NEWS WEEKEND TO 4TH OCTOBER 2020
NEWS WEEKEND TO 4TH OCTOBER 2020
TAX NEWS WEEKEND TO 4TH OCTOBER 2020
More complaints against the taxman upheld
Figures from the Adjudicator’s Office show that 44% of complaints made about HMRC were found to have merit in the 12 months to April, up from 35% in the year before. Analysis from Price Bailey found that the Adjudicator’s Office resolved 1,024 complaints against HMRC in 2019/20, of which 61 were substantially upheld and 297 were partially upheld. Price Bailey’s Jay Sanghrajka described the increase as “startling”. The firm warned that HMRC is “under political pressure to maximise tax revenues, which means that it doesn’t always give complaints the individual care and attention they deserve”. HMRC commented: “We take complaints very seriously and resolve the majority ourselves. There’s always room to improve, so we work with the adjudicator to provide the best possible service.”
Surrey the UK’s IHT capital
HMRC figures show that Surrey pays the most inheritance tax in the UK, with the English county paying more than the whole of Scotland. Analysis reveals that residents in the county pay around £234,000 on average in death duties, with a total of £259m in IHT paid in 2017/18. This exceeds the £209m paid in Scotland. Surrey’s overall bill was also higher than the combined total for Wales and Northern Ireland, with Wales accounting for £82m and estates in Northern Ireland paying £25m. Geoffrey Todd of law firm Boodles Hatfield said rising property prices meant more people are having to pay the taxes, commenting: “It is not just the super-rich who pay inheritance tax nowadays.” Meanwhile, HMRC data also show an increase in earnings from inheritance tax investigations, with the Revenue pulling in £274m from over 5,000 investigations in the 2019/20 tax year.
The Daily Telegraph Daily Express
Property sellers risk tax penalty amid mini-boom
The FT warns that a lack of awareness over a rule change that means there is a 30-day window for paying CGT is putting those selling property at risk of large penalties.
Taxpayers’ date for the diary
Harry Brennan in the Telegraph highlights that October 5, which is exactly halfway through the tax year, is the date by which people are obliged to notify HMRC if they have a tax liability. While this does not apply to those who regularly file an annual tax return or where income has already been taxed at source, it does apply to the newly self-employed and those who earn untaxed income from investments, rental properties and dividends. Mr Brennan warns that those who miss the deadline risk fines.
Interest hit for those spreading tax payments
Harry Brennan in the Telegraph details how small business owners, self-employed workers and landlords who opt to spread their annual tax bills across monthly payments will pay more as a result. As of October 1, those who pay taxes in a lump sum have been able to apply online to spread payments due in January over monthly instalments, with HMRC having raised the threshold for fast online applications for Time to Pay payment plans from £10,000 to £30,000. While Rishi Sunak said this will give freelancers and self-assessment taxpayers more breathing space, Mr Brennan says the Chancellor failed to note that those breaking payments down over the year will be charged interest of 2.6% on their outstanding tax debts from February. Dawn Register of BDO said that while the increased threshold will make life easier for those whose finances have been stretched amid the coronavirus crisis, “this is effectively a loan from HMRC – and they are not going to lend money for free.”
Starmer: More tax for top 5% a ‘priority’
Labour leader Sir Keir Starmer says plans to raise taxes for the top 5% of earners are among his top priorities. Having pledged the move during the Labour leadership contest, he was asked by HuffPost UK if his stance on pledges set out while campaigning had since shifted. Mr Starmer said that the pledges are “very important” and insisted “they remain my priorities.” He went on: “The next General Election is in 2024, so I don’t think it’s prudent at this stage to set out tax arrangements for 2024, when we don’t know the size of the debt, we don’t know the damage that has been done.” He added that work on tax policy will have to be conducted closer to the election, adding: “We will then set it out in full detail and in a costed way.”
Harry could see ‘monumental’ tax bill
Tax experts have suggested that Prince Harry could be hit with a “monumental” tax bill unless he takes a break from Californian home next month. Harry faces paying both US federal and Californian state taxes under the substantial presence test that requires any foreigner who spends 183 days in the country during a three-year period to pay US taxes on worldwide earnings. LA-based tax lawyer David Holtz warned: “You can safely assume that someone at the Internal Revenue Service is looking very closely at him”, while another expert told the Mail on Sunday: “Harry’s bill could be monumental and could open up a can of worms for the Royal Family because the IRS will want to know all his sources of income.”
The Mail on Sunday, Page: 25
Analyst: Tax rises will be needed
Tom Selby, senior analyst at AJ Bell, believes taxes will have to rise to cover the cost of coronavirus-related support measures. He comments: “The hope will be that a rapid economic bounceback driven by improved Covid testing and the development of a vaccine might do some of the legwork. But this is likely to be coupled with hard decisions on taxes and state spending. Various ideas have already been floated, including raising CGT, breaking the state pension triple-lock and doing away with higher-rate tax relief on pension contributions.”
