News Roundup Wednesday 8th August 2018

NEWS ROUNDUP

TAX NEWS

UK Government gives Amazon more than it pays in tax

Alex Hawkes points out in the Mail on Sunday that the UK government spent over £11m on Amazon Web Services in the first three months of 2018 – £50m if extrapolated out for the year and far more than the online retailer’s UK Services subsidiary pays in corporation tax. Robert Palmer, executive director at campaign group Tax Justice UK, said: “The biggest companies can hire really clever accountants to slash their tax bill, whereas hard-working families don’t have that choice.” The paper’s Ruth Sunderland looks at Amazon’s “labyrinthine corporate structure” and says the company is at risk of “moral bankruptcy” if it doesn’t start “caring more about society and less about low tax bills.” Finally, Karren Brady says in the Sun that Amazon’s tax bill is particularly “galling” considering that extortionate business rates are killing sm all businesses on the High Street: “There is something seriously wrong with this equation.”

The Mail on Sunday, Page: 25 The Sun, Page: 25

HMRC officers probed over criminal conspiracy

HMRC is conducting an internal investigation following complaints that tax office personnel colluded with accountants and insolvency practitioners to ruin US businessman Frank Dowling. HMRC launched a four-year investigation into the London restaurateur but the prosecution collapsed in 2017 costing the taxpayer over £250,000. Administrators working with HMRC seized his company mid-restructure and placed it into liquidation after he was arrested and charged with cheating the public purse. No evidence was provided by HMRC and a judge threw the case out on the grounds of abuse of process.

The Sunday Telegraph, Page: 5

People must fight back against inheritance tax grab

Harvey Jones talks to a range of experts in the Sunday Express about the rise in IHT receipts for the Treasury following news the Government received almost £5.23bn from the tax during the 2017/18 tax year, up 8% on last year or £388m. The tax is over-complex while the thresholds have been frozen meaning more people are dragged in to IHT as their asset values rise, experts say. “HMRC is working hard to increase its share of the nation’s wealth,” says Jones. “You have to work just as hard in order to hang onto it.”

Sunday Express, Page: 55

Rees-Mogg calls for tax cuts to boost the economy

Jacob Rees Mogg is calling for tax cuts to stimulate the economy and build on the benefits of Brexit. He said the UK could learn from Donald Trump whose tax cuts have “liberated the American economy”. He added: “Economically, free market policies work, lower taxes boost the nation’s income which in turn provides more funding for public services.”

Sunday Express, Page: 4

Amazon shows reform of corporation tax needed

Several papers analyse Amazon’s UK tax bill and the tax treatment of companies like it. The Mail and the Times explain how Amazon has a web of companies in the UK, Luxembourg and the US which leave its UK tax liabilities “hidden from public scrutiny.” Richard Murphy, of Tax Research UK, said: “Amazon appears to pay tax at about 25% on profits, which is surprisingly high, although perhaps not for Europe as a whole. However, that’s split between seven countries and we have no idea where they’re paying what. We don’t know if they’re paying the right amount in this country.” The Express details how Amazon is fighting a £221m fine levied by the EC over illegal tax benefits provided by Luxembourg. The company is widely derided as arrogant while the UK government is criticised for failing to hold Amazon to account and for not imposing a country-by-country reporting regime that would improve transparency. The Independent’s James Moore describes the online retailer’s £1.9m corporation tax payment as “immoral”, going on to say that rules need to change in order to get multinationals like Amazon to pay more tax.

The Independent, Page: 2, 9 Daily Mail, Page: 10, 16 Daily Express, Page: 31 The Times, Page: 7 The Sun, Page: 9, 10

Warning over undeclared income from overseas

The Times’ Laura Whateley warns readers that if they have any income from overseas assets, such as rent from a holiday home, gains from sales or inheritance, or a foreign bank account that pays interest, it must be declared to a tax office by September 30, or they can expect hefty penalties.

The Times, Page: 37

SMEs NEWS

Energy regulator wants new powers to tackle energy mis-selling

Ofgem has asked the Department for Business, Energy & Industrial Strategy (BEIS) to give it more powers to clamp down on mis-selling to small businesses. Third-party energy brokers are not currently subject to regulation. “Strengthening our powers to enforce consumer protection law that applies to the non-domestic market, particularly for smaller businesses, would improve our ability to tackle misconduct by intermediaries,” Ofgem said.

The Sunday Times, Business, Page: 1

Time to put customers first, RBS told

FSB chairman Mike Cherry has called on Royal Bank of Scotland to improve its service to customers after the bank declared pre-tax profits of £1.8bn for the first half of 2018. Mr Cherry said: “Now the big banks are back in the black they should be putting customers first – and that includes face-to-face contact. By investing in their physical presence on high streets, banks can gain a competitive advantage, which can also help small businesses flourish.”

Daily Express, Page: 8

PROPERTY NEWS

Landlords face House of Fraser hit

The Times looks at House of Fraser as it seeks investment, saying that if the retailer was to collapse it would “cause chaos” for shopping centre owners. EY has been put on standby to handle a potential collapse. Elsewhere, several papers note that a group of commercial landlords represented by JLL and restructuring firm Begbies Traynor have launched a legal challenge to House of Fraser’s proposed CVA.

