News Roundup Wednesday 25th July 2018
News Roundup Wednesday 25th July 2018
Britain has highest tax burden in nearly 50 years
UK businesses and households are struggling under the highest tax burden for 49 years with tax now hitting 34.3% of GDP. Each household is paying £28,000 tax on average, pulling in a total £776bn for the Treasury. Chief executive of the TaxPayers’ Alliance John O’Connell said: “The increase of taxation and the introduction of new taxes have hit poorer families the hardest, leaving them with less and less at the end of the month. The funding models for social care and the NHS need real reform, not ever higher taxes. Instead of taking even more money away from families and businesses, the Government should consider cutting taxes, or reducing spending in other areas.” A report from the campaign group warned against further rises and outlined how tax cuts had increased receipts for the Treasury.
Daily Express, Page: 44 The Sun, Page: 4, 10 Daily Mail, Page: 2 The Daily Telegraph, Page: 7 The Times, Page: 9 Yorkshire Post, Page: 4
Every new tax makes the UK a harder place to do business
Research by UHY Hacker Young found that £28bn has been raised in new taxes since 2008-09 through measures such as the sugar tax, diverted profits tax and the apprenticeship levy. Darren Grimes, a tax partner for UHY Hacker Young, commented: “Past and present Governments seem to be addicted to tinkering and introducing new measures. Every new tax makes the UK a harder place to do business.”
Daily Mail, Page: 2
HMRC steps up action against avoiders
The Sunday Telegraph reports that HMRC initiated twice as many enforcement actions against taxpayers who had ignored an “accelerated payment notice” in 2017 than in the previous year. Dominic Arnold of Moore Stephens points out that prior to 2014 HMRC would challenge taxpayers individually, but since the introduction of APNs, HMRC effectively issued APNs in bulk once a tax tribunal had established that a particular type of avoidance scheme was unlawful. This has led to a total of 79,000 APNs being issued since 2014, of which 6,000 were later withdrawn. The paper’s Sam Meadows points out that the tax office last week revealed plans that would permit it direct access to a taxpayer’s banking records, meaning banks would no longer be obliged to inform the customer when a request is made. Martina Fitzgerald of Menzies described the new powers as “quite disturbing.”
The Sunday Telegraph, Business, Page: 12
HMRC criticised for handing out £3m in bonuses
HMRC employees were handed £3m in bonuses last year, despite performance reports revealing that 4m calls to HMRC in the past year failed to get through. James Price, of the TaxPayers’ Alliance, said: “The principle of performance-related pay is a great one – but it should not be used as an excuse to give carte blanche bonuses to staff regardless of merit.”
Sunday Express, Page: 20
Why more Brits are heading for Portugal
The number of foreigners applying for special tax status in Portugal has risen from 100 per year during 2009 to 2012 to 6,000 during 2016. Brits are among those taking advantage of the Non- Habitual Residents tax programme which offers a 20% tax rate on much income, while some foreign-sourced revenue is totally tax-exempt, providing at least 183 days a year is spent in the country.
Will Hammond use Brexit chaos to raise taxes?
The Observer’s Phillip Inman predicts that the Chancellor will use the fog of Brexit mayhem in October to raise taxes in his Autumn Budget. He suggests Philip Hammond will “throw away the Tory manifesto and its ban on mainstream tax rises” to fund increased public spending.
The Observer, Page: 57
HMRC hit by rise in legal challenges
Research by RPC reveals a 184% increase in judicial reviews against HMRC over the past three years. The taxman faced 122 judicial reviews in court last year, up from 90 in 2016, as people and businesses fight back against an ever more aggressive HMRC. RPC says that the judicial reviews usually relate to claims that the taxman overstepped its authority or acted unfairly. Many of the cases relate to HMRC’s use of Accelerated Payment Notices (APNs), which require individuals or businesses suspected of tax avoidance to pay within 90 days without the right of appeal. Adam Craggs, a tax expert and partner at RPC, says: “Many cases are the result of simple errors by HMRC and a dogged refusal to correct them. It is regrettable that taxpayers are forced to take such action before HMRC acknowledges its mistakes.”
Williamson argues against raising taxes
Gavin Williamson has urged Theresa May to return to core Conservative values and cut taxes to generate more revenue. The Defence Secretary told Cabinet on Tuesday that raising taxes was not necessarily the best way to bring down public sector debt and boost Treasury coffers and suggested the Tories should return to the values espoused in the 1980s under Nigel Lawson by “giving people more control over their own money”.
