News to 29th November 2019
News to 29th November 2019
TAX NEWS TO 29th NOVEMBER 2019
Corbyn’s taxation plans break £80,000 pledge
Several papers follow up on the news that Labour’s tax increases will not be restricted to those earning more than £80,000. Jeremy Corbyn was forced to concede during an interview that couples would lose the marriage allowance and savers would be hit with a hike in tax on dividends. But the Federation of Small Businesses warned that business owners would be hit too. National chairman Mike Cherry said: “These dividend proposals would mean a huge rise in tax payments that would threaten small business owners earning relatively modest amounts. On the face of it, a small business owner making £40,000 could face thousands of pounds more tax every year. This is a huge concern and urgent clarification is needed.” But responding to a question by the FT, Mr Corbyn clarified that Labour’s tax pledge in relation to those earning less than £80,000 only applied to income tax and national insurance. Elsewhere. the Independent’s James Moore says that Mr Corbyn is simply attempting to tax income from wealth at a similar rate to income and this will understandably annoy the wealthy. But the UK’s richest need to “step up”, says Moore, in light of the stark levels of inequality in the country. Finally, the Times’ Simon Nixon says those earning £80k or more may be in the top 5% of earners, but they are not necessarily in the richest 5%. The challenge will be to shift the burden onto these people, he suggests.
EU to vote on country-by-country reporting for global firms
European government ministers are set to vote on a new directive requiring multinational companies to reveal how much profit they make and how much tax they pay in each of the EU’s 28 member states. The new rules will require “country-by-country reporting” by companies with an annual turnover of more than €750m (£640m). The Guardian’s Nils Pratley says country-by-country disclosure rules are “mild”. He says: “It’s not about changing tax rates – it’s about allowing outsiders to see financial information that companies already file to national tax authorities. It’s extraordinary that it could take three years for the EU even to contemplate such a small advance. In the world outside Brussels, voters are enraged by corporate secrecy over tax.”
The Guardian, Page: 49, 52
Labour and Tory spending pledges set to bust budget rules, warns think-tank
The Resolution Foundation has warned that both a new Conservative and a Labour government would need to implement higher taxes or cut spending pledges as soon as they were elected if they intended to stick to their budgetary rules.
Financial Times, Page: 1 The Guardian, Page: 10
New Advisory Fuel Rates from 1st December 2019
HMRC have published company car advisory fuel rates for use from 1 December 2019. See the details here: –
EU’s country-by-country reporting plans widely rejected
Ireland was among twelve EU countries to vote against a proposal to introduce country-by-country reporting for multi-nationals. The move was designed to open up to scrutiny those companies which shift profits from high to low tax jurisdictions, such as Apple, Facebook and Google, to avoid paying an estimated $500bn a year in taxes. Ireland’s decision to vote against the proposed directive coincided with a warning from the Irish Fiscal Advisory Council (IFAC) that the country’s economy could collapse if there was a global clampdown on tax avoidance. The IFAC said half of all of corporate taxes paid in the nation come from just 10 global companies. Luxembourg, Malta, Cyprus, Latvia, Slovenia, Estonia, Austria, Czech Republic, Hungary, and Croatia were among the other countries to vote against the plans. Sweden voted against because amid fears the directive might water down their higher standards on transparency. France, Spain and the Netherlands were among those voting for the proposals. Germany abstained while the UK did not vote because it is in purdah before the general election. Elena Gaita, a senior policy officer at Transparency International, said: “It’s an outrage that member states have once again put the interests of big business above those of citizens.”
The Guardian, Page: 46 The I, Page: 57
Economists warn of tax rises across the board after election
The Institute for Fiscal Studies (IFS) has warned that neither the Conservatives nor Labour have realistic spending plans as the general election approaches, with director Paul Johnson saying that both were being dishonest with voters. He claimed the Conservatives were continuing to “pretend that tax rises will never be needed to secure decent public services”, stating: “It is highly likely that the Conservatives would end up spending more than their manifesto implies, and thus taxing or borrowing more.” As for Labour’s plans, the IFS said the party’s claim that only the top 5% of taxpayers would be affected by its tax rises was “false” and that “many millions” of ordinary working people would in fact be hit. Labour’s plan to force firms to put 10% of their shares into joint employee ownership funds would effectively hike corporation tax to 33%, the IFS added.
