Weekend News 18 November 2019
Weekend News 18 November 2019
TAX – Weekend News 18 November 2019
Property-related IHT refunds climb
Research from financial adviser NFU Mutual shows the rate at which people who inherited properties are claiming money back from the taxman as homes have fallen in value by the time they were sold. The analysis shows that property-related refunds granted by HMRC rose 86% from 2,177 in the 2016/17 tax year to 4,052 in 2017/18 and climbed 11% to 4,516 in the year to this April. Sean McCann at NFU Mutual said many people may have paid more IHT than they need to, noting: “When property prices and share values fall, rebates are not given automatically and need to be proactively claimed.” While people who sell a property for less than its IHT valuation within four years of paying the tax can reclaim the tax they have overpaid, there are concerns over a lack of knowledge about the potential rebate. George Bull of RSM, says: “For more valuable properties this is becoming a significant issue and the level of public knowledge in this area is poor.”
The Times, Page: 63
Stamp duty reform could trim 63% from bills
Analysis suggests that reform of stamp duty could save the average owner-occupier £4,300 and cut the typical stamp duty bill by 63%. Research from Purplebricks and property market economists Glenigan suggests that increasing the stamp duty threshold from £125,000 to £500,000 could see 131,000 more moves completed in the next 12 months while trimming movers’ average bill from £6,800 to £2,500. Rethinking the threshold would also mean the levy is not applied to 89% of home purchases. While the Government would lose £3.2bn in stamp duty revenue, increases in areas including VAT and other tax receipts are estimated to potentially hit £1.2bn.
Labour broadband plan questioned
A number of papers carry comment on Labour’s proposed plan to nationalise the broadband network and provide free full-fibre coverage to every home and business in the country by 2030. The Times notes that Labour has suggested the £20bn bill for such a move could be raised from tax revenues on large technology firms, saying that while there is “justifiable concern that these corporate behemoths pay too little tax”, targeting them is “sure to fail” and raises the question of why they would operate in Britain in such conditions – a point also raised by a Mail editorial. On the possible tax on tech firms, the Guardian says Labour’s plans are “light on detail.” Prime Minister Boris Johnson called Labour’s plan a “crackpot scheme that would involve many, many tens of billions of taxpayers’ money nationalising a British business.”
The Times, Page: 10 The Times, Page: 33 Daily Express, Page: 6 The Guardian, Page: 1, 6 Financial Times, Page: 2 The Daily Telegraph, Page: 4 Daily Mail, Page: 10, 20 The Independent, Page: 6 Daily Express, Page: 14
HMRC refutes Rangers tax error story
HMRC says it did not make mistakes in regard to the tax bill handed to football club Rangers, despite reports claiming the club’s former operating company had been billed for £50m more than they should have. HMRC tweeted in response to the claim, insisting that they “did not miscalculate anything”. In a letter to the Times, which carried the initial claims, HMRC CEO and first permanent secretary Jim Harra said: “HMRC did not make any mistakes that led to the club’s insolvency.” He added that HMRC is “committed to getting tax right, for everyone,” adding: “Inaccurate and partial reporting only serves to undermine public trust in the tax system.”
The Scotsman, Page: 10
Tax rules hit contractor market
Harry Brennan in the Telegraph says tax rules under the IR35 regime have left the contractor market “in disarray”. He suggests that with employers to be responsible for assessing the tax status of their contractors as of April, a number of self-employed people are closing down businesses and returning to full-time employment. This comes, he adds, as a number of firms have said they will no longer employ contractors so as to avoid legal disputes with the taxman.
The Daily Telegraph, Money, Page: 2
PM: Tax cuts can boost economy
Boris Johnson has told the Sunday Telegraph that he is postponing a plan to increase the threshold at which people start to pay the 40p tax rate, but says the move remains an “ambition” if he wins a Commons majority. The Prime Minister tells the paper: “We do want to reduce the burden of taxation,” adding: “That’s very much our ambition, but we won’t do that until we have done more to lift the burden particularly on people on low incomes.” Mr Johnson says his party’s “instincts are to try to cut tax where we can, but only because we think that there are some taxes that you could obviously cut and see an increase in yields.” While he suggests the Treasury “will sometimes contest this assertion,” he insists it is a “very good point”. Citing fourteenth century sage Ibn Khaldun, Mr Johnson notes: “He observed that if you cut taxes on the olive harvest … that actually people grew more olives, and tax yields went up. It doesn’t apply in every case but he is making a valid point.”
