News in brief
27 February 2020: IFS warns Chancellor must raise taxes; Metro Bank to cut growth plans; Eamonn Holmes loses HMRC appeal; Eddie Stobart half-year results take £169m charge; HMRC runs consultation on revised charter; North West cross-border deals drop.
Chancellor Rishi Sunak must raise taxes in his first Budget or break the government's rules on borrowing, economic think tank the Institute for Fiscal Studies (IFS) has warned. Sunak is under pressure to increase spending on social care, the NHS and schools, and to balance spending by 2022. The IFS says this will not be possible without increasing taxes.
Metro Bank is to cut its growth plans after falling to a £131m pre-tax loss in 2019, compared to a profit before tax of £40.6m in 2018, according to City A.M. The bank took a hit last year when an accounting scandal sent shares plunging and led to an exodus of its senior executives.
This Morning television show host Eamonn Holmes has lost an appeal to an HMRC tax assessment that could leave his trading company ‘Red, White and Green Limited’ facing a £250,000 tax bill. ContractorCalculator reported that Holmes claimed tax as a freelancer concerning engagements with ITV during years 2011/12 and 2014/15.
UK haulier Eddie Stobart took a £169m charge, as well as large operating and pre-tax losses, in its half-year results on Wednesday, as it attempts to recover from a damaging accounting scandal. The company discovered accounting mistakes in its 2018 reports, leading to the suspension of its shares last August. It told Reuters that it expects to report a “small” underlying operating loss for the full year but that the loss could be greater depending on the outcome of an audit.
HMRC is running an open consultation on revisions to its recent charter, made following recommendations in the Loan Charge Review last year. The Revenue says its charter “sets out the standards of behaviour and values that HMRC aspires to when interacting with customers”. The consultation will close on 15 May 2020.
The volume and value of cross-border transactions in the North West fell last year, according to new research by Deloitte in partnership with Experian MarketiQ. Insider Media reported that 96 deals were completed in 2019, compared to 120 in 2018, while value dropped to £2.29bn from £6.54bn respectively. Deloitte partner in the North West, Olly Tebbutt, said the firm was confident there would be a “rise in activity” as the UK’s position in Europe “becomes clearer”.
26 February 2020: Chancellor promises no "heavy-handed" approach to IR35 rules; sharp rise in north west business administrations; Ted Baker in talks to sell London HQ; MP brands tax avoidance a “stain on the UK”.
New Chancellor Rishi Sunak said HMRC will not be “heavy-handed” in the first year of application of new IR35 tax rules. The changes aim to drive down disguised employer schemes to avoid employment tax. Sunak promised a “seamless as possible” transition, writes Daily Business.
ICAEW published its response to HMRC’s consultation on draft secondary legislation for changes to the off-payroll working rules from April 2020. It noted the “poorly drafted” regulations, along with HMRC’s incomplete guidance which “does not align with draft law”.
The Prudential Regulation Authority (PRA) has appointed PwC to scrutinise the quality of Goldman Sachs' regulatory reporting at its vast London-based operations. The firm will undertake a "skilled person's report" on Goldman Sachs International amid concerns about balance sheet information, Sky News reports.
HMRC has published its response to the 2019 Adjudicator’s Annual Report, and sets out how it will address five areas for change, highlighted by the report. These include customer focus, complaint handling and HMRC’s lack of a systemic approach to learning from complaints.
Fashion retailer Ted Baker is reportedly in discussions to sell its London headquarters, a move that could help shore up its balance sheet. A sale would boost the retailer, beleaguered by last year’s £58m accounting gap and scandal involving conduct of its CEO, City A.M. reports.
Last year saw a “sharp rise” in the number of businesses in the North West entering administration. Data from KPMG shows a 33% increase to 283 in 2019, up from 213 in 2018. This outpaced the national increase by 5%, as 1,403 businesses went into administration, up from 1,341 in 2018, according to BusinessLive.
