News to Friday 10th January 2020

NEWS ROUNDUP

TAX News to Friday 10th January 2020

THURSDAY

Scots paid £750m more in income tax following SNP tax changes

Workers in Scotland paid almost £750m more in income tax in 2018/19 than they did the year before following an overhaul of the tax system by the SNP. A National Audit Office report confirmed Scotland’s estimated income tax revenue was around £11.7bn in 2018/19, compared to £10.9bn the previous year. Critics say the changes make Scotland the highest-taxed part of the UK. But a Scottish Government spokeswoman said: “Under our progressive approach, 55% of Scottish income taxpayers pay less income tax than people living in the rest of the UK, whilst raising additional revenue to support our economy and invest in the delivery of first-class public services. Whilst higher-earning taxpayers are asked to pay more, we are able to provide the widest set of free-to-access public services anywhere in the UK.”

The Herald

Irish should ignore EU tax demands, says Sugar

Alan Sugar has said Ireland should ignore Brussels and set its corporation tax rate how it pleases if the EU tries to harmonise tax rates. The businessman said the country should follow France’s example and simply do what it wants regardless of EU rules. Speaking at the Pendulum Summit in Dublin, Mr Sugar said that if Ireland was forced to raise its corporation tax from the current rate of 12.5%, he felt it would still remain an attractive place to do business, as long as levels did not rise above British rates. He also said Ireland could benefit after Brexit from companies moving there to gain access to the single market.

RTÉ

FRIDAY

Business beware HMRC’s latest focus

Andrew Sackey, partner and head of tax fraud investigation at Pinsent Masons, explains how HMRC’s investigations into non-compliance have progress since 2010 when the UK’s tax administration undertook a Spending Review, which boosted funding for criminal investigators. Periodic improvements in enforcement work since have seen revenue from prosecutions rise sharply and the scope of targets broaden. In 2020, there are already more than twice as many corporates and wealthy individuals under criminal investigation as there were ongoing criminal prosecutions of any type in 2010, says Sackey, adding that with HMRC’s Offshore, Corporate and Wealthy compliance division (OCW) now prosecuting corporates for failing to prevent tax evasion by employees or agents, businesses “would be well advised to ensure that their tax governance and compliance measures cover the unique risks posed by the new corporate compliance landscape.”

The Scotsman, Page: 36

Former head of tax at Freshfields charged over illegal rebate scandal

Ulf Johannemann, the former head of global tax at Freshfields Bruckhaus Deringer, has been formally charged over his alleged involvement in a fraudulent reclaim of €383m tax which was never paid to the German state. Dividend stripping, or cum-ex trading, involved using a now closed legal loophole to claim tax credits for both buyers and sellers of shares by buying shares just before their dividends expired and then selling them on straight away.

City AM Financial Times, Page: 14

CORPORATE News to Friday 10th January 2020

THURSDAY

Ted Baker’s lenders appoint advisers

Sky News reports that struggling fashion retailer Ted Baker’s banking syndicate, which includes Barclays and Royal Bank of Scotland, have appointed restructuring experts from FTI Consulting to undertake an independent business review (IBR). FTI’s IBR is expected to take several weeks to conclude and could result in the lenders further tightening the terms on which they provide debt to the fashion retailer, according to the news agency. Last year, the company announced that an accounting error had led it to overstate the value of its stock by up to £25m. Deloitte and lawyers from Freshfields Bruckhaus Deringer have been brought in to investigate the matter. Sky News says that Deloitte’s probe into the accounting error may ultimately provide awkward reading for KPMG, Ted Baker’s auditor since 2002, noting that in 2018, KPMG was fined £3m by the Financial Reporting Council for breaching the watchdog’s ethical standards in relation to non-audit services provided to the fashion retailer.

Sky News Reuters UK The Guardian, Page: 37 City AM, Page: 3

Luxury dealer collapses into administration

Almost 140 staff at specialist motor dealer Leven Car Company are facing an uncertain future after the business entered administration. Administrators at Leonard Curtis Business Rescue & Recovery were hired earlier this week following an internal company review.