IFS says spending pledges will need tax rises
The Institute for Fiscal Studies has warned that tax increases will be required to meet Conservative spending pledges. With the IFS saying Chancellor Sajid Javid only has enough spare cash to finance £13.8bn of spending in 2020/21 and money previously pledged to schools and hospitals, IFS research economist Isabel Stockton warns: “If they are planning further increases in day-to-day spending, that would not be possible without tax increases or other cuts in spending.” The IFS has also questioned Labour’s plans to boost spending with money funded purely from tax hikes on high earners and big companies, with Ms Stockton offering: “It’s difficult to raise enough money for substantial increases in spending solely from high-earners – you need to look to a broad-based tax.”
The Independent, Page: 3
Letter: Tax simplification a ‘daunting challenge’
In a letter to the Sunday Times, BDO’s Paul Falvey calls for policymakers to be bolder on tax reform. He says the Office of Tax Simplification (OTS) has a “daunting challenge” in reworking a tax system which “lacks coherence.” He says the system has “grown by adding taxes, reliefs and complex rules to a system with its roots in the 19th century,” asking whether the OTS should “reform the more obviously dysfunctional aspects – or throw the whole mess out and start again.” He suggests national insurance and income tax should be aligned to create one simple payroll tax and proposes a moratorium on fundamental corporate tax changes until the Brexit transition period is over to give businesses certainty.
Voters lured by tax pledges
A Savanta ComRes poll for the Sunday Telegraph shows that 35% of voters would be more likely to back a party that would cut inheritance tax, while cutting taxes was the second most likely policy to attract voters – although it was cited by 23% fewer respondents that the 66% who said they were more likely to vote for a party that promised to recruit an additional 20,000 police officers.
US and UK see wealth attacked
Hamish McRae compares the political climates in the UK and US, pointing to a similarity centred on an “attack on wealth from the political Left.” He says in the US there is “a wave of support not only for higher income tax rates, but for something that the UK has not contemplated: a wealth tax.”
The Mail on Sunday, Page: 98
INDUSTRY – Weekend News 18 November 2019
HMRC staff vent fury at top management
Responding to a blog post in which HMRC CEO Jim Harra vowed to address concerns over pay and workplace culture, tax office staff have spoken out over “demotivated, overworked and underpaid” workers.
WEALTH MANAGEMENT – Weekend News 18 November 2019
Report reveals wealth manager costs
Analysis by Grant Thornton shows that Investec is the UK’s most expensive wealth manager. The report, which looks at the cost of investing £100,000 with 20 of Britain’s largest financial advice firms and the impact of charges over 10 years, found that Investec charges customers more than double the rate of the cheapest firm. Investec’s reduction in yield stands at 3.8%, while Rathbones’ is 3.4%. Barclays Wealth, 1825 – the advice arm of Standard Life – and Smith & Williamson are joint third, with a rate of 3.2%. The cheapest overall is HSBC at 1.7%, followed by Nationwide at 2%. The Sunday Times notes that comparing the impact of charges across different wealth management firms is “notoriously difficult” as each firm will levy different fees.
CORPORATE – Weekend News 18 November 2019
Tech Nation in tax row
Publically-funded technology lobby group Tech Nation is embroiled in a long-running row with HMRC over its taxes, with the taxman addressing historic claims dating back to 2014. Tech Nation said it expects the dispute to be resolved by the end of 2020 and that it has been advised it may not have to pay any money out, saying: “Professional advice received does not indicate that a payment is probable.” A spokesman said: “It’s a technical matter involving interpretations of Tech Nation’s status by HMRC dating back to 2014. We are working through appropriate procedures with HMRC to resolve.”
Chilango auditor declines to sign off accounts after bond raising
Grant Thornton is “not willing” to sign off the accounts of Chilango because of a “risk related to going concern”. The food chain has hired RSM to review its options.
