NEWS – WEEK ENDING 14TH FEBRUARY 2020
NEWS – WEEK ENDING 14TH FEBRUARY 2020
TAX NEWS – WEEK ENDING 14TH FEBRUARY 2020
Government urged to delay IR35 changes for 12 months
The Government has been urged to suspend changes to the IR35 regime – which assesses the tax status of freelancers – for at least 12 months as they are already devastating the contractor sector prior to their introduction on April 6. Follows a recent softening of the rules by HMRC last week, that will now only apply to payments made for services provided on or after April 4, in a letter to the Chancellor on Wednesday a dozen organisations representing much of the nation’s 5m self-employed said a delay was necessary to allow time to explore alternative arrangements and protect off-payroll workers and their personal businesses.
All sectors at risk from corporate criminal offence crackdown
Pinsent Masons say news that HMRC has launched criminal investigations into multiple companies for failing to prevent tax evasion should serve as a wakeup call to Scottish businesses. Andrew Sackey, head of tax fraud investigations at the law firm said: “All parts of the financial services sector are clear targets for HMRC’s activities; however infrastructure, haulage, labour service providers and construction businesses also look particularly vulnerable to investigations under these rules because of their reliance on supply chains and sub-contractor networks.”
The National The Scotsman
A tax on wealth would bring disaster for the Tories
The Telegraph’s Allister Heath says imposing a mansion tax on the wealthy and cutting pensions tax relief would be completely unjustified and amount to populist policies Boris Johnson should reject. The Conservatives’ post-Brexit plan “should be to cut and simplify taxes” Heath asserts, adding that “there can be no such thing as a successful tax-raising Tory government.” Robert Palmer of Tax Justice UK and Tory MP Nickie Aiken debate for or against a mansion tax in City AM.
The Daily Telegraph, Page: 18 City AM, Page: 23
Britain needs a new strategy for taxation
An FT editorial says the Chancellor has the space to set out a cogent agenda that would help persuade the country to go along with what could be painful, but necessary reforms.
IR35 reform a serious risk to economy and security
Accountants say there is a heightened risk to national security from a massive walk-out of PSC contractors in the defence industry. Research shows 75% of PSC contractors on projects spanning the UK’s major sectors, including defence, have already left their client or will do in the coming days or weeks due to the introduction of IR35 rules in the private sector; and 60% warn that their project will “fail to be delivered on time,” due to either PSCs being banned or PSCs walking off-site. Nearly half of contractors (47%) are also reporting their clients are offshoring work thanks to the IR35 changes. Graham Jenner, co-founder of Jenner & Co, comments: “With end-clients blanket banning the use of PSCs across various sectors due to fears of liabilities, significantly more than 170,000 people are facing drastic and unnecessary changes to their livelihoods. When draft legislation has that effect, it is clearly w rong to introduce it in its current form.”
Zuckerberg backs OECD moves for tax reform
Facebook founder Mark Zuckerberg is set to back OECD plans to reform international corporate tax rules that would see multinationals pay more tax. Some countries have been proposing their own digital services tax, including the UK, but new OECD rules would supersede these. Mr Zuckerberg will tell the Munich Security Conference tomorrow: “We want the OECD process to succeed so that we have a stable and reliable system going forward. We accept that may mean we have to pay more tax and pay it in different places.”
HMRC proposes Valentine’s Day cash boost
HMRC is proposing to married couples and those in civil partnerships to sign up to a £250 tax break this Valentine’s Day. More than 1.78m couples are already committed to the Marriage Allowance boost, but it is estimated more than 2m are missing out on up to £250 this year. If their claim is backdated, they could even receive up to £1,150. This is the last chance for eligible couples to backdate their claim for the 2015/16 tax year as the deadline for doing so is 5 April 2020.
The I, Page: 2
Cayman Islands to be put on Brussels blacklist
The British overseas territory of the Cayman Islands is expected to be placed on a EU blacklist of tax havens next week. The Cayman Islands will join Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three US territories of American Samoa, Guam and the US Virgin Islands on the “noncooperative” list.
The Guardian, Page: 22
GOVERNMENT NEWS – WEEK ENDING 14TH FEBRUARY 2020
Chancellor resigns amid cabinet reshuffle
Sajid Javid shocked Westminster on Thursday by quitting as chancellor in the middle of Boris Johnson’s cabinet reshuffle. Mr Javid rejected the prime minister’s order to fire his team of aides, saying “no self-respecting minister” could accept such a condition. Mr Javid had been due to deliver his first Budget in four weeks’ time and his resignation follows rumours of tensions between his team and Dominic Cummings, Boris Johnson’s senior adviser. He has been replaced as chancellor by Chief Secretary to the Treasury Rishi Sunak, MP for Richmond in North Yorkshire, who just seven months ago was a junior housing minister. A former Goldman Sachs banker, Sunak’s father-in-law is one of India’s richest men, NR Narayana Murthy, the billionaire co-founder of IT and consulting firm Infosys. Former Brexit Secretary Stephen Barclay becomes chief secretary to the Treasury and international development secretary Alok Sharma, MP for Reading West, has been appointed as the new Business Secretary. Sharma read applied physics at Salford University before qualifying as a chartered accountant and training with Deloitte. Anne-Marie Trevelyan, a former accountant with PwC, has been appointed to lead the international development department.