The Sunday Times, Business and Money, Page: 5 The Sunday Telegraph, Business and Money, Page: 1 The Mail on Sunday, Page: 47 The Observer, Page: 46 Sunday Express, Page: 53

Hammond warned against new buy-to-let levy

Plans to hike stamp duty on buy-to-let purchases have been criticised by two former Conservative cabinet ministers. The Chancellor is reportedly considering increasing the levy but John Redwood and Lord Lilley warn the move would damage tax receipts and further dampen the property market.

The Sunday Telegraph, Page: 2

Stamp duty hikes sees yields fall

The increases to stamp duty on expensive homes and second properties introduced by George Osborne have led to a slowdown in London’s prime market and a fall in tax revenues for the Treasury, the Times reports. Marcus Dixon, head of research at LonRes, commented: “If the government’s policy is to get as much money as they can from stamp duty, then if they lowered the rate then they would probably get as much, if not more money, than they are today.”

The Times, Page: 2

PENSIONS NEWS

Rate rises help to close pension gap

A combination of rising interest rates and buoyant markets have meant private sector pension schemes have all but wiped out their deficits for the first time since the financial crisis, writes Tommy Stubbington. Calculations by JLT Employee Benefits show the combined shortfall across the 5,500 schemes fell to £22bn at the end of last month, down from £130bn a year earlier.

The Sunday Times, Business, Page: 2

Exiting landlords could boost pensions business

The increase in the interest rate and tax reforms on second-home owners could unlock £28bn as half a million amateur landlords look to exit the market and put cash into pensions instead, according to research by Aegon, the pensions company.

The Times, Page: 64

PERSONAL FINANCE NEWS

What would a no-deal Brexit mean for your finances?

FT Money reporters reveal the strategies industry experts have for investments, properties and pensions in light of various Brexit outcomes, including a no-deal Brexit.

Financial Times, Money, Page: 2

ECONOMY NEWS

Fox: EU needs to decide if it wants to put “ideological purity” ahead of the real economy

Liam Fox has said “intransigence” from the EU was pushing Britain towards a no-deal Brexit. In an interview with the Sunday Times, the International Trade minister and Brexit supporter said: “We have set out the basis in which a deal can happen but if the EU decides that the theological obsession of the unelected is to take priority over the economic wellbeing of the people of Europe then it’s a bureaucrats’ Brexit – not a people’s Brexit – [and] then there is only going to be one outcome.”

The Mail on Sunday Reuters The Independent on Sunday

Carney’s gloomy Brexit predictions send pound down

Mark Carney has been described as the “high priest of project fear” by Jacob Rees Mogg after he told BBC Radio 4 that the risk of a no deal Brexit was “uncomfortably high” and that banks had been stress tested to ensure they could survive, in a worse-case scenario, a 4% recession, property prices falling by a third, interest rates increasing by four percentage points and unemployment reaching 9%. But the Bank of England Governor’s comments sent sterling down against the dollar and the euro. James Knightly, an economist at ING, said: “Mark Carney’s warning isn’t exactly going to help stimulate businesses into action” while former Brexit minister David Jones said Carney’s remarks were “ill-considered”. The Telegraph’s Ambrose Pritchard gently dismantles two key claims made by the Governor yesterday: that the UK had fallen to the bottom of the G7 growth league, and that there had been a 2% loss to GDP since the referendum, describi ng the former claim as “categorically false” and the latter as “sophistry dressed in pseudo-science.”

The Daily Telegraph, Page: 1, 4 The Daily Telegraph, Business, Page: 30 Daily Mail, Page: 12 Daily Express, Page: 7 The Independent, Page: 8 Financial Times, Page: 2 The Times, Page: 6

Services sector slips back into the slow lane

The Markit/CIPS services purchasing managers’ index showed a reading of 53.5 in July, down from 55.1 in June – the slowest rate of growth in three months. A reading above 50 indicates growth. IHS Markit said the service sector moved back into the slow lane, weighed down by the hot weather, the World Cup and increased staffing and fuel costs. The eurozone services sector also lost steam in July, with a PMI figure of 54.2 in July, down from June’s four month high of 55.2.

Daily Express, Page: 67 The Daily Telegraph, Business, Page: 29 The Times, Page: 50 Daily Mail, Page: 101 The Scotsman, Page: 35

OTHER NEWS

An American questions the British disease

A letter to the Sunday Times expresses exasperation at comments in the section last month, questioning the assertion from one reader that business models are “morally corrupt” if they mean paying little or no tax. “So, paying more tax is moral?” Rahul Handa from Chicago asks. Another letter riles Handa – it lamented the fact that the Financial Reporting Council has actual accountants working for it. “Would you rather have a plumber on the FRC?” Handa queries, before adding: “I wonder: is this naivety and self-inflicted envy what they call the British disease?”

The Sunday Times, Business, Page: 10

Bitcoin mining uses more energy than Austria

Alex de Vries, a blockchain specialist at PwC, has calculated that bitcoin mining is now using more power than Austria. “It uses up so much energy because while the bitcoin network does two to three transactions per second, it does 40 quintillion calculations per second for the mining – non-stop.”

The Sunday Times, Business, Page: 3

Contact Paul Southward if you have any queries.

Paul Southward