News Roundup Wednesday 24th July 2019

NEWS ROUNDUP

TAX NEWS

Think-tank proposes stamp duty rethink

Think-tank Onward has suggested that stamp duty on homes worth more than £500,000 should be halved to help older homeowners sell larger homes, opening up more property to families. The plans, set to be considered by Conservative leadership frontrunner Boris Johnson, could also see the levy scrapped on all homes under £500,000. The cost of the reforms, estimated at £3.3bn, would be covered by taxes on non-UK resident buyers, vacant homes and people buying second homes. The report, co-authored by Chris Philp MP and former No10 policy adviser Will Tanner, suggests that scrapping stamp duty, at a cost of £5.1bn, “should be seriously considered”. The report says: “Taken together, the changes proposed in this paper will help tilt the playing field back towards owner-occupiers and provide a powerful signal that this Government believes in home ownership.”

The Daily Telegraph, Page: 4

HMRC told to tighten up

HMRC has been told to do more to tackle fraud and errors in personal tax credits. The National Audit Office (NAO) called for action after overpayments increased to an estimated £1.46bn in 2017/18, with the rise to 5.7% of overall tax credit exceeding the taxman’s 5% target. NAO head Gareth Davies said: “HMRC can do more to get a clearer picture of the causes of fraud and error in tax credits, the increase in self- assessment tax returns and what these mean to its costs and plans going forward. HMRC will need to do this against a challenging backdrop of preparing for the UK’s exit from the EU.”

The Scotsman. Page: 11

IHT the most unfair tax?

Jenny Ross looks at the Office of Tax Simplification’s (OTS) proposed reform of inheritance tax. She notes that the OTS has described the levy as “almost uniquely unpopular” and points to a 2015 YouGov survey which saw it crowned the most unfair tax, with just 22% of people considering it to be fair. Meanwhile, Paul Lewis of BBC Radio 4’s Money Box says he has “never understood the deep unpopularity of inheritance tax”, noting in the FT that the levy contains some “very generous” tax breaks.

The Scotsman, Page: 33 Yorkshire Post, Page: 25 Financial Times, Money, Page: 5

Khan’s tax vow

The Sun says that London Mayor Sadiq Khan has vowed to clamp down on workers getting paid through their own company, even though his wife Saadiya does so through her own personal service company. It adds that there is no suggestion that the solicitor has tried to evade tax.

The Sun, Page: 2

INDUSTRY NEWS

Audit failure ‘ too widespread to be a fluke’

The Daily Mail’s Alex Brummer reflects on the audit sector, arguing that audit failure is too widespread to be a fluke and that there is “systemic failure in the way that contemporary audit is conducted.” He points to Sir John Kingman’s review of the Financial Reporting Council, saying it identified a “ramshackle house”, while the Business Select Committee has demanded total separation of audit from consulting and the Competition and Markets Authority has suggested smaller firms should be brought in on audits as junior partners. Mr Brummer says that while the Government has tasked Sir Donald Brydon with bringing the changes together, “it is not easy” as the Big Four of PwC, EY, Deloitte and KPMG “are armed to the teeth with lobbyists and public affairs operatives determined to defeat reforms.&rdq uo; Mr Brummer suggests that problems with the system include “far too cosy relationships” between finance directors, audit committee chairs and the auditors. On proposed reform, he suggests that an internal split of audit and consulting will not go far enough, arguing that consulting units need to be floated off as separate entities “and auditors must stick to their knitting”.

Daily Mail. Page: 109

APPG questions HMRC over loan charge

The All-Party Parliamentary Loan Charge Group has written to Sir Jonathan Thompson, the chief executive of HMRC, to express concern over the loan charge and “the use of aggressive imagery and slogans with regard to the pursuit of people, including vulnerable people”.

Yorkshire Post, Page: 17

REGULATION NEWS

Complaints submitted to FCA double

The number of complaints submitted to the Financial Conduct Authority (FCA) almost doubled last year, with 1,075 complaints in 2018/19, a 92% jump on the 557 received in 2017/18. The bulk of the increase centres on complaints about London Capital & Finance and the Collateral Companies, with matters related to the firms drawing 550 complaints from investors. The figures were released by the regulator in response to an annual report published by the Financial Regulators Complaints Commissioner, which criticised the FCA’s register, describing the service as “difficult to understand and sometimes inaccurate”. “The FCA must, as a priority, complete its programme to strengthen its complaints team and eliminate the backlog of complaints,” said the commissioner.

