News Roundup Wednesday 22nd August 2018
News Roundup Wednesday 22nd August 2018
IHT-free Care Isa could help solve care crisis
The Government is considering launching a “Care Isa” that would be exempt from IHT in an attempt to solve the social care crisis. Treasury proposals could see the Care Isa plan included in the Government’s upcoming social care Green Paper. Another proposal is to allow people to take money out of their pension fund tax-free, if it is used for care.
Wollaston argues Care Isa would only benefit wealthy
Tory MP Sarah Wollaston, the chair of Commons Health and Social Care Committee, has warned that the proposed Care Isa, designed to help fund social care for the elderly, would only work for a “small minority of wealthy people” who can afford to invest. The Care Isa would be exempt from IHT, meaning any unspent money after care was paid for would be passed on to the holder’s family when they die without being taxed. Dr Wollaston said the move wouldn’t solve the care crisis as there was no pooling of risk. But former pensions minister Baroness Altmann said current tax rules meant there was a “perverse incentive” to spend cash in Isas before people die when it could be put towards their care instead. Meanwhile, research published by consumer group Which? shows only one in 10 over the age of 55 have put aside money to pay for care in old age.
Treasury losing £3.8bn a year to fake goods
Cuts to Border Force staff have led to a 55% fall in the volume of counterfeit items seized at UK ports and airports, a campaign group warns. The Anti-Counterfeiting Group says fake goods sold through online marketplaces and on the high street are costing the exchequer an estimated £3.8bn a year in unpaid tax. The Home Office said: “Security at the border cannot be measured by the number of staff. Border Force uses a sophisticated combination of experienced officers, intelligence, technology and partnership working to keep our borders secure.”
Daily Mail, Page: 27
Amazon Tax will only lead to higher prices
Morgan Schondelmeier says in City AM that an “Amazon Tax” will not save the high street and will likely lead to higher prices for consumers online. High street brands need to adapt to the new retail landscape instead, he says. If the Government must intervene, it should lower the tax burden on high street stores. Tax rises will just make the “wide world of shopping much worse off”.
City AM, Page: 15
Mayoral candidate wants tax powers devolved
Tory London mayoral candidate Joy Morrissey wants City Hall to be allowed to set its own income tax rates. Ms Morrissey said the tax-raising powers would help to ensure the capital was “unshackled from the constraints of central government and allowed to realise its potential as one of the greatest cities on the planet”. She continued: “The full suite of property taxes should be devolved, including council tax, business rates, and stamp duty.”
The Sunday Telegraph, Page: 4
More people take cash for informing on neighbours
Figures obtained from HMRC show the number of people seeking a financial reward from HMRC for informing on suspected tax evaders has risen to 40,695 in 2017-18 from 20,200 the previous year. Last year, the taxman paid out £343,500 in financial rewards for reporting suspicious activity. Fiona Fernie, a dispute specialist at Blick Rothenberg, said: “There will be a huge mixture of things. You will get the people reporting VAT fraud on art, that can be multi-million pounds, the local builder who is getting paid cash in hand, the structures offshore where people are hiding their money. Then there will probably be vindictive people who just think their next-door neighbour has a bit too much money.”
Plastic tax to cut waste
Philip Hammond will announce new taxes in the autumn budget designed to encourage manufacturers to use more recycled and recyclable plastic in their products after the public overwhelmingly supported moves to combat plastic pollution.
The Times, Page: 7 The Guardian, Page: 7 Daily Mirror, Page: 2 Daily Mail, Page: 1, 2 The Daily Telegraph, Page: 1, 4
Peoples’ anger should be redirected towards tax dodgers
Caitlin Moran lashes out in the Times at multinationals that use complex company structures to avoid paying tax. She suggests the general population is too caught up with fear about “Muslims, Momentum and refugees” to recognise the gravity of corporate tax dodging. She states that “when capitalism doesn’t play by the rules, it feels as if you’re being taken advantage of.”
IHT needs to be made simpler and fairer
Annabelle Williams explores in the Times why more families are being sucked into paying IHT. She talks to Rachael Griffin of Old Mutual Wealth about the proposals the company has put to the Government to simplify the system whilst not diminishing the tax take.