The Mail on Sunday
CORPORATE NEWS WEEKEND TO 4TH OCTOBER 2020
Ministers look to press ahead with regional paper rescue
The Sunday Telegraph reports that the Government is exploring a rescue package for local newspapers, with ministers said to be considering options for a fund to support the sector after a £2m pilot ended in June. This comes as Bullivant Media, publisher of the Coventry Observer, confirmed it has called in Mazars to carry out a CVA. The firm saw advertising sales fall amid the coronavirus crisis and has had to reduce its workforce by a quarter and restructure debts of about £1m.
Asda owners’ tiny tax bill
Neil Craven in the Mail on Sunday says brothers Mohsin and Zuber Issa, founders of petrol forecourts firm EG Group and the new owners of Asda, have built an empire “fuelled by billions of pounds of debt, low tax bills and links to a string of global tax havens”. He says figures show that the firm’s structure means the lossmaking group has paid just £55m in tax over five years – including two years when the company paid no corporate tax at all – despite total revenues for the period hitting £37.5bn.
The Mail on Sunday, Page: 121
Flower firm booming
The Mail on Sunday details the success of home delivery company Freddie’s Flowers ahead of the launch of its Flower Bond that will let customers invest in the firm’s growth. It hopes the move, which grants investors twice-yearly cash payments worth 5% a year, will raise between £2m and £10m from the four-year mini-bonds. PwC recently named Freddie’s Flowers among a batch of firms that could possibly be Britain’s next billion-pound start-ups.
The Mail on Sunday, Page: 123
INSOLVENCY NEWS WEEKEND TO 4TH OCTOBER 2020
Experts expect company collapses
Concern has been raised that a wave of insolvencies could be on the horizon, with the Institute of Directors warning that companies face collapse because a temporary relaxation of rules regarding directors’ personal responsibility for “wrongful trading” has now come to a close. Michelle Thorp, chief executive of the Insolvency Practitioners Association, says she is braced for a “bow curve” of insolvencies, saying that Government support means 2,500 have probably been prevented so far. Julie Palmer, regional managing partner at Begbies Traynor, says data shows a “wall of distress”, with 527,000 businesses showing signs of strain by the end of June. Begbies Traynor analysis shows there were just 778 company insolvencies in England and Wales in August, a 43% decline on August 2019.
SMEs NEWS WEEKEND TO 4TH OCTOBER 2020
Pandemic insurance case goes to Supreme Court
The Financial Conduct Authority’s (FCA) test case over coronavirus-related insurance claims will head to the Supreme Court after the High Court agreed to a fast-track appeal. The case was brought by the FCA against eight insurers to clarify policy wordings and whether policyholders were due payouts. With insurers and the regulator set to take disputed claims to the Supreme Court, small firms face waiting until next year to find out if they will receive payouts for pandemic-driven disruption. Sonia Campbell of law firm Mishcon de Reya, who is leading one of two action groups of policyholders, said insurers opting to appeal was another “nail in the coffin for small businesses”.
Daily Mail, Page: 103 Financial Times Reuters
WhatsApp initiative seeks to help SMEs
Private messaging service WhatsApp has launched a new initiative designed to help smaller firms, with its WhatsApp High Street enabling SMEs to connect easily with customers. A pilot scheme being carried out in Watford sees experts from the tech firm training local businesses on how to use its free-to-download business app as a shopfront for their products and services. This comes as a poll by WhatsApp reveals that two thirds of businesses have seen footfall decline since the coronavirus lockdown. The poll also found that while 82% of firms with 100-248 employees have increased their use of online tools during the pandemic, for those with fewer than 10 employees, this drops to 48%.
Daily Star, Page: 25 Daily Express
EMPLOYMENT NEWS WEEKEND TO 4TH OCTOBER 2020
Freelancers see pay fall 30%
Figures used by the Bank of England to track UK-based freelancers show that average incomes dropped by more than 30% in the first half of the year. A report from the freelancer trade body IPSE says the self-employed saw their average earnings fall from £22,742 per quarter at the start of the year to £15,709 at the end of June. Andrew Chamberlain of IPSE has called for broader Government support for freelancers, including around taxation. He said IR35 tax rule changes, due to come into force in April but delayed until 2021 because of the coronavirus crisis, should be scrapped. The reform is set to shift the responsibility of assessing the tax status of contractors from the individual to the employer.
The Daily Telegraph, Money, Page: 1
Ministers working on jobs programme
Chancellor Rishi Sunak has said the Government is working to provide more support to people facing long-term unemployment because of the coronavirus crisis, revealing that the Department for Work and Pensions is looking to develop a new version of the Work Programme launched in 2011. He said ministers are “actively looking” at a version of the initiative that would provide “intensive support to find new opportunities for those who have been unemployed for a long time”.