Special procedures end for student workers
Blick Rothenberg warned this week that tax rule changes mean students taking temporary jobs this summer will now face being taxed as any other worker if they earn more than £987 in a single month. Previously, low-earning students could declare their student status and be paid tax free. Now they face having to pay the tax then reclaim it.
The Guardian, Page: 44
Councils pay private firm to squeeze more out of local businesses
Nearly half of English councils are using a company called Analyse Local to trawl through satellite images to see if businesses are underpaying business rates after having been extended or redeveloped or have been left off the ratings list altogether. The firm charges councils a £6,000 annual fee to use its software, and then takes a 10% cut of any increase in the value estimates. Mike Cherry, chairman of the FSB, added: “Councils should be competing to create the most probusiness, low-tax regime to attract more businesses. It’s high time Government stepped in and solved this business rates crisis once and for all.” Elsewhere, research from estate agent adviser Altus Group shows 25 pubs are closing every week due to high business taxes.
Daily Mail, Page: 8 The Sun, Page: 26 Yorkshire Post, Page: 8
Brexit turns investors on to internationally scalable businesses
Research from the UK Business Angels Association (UKBAA) reveals that British investors are more likely to invest in SMEs capable of an international outlook, with millennial investors in particular citing Brexit as a key driver towards this attitude. Investors in general reported that technological investments, such as drones and other automated devices, were growing in importance, which the study claimed was due to their easily transferable nature into international markets.
The Scotsman, Page: 34
SMEs think industrial strategy is a gimmick
A survey by Bibby Financial Services has found that nearly one third of small businesses believe the Government’s industrial strategy is a gimmick, while over half of those questioned thought investment was unevenly spread across the country, with too much going to London.
Daily Mail, Page: 72
North East business optimistic about EU exit
A quarterly YouGov Brexit monitor for RSM showed a jump in confidence among SMEs in the North East and Yorkshire at the end of June, with support for Brexit particularly noticeable among those with a strong entrepreneurial streak.
More firms staying in AIM
The number of firms leaving AIM last year fell by more than 70% compared to the aftermath of the financial crisis. According to UHY Hacker Young, there were 74 departures in 2017/18, down from 257 in 2008/09.
Daily Mail, Page: 72
RBS to close small businesses compensation scheme
The Royal Bank of Scotland is closing its compensation scheme for customers of its now defunct restructuring unit Global Restructuring Group, which is alleged to have mistreated thousands of small businesses it was meant to help during the financial crisis. The bank said it would close the scheme for customers with fresh complaints in three months’ time. Federation of Small Businesses chairman Mike Cherry said: “RBS is still receiving six complaints a week about GRG. If claims continue at that rate the deadline must be extended.”
Financial Times, Page: 2 Daily Express, Page: 61 The Times, Page: 54 The Daily Telegraph, Business, Page: 31 Daily Mail, Page: 101
Staff pay as auto enrolment undermined by errors
Experts say small business employees are at risk of losing out on their pension entitlements because employers, advisers and pension providers are making mistakes when calculating pension contributions. Brendan Shanks, chief executive of Husky Finance, a company that helps businesses to comply with pension rules, said he feared that hundreds of thousands of workers might be receiving the wrong pension contributions. “There’s no one auditing this stuff,” Mr Shanks said. “People are trusting their accountant to get it right. Once it’s wrong, the risk is it stays wrong.”
Landlords file challenge to House of Fraser CVA
A group of landlords advised by JLL and Begbies Traynor have filed a legal challenge to House of Fraser’s CVA claiming “unfair prejudice” during the restructuring process. The landlords hope the legal challenge, which will be heard in a Scottish court, will ensure future deals treat landlords more fairly. In a statement, the advisers said: “CVAs were designed as a means to rescue a business, not simply a tool to shed undesirable leases for the benefit of equity shareholders.”
Five-year forecast predicts steady house price rises
Annual UK house price growth is projected to slow to around 3% in 2018 and is likely to remain around this level until 2025, according to new analysis from PwC. The average price is estimated to rise from £221,000 in 2017 to around £285,000 by 2025, according to PwC’s projections.
Yorkshire Post, Property Post, Page: 2
PERSONAL FINANCE NEWS
Are investors paying extra to train their advisor?