CORPORATE NEWS – WEEK ENDING 14TH FEBRUARY 2020
Probe into crash of legendary motorcycle firm
MPs have called for an investigation into the collapse of motorcycle manufacturer Norton. The boss of the firm, Stuart Garner, is to face the Pensions Ombudsman today after dozens of complaints were made about pensions being invested into the company just before its demise. A report by Norton’s administrators BDO for prospective buyers of the business shows Garner personally owes Norton £160,000 and another loan of £324,002 to one of Garner’s other companies has been written off. Norton also had a n £800k fleet of luxury cars. Garner claims he lost everything after Norton’s main lender Metro pulled the plug “without dialogue” a fortnight ago.
The Times, Page: 38 The Guardian, Page: 39
Carlauren con man leaves elderly out in the cold
The Standard’s Jim Armitage reports on the Carlauren Group, which promised investors it would renovate properties and turn them into care homes for the wealthy. Offering a 10% return, investors ploughed £75m into the company which is now being administered by Quantuma and Duff & Phelps after collapsing before Christmas. Founder Sean Murray is alleged to have spent company funds on supercars, a private jet and a yacht which have now been seized. Two homes are also expected to be requisitioned. Armitage says the FCA has been asleep at the wheel again with £50m supposedly missing and nurses and elderly residents in the care homes that were built now turfed out.
Evening Standard, Page: 48
Recruitment firms remain attractive
A report from BDO indicates a strong interest in recruitment firms as the market continues to grow. The global recruitment market grew at a compound annual rate of 7.4% over the last five years and 5.5% in 2019. James Fieldhouse, M&A managing director at BDO, explained: “The recruitment sector has remained resilient and attractive to investors despite economic uncertainty. There’s a real appetite for recruitment businesses innovating with technology or providing specialist expertise and serving a niche part of the market.”
Yorkshire Post, Business, Page: 7
LCF-linked property firm in administration
Smith & Williamson has been appointed as the administrator to Prime Resort Development, a company behind property developments in the Dominican Republic and Cornwall that are linked to the £237m London Capital & Finance minibond scandal.
The Times, Page: 48
PENSIONS NEWS – WEEK ENDING 14TH FEBRUARY 2020
Pensions tax relief cuts fuelling self-employed savings crisis
Industry leaders are warning that Government plans to cut pension tax relief could further fuel the self-employed savings crisis. While Chancellor Sajid Javid considers a 20% charge on pension contributions made by those earning over £50,000 a year in next month’s Budget, Mike Cherry, head of the Federation of Small Businesses, warns: “Rash policy moves threaten to make a bad situation worse.” Sam Bowman at the Adam Smith Institute, a pro-free markets think tank, suggests cutting pensions tax relief would be “a really blunt tool”.
Pension plans come under more pressure on climate risks
The impact of climate change on savers’ pension pots will need to be better explained by trustees, the government has said, with schemes now required to disclose their strategies to manage risk. Therese Coffey, the Secretary of State for Work and Pensions and Mark Carney, the Prime Minister’s finance adviser for COP26, outline the rationale for greater climate-related disclosure in a piece for the Telegraph. They say pension funds “have the power to channel funding towards companies with a plan to make the transition to net zero.”
SMEs NEWS – WEEK ENDING 14TH FEBRUARY 2020
Bombardier slammed over late payment practices
The interim small business commissioner, Philip King, has accused the British division of the manufacturer Bombardier of exploiting its suppliers by failing to settle invoices on time. The Federation of Small Businesses described the company’s behaviour as “shocking”. Mike Cherry, the federation’s national chairman, said: “Bombardier must change course, and other big businesses using their dominant position to bully small suppliers must realise they are on borrowed time. Nobody deserves to be treated like this.” Bombardier agreed to review its payment practices.
BAE and Shell sanctioned for late payment
BAE Systems and Shell have been removed from the prompt payment code – a government-backed scheme that promotes fair treatment of suppliers – after having failed to honour a promise to pay 95% of invoices within 60 days. in the hope of being reinstated, BAE has submitted a plan for improving its treatment of suppliers to the Chartered Institute of Credit Management, which runs the scheme. Mike Cherry, national chairman of the Federation of Small Businesses, said: “Suspending BAE and Shell from the industry code is an important statement. Taking decisive and public action against those businesses that are found to be bullying suppliers or consistently paying late is the only way we can affect the cultural change needed.”
