NEWS – WEEKEND TO 2ND FEBRUARY 2020
NEWS – WEEKEND TO 2ND FEBRUARY 2020
TAX NEWS – WEEKEND TO 2ND FEBRUARY 2020
Talks over global digital tax are back on track, says OECD
Outdated global tax rules are set to be rewritten after the 137 countries involved in the talks overseen by the OECD, agreed to “affirm their commitment to reach an agreement on a consensus-based solution by the end of 2020”, on the basis of the proposals for a new way to tax companies and a minimum corporate tax rate which was outlined last autumn. The talks come as a growing number of countries are preparing national digital taxes, despite Washington’s threat of retaliatory trade tariffs because it sees such levies as discriminatory against the likes of Amazon, Google and Facebook. Pascal Saint-Amans, director of tax administration at the OECD, said. “The prospect of trade wars triggered by tax disputes is clearly pushing countries to compromise”.
Financial Times Reuters
Savers could be missing out on tax relief
Online pension provider PensionBee has estimated that higher and additional rate taxpayers could be missing out on as much as £830m each year in unclaimed tax relief on their pensions. HMRC figures obtained by Pension Bee, through a Freedom of Information, show that the tax agency received only 259,000 claims from higher rate taxpayers and 54,000 from additional rate taxpayers in 2017-18. Pension Bee said the total number of claimants only represented 20% of higher rate taxpayers eligible to make a claim and 43% of the additional rate payers. Tom Selby, of pensions firm AJ Bell, said one of the great benefits of pension saving for higher and additional-rate taxpayers is the ability not only to receive 20% tax relief upfront, but claim back an extra 20% or 25% through your tax return. He added: “Those who fail to get their full tax relief entitlement are essentially turning down free money.”
IR35 to be extended
IR35, HM Revenue and Customs’ initiative to determine whether non-payroll workers are really contractors or employees in disguise, is to be extended to private sector firms from April this year, with the burden of proving tax status likely to remain on individuals where smaller advice firms are concerned. This comes as research by recruitment consultancy BWD shows that the average total earnings for employed financial advisers reached £99,701 in 2018, an increase of 7% from £93,115 a year earlier, while the number of self-employed workers in the financial and insurance sectors has increased from 41,000 in 1997 to 86,000 in 2019.
Print firm fraudsters slashed pay while stealing from taxpayers
Five company directors from Essex have been sentenced for their part in a £3.1m fraud, that saw each of them collect hundreds of thousands of pounds of taxpayer cash. The five – Stephen Knight, John Knight, Brian Thomas, Paul Murphy and Philip Sach – were all directors of collapsed Basildon-based large printing business Anton Group Ltd. The fraud was uncovered following an investigation by HRMC. It is noted that during the fraud, the directors slashed staff pay – including their own – telling employees that this would assist with cash flow and keep the business afloat.
Wanted: bright ideas on how to tax the wealthy
Claer Barrett discusses in the FT some ways to tax the wealthy. She says she is hoping that the Chancellor proves himself to a “simple tax guy” in next month’s Budget.
Javid wavers as entrepreneurs bemoan tax raid
According to the Sunday Times, the Chancellor, Sajid Javid, is considering rowing back on plans to remove entrepreneurs’ relief after an outcry from company founders who were relying on the tax break for their retirement. The relief, which lets business owners and some directors pay only 10% of CGT when they sell, is set to be cut from £10m to £1m in the Budget. However, officials at the Treasury are now said to be reviewing the plans with small business owners complaining that they have invested in their companies rather than putting money into a pension. A source close to the Treasury said: “Nobody ever started a business because of entrepreneurs’ relief, but there ‘could be’ a problem if someone has spent years investing because of it.” The British Chambers of Commerce said last week that scrapping the measure risked “undermining some of our most promising young firms and entrepreneurs by stifling investment”. Critics add that reducing the relief to £1m would act as a disincentive for business owners to invest in growth. Tim Stovold, head of tax at Moore Kingston Smith, quipped: “All entrepreneurs ought to throw in the towel and go and work for the civil service and take a risk-free final-salary pension, rather than think about creating wealth or employment for others.”
