Taxman goes fishing for offshore accounts

HMRC launched a fishing exercise aimed at snaring offshore tax evaders last week, sending letters to UK taxpayers with a foreign bank account who the revenue suspects might have received overseas income or gains. Dawn Register, a partner at BDO, said: “We’re not surprised that HMRC is focusing its resources on clamping down on undeclared offshore assets as there is plenty of money on the offshore money tree. Anyone who has received one of these nudge letters should be aware that HMRC’s knowledge of their financial affairs could lead to questions about where wealth has emanated.” A Freedom of Information request by Price Bailey revealed HMRC launched 605 in-depth investigations into people it suspected of offshore tax evasion last year, netting £684,298 per inquiry on average. Partner Jay Sanghrajka said the high penalties for those found guilty of evasion “is likely to encourage behavioural change .”

The Times, Page: 62

Greater scrutiny of devolved taxation essential for Scotland’s recovery

A piece in the Times by Joanne Walker argues that with Scotland’s devolved tax system likely to come under closer scrutiny as ministers attempt to deal with the costs of COVID-19, now is a good time to ensure Holyrood’s tax powers remain fit for purpose. She cites a poll commissioned by the Chartered Institute of Taxation which suggested a decline in awareness and understanding of Holyrood’s tax responsibilities among Scots. This is why the CIOT has argued for an annual Scottish Finance Bill, says Walker, which, along with a dedicated parliamentary committee to oversee Scottish taxes “could help ensure increased accountability while giving taxpayers a chance to know more about the tax changes that are being made in their name.” Walker concludes that a, “tax system that expedites change, enables scrutiny and empowers public participation will be crucial to Scotland’s recovery” from the pandemic.

The Times

Ethical questions raised over betting firms’ tax arrangements

The Mail’s Tom Witherow reports on the UK betting firms with offshore subsidiaries, citing a recent by public policy think-tank, the Social Market Foundation, which said most online companies operating in the UK are headquartered in tax havens, and claimed some do not pay corporation tax in full. Matt Zarb-Cousin, director of campaign group Clean Up Gambling, comments: “This sector is extracting massive profits from Britain while leaving the rest of the country to pick up the bill for the damage.” Witherow stresses that there is no allegation that the firms have broken the law, “but the opaque web of companies they deploy makes it almost impossible to check if firms are paying the correct amount.”

Daily Mail, Page: 95


Netflix faces new tax probe

After scrutinising the tax affairs of UK gambling companies, the Mail turns the spotlight on Netflix, noting that HMRC is investigating the US streaming service over large tax credits claimed in 2018, as well as the amount of tax paid in 2015 and 2016. Netflix does not say exactly how much it makes in the UK, but the think-tank TaxWatch estimates it made £1.1bn in revenues in the UK last year, which should have generated £68.5m in profit and therefore taxes of £13m. Netflix’s subscriber numbers have surged during lockdown, the paper’s Jamie Nimmo observes, but profits are funnelled through separate accounts at its European HQ in the Netherlands.

The Mail on Sunday, Page: 120

Residential landlords cheating taxman out of £1.7bn

Research by Tax Watch has found that tax evasion by residential landlords could be costing the Treasury up to £1.7bn a year – three times higher than the £540m reported by HMRC for 2010. The think tank claims the revenue is being lost because many landlords fail to declare their income on self-assessment forms. The group cites research by the University of Warwick that found a quarter of landlords who filed self-assessment tax returns failed to report 60% of their property revenue. Tax Watch recommends the establishment of a UK-wide landlord database to stem the losses.

The Mail on Sunday, Page: 127



Sunak refuses to rule out extending furlough scheme

The Chancellor has declined to rule out extending the furlough scheme should the UK be hit with a second wave of COVID-19. Rishi Sunak previously ruled out an extension but appeared to soften his stance on Friday, telling the BBC that it was not something the Government wanted to see happen. He later told Sky News that extending the scheme indefinitely was “not fair to the people on it,” adding: “We shouldn’t pretend there is, in every case, a job to go back to.” The Chancellor also urged more people to return to the office, adding it would be “good for businesses and good for people”. The Mail’s Maggie Pagano comments on the furlough dilemma facing Mr Sunak, arguing that creating new jobs is arguably more important than saving them. She suggests generous tax incentives should be used to incentivise investment in SMEs while taxes paid on equity should also be reduced to help companies convert debt to equity.