Loan keeps Stobart on the road
Trucking firm Eddie Stobart Logistics has accepted a £55m emergency high-interest loan from investment firm DBay Advisors to avoid collapse. Logistics company Wincanton is preparing an offer for the business but is waiting for PwC’s approval before finalising an approach, with the auditor yet to sign off Eddie Stobart’s half-year figures.
Buyers eye farm
Liquidators MHA Henderson Loggie say ten different parties have shown interest in taking over Edinburgh’s Gorgie City Farm.
The Scotsman, Page: 15
Tax boost for F1 teams
Data from HMRC shows that UK-based Formula 1 teams received more money from the taxman than they paid last year, receiving a net sum of £13.6m. This takes the total over the last ten years to £120m. This comes as tax bills were offset by losses, with firms seeing a total net loss of £60m last year. Losses can be carried over to future years to reduce future tax bills. Firms are also eligible for refunds of up to 12% of their research spending.
The Mail on Sunday, Page: 101
Seafood chain Ceviche has been sold after a pre-pack administration, with Alex and Saiphin Moore, founders of the Rosa’s Thai Cafe chain, saving the business. Martin Morales, Ceviche’s founder, will become a “brand ambassador”, but have no day-to-day involvement in the running of the chain.
The Sunday Times, Business and Money, Page: 3
SMEs Weekend – News 18 November 2019
FSB warns over wage pledge
The Federation of Small Businesses (FSB) has warned that a pledge to raise the minimum wage to £10.50 made by the Prime Minister could put a number of small firms at risk, as would the rise from £8.21 an hour for over-25s. The body has also called for a minimum £1,000 increase in the Employment Allowance, saying it would help with the cost of employing people and offset the increased wages companies will have to pay. The FSB’s Back to Business manifesto also urges the next Government to extend maternity and paternity pay to self-employed workers who choose to adopt. FSB national chairman Mike Cherry said: “We are urging all candidates standing at this election to listen to, and make every effort to understand, the challenges faced by small firms in the communities they hope to represent.”
The Sun, Page: 11
EMPLOYMENT – Weekend News 18 November 2019
Workers get flexible
The Telegraph’s Lucy Deyner looks at a shift toward flexible, part-time work, highlighting PwC’s Flexible Talent Network which allows people to choose different working patterns. It saw more than 2,000 people register within two weeks of launching last year.
The Daily Telegraph, Page: 20
PENSIONS – Weekend News 18 November 2019
Reflecting on ring-fencing
Ian Cowie in the Sunday Times says ring-fencing of pensions “can prove surprisingly porous in an insolvency,” highlighting details of PwC’s winding up of failed broker Beaufort Securities and charges to clients.
ECONOMY – Weekend News 18 November 2019
Expert: Pound could be among strongest currencies
Richard Buxton, head of UK equities at Merian Global Investors, has suggested that a Brexit deal could put the pound among the world’s strongest currencies, given the right circumstances. Mr Buxton believes the Bank of England may have to “gently nudge” interest rates up by the second half of 2020, saying: “I think it will just be symptomatic of the fact that the UK, relatively to other parts of Europe, will be growing really quite nicely.” This comes as 0.3% expansion reported this week means Britain has had 13 quarters of economic growth since 2016’s Brexit referendum.
Voters open to economic reform
A YouGov poll commissioned by the IPPR think-tank suggests that voters are increasingly open to a radical change in the way the economy is organised. A survey of more than 1,600 people saw 60% in favour of the next government making “moderate” or “radical” changes to the way the British economy is run, while only 2% said the government should leave the economy as it was. Of those open to change, 29% backed moderate policies and 31% supported more radical reform. Looking at respondents’ political allegiance shows that 59% of Labour voters back radical change compared to 9% of Conservative supporters, with 35% of Tory voters calling for “moderate” changes.
The Observer, Page: 56
OTHER – Weekend News 18 November 2019
Retailers look to counter slowdown
The Mail looks at the climate for retailers and notes that the appeal of Black Friday has dipped in recent years as people question whether price cuts are genuine. Ian Geddes, head of retail at Deloitte, said companies have tried to counter the slowdown with heavy discounting in October and by introducing Christmas product lines early. He said: “Falling consumer confidence in the third quarter, amidst ongoing Brexit uncertainty, is still impacting major purchases.”
Daily Mail, Page: 9
Contact Paul Southward.