BBC News Financial Times, Page: 2 The Daily Telegraph, Page: 7 The Times, Page: 8 The Independent, Page: 11 Daily Mail, Page: 12, 18 The Guardian, Page: 14 The Daily Telegraph, Business, Page: 4 The Sun, Page: 10
LinkedIn Irish subsidiary paid no corporation tax on £70m profit
An Irish subsidiary of LinkedIn paid no corporation tax last year despite posting a profit of almost £70m. LinkedIn Technology enjoyed a profit of $86.7m (£67.1m) in 2018, up on the $10m posted the year before. A note in LinkedIn Technology’s accounts stated: “As the company is Isle of Man tax resident, accordingly the company is subject to the Isle of Man income tax at a rate of 0% on any profits made.” Moreover, LinkedIn Ireland, posted a profit of $2.7bn in 2017 driven by the sale of LinkedIn’s intellectual property to Microsoft after its $26bn takeover in 2016. However, it paid just $127m in corporation tax on its profit for 2017, well below the standard rate of 12.5%.
Helen Brown: How tax relief can work for your business
Helen Brown of Anderson Anderson & Brown explains in the Scotsman how small businesses can make tax reliefs work for them. However, rules are complex and change frequently, she says, underlining the need for business owners to have a proactive and skilled tax advisor.
Wealth taxes will not solve inequality
Megan Greene writes on wealth inequality in the Financial Times, arguing that “history shows wealth taxes do not usually work.” She notes that administrative costs often offset any extra revenue.
EMPLOYMENT NEWS TO 29th NOVEMBER 2019
UK’s top firms urged to pay workers living wage
A letter organised by campaign group ShareAction calls on companies including Royal Mail, British Airways and JD Sports to pay their workers a real living wage. Legal & General Investment Management, Candriam Investors Group, BMO Global Asset Management and responsible investment group Hermes EOS are among the signatories. Pauline Lecoursonnois, who negotiates with companies for Hermes EOS, said: “The case is clear: a workforce that is fairly paid, well valued and respected will perform better than one that isn’t and therefore we are asking UK companies to consider paying the living wage as a key indicator of a responsible and sustainable business.”
Tories claim Labour free movement pledge will cost £4bn
Shadow home secretary Diane Abbott has dismissed Conservative claims that Labour’s plans to retain free movement with EU countries would add £4bn to Britain’s benefits bill within a decade. The average EU migrant claims £848 a year in working-age benefits and the Tories estimate that an additional 837,000 European citizens in the UK over the next decade will add up to an extra £4.1bn in handouts. Work and Pensions Secretary Therese Coffey said: “This is yet another line item in Labour’s long list of uncosted pledges.” But Ms Abbott said the claims were “dodgy Tory accounting”.
The Daily Telegraph, Page: 8 The Sun, Page: 9 Daily Express, Page: 4
Wage growth slows
Slowing global trade and Brexit uncertainty hit pay growth in October as business confidence fell, according to Guardian analysis. Average wage rises dropped back to 3.6%, down from 3.8% in September and 4% in July while employment fell at its fastest rate in four years. The inactivity rate increased as thousands of workers withdrew from the jobs market. David Blanchflower, a former member of the Bank of England’s monetary policy committee, said a rise in inactivity and persistent under-employment helped to explain why wages growth had started to fall.
The Guardian, Page: 50
CORPORATE NEWS TO 29th NOVEMBER 2019
Quindell shareholders seek compensation
Shareholders in the insurance services group Quindell have initiated legal proceedings against the company, now called Watchstone, accusing it of disadvantaging investors by misreporting its finances when it was at its peak. The company was forced to restate its accounts for 2012, 2013 and 2014. In 2013 alone, a £107m profit became a £64m loss. A Serious Fraud Office investigation is continuing and the Financial Reporting Council fined KPMG £3.2m over its auditing of the company. The proposed lawsuit will seek damages from former CEO Rob Terry.
Blackmore’s interest payments delayed again
Blackmore Bond, a minibond company that has raised at least £25m for property developments, has warned its 2,000-plus investors that it will miss its self-imposed deadline of paying their quarterly coupons today. The interest had originally been due at the end of October and this further delay will raise questions about the company’s financial health. Blackmore has also twice this year postponed the publication of its 2018 accounts after Grant Thornton resigned as its auditor. The firm must now file its accounts by the end of December. A spokesman for Blackmore said: “We have been working tirelessly to pay the interest due, however a number of properties have not yet completed. Contracts have been exchanged and completion dates are now agreed, so we expect to be able to be in a position to pay interest by the end of December.”
