News Roundup Wednesday 5th September 2018

NEWS ROUNDUP

TAX NEWS

Companies pay up to avoid Google Tax stigma

Patrick Hosking reports that multinationals are paying hundreds of millions in extra tax bills to avoid the embarrassment and reputational damage of being seen as paying the diverted profits tax. He cites the case of Diageo, which agreed in July to pay an extra £190m in conventional corporation tax in order for HMRC to return £107m it had paid previously in DPT. The new regime was introduced to combat the loss of revenue when international companies booked high profits in low-tax jurisdictions and lower profits or losses in Britain to reduce their overall tax bills and it is set at a higher rate than corporation tax. HMRC has rapidly increased its issuance of DPT notices. Andy Wood, a director of Enterprise Tax Consultants, said: “The size of the amount paid up in the Diageo case perhaps shows the premium companies place on their good names and how far they will go to avoid the stigma of the Google Tax.”

The Times, Page: 31

MPs back gong block for tax avoiders

Many politicians have welcomed news that HMRC is issuing warnings to the Cabinet Office over honours nominees it considers to have misbehaved financially, but most would prefer it if they just forced them to pay the right amount of tax. The Times points out that Edward Troup, the senior HMRC official who signed an agreement to provide confidential tax information to the compilers of the honours list, was knighted several months later. The Mirror’s Kevin Maguire thinks the logical extension of HMRC’s warning system is to strip knighthoods from tax haven tycoons such as Richard Branson, Philip Green or Jim Ratcliffe, unless they bring every penny back onshore.

The Times, Page: 13 The Times, Page: 13 Daily Mirror, Page: 8

Hammond told to forget tourist tax

Hospitality industry leaders have urged the Chancellor to abandon any plans to introduce a tourist tax, warning it would wreak havoc “on an already strained and over-burdened sector”. FSB chairman Mike Cherry said: “Our visitor economy is a huge success story, contributing more than £125bn to the economy annually and providing vast tax receipts to pay for public services. Small firms operating in the tourism sector are already up against high business rates, rising employment costs and surging input prices, particularly where utilities are concerned. Adding tourist taxes to the mix would mean yet another reason for small B&B, hotel and hostel owners to spend time away from running and growing their firms.”

The Daily Telegraph, Business, Page: 3

Taxman opens 27 new serious tax evasion cases

Research by Pinsent Masons has revealed that HMRC opened 27 new investigations into suspected serious tax evasion by some of the UK’s top businesses in the last year. Partner Jason Collins says the probes do not mean evasion has taken place and they may have been triggered by irregularities resulting from new procedures businesses are putting in place to comply with the Criminal Finances Act 2017, which makes corporates liable for employees, agents or those providing services.

economia

Don’t tax innovation to save traditional shops

The Times’ Patrick Hosking disputes claims that the high street needs to be helped with extra taxes placed on online sellers like Amazon. There is already a level playing field, he asserts, and ultimately the “unpalatable truth is that online retailers by and large are winning not because of their tax advantage but because they are producing a better service compared with many traditional shops.” Using taxes to slow the advance of online shopping would only signal “that innovation and investment should be penalised and stasis and under-investment rewarded.”

The Times, Page: 45

Donate your art to reduce your tax liabilities

The Telegraph’s Sam Meadows details how donating works of art can reduce your tax bill. The Cultural Gifts Scheme, which was introduced in 2013, allows donors to save money on income, capital gains and corporation tax by giving away culturally significant items. Nimesh Shah of Blick Rothenberg said: “The Government wants these items of national significance to be accessible so the public can see them. A lot of the world is quite envious of the cultural tradition we have in the UK and this is quite a noble scheme from the Government to encourage donations.”

The Daily Telegraph

Coca Cola warned over Costa tax ruse

Labour MP Peter Kyle, who sits on the BEIS Committee, has warned Coca Cola that it would face a full investigation if its purchase of Costa Coffee looked like a restructuring would reduce its UK tax liabilities.

Daily Mail, Page: 64

REPORTING NEWS

Spotlight is on auditors, but plenty of others have an equal responsibility

Jane Fuller, a member of the Audit and Assurance Council of the FRC, says not just auditors, but NEDs, investors, analysts and journalists also have a responsibility to hold management to account.

Financial Times, Page: 10

In defence of quarterly reporting

Peter Malmqvist, the Chairman of the Swedish Association for Financial Analysts, says that, despite a requirement for half and full-year reporting, Swedish companies stuck with quarterly reports. Elsewhere, Nicolas Moreau, the CEO of European asset manager DWS, has defended quarterly reporting, describing it as a “highly important tool” for investors.

Financial Times, Page: 10 Financial Times, FT, Fm, Page: 1, 2

Ending quarterly reports will not stop corporate short-termism

Former US Treasury secretary Lawrence Summers dismantles arguments claiming less frequent reporting would combat an excessive corporate focus on the short term.

Financial Times, Page: 11

SMEs NEWS

New firm will link family offices with start-ups

A group of investors including Sir John Hegarty, a founding partner of Saatchi & Saatchi, and Michael Jackson, former chairman of Sage, have launched YYX Capital, a new firm that will co-invest with “family offices” and individuals in consumer internet, ecommerce and software start-ups. Mr Jackson, chairman of YYX Capital, said that the firm’s interests would be aligned with its clients’ since it would “only make money when they do”. YYX investment partner Julian Barnett said linking early stage businesses with family offices is a niche in the market which has been “critically underserved”.

