News Roundup Wednesday 1st August 2018
News Roundup Wednesday 1st August 2018
Britain can learn from Trump’s tax cuts
The Sunday Times’ leader argues that Britain should follow America’s lead and introduce sweeping tax cuts to boost the economy. “Big cuts in corporate and personal taxes have given America back its economic mojo,” it says.
HMRC reaps extra £300m from the super-rich
HMRC’s High Net Worth Unit collected almost £300m more this year than last, according to analysis of data by UHY Hacker Young. It found that the unit’s tax take increased 29% to £1.2bn for the 2017-18 tax year, compared with £919m in 2016-17. HMRC set up the unit in 2009, but has been pushing hard to collect more tax from those worth more than £10m since the Commons’ public accounts committee last year said that it needed to crack down on tax evaders. Andrew Snowdon, head of tax at UHY Hacker Young, said: “HMRC sees these individuals as a segment of the market that it can target aggressively because, with little public sympathy for tax avoidance among the wealthy, it knows its tough approach is unlikely to be reined in.” Meanwhile, there was a 23% fall in people claiming non-domiciled status (almost 27,000 fewer people) between 2016 and 2017, according to HMRC.
CIOT welcomes easing of MTD requirements
The CIOT has welcomed the legal status of HMRC’s “soft landing” intended to help taxpayers meet the IT demands of Making Tax Digital for VAT. Businesses who have a turnover above the VAT threshold will be required to comply with the Making Tax Digital for VAT rules from April 2019. A recent VAT Notice published by HMRC said that in the first year, businesses will not be required to have digital links between software programs. In this initial period, HMRC will accept the use of cut and paste, or manual transfer, as compliant for these VAT periods. John Cullinane, CIOT Tax Policy Director, said: “Most businesses want to comply with what the law requires them to do, and this approach from HMRC helps ensure that is the case.”
UK MPs call for tax on Facebook to pay for policing data misuse
MPs have called for a new tax to be levied on Facebook and other social media companies to pay for the costs of policing data misuse.
BGF in talks over £7.5bn war chest to help small businesses
City sources say BGF, formerly the Business Growth Fund, could partner with the state-owned British Business Bank in its efforts to build a £7.5bn war chest to back small companies. The two have held talks about combining in a fund called British Patient Capital. It would be a subsidiary of the business bank and would combine public and private money to make investments worth up to £100m in small businesses.
Tories face task to win back trust
The Sunday Times questions whether newly appointed small business minister Kelly Tolhurst can bring some stability to the role, after becoming the third person to hold the post this year. The frequent changes at the department have added to concerns amongst business leaders that the government is neglecting entrepreneurs. The paper says Ms Tolhurst is likely to be pressed to provide more support for small companies to deal with life outside the EU. She will also be petitioned to stand up for the self-employed, amid discontent regarding proposed changes to the tax law for private-sector contractors who operate through personal service companies.
FCA sets out crackdown on peer-to-peer lending
The Financial Conduct Authority is planning to crack down on peer-to-peer lenders and crowdfunding platforms amid concerns that investors could be taking on more risk than they realise. About 150,000 Britons have handed over nearly £10bn in the past decade through the forums, earning an attractive average of 4.5% interest.
RBS manager ‘took bribes from troubled companies’
A former banker from Royal Bank of Scotland’s notorious Global Restructuring Group is alleged to have demanded tens of thousands of pounds in cash from small business owners in return for forbearance on their debts. The allegations are subject to a criminal investigation by Police Scotland as well as an internal inquiry at the bank.
BT accountant’s £500m pension miscalculation
An “isolated human error” by BT’s actuary Willis Towers Watson meant it underestimated its pension liabilities by half a billion pounds, the telecoms firm has said. BT is now reviewing Willis Towers Watson’s calculations in relation to Britain’s biggest private sector pension scheme. The firm has assured BT following its own review that there are no other errors.