FINANCIAL SERVICES NEWS WEEKEND TO 4TH OCTOBER 2020
McGuinness in Brexit warning for the City
Mairead McGuinness, who is expected to become the EU’s financial services commissioner, says Brussels will refuse the UK access to the EU market unless Britain details how it intends to diverge from the bloc’s financial rules once the transition period comes to an end. She said the EU is looking for the UK to offer “some idea of their vision for their financial services sector”, saying that while Brussels does not know the UK’s intentions, particularly on financial services, it does “know they plan to diverge.” Ms McGuinness said that without “clear answers” from the UK, it will be hard for the EU to grant equivalence, warning that trade in financial services between the City of London and the EU will be “less fluid” post-Brexit, with the UK becoming a third country.
Uncertain times for the City as Brexit nears
Jill Treanor in the Sunday Times looks at the climate for financial services firms in the City, saying that with talks over a trade deal between Britain and the EU entering their final stage, it remains unclear whether the end of the Brexit transition period will prompt an exodus of firms to the continent. While EY estimates that 7,500 roles have left Britain, the firm’s Omar Ali comments: “It is conceivable that this is simply the starting point and as we come out of the pandemic, [when] travel and moving people become easier, you could see those numbers rising.”
UK price comparison sites face challenge in switching shake-up
The FT looks at Financial Conduct Authority rules on the price of insurance products, with EY’s Rodney Bonnard saying a rethink may mean there is less incentive for policyholders to shop around.
PROPERTY NEWS WEEKEND TO 4TH OCTOBER 2020
Cost of climbing the ladder hits record high
A surge in house prices in the aftermath of the coronavirus lockdown has driven the cost of upsizing to a record high. Data from Rightmove shows that the average buyer needed to pay an additional £67,761 to move from a two-bedroom flat to a three-bedroom home in August, marking a £4,000 year-on-year increase. With London figures extracted, the average asking price for a two-bedroom flat was £171,751 in August, while the typical three-bedroom home cost £239,512. While the step up from a two-bed flat to a three-bed home costs almost £68,000, the next step up – to a four-bedroom home – costs £183,000 on average, with the typical four-bed costing £422,605.
IWG agrees rent cuts but faces legal fight
Office provider IWG has persuaded more than half of its UK landlords to accept rent cuts. A company source has told the Sunday Telegraph that the firm had been in negotiations with 40 landlords in regard to 70 of its offices, with most of those city centre sites hit by the coronavirus outbreak and lockdown. Of these, around 60% have so far agreed to accept a combination of “relatively small” cuts and variable rents. The paper’s Russell Lynch says some landlords are considering legal action over the plan, with a source saying “aggrieved landlords are pooling resources”. Mr Lynch notes that IWG has caused “outrage” in the property industry with its plan to put Jersey-based subsidiary Regus – which holds lease guarantees worth almost £800m – into administration.
ECONOMY NEWS WEEKEND TO 4TH OCTOBER 2020
Economy likely to have grown 5% in August
Figures released later this week are expected to show that the economy grew 5% in August. This would mark a decline on the 6.6% month-on-month rise recorded in July and the 8.7% increase seen in June. Howard Archer, chief economic adviser to the EY Item Club, said that if the forecast of 5% month-on-month in August is correct, “this will cut the decline in economic activity from 11.7% in the year to July to 7.1% in the year to August.” Analysis from research group Consensus Economics shows that the average forecast from analysts for GDP over 2020 has slipped from a fall of 9% three months ago to 9.9% a month ago to 10.1% now. However, growth projections for 2021 have risen from 6.1% to 6.4% to 6.5% now.
The Mail on Sunday, Page: 122
Transport boost to put economy on the right track?
Prime Minister Boris Johnson has launched a review aimed at improving transport links across the UK, with the move part of a plan to boost the economy in the wake of the coronavirus pandemic. The PM hopes that enhancing transport infrastructure will not only bring the UK’s member nations closer together but also create more jobs. The review, which will be conducted by Network Rail chairman Peter Hendy and report its findings in summer 2021, will explore improvements to road, rail and air links, including a possible bridge between Scotland and Northern Ireland.
City AM Reuters
OTHER NEWS WEEKEND TO 4TH OCTOBER 2020
NCA: Criminals exploiting loan scheme
The National Crime Agency (NCA) says organised criminals are targeting the Bounce Back Loan Scheme, the Government’s emergency loan scheme for small businesses hit by the coronavirus crisis. The NCA said it has shared “red flag indicators” with banks in an effort to help them tackle fraudulent loan applications. This comes just days after it was revealed that the CEO of the British Business Bank wrote to Business Secretary Alok Sharma ahead of the launch of the initiative, warning that it carried “very significant fraud and credit risks”, pointing to a PwC review which classified the risk of fraud as “very high”.
Experts needed to fulfil emissions ambitions
With Prime Minister Boris Johnson and Business Secretary Alok Sharma under pressure to deliver policy that will put the UK on course to cut carbon emissions to net zero by 2050, Simon Virley, head of energy at KPMG, suggests: “The bandwidth to do this in Whitehall is now heavily constrained by Covid and Brexit. So there is a growing case for an independent energy agency to provide that expert advice to government.”
Contact Paul Southward