The Daily Telegraph, Page: 8 Daily Mail, Page: 97


More firms planning mass redundancies

Notifications made to the Government indicate that the number of companies planning 20 or more redundancies by June rose more than fivefold compared to the same month in 2019. A total of 1,778 firms submitted plans to cut more than 139,000 jobs in England, Wales and Scotland during the month compared with 345 firms which notified plans to cut 24,000 jobs the year before. The figures from May and June show a substantial increase from the same months the previous year, and from March and April, when the coronavirus lockdown began. Tony Wilson, director of the Institute for Employment Studies, said: “I would expect it to be bigger in July and bigger again in August, because there was a wave of firms that announced redundancies in the first week of July and the first week of August. I think it is inevitable now that redundancy numbers will be higher than they were at the peak of the last recession in 2008.”

BBC News



MTD extension opens opportunities for tech vendors

Leanna Reeves explores how HMRC’s Making Tax Digital (MTD) programme will provide a boost to tech providers and vendors operating in the accounting sector. Nick Longden, vice president sales at FreeAgent, says the extension of the MTD system “enables us to extend our reach because more micro-businesses are going to start using digital accounting software.” Paul Nicklin, technical director at inniAccounts, says the extension presents an opportunity for businesses as well as vendors. “With HMRC acting as a central hub for all of your data, you can pick and choose your providers without fear of lock-in and vendors can operate in a narrow area, confident that the other aspects of the scope are dealt with by others,” he said.

Accountancy Age



FSB urges councils to release £1.5bn in small business grants

Local councils in England are being urged to distribute an estimated £1.5bn in unspent small business grants by the Federation of Small Businesses (FSB), whose research reveals only 7% of all councils have issued 100% of the cash earmarked for the discretionary grant fund or the small business grants fund. “Every local authority will know that long before this crisis struck, small firms were already facing huge difficulties with major chains leaving high streets, rising business rates and soaring employment costs,” said the FSB’s national chair Mike Cherry. “This is why councils simply cannot afford to delay in getting these funds out to businesses. Many councils have already handed out more than 90% of their small business grants which is good to see, but that means that more money remains which needs to be handed out.”

Peer2Peer Finance News BBC News

New planning consultation paves way for small business construction boom

The Federation of Small Businesses has welcomed the Government’s consultation on planning laws saying proposals to streamline approval will bring welcome relief to small building firms. The FSB’s Policy and Advocacy Chair, Martin McTague said: “The current planning process is slow, complicated and far too cumbersome, putting small construction firms off building applications.”

Press Release


The “forgotten” company directors desperate for coronavirus relief

The Sunday Times reports on the plight of the “forgotten” limited company directors who have been left out of Government coronavirus support programmes for workers. The main reason given for not providing a bespoke support scheme is that HMRC cannot ascertain from tax returns whether dividends taken were in lieu of salary, rather than a return on capital or investment. Another reason is that directors often use limited companies to cut their tax bills. “There were suggestions that they are involved in some sort of tax avoidance and it’s now time for them to pay back their ill-gotten gains,” said Tim Stovold, tax partner at Moore Kingston Smith. “A more helpful tone would be to recognise that for businesses to rebuild, they are going to need to be agile, and having a large volume of skilled freelancers who can be engaged on projects and released without obligation later is essential.” Craig Beaumont, external affairs chief at the Federation of Small Businesses, adds: “As the government’s schemes end, directors and others excluded from support are trying to survive any way they can. We want to see a rescue package aimed at this group so they can contribute to the economic recovery.”

The Sunday Times, Business, Page: 2

Councils urged to distribute £1.5bn in business grants

The Federation of Small Businesses is urging local authorities to hand out unclaimed coronavirus funding worth £1.5bn before it is returned to the Treasury. Over £12bn was given to councils in March to distribute to small businesses in England at the start of the pandemic. The Local Government Association wants more time to ensure that eligible businesses can be reached.

The Sunday Telegraph, Page: 2

One tenth of small businesses will have to cut jobs

Almost half of small businesses say they will have to cut wages or jobs to help them survive the coronavirus crisis, according to employee benefits group WorkLife. Some 10% said they will have to cut jobs, while 12% said they will cut salaries. The survey also found 23% had ruled out wage increases for at least six months.