Starmer courts radical left with tax pledge
The Labour leadership frontrunner Keir Starmer will today signal his intention to retain the party’s radicalism by signing up to John McDonnell’s plan to increase tax for the top 5% of earners. Starmer will promise to keep Labour’s manifesto pledge to introduce sweeping tax rises for those earning more than £80,000 a year, arguing that it is “right to ask those with the broadest shoulders … to pay more.” He will also promise to keep the party’s election commitment to reverse the Conservative cuts to corporation tax and to clamp down on tax avoidance.
Shining a spotlight on UK tax exiles
George Turner, director of Tax Watch UK, commends the Sunday Times for publishing its Tax List last weekend. He says the 2020 edition highlights the role of corporation tax in making sure that the super-rich cannot simply run off to tax havens and pay nothing on the profits from their UK businesses. Turner adds that if corporation tax were abolished it would clearly benefit tax exiles, while those who remained would just see an increase in their income tax bills.
Advice on spotting tax code mistakes
The Sunday Times gathers expert advice on what readers should do if they spot a problem with their tax code, which could mean they are paying too much or too little tax. Mike Parkes of GoSimpleTax, which offers online self-assessment software, said people who spot an error should talk to HMRC rather than their employer. “Contact HMRC as soon as possible and have your tax reference and national insurance number to hand, both of which are on your payslip,” he said.
CORPORATE NEWS – WEEKEND TO 2ND FEBRUARY 2020
Soak seeks buyer before plug is pulled
Bathroom retailer Soak.com has lined up restructuring and insolvency specialist Leonard Curtis to seek a buyer in a last-ditch attempt to avoid administration. It comes after an attempt by BDO to sell the business less than a year after it was spun out of plumbing and heating supplier Ferguson. Soak.com is understood to have annual sales of £43m, down from just over £70m for the year ending July 2018.
French retailer sued for £115m by liquidator to Comet
Fnac Darty is being sued for £115m by FRP Advisory, the liquidator to Comet, the electrical chain it used to own. FRP Advisory’s Geoff Carton-Kelly alleges that the French retailer breached insolvency rules.
Engineering firm on the brink
Smiths (Harlow), which makes parts for Bombardier and Rolls-Royce, is set to collapse into administration tomorrow after a cash crunch it claims was sparked by the theft of intellectual property. Administrators at FRP Advisory have been lined up.
Conran creditors on the rack
The Sunday Times reports that creditors of Content by Terence Conran could get back just 18p in the pound after the company announced it would close. The furniture wholesaler has appointed FRP Advisory to carry out a CVA.
SMEs NEWS – WEEKEND TO 2ND FEBRUARY 2020
Small UK businesses have big plans for the US
A report from the Federation of Small Businesses (FSB) and the UK Trade Policy Observatory at the University of Sussex Business School has found that the US will be the top destination for UK SMEs to trade with over the next three years. Trading with the EU would also continue, with Germany and France the next best trading destinations after America for UK small business post Brexit. Mike Cherry, FSB national chairman, said: “It is essential that the needs of smaller firms are at the heart of future free-trade agreements through a dedicated small business chapter in each agreement.”
Daily Express, Page: 9
Pension transfers reach £80bn in five years
A freedom of information request by Mercer has found that about 390,000 final salary pensions have been transferred since 2015. The actuarial consultant found that £80bn held in defined benefit schemes had been transferred in return for a cash value invested in a contribution-linked scheme.
The Sunday Times, Business, Page: 16
PERSONAL FINANCE NEWS – WEEKEND TO 2ND FEBRUARY 2020
How best to avoid IHT
Samantha Downes in The I offers advice on how not to inherit a large IHT bill, with grandparents wanting to pass on their wealth urged to plan ahead. Downes suggests it makes sense to give small and regular amounts away early, if affordable. She says grandparents could open a bank account for grandchildren, noting that any money paid in will be out of the IHT estate straight away if it falls within one of the exemptions, and the interest earned will not be applicable for tax purposes. She also raises the options of a Junior Isa or even a pension. Meanwhile, David Byers in the Times profiles a couple who are planning to sell their £850,000 home in the event one of them dies to share the proceeds out amongst their children, rather than have the home cause division and rancour later when they both pass away. The couple are keen to hear how such a plan could impact their IHT reliefs. Of course, if you really want to know how you can avoid IHT you should contact KSK.
