Weekend News Roundup Monday 4th November 2019
Weekend News Roundup Monday 4th November 2019
WEEKEND NEWS ROUNDUP
TAX – WEEKEND NEWS ROUNDUP
Leadsom hints at tax cuts
Business Secretary Andrea Leadsom has signalled that the Conservative manifesto will carry a commitment to cutting taxes, telling the Telegraph: “A Conservative government will always be a tax-cutting government.” When asked if income tax was too high, she said: “We have raised the personal tax-free allowance to let people keep much more of their own hard-earned cash. We will set out more in the manifesto about our ambition for income taxes.” She declined to give any further details, including whether the party’s tax plans would include proposals previously put forward by Boris Johnson which saw the Prime Minister say he would raise the higher-rate income tax threshold from £50,000 to £80,000. Ms Leadsom did say the Government would keep business rates and further tax breaks “under review”. Elsewhere, Michael Gove has told the Mail that the Tory manifest o will promise tax cuts that leave people with “more of what they earn”.
The Daily Telegraph, Page: 1 Daily Mail, Page: 11 The Sun, Page: 9
HMRC ‘swamped’ by tip-offs
Research from BDO suggests that HMRC does not have enough staff to investigate 5.7m tip offs about overseas bank accounts held by 3m British citizens. It suggests that the tax office is instead sending letters to the people named, asking them to send details of their financial affairs. The flood of information stems from the common reporting standards agreed by the international Organisation for Economic Co-operation and Development, with the standards designed to stop tax evasion, or avoidance, by making governments aware of overseas money held by their citizens. Richard Morley, a partner at BDO, says HMRC has a new computer system which files the information “but no-one can look at it and they are swamped.”
Alliance calls for IHT pledge
Political parties vying for votes ahead of December’s election have been urged to include a pledge to cut inheritance tax in their manifestos. Research by the TaxPayers’ Alliance highlights that 27,781 estates will not have to pay the tax next year alone if the threshold is raised to £1m, with this rising to 30,000 the following year. It also suggests that increasing the threshold from its current £325,000 will not cause a significant dent to the Treasury’s coffers. If inheritance tax was payable only on estates worth more than £1m, the estimated revenue would be £3.9bn in 2019/20 and £4bn in 2020/21. John O’Connell, the chief executive of the TaxPayers’ Alliance, said: “The death tax is anti-aspirational and unpopular, and politicians should look to cut it ahead of the upcoming election.”
Daily Express, Page: 6
Talking tax as the election looms
The Times offers a guide to what the December’s election could mean for personal finances, weighing the competing parties likely manifesto pledges. On tax, the Conservatives could rethink the income tax threshold, with the Prime Minister previously suggesting the level at which people start paying higher-rate income tax in England could rise from £50,000 to £80,000. Chancellor Sajid Javid has also suggested that he was considering scrapping inheritance tax, while the Tories have also promised to look at the pension tax rules for higher earners. Labour’s Shadow Chancellor John McDonnell has suggested lowering the threshold at which the 45% additional income tax rate kicks in from £150,000 to £80,000. Labour has also pledged to scrap the existing inheritance tax system, instead imposing a lifetime cap of £125,000 on the amount that can be inherited tax-free. The Lib Dems have previously vowed to tax capital gains as income and plan to introduce a flat 25% rate of tax relief on pension contributions.
King hits out at business rates
Justin King, the former boss of Sainsbury’s who sits on the board of Marks & Spencer, says halving business rates and lifting VAT to 22% would help to level the playing field between struggling high street shops and their online rivals. Mr King told the BBC: “Business rates are a tax that are past their time. A simple move in VAT, 2pc on the rate, would allow the Government to reduce business rates by 50% for all retailers.” He added that such a move “wouldn’t cost the Government a penny”, adding: “because it is one tax moving to another, it wouldn’t put prices up either.” Meanwhile, the Independent’s Chris Blackhurst contends that the business rates system is way out of touch. He says it is only reduction in business rates bills that will help struggling firms, and bring the UK into line with other developed nations.