Child benefit confusion could see parents lose out on state pension
Treasury select committee chair Nicky Morgan has warned that thousands of parents will miss out on state pension entitlements because they are confused by the child benefit system. HMRC figures show a dramatic reduction in the number of people registering for child benefit since the rules changed in January 2013, sparking concerns that they are therefore failing to build up their full state pension entitlement by missing out on NICs.
US bosses commit to audit quality
Leaders of the audit profession in the US have outlined their efforts and commitment to improve audit quality in a joint letter. Signatories included the bosses of KPMG, Deloitte, EY, PwC, BDO and Grant Thornton, as well as the American Institute of Certified Public Accountants (AICPA) and the Association of International Certified Professional Accountants. Welcoming newly trained accountants into the profession, the leaders said they could now “take pride in being part of a profession that is built on trust and integrity”, while continuing to build on the auditing “bedrock”.
Trump tax cuts fuel US growth
The US economy grew at an annual rate of 4.1% in the second quarter of 2018, following the Trump administration’s sweeping tax cuts at the start of the year.
BoE tipped to raise rates
The Bank of England is expected to raise interest rates this week, pushing them to their highest level since 2009. The Monetary Policy Committee is widely expected to increase rates by 0.25% to 0.5%. Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, said: “The committee likely won’t vote unanimously to hike rates – we look for a 7-2 split – but most members still believe that inflation will exceed the 2% target in the medium term if they don’t start to withdraw some monetary stimulus now.”
The Sunday Times, Business, Page: 1 The Mail on Sunday, Page: 46 Sunday Express, Page: 53 The Observer, Page: 46-47
Personal insolvencies at six-year high
The number of personal insolvencies in England and Wales has hit a six-year high. Figures from the Insolvency Service show there were 28,951 people declared insolvent in the past three months, a rise of 27% on the same period last year and up 4.4% on the first quarter of this year. It said the increase was driven by a record number of people taking out IVAs. Stuart Frith, president of R3, suggested there were a number of reasons Britons were feeling the pinch. “Wage growth is barely higher than inflation after a long period of real wage falls. Although unemployment is low, there are more people earning variable amounts in the gig economy, which can make budgeting difficult,” he said.
The Times, Page: 6 Yorkshire Post, Page: 25
Too late to normalise rates?
The Bank of England is widely expected to raise interest rates above 0.5% for the first time since the financial crisis next week, with the financial markets putting the chances of an increase at 90%. However, PwC ’s Andrew Sentance suggests the Bank has left it too late to start the process of raising rates. He says a rate rise next week would need to be followed by further rises over the next two to three years to put UK monetary policy “back on an even keel.”
State should offer loans for first-time buyers
The Housing and Finance Institute has suggested that young people struggling to buy their first home should be offered loans by the government to help them pay the deposit. It also says prospective first-time buyers could be offered a “first home deposit tax allowance” under which the mortgage interest on their repayments could be deducted from tax.
The Observer, Page: 6
Psychic fails to foresee £3m tax bill
TV clairvoyant Psychic Sally has been hit by a tax bill for almost £3m. Companies House documents show HMRC has lodged a £2,919,679 claim against Sally Morgan Enterprises, which the company disputes. Liquidators FRP Advisory are also pursuing a £323,000 loan that was taken out by the medium and her husband John, 70, and never repaid.
Self-employed author Hunter Davies expresses his joy at finally being in a position to deregister from VAT. “My aim in life is to earn less, pay less tax, have less paperwork and have a simpler life. Leaving VAT will be a godsend, in time and money and stress,” he explains.
Cash accused of hiding millions
Despite appearing in 245th position in last year’s Sunday Times Rich List, property mogul Kevin Cash has been declared bankrupt after a group of creditors rejected his offer of a softer IVA. According to his proposed IVA, Mr Cash owes his creditors about £31.5m, including nearly £14m to HMRC. However, lawyers for a fellow property investor based in Los Angeles allege that Mr Cash has stashed the vast majority of his wealth in an offshore family trust that is beyond the reach of an English court’s bankruptcy order.
Will we ever stamp out fraud?
The FT reviews Lying for Money, a history of financial crime which includes the story of how the Kray twins’ plan to murder their accountant ultimately led to their downfall.