A report from the Financial Conduct Authority (FCA) last week raised questions over the benefits of the investment tools offered to financial advisers by the fund shops to which they direct their clients. The FCA said: “Tools and services that advisers and platforms focus on typically benefit the adviser, with some potential indirect benefits for the consumer.” This raises the possibility that advisers are discouraged from switching the money to a cheaper rival. “We think [free] tools can potentially distort advisers’ incentives when considering which platform to choose and could create barriers to switching,” the FCA’s report stated. However, the Personal Finance Society said the tools helped advisors’ professional development with consumers “ultimately the beneficiaries of well-qualified and well-trained personal finance professionals.” Meanwhile, Ali Hussain in the Sunday Times reports on how hundreds of thousands of investors are paying unnecessarily high fees because they are still using “advised platforms” despite no longer receiving advice from the adviser who recommended them.
The Sunday Telegraph, Business, Page: 9 The Sunday Times, Business, Page: 12
FCA to monitor early arrears
The Financial Conduct Authority is looking into the fact that three in every 1,000 new mortgage customers are unable to meet their monthly payments within six months of the loan being taken out, with one in every 600 into arrears by the point the second payment is due. The regulator said: “Where a consumer falls into arrears within a short period of time (two to six months) this could be an indicator of an unsuitable or unaffordable product having been sold.” It added that it would monitor the situation as “any sustained increases may indicate that we need to do more work to assess if the harm of unaffordable or unsuitable mortgage sales is increasing.”
Northwest leads manufacturing boom
Manufacturing companies have reported an up-tick in confidence in most British regions over the past year, with a report from EEF and BDO finding that all parts of the UK had created more manufacturing jobs since 2010, except Scotland. The annual Regional Manufacturing Outlook shows the northwest of England and the east Midlands saw the highest growth rates in investment and job growth. However, the EEF warned that anxiety over Brexit meant overall investment levels were “consistently and disappointingly subdued”.
The Times, Page: 39 I, Page: 40 Yorkshire Post, Business, Page: 15
High Street health on the decline
The latest KPMG/Ipsos retail health index shows that the health of the high street was flat in Q2, with an index rating of 79, and a further one-point decline is forecast during Q3. Paul Martin, head of retail at KPMG, said that margin and cost pressures in the industry were relentless.
Living standards to remain flat for another 10 years
The Office for Budget Responsibility (OBR) has revised its predictions on productivity growth, stating that it will take another 10 years for the measure to reach annual growth of 2%. The forecast suggests living standards will remain flat for the next decade. John Hawksworth, chief economist at PwC, said part of the problem was that growth in recent years has been fuelled by firms hiring more workers instead of investing. Elsewhere, Kallum Pickering from Berenberg Bank said if investment appetite returns then digital technologies can start to move into wider use. He said: “Over time other industries will incorporate that technology. As that happens, productivity should improve.”
The Sunday Telegraph, Business, Page: 3
Profit alert surge driven by struggling retailers
The number of profit warnings issued by stock market listed companies has been driven up by nearly a third during the second quarter by retailers struggling with reduced consumer spending, EY has said. The firm said that 58 firms issued profit warnings during the course of 2018’s second quarter, compared to 45 for the corresponding period the previous year. Of these, 65% had not issued a warning in the previous year. Alan Hudson, EY head of restructuring for UK & Ireland, said: “UK growth and the global recovery are still in evidence, but both face risks as threats multiply. A rise in restructurings and profit warnings, as well as sharper investor reactions to those warnings, underscore that we face a more precarious earnings outlook.”
Sunday Express, Page: 54
UK deficit falls to lowest level since before financial crisis
UK public finances continued to improve in June, with the deficit lower than at any time since 2007. Tax receipts showed relatively weak growth at 3%, but there was a 1% fall in public spending. Borrowing for the financial year so far has reached £16.8bn, £5.4bn less than in the same period in 2017, the ONS said. The EY Item Club said the news would give the Chancellor “more room for manoeuvre in November’s Budget as he looks to find the extra funding needed for the increased spending promised for the NHS”.
French village deemed too rich to charge taxes
State auditors have told a French village near the Spanish border that it is “too rich” to continue taxing residents and should cancel council and property taxes this year. Le Perthus makes more than £700,000 a year from parking fees alone and has a population of just 586 people.
The Daily Telegraph, Page: 14
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