News Roundup Wednesday 29th August 2018
News Roundup Wednesday 29th August 2018
Aim to invest wisely
The Times’ Mark Atherton highlights concerns that investors are putting money into Aim stocks purely because of the tax savings on offer. Jason Hollands of Tilney suggests that IHT mitigation represents a significant chunk of the money invested in Aim, which could skew the objectives of these IHT portfolios. Elsewhere, the FTlooks at how the government’s Enterprise Investment Scheme (EIS) is attracting investors by offering income tax relief of 30% on up to £1m per year.
Celebrities’ tax adviser hit with £50m bill
A tax adviser that helped celebrities to invest in film schemes has been hit with a £50m demand by HMRC. The move is the latest development in HMRC’s long-running battle against Ingenious Media, whose clients included David Beckham and the PR supremo Matthew Freud. Ingenious, founded and led by accountant Patrick McKenna, is fighting two demands, which add up to £47.3m plus interest. The disputed tax liability relates to relief claimed by Ingenious companies for investing in film and video partnerships. Ingenious said the latest HMRC claim was against an Ingenious company that is separate from its current operations and the size of the claim was based on a “deeply flawed” tax tribunal decision.
Hammond plans to hammer pensions to fund NHS
The Mail on Sunday reports that Philip Hammond is targeting the pensions of thousands of higher-rate taxpayers to fund Theresa May’s £20bn-a-year boost for the NHS. A government source said the chancellor had identified the £38bn which is paid out from the public purse each year in pension tax relief as “one of the last remaining pots of gold we can raid.” Mr Hammond may also remove historic tax breaks for investors who plough money into small companies in November’s Budget as he tries to find the money needed to fulfil the Prime Minister’s pledge.
The Mail on Sunday, Page: 2
Hammond facing backlash over tax-raising plans
Pensions experts have warned Philip Hammond against raiding middleclass savers’ pensions to fund a public spending spree. The chancellor is reportedly plotting to cut tax relief in an effort to raise an extra £20bn for the NHS. Baroness Ros Altmann, an ex-pensions minister, said: “There’s a huge amount of resentment against changes of this kind, particularly among Conservative voters, because there would be quite a lot of losers.” Steve Webb, policy director at Royal London, added: ‘Pension tax relief shouldn’t just be used as a pot of cash when money is short.” Meanwhile, the Mail’s leader criticises plans to target small business investors, the self-employed and those who save into private pensions. It accuses Mr Hammond of wanting to tax enterprise, initiative and thrift.
Daily Mail, Page: 2, 16
Lack of action on tax crime comes as no surprise
The Independent’s Chris Blackhurst says the fact that only three unexplained wealth orders have been served in the six months since the instrument’s introduction is unsurprising. He says that politicians have for decades promised to crack down on tax avoidance and corrupt wealth, with no apparent effect. He adds: “The City of London is full of lawyers, accountants and financial advisers who specialise in defeating investigators and hiding wealth. To assist them, we have a hideously detailed tax code – more convoluted than that of India – which is full of get-outs and exclusions.”
The Independent, Page: 59
Experts call for rethink of IR35 plans
Qdos Contractor has compiled a series of measures devised by IR35 experts that the government should consider before implementing off-payroll tax reforms in the private sector. Measures proposed include: linking employment rights to tax status; granting ‘IR35 Passports’; a more nuanced approach to sectoral impact; and exemptions for the smallest businesses.
Closing IHT ‘loopholes’ could be counterproductive
Colin Henderson, partner at Anderson Strathern, warns that introducing a separate inheritance tax regime for Scotland could just create more complexity. He predicts there would be many cases where establishing if someone’s permanent home was in Scotland or elsewhere in the UK would be problematic and “it would not be in anyone’s interest to deal with two separate tax authorities.”
Retail body wants zero rate tax band
The Scottish Retail Consortium has called for a zero-rate of income tax for low-earners to be central to the next Scottish budget, as part of efforts to help business.
The Scotsman, Page: 9 The Press and Journal, Page: 33
Judge clears way for Chappell appeal
Former BHS owner Dominic Chappell will appeal his conviction for breaching pensions laws next month. The 51-year-old was ordered to pay more than £87,000 after being found guilty in January of failing to provide information to investigators about the retailer’s pensions schemes when it collapsed with the loss of thousands of jobs. At a preliminary hearing at Hove crown court, his solicitor, Michael Levy, said The Pensions Regulator was put under political pressure to take action against Mr Chappell.
Financial Times The Guardian Daily Mail
Homebase creditors urged to back CVA
Creditors to DIY retailer Homebase have been urged to back a CVA next week or risk seeing the chain collapse into administration or liquidation. A proposed CVA would see 42 stores close by next year with the loss of up to 1,500 jobs. The retailer is also seeking rent reductions of 25 to 90% at 70 stores. The Express highlights that a document prepared for landlords and other creditors is understood to show that over 70% of Homebase’s 241 shops are currently loss-making.
‘Phoenixing’ bosses face bans
Directors who allow companies to go bust to avoid debts could be disqualified and fined under new powers for the Insolvency Service. Ministers want to curb so-called “phoenixing”, where liabilities such as pension deficits and supplier payments are left behind by companies who then re-emerge under a different name with a clean bill of health. The proposals will enable the Insolvency Service to take enforcement action against directors of dissolved companies for the first time. The new powers, to be outlined in further detail this autumn, will focus on directors who sell a subsidiary only for that company to collapse into insolvency within one year. However, Adam Marshall, director-general of the British Chambers of Commerce, warned: “In genuinely difficult situations, who’s going to be the arbiter, because not every situation is a BHS where it’s very clear that things were handled badly.”