The Independent, Page: 39 Daily Mirror, Page: 27 Daily Mail, Page: 107
Tax reforms ‘punish’ freelancers
Harry Brennan in the Telegraph says self-employed contractors working in the private sector could face pay cuts – or even the loss of work – due to new tax rules. A Government crackdown on temporary workers gaming the system means that, as of April, employers will be responsible for assessing whether freelancers are truly self-employed or should be treated as full-time employees. Andrew Chamberlain of The Association of Independent Professionals and the Self-Employed said the legislation is punishing freelancers.
The Daily Telegraph, Money, Page: 2
‘UK tax system too difficult for landlords and self-employed’
The Office of Tax Simplification has suggested that digital technology should be used to simplify the UK’s complicated tax system, claiming it is causing difficulties for self-employed people and private landlords. Meanwhile, a poll of more than 1,000 contractors and freelancers by tax adviser Qdos saw 83% say HMRC’s treatment of the self-employed is the biggest threat to their business in the next year.
Labour eyes penalties for financers of climate change
The FT looks at Labour’s plans to tackle climate change, with a steeper rate of tax on the sale and purchase of shares in companies identified as major polluters among options.
Super-rich could flee Corbyn’s Britain
Rupert Neate in the Guardian considers the impact a Jeremy Corbyn-led government could have, saying that Labour’s vow to “go after” the wealthy by introducing a raft of new taxes could see the super-rich leave the UK.
The Guardian, Page: 41
Conservatives plan NI cut
The Conservatives are reportedly considering a manifesto pledge to raise the threshold at which employees begin paying National Insurance, a measure that could give the average worker a tax cut worth up to £460. This figure comes from suggestions that the threshold at which workers start paying the tax could be increased from £8,632 per year to £12,500, matching the starting point for income tax. Such a move would leave 2.4m fewer workers paying the levy. The Institute for Fiscal Studies says 600,000 workers would be freed from making any national insurance payments for each £1,000 by which the current threshold is raised. Speaking in June, Boris Johnson said: “I think we should be looking at lifting people on low incomes out of tax, lifting the thresholds for national insurance and I would remind you that that’s where my priority is.” Meanwhile, Conservative chairman James Cleverly has suggested the party will look to reduce taxes, telling the Sunday Telegraph: “We talk about tax cuts [but] a better way to think of it is the money that people have in their pockets to spend on the things that they want to spend. So cutting their taxation is a way of doing that and as Conservatives we always look at ways of doing that and lifting the financial burden on people, particularly those people who are struggling financially.”
The Sunday Telegraph, Page: 10 Sunday Express
Tax to play a part in pledges
The Sunday Telegraph’s Adam Williams looks at the financial issues that will play a part in December’s general election, including potential policy pledges on income tax, stamp duty and inheritance tax. Prime Minister Boris Johnson has previously spoken of an intention to increase the threshold at which workers pay 40% tax from £50,000 to £80,000, while Labour would lower the boundary for the 45% tax bracket from £150,000 to £80,000, with a 50% rate introduced for earnings above £123,000. On IHT, Labour has promised a new system allowing all individuals to receive inheritance of up to £125,000 across their lifetime, the Brexit Party says it will scrap the tax entirely, while the Lib Dems plan to replace IHT with a tax levied on the inheritor, rather than the deceased’s estate. Labour leader Jeremy Corbyn wants to scrap stamp duty for purchases where the buyer int ends to live in the property, while Boris Johnson has suggested an exemption on all homes worth £500,000 or less.
Bank taxes up 50% in 5 years
A report from trade body UK Finance and PwC shows banks in the UK have paid almost £40bn in tax in the past year. The study also shows that across the banking industry, taxes paid have risen by 50% over the past five years.