FT Adviser The Independent

PENSIONS NEWS

Pension scam warning

Experts have warned that pension scams are costing Britons up to £4bn a year and are the “next big financial scandal”, reports Alexi Mostrous in the Times. Analysis suggests that a third of all pension transfers exhibit “red flags”, up from one in 19 three years ago. Mr Mostrous looks at a number of pension scams and the tax charges HMRC can impose on those involved in them. The paper also considers controversial offshore pension schemes and the scrutiny they may come under from the taxman. It offers a case study centred on victim Jeremy Donaghty-Sutton’s efforts to fight a £80,000 tax bill from HMRC. He claims the regulatory framework is not fit for purpose and calls for a “more practical and empathetic approach” toward victims from the authorities, describing HMRC as “completely soulless.”

The Times, Page: 1 The Times, Page: 13 The Times, Page: 12 The Times, Page: 12 The Sun, Page: 9

SMEs NEWS

Bank extends free banking to support SMEs

The Co-operative Bank has extended its fee-free introductory period for its New Business Direct plus customers by one year. Previously, new customers were given 18 months’ free day-to-day banking – removing a £5 fee. This will be extended to 30 months, while current customers still within their 18 month introductory period will have an extra 12 months added. The Co-op says developing its SME banking business is one of its key priorities. Pointing to a 2018 report from the Office for National Statistics which found that 26% of the 380,000 businesses that are established each year are likely to struggle or fail in their first two years, Donald Kerr, Co-operative Bank’s managing director of SME banking, said extending free banking “will be an important helping-hand which eases pressure for entrepreneurs at a crunch point in their development and provides them with additional support.”

Daily Mail

LEGAL NEWS

Credit Suisse fails to recoup bankers bonus tax

The High Court has dismissed an attempt from Credit Suisse to recoup £239m that it paid as a one-off tax on bonuses. The bank’s case against HMRC centred on a temporary four-month fee on banks following the financial crisis which placed a levy of 50% on individual bonuses paid above £25,000. Credit Suisse argued that the fee was applied “unlawfully” and contravened EU rules, adding that the tax conferred an advantage to untaxed banks, with this amounting to state aid. Justice Falk dismissed the firm’s arguments against HMRC.

The Times, Page: 50 Financial Times, Page: 11 City AM

CORPORATE NEWS

Restaurant creditors face £83m hit

An administrators’ report from KPMG shows that the collapse of Jamie’s Italian, Jamie Oliver’s Italian restaurant chain, has left creditors facing losses of £83m. KPMG said that secured creditors faced a “significant shortfall” from the money they are owed by Jamie’s Italian.

The Times, Page: 45

Bathstore in Homebase talks

Homebase is reportedly close to buying bathroom chain Bathstore, which collapsed into administration last month. Talks over a deal are expected to be finalised this weekend and it remains unclear if Homebase would acquire all or just some Bathstore sites. BDO, which has been seeking a buyer for the retailer, has declined to comment.

The Daily Telegraph, Business, Page: 33 Daily Mail, Page: 109 The Sun, Page: 46

Firm bought out of administration

Curot Contracts, a specialist shopfitting firm trading as Dimension Shopfitting, has been bought out of administration by construction group City Gate Construction. Blair Nimmo, joint administrator at KPMG, said the sale “protects skilled jobs in the construction sector and preserves a market-leading brand”.

The Scotsman. Page: 28

ECONOMY NEWS

Government borrowing up 33%

Figures from the Office for National Statistics show that public sector net borrowing rose sharply in June, hitting £7.2bn. This marks the highest June borrowing figure since 2015 and compares to the £3.3bn recorded in June 2018. While the tax and National Insurance take was up £800m on a year earlier, debt repayments rose by £2.1bn. In the three months to June, borrowing was 33% higher than the same period in 2018, totalling £17.9bn. Analysts have suggested the data will add to economic uncertainty ahead of Brexit, with Howard Archer of EY Item Club saying: “Much will depend on whether the economy can shrug off its current weakness, as well as on Brexit developments. It will also be influenced by any changes to fiscal policy by the new Prime Minister and Chancellor .”

The Times, Page: 49 Financial Times, Page: 2 The Daily Telegraph The Guardian, Page: 43 The Independent, Page: 8 BBC News Sky News

Contact Paul Southward.

Paul Southward