Sunday Express, Page: 43



In anticipation of Ashley’s results

The Observer’s Zoe Wood looks forward to the annual results of Frasers Group, which the company has said will be published “subject to the satisfactory completion of the audit.” Founder Mike Ashley has had a rough time of it lately, Ms Wood notes, with last years’ results published late after Belgian authorities issued a last-minute £608m tax demand. Following this debacle, Frasers parted company with Grant Thornton and sought to appoint one of the Big Four – but there were no takers, with the top auditors citing problems such as conflict of interest. RSM later took on the role. An investigation by the Guardian this year found Ashley’s warehouse workers were potentially earning less than the minimum wage. As with most retailers, the results are unlikely to bring good news, Woods predicts.

The Observer, Page: 45

New Look seeks to link turnover with rent

New Look is expected to appoint advisers from Deloitte as soon as this week to oversee a CVA. The fashion giant will ask landlords at more than 450 stores to accept new lease contracts that would ensure it pays rent based on how much money each shop makes. One rival executive source told the Mail: “This is a significant moment – it’s never been tried before. Landlords will read the writing on the wall or bury their heads in the sand. But retail’s troubles aren’t going away.”

The Mail on Sunday, Page: 121

WH Smith enters negotiations with landlords

WH Smith has drafted in its property adviser Gerald Eve to negotiate rent cuts from landlords as it struggles to contain costs. One landlord said WH Smith was brandishing the threat of a company voluntary arrangement to extract rent reductions but a source close to the retailer claimed a CVA was not “actively being pursued” or used as a threat, but declined to rule one out.

The Sunday Times, Business, Page: 1



House prices surge to all-time high

House prices rallied to the highest levels on record in July as months of pent-up buyer demand was released. Prices saw an uptick for the first time since the lockdown began, according to the latest Halifax house price index, growing on average 1.6% after months of downturn. This brings the price of the average UK home to £241,604 – up 3.8% on last year despite the decline in the first half of 2020. But experts warn the recovery may be short lived as the furlough scheme nears its end and fears of the health of the economy loom. Some 63,250 homes were bought and sold in June, a rise of 31.7% from May following the Government’s lifting of lockdown measures and the introduction of the stamp duty cut. Meanwhile, Knight Frank found since the stamp duty holiday came into effect, the number of offers accepted on properties has jumped. For those valued under £1.5m, the number of deals closed was 146% above the five-year average, whilst the number of new prospective buyers registering to purchase properties under £1.5m was 100% higher.

Financial Times, Money, Page: 2 BBC News Daily Mail The Independent, Page: 31 The Daily Telegraph, Page: 8 The Guardian, Page: 36



Founders of Hargreaves Lansdown set to pocket £82m payout

Peter Hargreaves and Stephen Lansdown, the founders of the investment platform Hargreaves Lansdown, are set to pocket £63.4m and £18.6m in dividends respectively after profits rose in the 12 months to June. Underlying pre-tax profits were up 11% to £339.5m on revenues that increased 15% to £550.9m. The FTSE 100 firm signed up a record 188,000 extra customers to take the total number of active clients to more than 1.4m.

The Daily Telegraph The Times Daily Mail, Page: 95

Crackdown saves investors £30m

Analysis of the value assessment reports, which the Financial Conduct Authority forced the asset management industry to publish, shows that fund managers have had to switch more than 320,000 customers on to cheaper versions of their products after failing to justify their fees. As a result of the reports, the fees on dozens of funds were reduced, and others were shut down because of poor performance.

The Times, Page: 57


Action plan to thaw frozen funds

Experts have warned that proposals for a 180-day notice period for investors wishing to cash in their holdings in property unit trusts could sound the death knell for the funds. Dzmitry Lipski from Interactive Investor said: “We question what investors have to gain by sacrificing daily liquidity, given that there is a good structure for investing in illiquid assets already in place – investment trusts. They are closed-ended funds with a fixed number of shares traded on the stock market on a daily basis so the managers don’t have to sell holdings to meet redemptions.”

The Sunday Times



Property fund investors face six-month notice periods

New rules proposed by the FCA could leave investors in open-ended property funds required to give up to six months’ notice before they can sell down their investments.