The Sunday Times, Business and Money, Page: 3
A levy to wine about
The Sunday Times looks at taxes paid on wine, with critics of the levy saying drinkers and retailers are penalised by the fact wine is still viewed as a luxury compared with other alcoholic drinks. Wine duty has doubled since 2000, while beer and cider have seen rises of 59% and 53% respectively. Wine Drinkers UK says tax accounts for 61% of the price of a £5 bottle.
Kelly comments on ‘complicated’ tax case
TV presenter Lorraine Kelly has broken her silence on a battle with HMRC that saw her absolved of a £1.2m income tax and national insurance bill as a judge ruled she was a “self-employed star”. She said the matter was “very complicated,” adding: “It was to do with what tax category you’re in and whether you’re an entertainer or a presenter or a contributor. And I’m considered to be an entertainer.” “I always think of myself as a little bit on the edges, and that was picked up on.”
CORPORATE WEEKEND NEWS ROUNDUP
Ex-Goals CEO denies knowledge of fraud
Keith Rogers, the former chief executive of Goals Soccer Centres, has denied being involved in alleged inappropriate accounting that may have seen profit being overstated by up to £40m. The matter came to light after an accounting inquiry by BDO, which initially suggested Goals owed £13m in VAT. Mr Rogers said: “I have not been informed by the company or BDO of any allegations of fraudulent activity relating to my tenure as chief executive of the company. I have not been approached to assist in any investigation and BDO has not put allegations to me for my comment or response so it is difficult to comment on the apparent findings of their audit.”
Thomas Cook brand sold to Fosun for £11m
China’s Fosun Tourism is buying the Thomas Cook brand for £11m. It is also acquiring the Casa Cook and Cook’s Club hotel brands. The assets were sold by AlixPartners, which is acting on behalf of the Official Receiver. KPMG is overseeing the sale of Thomas Cook’s airport take-off slots.
LCF administrators appoint third party to explore legal action
Smith & Williamson has turned to a third party to explore a potential lawsuit against LCF’s auditors PwC and EY because of a conflict of interest, with FRP Advisory appointed as a second administrator.
Timpson hits out at ‘immoral’ firms over tax
James Timpson, boss of the Timpson shoe repair chain, has slammed “immoral” multinational firms over their corporation tax payments, saying they use “clever stuff ” to slash their tax bill. Mr Timpson said: “The argument from the Amazons and Starbucks of this world is, we pay all the tax we have to. Well, sleeping with my next door neighbour isn’t illegal but it’s immoral.” He added: “This argument that they are playing by international rules – well you may be, but your business is hollow.”
Daily Mirror, Page: 26
CVA on the cards for Clintons
Greetings card and gifts chain Clintons is to hold meetings with landlords to discuss a possible CVA, with KPMG lined up to work on the proposals.
Daily Express, Page: 65 Daily Mail, Page: 107 The Daily Telegraph, Business, Page: 32
City farm to close
Gorgie City Farm in Edinburgh, one of the last urban farms in Scotland, has closed after going into liquidation. MHA Henderson Loggie has been appointed to wind up the charity.
The Scotsman, Page: 9 BBC News
Green in Topshop store talks
Sir Philip Green’s Arcadia Group is said to be in talks with specialist lenders about refinancing the £310m mortgage on Topshop’s flagship store on London’s Oxford Street which is due for repayment next month. Auditors at PwC have warned that if the retail group was unable to refinance the loan, lenders would be able to demand immediate repayment or take possession of the site.
M&C Saatchi eyes overhaul
Advertising agency M&C Saatchi is in talks with advisers from the boutique deal advisory Clarity about a strategic overhaul after the discovery of accounting irregularities. A report on a review of the accounts by PwC is due this month.
The Sunday telegraph, Business and Money, Page: 1
Landlords accuse Regis over Supercuts
Landlords have accused Regis Corporation, the former owner of the collapsed hair salon operator Supercuts, of stripping its assets before it failed. Regis UK collapsed in to administration last month, with Deloitte now seeking a buyer.