Unexplained wealth orders used only three times
The Times reports that unexplained wealth orders have been used against suspected crime lords and corrupt oligarchs just three times in the six months since they were introduced. The National Crime Agency implemented all three orders. HMRC, the Serious Fraud Office, the Financial Conduct Authority and the Crown Prosecution Service have so far not deployed the seizure powers. Rachel Davies Teka, of Transparency International, said: “Asset recovery rates have been woefully low compared with the scale of the problem … While we understand the need to test the new power, there is no shortage of cases and the government should ensure a notable increase in the use of UWOs. Failure to do so would damage the credibility of the UK’s rhetoric on providing a hostile environment to dirty money.”
House of Fraser owed £484m to suppliers before Ashley swooped
A report from House of Fraser’s administrators EY reveals the retailer owed £484m to suppliers including Armani, Diesel and Prada before it was bought by Mike Ashley’s Sports Direct last week for £90m in a pre-pack deal. Total debts are estimated at £884m and will not be paid. The documents were revealed as House of Fraser apologised after cancelling all online orders due to a dispute with distributor XPO Logistics over non-payment which also shut the chain’s distribution centre in Wellingborough. The Times points out that brands owned by Philip Day, who failed in his own bid for HoF, are owed millions.
Katie Murray lands CFO role at RBS
Katie Murray has been made interim CFO at Royal Bank of Scotland as the bank seeks a replacement for Ewen Stevenson, who resigned in May to join HSBC. Ms Murray will be the first female CFO of a major UK lender. Meanwhile, observers speculate that Alison Rose, the bank’s head of commercial and private banking, could be in line for the top job if Ross McEwan steps down as expected.
Swap ‘broken’ business rates for land value tax, urges Cable
Lib Dem leader Sir Vince Cable, is calling for the business rates system to be replaced by a land value tax. Sir Vince said: “Business rates were a badly designed policy to begin with and have become an unacceptable drag on our economy. They are a tax on productive investment at a time of chronically weak productivity growth, and a burden on high streets adapting to the rise of online retail. By only taxing land and not the productive capital above it, this reform would remove a major disincentive to investment, boosting productivity and contributing to a necessary revival in UK industry.”
Financial Times, Page: 2 Daily Mail, Page: 4
HMRC send in team to fix rates appeals portal
HMRC has sent around 25 staff to the Valuation Office Agency to work on a fix for the Government’s new implemented “Check, Challenge, Appeal” process. The system was intended to make it easier for businesses to query the amount they were paying in rates, but users have complained that the process is overly complicated. Jerry Schurder, head of business rates at Gerald Eve, said small businesses were finding the online portal particularly problematic as they have neither the resources nor the capabilities to navigate the new system. “They are potentially missing out on millions of pounds in refunds,” he said.
Cooling market threatens estate agents
KPMG predicts that pressures on high street estate agents will come to a head in the second half of the year as the housing market cools. Blair Nimmo, KPMG’s head of restructuring in the UK, said: “High street estate agents are presently facing an unprecedented set of challenges. The rise of online-only agencies have combined with falling house prices, a general slowdown in sale activity and a raft of legislative changes, all of which have generated headwinds for your average high street agent. I would therefore not be surprised to see operators across this sector struggle over the second half of the year and beyond.”
The Independent, Page: 42 Daily Express, Page: 28 The Sun, Page: 46 Yorkshire Post, Page: 8
Don’t forget EU trade, warns bosses
Business leaders have called on the Government to provide the country’s smallest companies with as much trade aid and support as its largest and to focus on “essentials”, such as improving broadband and roads. Martin McTague, policy chairman of the FSB, said that while its members were examining markets such as China, India, South Africa and the United Arab Emirates, “we would welcome support for smaller businesses looking to export to these markets along with a push to increase exports to established markets”. Adam Marshall, director-general of the BCC, added: “If the broadband’s no good, services businesses aren’t going to be exporting. If the roads aren’t good, it might be uncompetitive. If you can’t get the right people because your immigration policy is in constant flux, then you’re limited.”
UK support for fintech means bright future for blockchain start-ups
Blockchain start-ups are concerned they will have to set up offices on the continent if passporting rights are lost after Brexit. But Richard Cohen at Allen & Overy said Brexit would allow the UK “to come up with a regulatory framework that is much more favourable to fintech companies and become a friendly jurisdiction in which banks can make the best use of blockchain and global opportunities”. Alastair Johnson, CEO of e-commerce and payment ID platform Nuggets also took a positive view, stating that the high level of UK support for fintech meant blockchain and distributed ledger start-ups “will also see that as an opportunity to create markets, continue growth and associate with Europe and the world as a whole.”