The Scotsman, Page: 39

FRIDAY

Northern Rail could be nationalised ‘within months’, says Shapps

The transport secretary has warned that Northern Rail could be nationalised within months as its operator, Arriva Rail North, rapidly runs out of funds. Grant Shapps said he will either accept Arriva’s plan for reduced services under a new contract or the state will take over as an operator of last resort.

Financial Times The Daily Telegraph, Page: 8 City AM The Guardian, Page: 7

M&A deal value rises by £15bn in 2019

Financial firms completed £39.8bn worth of deals last year, up from £24.9bn in 2018, according to data from EY. The £15bn increase in M&A deals came despite the number of deals falling from 236 to 211.

City AM

SMEs News to Friday 10th January 2020

THURSDAY

SMEs owed £50bn in late payments

New research from digital banking platform Tide revealed that UK SMEs are chasing an estimated £50bn in late payments with the average small business chasing five outstanding invoices at once, wasting an hour and a half every day. London-based businesses are the hardest hit with an average of seven invoices outstanding. Oliver Prill, Tide’s chief executive, said: “It has been known for a while now that late payments are crippling SMEs, with the government having tried a number of times to address the issue. It is however shocking to see exactly how much time SMEs, and particularly the self-employed are wasting by having to chase clients to pay promptly. Cash flow is crucial for SMEs, and just a few late payments can tip them into danger of becoming insolvent.”

City AM, Page: 8

PROPERTY News to Friday 10th January 2020

THURSDAY

Halifax reports 4% rise in house prices for 2019

UK house prices rose 4% in 2019, according to Halifax, as a December bounce saw the average property’s value jump 1.2%, or £4,000 – the largest monthly rise since February 2007. The Halifax index, based on the lender’s own mortgage approvals, showed the average house price climbed £9,136 last year to £238,963, but the bank said that it only expected “modest” rises in the year ahead. Halifax managing director Russell Galley said: “Looking ahead, longer-term issues such as the shortage of homes for sale and low levels of house-building will continue to limit supply, while the ongoing challenges faced by prospective buyers in raising deposits will serve to constrain demand.” The bank has forecast gains of 1 to 3% for house prices in 2020.

The Daily Telegraph The Times The Guardian City AM Daily Mail

Options tighten for retailers

Shoe Zone boss Anthony Smith has attacked the lack of government action to reform business rates, decrying Boris Johnson’s promised rate cut for small businesses as “shameful” and “total rubbish”. Meanwhile, Deloitte has warned of more retail failures this year as landlords continue to push back against company voluntary arrangements (CVAs). Dan Butters, head of restructuring services at Deloitte, said: “We believe that this increase in administrations in December 2019 may be a sign of things to come in 2020 as retailers are left with fewer options to restructure.”

The Times, Page: 43 The Sun, Page: 45 City AM, Page: 5

PENSIONS News to Friday 10th January 2020

THURSDAY

Chess body pressed to drop grandmaster in pensions row

The English Chess Federation is being urged to part ways with Simon Williams, a Grand Master linked to a pension “liberation” scheme that left some investors with hefty tax bills.

Financial Times, Page: 2

WEALTH MANAGEMENT News to Friday 10th January 2020

FRIDAY

Vanguard plans to launch UK investment service

The Financial Conduct Authority has given US fund management group Vanguard the green light to begin providing investment advice in the UK. In a message to clients, Vanguard’s head of Europe Sean Hagerty revealed the firm has obtained approval from the FCA to provide retail advice and is “exploring the launch of a direct to consumer financial advice offer in the UK”. He stressed that the new service was in its early stages and “there is not currently a timescale for bringing a proposition to market”. Vanguard has offered professional investment products in the UK since 2009, where it manages a total of £87bn.