Pension freedoms withdrawals hit £30bn
HMRC data shows that over-55s have withdrawn over £30bn from their retirement savings since pension freedoms were introduced in 2015. Some £2.4bn was withdrawn in Q3 2019, up 21% on Q3 2018.
WEEKEND NEWS ROUNDUP
Landlords lose patience with CVAs
Sam Chambers in the Sunday Times says landlords are increasingly challenging CVAs which allow retailers to shut stores and cut rents, suggesting this could see “the recent flood could slow to a trickle”. Will Wright, a partner in KPMG’s restructuring practice, argues that while a CVA is “not a great outcome for landlords, it has to be better than the alternative, which is an administration, where the impact on creditors is much more severe.” “Now, CVAs are being challenged almost routinely, which makes them harder to implement and may result in more administrations,” he adds. Mr Chambers argues that if landlords are successful in driving reform of CVAs, “it would not ease the gloom on the high street,” adding: “They would be winning the battle, but still losing the war.”
WEEKEND NEWS ROUNDUP
Picture ‘remains bleak’ for manufacturing
Stockpiling ahead of the aborted Halloween Brexit deadline briefly gave manufacturing a bit of a boost in October, “but the underlying picture remains bleak” says Samuel Tombs, chief UK economist for Pantheon Macroeconomics. He adds that the volume of new orders indicated by the survey “points to the resumption of sharp falls in production ahead.” Manufacturing activity fell slightly last month from September, according to a closely watched survey. The sector scored 49.6 last month, on the IHS Markit/CIPS purchasing managers’ index where anything below 50 is considered a contraction, putting it above September’s reading of 48.3. Rob Dobson, of IHS Markit, said: “With a further Brexit extension confirmed and the prospect of a December general election, it looks as if the spectre of uncertainty will cast its shadow over manufacturing for the remainder of 2019.” Stephen Cooper, head of industrial manufacturing at KPMG, commented: “Brexit continues to weigh down on confidence in the sector, as does the global economic backdrop – but perhaps the result of the upcoming general election will help alleviate some of this.”
BoE expected to hold rates
The Bank of England’s (BoE) Monetary Policy Committee is expected to hold interest rates at 0.75% this week, with policymakers unlikely to make a change before the general election. Uncertainty over who will be in charge of the BoE is also believed to be a factor in any decision to hold rates, with the committee waiting to hear who will succeed BoE governor Mark Carney, who is due to leave on January 31. Howard Archer, chief economist at EY, said it would be “very unusual” for the BoE to act on rates so close to an election, saying he expects policymakers to “remain in wait-and-see mode.” He also notes the fact a new governor is set to be named, saying that while they will only represent a single vote on rates “they will want to be involved in the discussions.”
The Mail on Sunday, Page: 96
GDP growth forecast cut to 1%
EY Item Club will this week cut its estimate of UK GDP growth for next year from 1.5% to 1%, with uncertainty over the UK’s future relationship with the EU and the trade war between the US and China driving the revision. It will cut its 2021 growth forecast from 1.8% to 1.5%; its 2022 prediction 0.2% to 1.7% and its 2023 forecast to 1.8% from 2%.
Sunday Express, Page: 47
Bank loan writedowns climb
RBS, Lloyds, HSBC and Barclays wrote off £1.76bn in loans between July and September, an increase on the £1.17bn in bad debt writedowns recorded in Q3 2018. Figures from the Insolvency Service show 4,355 firms were unable to pay their debts in the third quarter – a five-year high.
The Mail on Sunday, Page: 94
WEEKEND NEWS ROUNDUP
Emerging markets and the economic map
Mark Atherton in the Times considers the potential for emerging market nations, noting that the “economic map of the world will look very different from today’s” by 2050, citing a PwC report which suggests China will stand alone as the world’s economic superpower, with a projected GDP of £49.8trn compared to the US on £34.1trn and India on £28trn. PwC puts Indonesia in fourth place, with Brazil, Mexico and Russia at sixth, eighth and tenth.
The Times, Page: 62
Contact Paul Southward.