The Times, Page: 39

HSBC pushes small business lending initiative

HSBC has hired more than 100 new staff to work on Project Iceberg at its Aldwych office. The digital initiative aims to revamp its small business banking effort and to defend against Shoreditch’s fintech stars.

City AM, Page: 3

Funding Circle confirms hefty IPO

Funding Circle has confirmed plans to float in a move which could value it at £2bn. The small business loans platform also posted results showing it had almost doubled revenue in 2017, making £94.5m compared to 2016’s £50.9m.

Financial Times Evening Standard The Guardian, Page; 28 The Daily Telegraph, Business, Page: 1, 5

WEALTH MANAGEMENT NEWS

Boylan moves to Brewin Dolphin

Brewin Dolphin has appointed LGIM CFO Siobhan Boylan as finance director. Ms Boylan is expected to join Brewin Dolphin in early 2019, subject to regulatory approval

Financial Times, FT Fm, Page: 3

True Potential shines through

Newcastle-based wealth management platform True Potential, used by many UK independent financial advisers (IFAs), has appointed bankers from Perella Weinberg Partners to help plot a sale that could value it at close to £2bn. The fintech firm is owned by 739 individual partners, with a minority stake held by US-based private equity firm FTV Capital.

Sky News

ECONOMY NEWS

Manufacturers maintain resilience

A quarterly report from the EEF and BDO has said that factory output and orders were “still very much in the black” over the past three months and were likely to continue to be for the rest of the year. Tom Lawton, head of BDO’s manufacturing department, said: “Despite [continuing] uncertainty, UK manufacturers continue to demonstrate resilience and some confidence in at least the short-term future.” However, the EFF said momentum had faded and downgraded its growth forecasts to 0.9% this year and 0.5% next, from 1.9% and 0.5% estimated in June.

The Times, Page: 32 Yorkshire Post, Business, Page: 15

Minimum wage lift could give urban regions a £1bn-plus boost

A study by the Smith Institute suggests that a small increase in the minimum wage in Britain’s main city regions would encourage employers to deploy workers more productively and help boost local economies by more than £1bn. The Guardian’s Phillip Inman notes that employers like KPMG have adopted the higher, voluntary living wage, and called on suppliers and clients to adopt it too.

The Guardian, Page: 30 The Scotsman, Page: 2 Yorkshire Post, Page: 4

Fox dismisses Treasury’s Brexit predictions

Liam Fox has refused to back Chancellor Philip Hammond’s warning that a “no-deal” Brexit could damage the economy. Speaking on the BBC‘s Andrew Marr Show, the International Trade Secretary said: “This idea that we can predict what our borrowing would be 15 years in advance is just a bit hard to swallow.”

BBC News

Manufacturing confidence lowest since Brexit referendum

British manufacturing in August grew at its slowest pace in over two years, according to IHS Markit’s latest purchasing managers’ index (PMI) for the sector, to a 25-month low of 52.8 for the month. Business confidence was at a 22-month low, with 47% expecting higher production in a year’s time. The growing opposition to Theresa May’s Brexit plan combined with the slump in UK manufacturing growth pushed Sterling to its lowest level against the euro in four months.

The Daily Telegraph Financial Times The Daily Telegraph Financial Times Daily Express, Page: 51 The Guardian, Page: 28

Consumer spending on the rise

According to data from Barclaycard, consumer spending rose by 4.5% in August compared with the previous year. Entertainment saw the biggest jump in spending as ticket sales climbed by 8.6% and spending in pubs increased by 11.9%. Meanwhile, figures from the British Retail Consortium-KPMG sales monitor showed that retail sales growth slowed in August, increasing by just 0.2% on a like-for-like basis compared to the same month in 2017.

The Times, Page: 44 Financial Times, Page: 3 Daily Mail I, Page: 43 Yorkshire Post, Page: 4

Economy 2% smaller than it would have been without Brexit

Research by UBS suggests the UK economy is already 2% smaller than it would have been had the public not voted to leave the EU, while investment is 4% lower and consumption 1.7% down.

The Daily Telegraph

OTHER NEWS

Carillion collapse led to a fall in public trust in business

The Telegraph’s Tim Wallace says peoples’ trust in business has plummeted since the collapse of Carillion, with a CBI survey finding just 56% believe businesses have a good reputation, compared with 65% last October. Individuals’ own interactions with firms are better, however, with 80% saying they have a positive relationship with their employer, a rise of 11 percentage points on the year. The CBI study also found 92% would welcome comments from business on political issues such as immigration, climate change and gender equality.

The Daily Telegraph, Business, Page: 4

Countingup raises £2.3m seed

Fintech firm Countingup, which meshes business banking with bookkeeping, has raised £2.3m in seed funding. It already has 4,000 active customers and is signing up new users at a rate of 1,500 businesses per month. Founder Tim Fouracre’s vision is that business banking and accounting software should be merged so that bookkeeping and filing accounts can be largely automated.

Tech Crunch

Over 60s benefits “difficult to justify”

The ATT has said if the qualifying age for free eye tests and prescriptions was be raised from 60 to the state pension age it would save £1bn a year. Many over 60s are working and could afford to pay for a variety of services they currently receive for free, saving the Government £27bn it could invest in the NHS.

The Times, Page: 48

Judge approves mentally ill mother’s £6m gift for son

A judge has ruled that a son should be allowed to give himself £6m from his mentally incapacitated mother’s £18.6m fortune to reduce inheritance tax liabilities.

The Times, Page: 25 The Daily Telegraph, Page: 2

Contact Paul Southward if you have any queries.

Paul Southward