Financial Times, Page: 1 City AM, Page: 7 Investment Trust Insider Financial News

ECONOMY News to Friday 10th January 2020

THURSDAY

UK productivity rises slightly after year of contraction

Official figures released yesterday by the Office for National Statistics (ONS) show output per hour worked – the standard measure of productivity – grew only marginally in the third quarter of 2019 following four successive quarters of contraction. In the services sector, which accounts for 80% of the economy, output per hour rose by 0.1%. Productivity in the construction sector was up by 5.7% while manufacturing productivity fell by 1.9%. “Although productivity grew on the year, the underlying picture is of sustained weakness since 2008, with growth over the past year being only a third of the average over the past 10 years or so,” said Katherine Kent, head of productivity at ONS. Alex Tuckett, senior economist at PwC, said: “Without sustained productivity growth, recent improvements in real wage growth are unlikely to be sustainable. This will require increased investment by both business and government, notably in transport infrastructure, upskilling staff and innovation.”

Financial Times The Times The Daily Telegraph, Business, Page: 4 City AM

British retail suffers worst year on record

Sales fell for the first time since records began in 1995, according to figures from KPMG and the British Retail Consortium (BRC). Total retail sales in stores and online fell by 0.1% in 2019. Helen Dickinson, chief executive of the consortium, said that 2019 had been “the first year to show an overall decline in retail sales. This was reflected in the CVAs, shop closures and job losses the industry suffered. Twice the UK faced the prospect of a no-deal Brexit, as well as political instability that concluded in a December general election – further weakening demand for the festive period.”

The Times, Page: 42 Financial Times, Page: 3 The Daily Telegraph, Business, Page: 3 The Guardian, Page: 37 Daily Mail, Page: 85 The Sun, Page: 45 City AM, Page: 5

FRIDAY

Business confidence hits record high

Business sentiment among finance chiefs has risen sharply following the Conservatives’ election victory, according to the latest Deloitte CFO survey. Over half (53%) of respondents were more optimistic than three months earlier, up from 9% in the previous quarter. The figures represent the biggest jump in confidence since Deloitte started the survey 11 years ago. Some 38% said they expected UK businesses to increase capital expenditure over the next year, up from just 6% during the previous period, and 27% said they expect hiring to rise next year, up from 3% during the last quarter. A separate study by the Recruitment and Employment Confederation and KPMG echoed the sentiment, with permanent appointments rising for the first time in a year, while temporary billings rose faster.

The Times, Page: 37 The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 82

Mark Carney hints of upcoming rate cut

The Bank of England’s outgoing chief, Mark Carney, has suggested that UK interest rates could soon be cut in order to bolster the economy amid slow growth. This resulted in the pound falling 0.6% against the dollar to $1.3016 in early London trading on Thursday. Meanwhile, the euro saw a 0.5% rise against sterling. The Bank has previously predicted that the new year will see a boost to the economy as Brexit uncertainty was eased following the election result, however the new comments hint that the Bank is not currently as confident in a Brexit bounce. Carney said that the bank’s Monetary Policy Committee has been debating “over the relative merits of near term stimulus to reinforce the expected recovery in UK growth and inflation.” He added: “There are downside risks from global growth and the possibility that uncertainties over future trading relationships could rema in entrenched”.

Financial Times Daily Mail Daily Express, Page: 13

OTHER News to Friday 10th January 2020

THURSDAY

World Bank warns of global debt crisis

The World Bank has warned that the latest wave of debt accumulation is the largest since the 1970s and that a small recovery in world output predicted for 2020 “is largely predicated on a rebound in a small group of large emerging market and developing economies, most of which are emerging from deep recessions or sharp slowdowns”. Total emerging and developing economy debt reached almost 170% of GDP in 2018 – or $55tn (£42tn) – an increase of 54 percentage points since 2010. The debt mountain leaves economies vulnerable to an unexpected spike in interest rates, the World Bank said, warning “the three previous waves of debt accumulation in debt have ended badly”.

The Daily Telegraph The Guardian

Contact Paul Southward.

Paul Southward