Financial Times



Options launches Sharia-compliant workplace pensions

Pension provider Options UK has joined forces with Halal investment specialists Wahed Invest to launch a fully diversified, Sharia-compliant workplace pension. The new pensions offering comprises Sharia-compliant funds selected for their adherence to Muslim values and also ensures all returns from these funds are Halal.

FT Adviser


Universities on strike alert after funding drought hits pensions

The Sunday Telegraph reports that crashing financial markets and rock-bottom interest rates have pushed the Universities Superannuation Scheme for pensions close to breaking point. The hole in the pension fund has grown from £3.6bn at its last full valuation in 2018 to a yawning £20.2bn by the end of June this year. A fresh revaluation of the £74.2bn scheme is due to commence this month, setting the stage for the latest showdown in a bitter dispute between universities and staff over who should shoulder the rising cost of ensuring future pensions can be paid.

The Sunday Telegraph, Business, Page: 5



Britain’s GDP shrinks by a fifth

Figures from the Office for National Statistics next week are expected to show the UK economy shrank by 20% in the second quarter, the biggest three-month fall on record. This follows a 2.2% fall in the first quarter and puts Britain into a technical recession. The UK’s reliance on services means its economy will likely be hit harder than any other advanced nation. Spain has recorded an 18.5% drop while the US registered a 9.5% fall.

The Times, Page: 51

US employment bounceback falters

The US economy added just 1.8m jobs last month, under half the 4.8m rise in June, following a rise in COVID-19 infections in the South and West of the country. America’s jobless rate fell to 10.2% from 11.1%, but the latest data showed an extra 10.6m Americans are unemployed compared to before the pandemic. Michelle Meyer, chief US economist at Bank of America Merrill Lynch, said: “It’s still a long road ahead in terms of fully recovering the labour market, but progress is being made.”

The Daily Telegraph Financial Times

German and French manufacturers record surge in demand

Industrial production in Germany jumped by almost 9% in June from the previous month, with exports up by 14.9%. French production climbed more than 14%. The apparent recoveries, alongside buoyant trade numbers in China, have raised hopes of a global rebound from the pandemic-induced crash.

The Daily Telegraph


UK expected to suffer most severe Covid hit of any major economy

Forecasters are predicting official figures released this week will show the UK economy suffered the worst impact from the coronavirus pandemic of any major advanced economy. Statistics are expected to show a 21.3% collapse in output between April and June resulting in a first half loss of 23% of GDP following a 2.2% hit in Q1. David Page, senior economist at Axa Investment Managers, said: “It is going to be the worst quarter that anybody has ever seen.” Looking ahead, Fabrice Montagne, chief UK economist at Barclays, warned that “fears of unemployment when policy support is phased out will likely act as a drag” on consumer spending in the autumn, slowing a predicted 18% bounceback in the current quarter.

The Sunday Telegraph, Business, Page: 3 The Sunday Times



Prosecutors suspect Wirecard was looted before collapse

The ongoing probe into Wirecard has raised suspicions that the German payments company funnelled $1bn to opaque partner companies ahead of its collapse in June.

Financial Times



Bernie Sanders proposes 60% tax on billionaires’ pandemic gains

US Senator Bernie Sanders has introduced a bill that would levy a 60% tax on the wealth gains made by 467 US billionaires from March 18th to the end of 2020. The senator says the measure would raise $421.7bn, sufficient to allow Medicare to cover all out-of-pocket health care expenses for every American for one year. He added that, if implemented, the billionaires would still have gained a collective $310.1bn in wealth. Mr Sanders is joined by Senators Ed Markey and Kirsten Gillibrand – both Democrats – on the legislation.

CNBC Newsweek The Independent


Time centibillionaires helped pay the costs of coronavirus

The Observer’s business leader argues that news that Mark Zuckerberg has become the third centibillionare only emphasises the need for wealth taxes to address rising inequality, much of it now brought about by the mixed fortunes manifesting from the coronavirus pandemic. Barbara Ellen says in the same paper that centibillionaires should not be “viewed as the zenith of business achievement but as a sign that priorities are upside down.”

The Observer, Page: 11, 48

Contact Paul Southward

Paul Southward