Aim-listed tech firms in fundraising boon
Tech firms raised £575m on Aim in the first half of the year due to higher valuations and follow-on fundraisings, according to Moore Stephens. The firm’s calculations suggest the average market capitalisation of an Aim-listed tech firm rose by 8.2% during the first half of the year, to hit £123m. Moore Stephens director Dougie Hunter commented: “There’s no doubt that in the last 12 months Aim has been an attractive market for UK and international businesses raising capital. There is likely to be a short pause and intake of breath in the coming months with Brexit and other political turmoil. Long-term, however, we still see a strong appetite from investors and companies alike towards Aim and particularly among the technology sector.”
City AM, Page: 10
Drinks industry growth sparks investment interest
Johnston Carmichael corporate finance director Lesley Munro remarks on the success of Scotland’s spirits industry in the Press and Journal, which has seen a 107% rise in the number of new gin and whisky distilleries across the UK in the past five years.
The Press and Journal, Page: 4
One in 10 companies have suppliers breaking wage laws
A survey for the Chartered Institute of Procurement & Supply reveals that one in ten UK companies are using suppliers that are failing to pay the minimum wage. Cath Hill, group director at the CIPS, said: “The vast majority of British businesses would agree that short-changing their employees is inexcusable, but when it comes to the workers further down their supply chain they don’t have the same level of concern. Too often it is the people at the bottom of the supply chain who feel the pinch. As a country we must take meaningful action against businesses who reap the benefits of worker exploitation in their supply chain.”
The Observer, Page: 20
UK exporters divided on prospects
Lloyds Bank’s latest Business in Britain report has revealed that while a growing number of UK exporters (54%) expect their ability to compete in international markets to improve over the next year, more than 22% of respondents have not yet reviewed their trading plans since the Brexit referendum. If that proportion holds true across all exporters, as many as 50,000 firms may not have considered changes that might need to be made to trading strategies after March 2019.
Small firms in fear over Network Rail arches sell off
Gurpreet Narwan talks to small businesses under threat from Network Rail’s decision to sell off 5,500 railway arches in England and Wales. Network Rail has been accused of hiking rents ahead of the sale to boost the price, something the company denies. There is a fear, Mr Narwan reports, that the new owners of the arches, which are home to 4,400 traders, will seek to maximise profits by throwing out small businesses and replacing them with chains.
SMEs missing out on R&D tax relief
A piece written by Mike Price of MPA Group points out how ignorance or bad advice is costing companies on average £150k a year in lost R&D tax relief. One thing that still seems to be widely misunderstood, says Price, “is that R&D is not only carried out just by men in white coats – it spans all industries and covers activity from app development and cell imaging technology to engineering and tooling development.”
Bosses fear Brexit economic fallout
The Institute of Directors has found that business leaders’ confidence in the UK economy has fallen to its lowest level of the year so far, as fears grow about the impact of a potential chaotic Brexit. The IoD’s monthly tracker found that 16% more bosses on balance had a pessimistic view of the UK’s economic prospects compared to an optimistic view. Uncertainty around trading with the EU concerned 44% of bosses, just below the UK’s general economic conditions at 47%. Tej Parikh, senior economist at the IoD, urged policymakers to “stay wary of the fragility of business confidence”.
UK slips down manufacturing league table
Figures from the EEF show that Britain’s manufacturing industry has fallen to ninth in the world below France. China kept the top spot ahead of the US and Japan. The EEF said the UK’s manufacturing industry was “punching above its weight” and was of vital importance to the UK’s economic health. The trade body added that productivity growth remained strong.
The Guardian Daily Express, Page: 44
July budget surplus biggest in 17 years
Philip Hammond has received more good news ahead of his Autumn Budget as City economists forecast the biggest July budget surplus in 17 years. ONS figures are expected to show a surplus of £1.1bn for last month – the strongest performance since 2001.
Academics find link between intelligence and economic conservatism
Robert Colvile, director of the Centre for Policy Studies, writes in the Sunday Times on two studies that have overturned the narrative that more education leads people to be more socially liberal. Higher intelligence is actually more likely to lead individuals to conservative attitudes. One study by psychologists Gary Lewis and Timothy Bates found the cleverer a child was, the more likely they were to hold conservative views on tax. “In short,” concludes Colvile, “the brighter you are, the more likely you are to throw over Marx for Hayek.”
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