PENSIONS NEWS – WEEK ENDING 14TH FEBRUARY 2020
Avoid being a victim of pension scams
Government bodies and the Pensions Regulator are warning savers over the risk they face from pension scams. It is estimated that over 5 million savers could be at risk from falling for one of the most common scam tactics. Last year the average victim lost £82k; for some, their entire life savings. The Pensions Regulator has published guidance on how to avoid scams here: –
There is also a booklet “how to spot a scam” here: –
PROPERTY NEWS – WEEK ENDING 14TH FEBRUARY 2020
Retail bosses call for rates action
Over fifty retailers have written to Chancellor Sajid Javid calling for reform of the business rates system. “The burden of business rates has become unsustainable for many retailers,” they said. The British Retail Consortium, which coordinated the letter, argues that they have subsidised other industries to the tune of £543m over the last three years, while firms outside London have subsidised those in the capital in the sum of £596m.
Daily Mail, Page: 75 Daily Express, Page: 10 The Times, Page: 36
UK mansion tax mapped
The Telegraph provides an overview of where a mansion tax would hit hardest with maps of the UK showing homes worth more than £1m and £2m. House price inflation in recent years means it would not just be the typically wealthy corners of London hit by the tax but areas such as Hounslow and Tower Hamlets. Outside of the capital Guildford and areas in Hertfordshire would feel the pain as would households further afield in Winchester and Cambridge, where 9.1% of owners would be have to pay the mansion tax. Kensington and Chelsea would be the hardest hit with 66.5% of homes valued at over £1m. If the tax was levied on homes worth over £2m 35.7% of households would have to pay up.
ECONOMY NEWS – WEEK ENDING 14TH FEBRUARY 2020
UK was third fastest G7 economy in 2019
Despite the UK stagnating in the final quarter of last year it had the third-fastest growing economy in the G7, expanding by 1.4% in 2019. France, Germany and Italy, grew by 1.3%, 0.5% and 0.2% respectively. Only the US and Canada, which posted growth of 2.2% and 1.5% respectively, were ahead of Britain. Howard Archer, chief economic adviser to the EY Item Club, said: “2019 was a real yo-yo year for the economy, with its performance being particularly distorted by the two scheduled Brexit deadlines.” But Ruth Gregory, senior UK economist at Capital Economics, says: “All this backward-looking news is less important than the timelier data which suggest that the economy has returned to growth in quarter one.”
Eurozone industrial production crashes
Industrial production slumped 4.1% at the end of 2019 in the eurozone compared with output levels the same month a year earlier, with Germany down 7.2%, Italy 4.3% and France 3.2%. Output was down 2.1% compared with November and economists see little hope for a swift revival with the coronavirus now seriously disrupting car manufacturers in particular.
Pound rises on Rishi Sunak’s appointment
Sterling rose above $1.30 yesterday after it was announced that Rishi Sunak would take over from Sajid Javid as Chancellor with traders predicting the move would herald a spending boon and put promised tax cuts back on the table. However, with markets anticipating extra borrowing, bond prices fell pushing up the cost of government borrowing. The Telegraph’s Matthew Lynn argues that increasingly “batty” proposals coming out of the Treasury showed Mr Javid was not the right man to deliver. In the same paper, Ryan Bourne says Mr Sunak must prove the Conservatives “haven’t forgotten the lessons of good tax policy” with a key early test being whether he “jettisons this misguided assault on pensions tax relief.”
OTHER NEWS – WEEK ENDING 14TH FEBRUARY 2020
New Bristol Regional Centre formally opens for business
Jim Harra formerly declared HMRC’s new regional centre in Bristol officially open yesterday. The hub is the second of 13 new regional centres to officially open across the UK. The modern, hi-tech building will be home to around 1,650 HMRC employees and will allow the department to work in new ways, delivering an effective service for customers and providing a modern and collaborative working environment for civil servants.
Top footballer studies accountancy as back up
City AM interviews top women’s footballer Leah Williamson about her career and rising to be an Arsenal and England defender. The piece notes that the realities of the women’s game mean Williamson, like others, can’t afford to focus just on the game. This is why she is studying accountancy part-time through the Football Association in preparation for life after her playing days. “You should dedicate your life to football – I have to, I’m an athlete – but it shouldn’t be everything, the be-all and end-all,” she says.
Tobacco smuggling gang jailed for 28 years
A tobacco smuggling gang who evaded more than £14.7m in duty have been jailed for a total of more than 28 years. The gang of eleven Lithuanian nationals were caught following an investigation by HMRC.
Contact Paul Southward.