The I, Page: 65 The Times, Page: 63
WEALTH MANAGEMENT NEWS – WEEKEND TO 2ND FEBRUARY 2020
Inside the world of Peter Hargreaves
Patrick Collinson in the Guardian interviews Peter Hargreaves, the co-founder of Hargreaves Lansdown. Hargreaves talks about his charitable donations and the launch of his own charitable foundation to help under-18s with a disadvantage or disability lead a fuller life. He says it made sense, considering his wealth, to set up the foundation now, rather than have it go through probate. He also speaks about his determination to pay his taxes in the UK, and is scornful of those fellow super-rich individuals who stash their fortunes in the Caymans or Monaco. Hargreaves also touches on the Woodford scandal and bemoans how it engulfed Hargreaves Lansdown. He says: “There was never any scandal at Hargreaves Lansdown. Well, at least not when I was there.”
The Observer, Page: 63
SJP bows to pressure over perks
St. James’s Place has unveiled an overhaul of pay and perks in the wake of an investigation by the Sunday Times. The financial advice group told staff that new bonus structures and job titles would reward “the right behaviours” and go beyond recognising sales made in a single year. Speaking at an annual meeting last week, CEO Andrew Croft and managing director Ian Gascoigne explained that advisers will no longer have their pay based solely on sales, other factors such as charitable work, customer retention and qualifications will also be considered. So-called cliff-edge bonuses will be replaced, and job titles such as senior partner and associate partner will be reviewed. The Sunday Times also reveals that SJP is set to announce the appointment of two more female non-executive directors after Dame Helena Morrissey joined the board last month.
INTERNATIONAL NEWS – WEEKEND TO 2ND FEBRUARY 2020
Bloomberg floats plan to tax wealthy
US democratic presidential candidate Michael Bloomberg has proposed major tax hikes on wealthy Americans and corporations, including a new tax aimed at people earning more than $5m per year. The proposals bear similarities with those of moderate frontrunner Joe Biden. Like Biden, Bloomberg advocates rolling back tax cuts for well-off Americans enacted under President Donald Trump, as well as charging higher tax rates on profits earned by the wealthy on asset sales. Also like Biden, he wants to raise the corporate tax rate to 28% from 21%. Bloomberg is also targeting hyper-rich individuals like himself, with an approach similar in spirit to new wealth taxes proposed by Bernie Sanders and Elizabeth Warren.
ECONOMY NEWS – WEEKEND TO 2ND FEBRUARY 2020
Mortgage approvals hit two-and-a-half year high
Mortgage approvals hit their highest level in nearly two-and-a-half years in December, according to Bank of England data. The figures show that the number of mortgages approved last month jumped to £4.6bn in the final month of 2019, some £400m more than the average for the previous six months. The figures suggest a precursor to the ‘Boris Bounce’ described by estate agents in the weeks following the election, which saw an uptick in the number of buyers and sellers coming to market. “Mortgage approvals in December were highly likely significantly lifted by increased confidence and reduced uncertainties among housing market participants following the decisive general election result,” commented Howard Archer, chief economic advisor to the EY Item Club.
Daily Mail The Independent
OTHER NEWS – WEEKEND TO 2ND FEBRUARY 2020
Sigh of relief for married couples
HRMC has had to confirm that couples will get their marriage allowance tax perk after a technical glitch in the system made it appear as though their claims were not being counted. The allowance permits the lowest earner to transfer up to £1,250 of their unused personal tax allowance to a partner.
The Times, Page: 56
Rugby ace tackled by French authorities
Former England rugby union star Jonny Wilkinson is involved with a stand-off with the French tax authorities that could land him with a £750,000 bill. Wilkinson has had to keep £765,000 in his image rights company, which he wanted to voluntarily wind up six years ago, in case he is hit by the French taxman. The authorities are investigating Wilkinson’s commercial deals during his five-year spell with French side Toulon.
The Mail on Sunday, Page: 51
Contact Paul Southward.