Bonmarche deal could see firm find its way out of administration
Womenswear retailer Peacocks could acquire rival Bonmarche, which entered administration last month, in a deal that could result in the closure of 30 branches of the latter before Christmas. Tony Wright, partner at administrator FRP Advisory, stated: “We have now begun advanced negotiations with Peacocks on a going concern basis and aim to complete a transaction that will maximise returns for creditors, but also provide the best opportunity to keep the retailer open and protect the greatest number of jobs.”
The Guardian, Page: 48 The Daily Telegraph, Business, Page: 1, 2 Daily Mail, Page: 93 The I, Page: 56 Yorkshire Post, Page: 18 The Press and Journal, Page: 31 City AM
Eddie Stobart Logistics rescue deal faces vote
TVFB has said it would like to see equity fundraising from new investors and existing Eddie Stobart shareholders of as much as £70m, to help reduce the haulage firm’s almost-£200m debt pile. The company earlier this year announced the discovery of an accounting error, suspended trading in August and issued a profit warning. Meanwhile private equity group DBAY, which floated Eddie Stobart two years ago and today holds a 10.1% stake, has proposed injecting £55m into the firm in return for majority ownership of its operating companies, with shareholders due to vote on the issue next month.
Evening Standard The Daily Telegraph
Thomas Cook’s aircraft maintenance unit to close
The plane-maintenance arm of Thomas Cook is to close two months after the tour operator collapsed, the Insolvency Service has said. Thomas Cook Aircraft Engineering will wind down as the group is liquidated. KPMG, appointed as special manager of the company, is contacting staff with the information they will need to claim redundancy payments.
The Times, Page: 59 The Independent, Page: 61 The I, Page: 59 The Sun, Page: 85 Yorkshire Post, Page: 18
PwC to help Intu raise cash
Shopping centre landlord Intu is said to have drafted in PwC to help with the tapping investors for more capital.
City AM, Page: 8
PROPERTY NEWS TO 29th NOVEMBER 2019
Nationwide figures reveal growth in house prices
Nationwide has issued figures revealing that annual growth in UK house prices has been under 1% every month for the last year, with the market remaining relatively stagnant. However prices were up 0.8% in the year to late November, representing a slight increase on October’s figures, while the housing market as a whole is being affected by Brexit-related economic uncertainty and weak global growth. The Nationwide said the average home in Britain now costs £215,734 and its chief economist Robert Gardner added that election periods tended not to directly affect the housing market, with wider economic conditions influencing buying and selling decisions more.
PENSIONS NEWS TO 29th NOVEMBER 2019
Labour’s pensions compo plan will benefit richest women
The Times reports that Labour’s £58bn plan to compensate women for rises in the state pension age will disproportionately benefit the better off. Analysis by the Institute for Fiscal Studies shows 25% of the women are in the top fifth of British households – with a disposable annual income after housing costs of more than £37,000 – while only 16% were in the bottom 20% of households, with annual income of less than £13,000. John Ralfe, an independent pensions expert, pointed out that Labour’s policy might also “discriminate against 1950s-born men who could mount a legal case for equal treatment”.
Men could claim Waspi’s compo under Labour’s gender plans
Labour’s pledge to compensate women whose state pension has been cut by changes to the retirement date has come under further scrutiny after experts raised the prospect of compensation being claimed by men as a result of Labour’s separate proposal to allow people to self-declare their gender. James Roberts, of the TaxPayers’ Alliance, said: “Letting people redefine their gender for pensions purposes could see canny baby boomers cheat the system.”
Daily Express, Page: 6 The Sun, Page: 10
SMEs NEWS TO 29th NOVEMBER 2019
HBOS compensation report delayed again
The findings of a review into the redress scheme set up by Lloyds for business owners damaged by the HBOS fraud scandal has been delayed for the second time. Owners of small businesses lost out when consultants linked with an HBOS “turnaround” unit in Reading exploited defective business lending processes to steal from the bank, damaging people’s livelihoods in the process. Nikki Turner, a director of SME Alliance, an organisation that campaigns on behalf of small business owners, said: “Justice delayed is justice denied.”