MP Anneliese Dodds has called tax avoidance a “stain” on the UK’s global reputation. In a comment piece for PoliticsHome, she said the £1.3bn lost annually through corporate tax avoidance could fund 52,000 nurses, care homes for 42,000 people and nearly double school funding in the North East.
25 February 2020: HMRC sets up secret unit to probe IHT; UK-US trade talks just “weeks away”; Government appoints outsourcer health check advisers; young workers' personal smartphone use for work almost doubles.
HMRC has implemented a secret unit to investigate the use of family investment companies by the very wealthy to avoid paying inheritance tax. The increasing use of family offices by the wealthy, to mitigate tax through sophisticated arrangements, triggered HMRC to set up the unit. Family offices are estimated to hold a combined total of more than $1trn in assets, City A.M. reports, citing figures published by the Financial Times.
Prime Minister Boris Johnson is ready to begin trade talks with the US within the coming fortnight, following frustration in Downing Street at the slow speed of talks between the UK and EU, it has been reported by Sky News. Number 10 will next week announce the government’s areas of no compromise, the report added.
The government has reportedly appointed Deloitte to monitor the health of important outsourcers, such as engineering company Kier, in a bid to avoid more high-profile collapses such as Carillion. The move comes as Kier hired EY as its financial adviser amid fears of growing financial pressures, according to a Telegraph article cited by City A.M.
The proportion of young employees using personal smartphones for business purposes outside of working hours almost doubled between 2018 and 2019, from 12% to 21% respectively, according to Deloitte’s Mobile Consumer Survey. Among 18 to 24-year olds, 16% of workers check work emails on their smartphone every hour, compared to 5% of those aged over 55. Meanwhile 15% of smartphone owners among the younger group wake during the night to check their phone.
The OECD plans to develop a single set of rules to govern the collection of information from online platforms, which would aid more efficient tax collection within fast-emerging sharing and gig economies. In its paper, Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy, the organisation says tax authorities need to consider adapting their compliance strategies to keep up with the increasing trend of taxpayers that make taxable gains via online platforms.
Trustees of the IFRS Foundation are calling for nominations for candidates for its SME Implementation Group. The group aims to support adoption and implementation of International Financial Reporting Standard for Small and Medium-sized Entities. Trustees of the foundation will accept nominations by March 20.
24 February 2020: a third of FTSE 100 board positions now held by women; Barclays stops spyware software use; GP practices may face huge financial penalties; business leaders could lose PM advisor role; error saw Plymouth Albion face HMRC winding up order.
Women now hold a third of all board positions in the FTSE 100, achieving a core government target, the latest data from the Hampton-Alexander review reveals. However, the research also shows that female representation in senior executive roles is still lagging, with just 15% of finance directors at top UK companies being women.
Barclays has stopped the use of spyware software that tracked time employees spent at their desks. City A.M revealed that the software told staff to “avoid breaks” as it monitored their productivity and recorded toilet breaks as “unaccounted activity”. Privacy campaigners slammed the bank for its use of the technology, which was introduced in a pilot scheme last week.
GP practices look set to trigger six-figure financial penalties under rules that cap pensionable pay growth. Moreover, a key tenet of the 2020 contract could worsen the situation. Penalties of up to £250,000 can be imposed where practice staff or non-GP partners on final salary pensions under the 1995 section of the NHS pension scheme see their pay rise faster than a set limit in the final three years before they retire, GPonline reveals.
Dozens of business leaders could be forced to renounce their roles as advisers to the Prime Minister as part of a review of Boris Johnson's engagements with industry leaders. Sky News reports that Downing Street officials are looking to overhaul the network of five business councils set up in 2018 by Johnson's predecessor, Theresa May.
Rugby club Plymouth Albion has sought to reassure its fans after “an error” saw it called before the High Court to face a winding up order from HMRC. The Devon club told Plymouth Live that the order, which forces an insolvent company into compulsory liquidation, "was an error" and had now been "dismissed".