digital sales tax, saying a levy on online retailers is “simply a nostalgia tax, an attempt to turn back the clock by those who have missed the ecommerce revolution.” He said that if policy makers are going to push ahead with such a tax, it must be applied fairly, applying levies to all sectors where online presences have disrupted traditional players, including banks, payment services and estate agents.

The Times, Page: 41

SME s NEWS

FSB: ‘Light-touch enforcement’ of MTD needed

The Federation of Small Businesses (FSB) has urged Chancellor Philip Hammond to recommit to “light-touch enforcement” of Making Tax Digital (MTD), which comes into force on April 1. The call comes after an FSB poll of 746 small businesses found that 50% are not yet ready to comply with the scheme, with 27% yet to start preparations for MTD and 23% having received quotes for the required software but yet to purchase it. The survey also shows that just 3% of firms were involved in a pilot rollout of the initiative. Claire Reading, FSB development manager for South Yorkshire, East Yorkshire and the Humber, has called for Mr Hammond to “double down on his commitment to light-touch enforcement,” adding that small business owners “shouldn’t be punished for honest mistakes, made more likely by a rushed HMRC roll-out.” She also notes that firms “are finding it far more difficult, time-consuming and expensive to become compliant than was predicted by HMRC.”

The Times, Page: 43 The Sun, Page: 2 The Scotsman, Page: 34 The Press and Journal, Page: 33 Yorkshire Post, Page: 17 Press Release

Record low for small business loan scheme

Research from finance marketplace Funding Options shows that the value of loans offered by the Enterprise Finance Guarantee scheme fell to a low of £55.6m in Q4 2018 – down 2.2% on Q4 2017 and 78% below the peak seen in Q2 2009. Funding Options chief executive Conrad Ford said Brexit means the scheme, designed to help small firms unable to secure finance from banks, could “come into its own once again and ensure that shortfalls in cash flows and gaps in lending can be covered up.”

City AM, Page: 12

LEGAL NEWS

HMRC launches money laundering investigations

HMRC has launched its first criminal investigations under a new money laundering offence introduced in the Criminal Finances Act 2017. A freedom of information request from law firm Greenberg Traurig shows that the Revenue is investigating several cases under the corporate criminal offence of failure to prevent the facilitation of UK tax evasion. The response to the request says HMRC “has less than five” criminal investigations for an offence under Article 45, with these “the first in a pipeline of cases HMRC has under development.” Barry Vitou at Greenberg Traurig said HMRC is “keen on pursuing an increasing number of criminal investigations”, with its 2018 business plan including a target of 100 investigations a year by the end of parliament. He adds: “Despite the apparent ’pipeline of cases’ it has under development that may involve the offence, it is likely to be some time until we see the fir st prosecution.”

City AM, Page: 5

INTERNATIONAL NEWS

Tech firms question Macron’s tax plan

Hannah Boland in the Telegraph says technology sector leaders believe French president Emmanuel Macron has underestimated the impact of a proposed digital services tax, with Tech London Advocates founder Russ Shaw describing a 3% levy on big tech companies as “misguided,” adding that it could “signal the start of the end for the French digital revolution”. Mr Shaw also called for Europe to deliver a “fully integrated digital market with reasonable tax policies” in order to achieve a “seat at the table alongside the US and China” as a tech powerhouse.

The Daily Telegraph, Business, Page: 5

An overhaul of the international tax system can wait no longer

Writing in the FT, IMF manging director Christine Lagarde says the growth of digital business means a rethink on international taxation is necessary, with the current system “fundamentally out of date.”

Financial Times, Page: 21

Accounting has become the opposite of useful for users

The FT’s Jonathan Ford considers why large US firms opt to use alternatives to generally accepted accounting principles in earnings releases, with 97% of S&P 500 companies doing so in 2017.

Financial Times, Page: 8

PROPERTY NEWS

Investors hit by stalled housing projects

Louisa Clarence-Smith in the Times looks at abandoned or stalled buyer-funded housing projects in the North of England, with Duncan Swift at Moore Stephens suggesting that up to £1bn of buyers’ deposits may have gone missing in buyer-funded developments. Louise Brittain at Wilkins Kennedy says investors “have parted with at least half their money, they don’t know where it’s gone and then they have nothing. They have a Land Registry number and a block of fresh air.”

The Times, Page: 36

Mortgage arrears ‘to soar under a no-deal Brexit’

Kensington Mortgages has warned that the number of homeowners who fall behind on mortgage payments will jump by about a third if there is a no-deal Brexit. The specialist lender estimated that 70,296 borrowers would be more than three months in arrears on their repayments in three years’ ti me if Britain were to leave the EU without a deal and the Bank of England did not step in to prop up financial markets.

The Times, Page: 38

ECONOMY NEWS

Brexit hits hiring plans

Analysis by BDO suggests that UK firms intend to hire fewer people for the second month in a row, with its employment intentions index, in which 100 is the long-term average, falling from 115.11 in January to 113.99 in February. The study also found that businesses have become less optimistic about the future for the seventh consecutive month, with BDO’s optimism index falling by 0.19 points in February to 99.79, the lowest it has been since December 2016. BDO’s Peter Hemington said: “The bright spot of Britain’s low-investment, low-growth economy in recent years has been its flexible labour market … Unfortunately the uncertainty created by Brexit is bringing this trend to a halt, with hiring intentions sharply down.”

City AM, Page: 12 The Times, Page: 38

Jersey draws the wealthy

Following a Times investigation which revealed that a third of British billionaires have moved to tax havens over the past decade, the paper’s Billy Kenber says Jersey, where income is taxed at 1% after a tax cap of £145,000 a year, has been among the beneficiaries. He notes that 29 new wealthy residents moved to the island in 2018, compared with 20 the year before.

The Times, Page: 19
Contact Paul Southward if you have any queries.

Paul Southward