Eyebrows raised over Labour’s small business tax plans
The Labour party has been accused of failing to understand the difference between turnover and profit after the party outlined plans in its election manifesto for a “small profits rate” of corporation tax for companies with a “turnover” under £300,000 a year. Labour has since published a revised document which outlines its plan to reintroduce a small profits rate for firms with “profits” greater than £300,000. But Robert Salter, director at Blick Rothenberg, said: “One must worry whether the initial communication in this regard indicates a potential lack of awareness about businesses and the difference between turnover and profit.” Jonathan Samuels, chief executive of the lender Octane Capital, added: “If businesses were worried about the prospect of a Labour government, this kind of schoolboy error suggests they have reason to be.” Tim Walford-Fitzgerald, a tax partner at HW Fisher, said: “It was a surprise to read this in the manifesto, as corporation tax is usually a tax on profits, but then it’s not unusual for chancellors to fiddle around in order to tax as broadly as possible.”
UK ahead of France and Germany in SME stakes
Analysis of 13 economies by Euler Hermes concludes that Britain provides a better environment for SMEs than France and Germany. Canada was rated the best place to run an SME, followed by Hong Kong and the United States. Britain was ranked seventh in the list of large and developing economies with its strong showing in areas such as access to finance offset by issues such as the relative difficulty its companies have in doing business overseas. Parity with larger companies when it comes to corporation tax rates also went against Britain. Canadian small businesses pay a corporation tax rate of only 9%, compared with its standard rate of 28%.
Former Gib regulator to mediate in bank clashes
Samantha Barrass, the former chief executive of Gibraltar’s financial services regulator, has been appointed as the first chief executive of the Business Banking Resolution Service. Ms Barrass, who is a former director of the Solicitors Regulation Authority, said the new service would be a “landmark moment for dispute resolution in the UK, bringing independent, transparent and effective closure for tens of thousands of businesses across the country”. Alexandra Marks, a deputy High Court judge and expert in dispute resolution, has been appointed chief adjudicator.
ECONOMY NEWS TO 29th NOVEMBER 2019
Services sector optimism falls
Business optimism in the service sector fell in the three months to November, according to the CBI Service Sector Survey. Business & professional services – which includes accountancy, legal and marketing firms – saw volumes decline over the last quarter with volumes expected to fall at a similar pace in the three months to February 2020. Consumer services volumes declined at a sharper rate in the three months to November, marking the fifth consecutive quarterly fall. Rain Newton-Smith, chief economist at the CBI, said: “The current economic climate is holding back UK services firms, which are reporting falling sentiment, declining volumes and weaker profitability. Neither is the outlook expected to improve, with firms pessimistic about their prospects for expansion, investment plans having been scaled back and hiring on hold.”
The Times, Page: 44 Daily Express, Page: 55 City AM, Page: 5
ONS figures on household net worth released
The Office for National Statistics (ONS) has released figures showing that UK households saw the weakest growth in their net worth for 10 years in 2018, with slowing property price growth resulting in UK household net worth increasing by 0.6%, or £58bn, to £10.3trn. Meanwhile, the UK’s net worth of financial assets was down by £2254bn in the same period.
UBS cautious on UK shares
UBS says earnings growth for UK equities will not improve in 2020 regardless of which party wins the upcoming General Election. If the Tory party wins, uncertainty over the future trading relationship with the EU will continue, limiting the benefits of pushing through a Brexit deal. If Labour wins, corporate tax rates, greater regulation, and the prospect of nationalisation will cause UK domestic stocks to suffer, analysts said.
City AM, Page: 2
INTERNATIONAL NEWS TO 29th NOVEMBER 2019
How money laundering is poisoning American democracy
Edward Luce, writing in the Financial Times, claims that law firms, real estate companies and lobbying bodies in the US are thriving on ‘dirty money’, with some $300bn laundered annually.
OTHER NEWS TO 29th NOVEMBER 2019
Sri Lanka’s new government poised to slash VAT rate
Sri Lanka’s newly-installed government is cutting the country’s VAT rate by nearly half in a move experts say is likely to increase strain on public finances and put the country on collision course with IMF.
Contact Paul Southward.