Homebase landlords rebel over CVA
A group of powerful landlords is considering legal action over Homebase’s attempt to slash its rents by as much as 90%. The DIY chain has asked creditors to approve a CVA that would see 42 stores closed and rents cut by between 25% and 90% on 70 others. However, property owners including M&G and Aberdeen Asset Management are understood to have hired the law firm Hogan Lovells to push for better rent terms or embark on legal action. Begbies Traynor is reported to be working with a separate group of Homebase landlords.
The Sunday Times, Business, Page: 1 Sunday Express, Page: 53-54
Banks failing to back small firms
A former senior financier has accused banks of adding to the pressure on high streets by failing to support small businesses when they hit financial difficulties. Business guru Rob Rutter warned: “Banks have become so slow and bureaucratic they are acting as a handbrake on the economy rather than an accelerant.”
Sunday Express, Page: 10
Bailiffs sent to 81,000 struggling firms
Bailiffs visited 81,000 companies struggling with new business rates last year. An investigation by ratings adviser Altus Group found that bailiffs were sent to 222 premises across England every day in 2017-18 because of business rate arrears. Altus found that 6.53% of firms liable for rates – nearly one in every 15 commercial properties with a bill – faced having their goods seized, up from 6% the year before.
The Sun, Page: 2 Daily Express, Page: 42 The Independent, Page: 56
Lack of Brexit planning puts SMEs at risk
The Times highlights concerns about the potential impact of a no-deal Brexit on SMEs. Research published last month found that the majority of mid-sized companies had done no planning at all for Britain’s exit and that their smaller counterparts were likely to be even less prepared. The FSB has warned that smaller companies will be “the least able to cope” with such a “cliff-edge moment”.
Stamp duty hikes are paralysing the market
The Mail cites figures which suggest stamp duty increases introduced by George Osborne are paralysing the housing market and costing the Treasury hundreds of millions of pounds in lost revenue. The figures from the ONS show that HMRC received £4.27bn from stamp duty between April and July. However, that was £364m – or 7.9% – less than in the same period last year. Meanwhile, a YouGov survey has found that scrapping stamp duty for the over 65s would encourage nearly 3m pensioners to downsize and free up large homes for younger families. The poll found that 22% of older people would be more likely to move if they were given a one-off exemption from paying the tax .
Daily Mail, Page: 34 The Daily Telegraph, Page: 15
Buyers go north to beat stamp duty trap
The number of Londoners relocating to the Midlands or north of England has more than tripled in the past decade in response to soaring house prices, high stamp duty costs and sluggish wage growth. Aneisha Beveridge, research analyst at estate agent Hamptons, said: “More people are making a bigger move and buying a larger home sooner to avoid having to pay stamp duty on additional moves as they trade up. But for many, this means heading further north.”
No jump in pension opt-outs
Opt-outs from the government’s auto-enrolment scheme have not risen as anticipated after higher contributions began in April. Workers were forced to begin paying 3% of their salary into a pension earlier this year, up from 1% before, with the option to drop out if they could not afford it. Analysis by Legal & General Investment Management found that opt-out rates showed “no jump in April and May”.
Public sector pensions dwarf private provision
Analysis by the TaxPayers’ Alliance has found public sector workers will retire on pensions three times larger than their private sector counterparts. The report predicts a new private sector employee aged 25 on the national average wage would retire with an average pension of 22% of their final salary, versus 61% for a worker in the public sector. Meanwhile, a report from the Centre for Policy Studies warns that pensions saving in Britain has plunged to a record low. Households are investing just 4.9% of their income for the future, the lowest level since records began in 1963. The think tank argues that millions of people have been put off saving for their retirement by the “incomprehensible” pension tax relief system.
The Daily Telegraph, Page: 10 The Times, Page: 13 The Sun, Page: 2 Daily Express, Page: 9
Consumers dipping further into savings
Consumers are continuing to dip into their savings to maintain their current levels of spending, as growth in personal deposits drops to a 11-year low. According to UK Finance, the rate at which Britons add to their savings has slowed dramatically over the past year, with growth in personal deposits falling to 1.2% last month.Figures from UK Finance have also revealed that mortgage approvals fell to 39,600 in July, down from 40,300 in June, as the UK housing market continued to show signs of slowing down. Total mortgage lending, however, rose in July to £24.6bn – a rise of 7.6% on the same month last year.
UK banks loosen mortgage standards to maintain growth
Britain’s banks are relaxing lending standards and reducing fees in order to maintain growth, as profit margins are hit by competition and a weakening housing market
HMRC callers facing longer waits
HMRC’s annual report reveals the tax authority is taking longer to answer phone calls because it overestimated how many would use the internet. Last year it took the Revenue an average of 4 minutes 28 seconds to answer the phone – more than 30 seconds slower than the year before. Almost 15% of callers waited more than ten minutes to be answered. The report admits the delays are down to the fact that HMRC expected more people to be using its digital services. Age UK said that Government bodies should be forced by law to ensure they have decent services for those who do not wish to use websites.
Daily Mail, Page: 59
Champion wrestler could have been an accountant
Wrestler Zack Gibson, the winner of this year’s WWE UK Championship Tournament, could have followed a much different career path, having studied accountancy before finding success in the ring. “I have to work really hard because I’m naturally skinny. I think God wanted me to be an accountant!,” he says.
Contact Paul Southward if you have any queries.