MPs demand action against advisers who facilitate tax evasion
The Times reports on a push by MPs to make it easier to prosecute lawyers and accountants who enable tax avoidance. In a paper produced by a cross-party parliamentary group on anti-corruption and responsible tax, Dame Margaret Hodge, the former Labour minister and ex-chairwoman of the Commons public accounts committee, said: “The way that the law is currently set out means that it is virtually impossible to prosecute these enablers of failed tax-avoidance schemes, even when a criminal offence has been committed.” The group said one change that could be made would be to remove the requirement for dishonest intent, which is required in all criminal fraud cases, and replace it with a “double-reasonableness” test, which is used for penalising enablers under the civil law regime. But Harry Travers, a partner at BCL Solicitors, says: “The need for the prosecution to prove dishonesty is a crucial safeguard for an accused, and should not be removed. ”
Source: The Times (23/07/2020)
Think tank calls for new capital gains tax on homes
The Guardian’s Nils Pratley says the idea put forward by the Social Market Foundation thinktank to introduce a capital gains tax on primary residences deserves a hearing. The paper’s author, Michael Johnson, calculated that when levied at a rate of 10%, and assuming houses rise in value by only 1% a year, the tax on “unearned” gains would raise £629bn for the Treasury over 25 years. He suggested that some of this should be used to abolish stamp duty and inheritance tax on property, leaving the Treasury with £421bn to repair the public finances. “Unearned gains on property are a better target for new taxes than workers’ earned income,” argues the thinktank, a sentiment that Pratley suggests “stands a good chance of commanding broad electoral appeal.” The only other place for a hard-up chancellor to go is pensions, he asserts, which “presents even more political pitfalls.”
Source: The Times (24/07/2020) The Daily Telegraph (24/07/2020) The Guardian (24/07/2020)
IFS: Inheritance major factor in future wealth
The Institute for Fiscal Studies (IFS) has calculated that as many as one in 10 of UK adults born in the 1980s will inherit more than half as much money from their parents as the average person earns in a lifetime. The thinktank found the median inheritance for those born in that decade is estimated to be £136,000, compared to £107,000 for those born in the 1970s and £66,000 for those born in the 1960s. People born in the 1980s had accumulated no more wealth than adults born in the 1970s had done by the same age, the IFS said, but that their parents were 40% better-off in comparison. Robert Palmer, executive director of the campaign group Tax Justice UK, commented: “It is natural parents want to hand a legacy to their kids, but at some point we need a grown-up conversation about wealth. As we build back from the economic shock of coronavirus, politicians should use the tax system to tackle inequality and support high quality public services.”
Source: The Guardian (23/07/2020)
Self-employed given 90 days to come clean on support
After HMRC received tip-offs that some workers may have overclaimed under the Self-employed Income Support Scheme (SEISS) the Treasury has given itself sweeping powers to issue penalty charges against people who may have claimed too much COVID-19 support. The scheme provided a taxable grant worth up to 80% of average profits for a period of three months, capped at £7,500. HMRC said there had been 2.7m claims worth more than £7.7bn in support. The Finance Bill grants a 90-day amnesty period to self-employed workers, after which those who have overclaimed would face fines on a sliding scale of between 30% and 100%.
Source: The Times (25/07/2020)
Rishi Sunak mulls online sales tax
A new online sales tax is being considered by the Chancellor as a means to provide a “sustainable and meaningful revenue source for the Government” and avert a collapse of the high street. In a call for evidence published last week, the Treasury said that the coronavirus crisis “has had a significant impact on how business is done” and that the Government must act to make sure that “the tax system raises sufficient revenue”. Two proposals are being looked at: a 2% tax on goods sold online and a mandatory charge on consumer deliveries. A plan to abolish business rates and replace them with a “capital values tax” – based on the value of land and the buildings on it – is also being considered, according to the Times. This levy would be paid by the owner of the property rather than the business leasing it.
Source: The Times (27/07/2020)
Small businesses cut jobs as furlough scheme winds down
A report by the FSB shows that, despite the Government’s furlough scheme, 23% of small UK businesses have cut jobs in the last quarter. The FSB also found that more than one in five respondents said they expected their performance to be “much worse” over the coming quarter, while about one in eight predicted improvements. FSB chairman Mike Cherry said: “The majority of small business owners have benefited from the Government’s emergency support measures but many have not. We need to see the Treasury outline how it intends to support those who have been left out.” Separately, the Telegraph reports that MakeUK, the manufacturers trade body, has found 46% of British manufacturers are planning to rely more on UK suppliers in future, which may help to offset the loss of jobs currently underway.
Source: Financial Times (26/07/2020) The Daily Telegraph (26/07/2020) Daily Express (26/07/2020)
UK Treasury and banks in talks on coming wave of bad Covid debt
The FT reports that the Treasury is in talks with banks about an industry-wide plan to help tackle the £16bn in bad debts expected from the “bounce back” loans scheme. The Times says the Chancellor is understood to be reluctant to write off the debt as it would be unfair on those businesses that struggled on without loans. The Federation of Small Businesses has suggested that repayment conditions should be relaxed. Mike Cherry, national chairman of the federation, said: “A guarantee that they won’t have to start making repayments until they’re turning a profit would give them the confidence to invest and hire today, rather than further down the line, when [it] may prove too little too late.”
Source: Financial Times (26/07/2020) The Times (27/07/2020)
Brand: Small businesses must be included in emergency response
Writing in City AM, Helen Brand, the chief executive of ACCA, says a tracker poll run by the ACCA and the Corporate Finance Network found 83% of business owners are stressed and anxious about their future compared to 69% a month ago. The proportion not sleeping rose from 17% to 33% and 18% now feel unable to cope compared to 8% last month. Brand says the ACCA is supporting the efforts of various campaigns calling for the smallest businesses to be given government support to ride out the pandemic. The ACCA has also contributed to TheCityUK’s Recapitalisation paper, which proposed converting state-backed business loans into a tax obligation which is repaid alongside other business taxes in a similar model to student loans. Brand concludes that: “There is a clear need for greater government support for the left behind. Accountants are joining the cause, and it’s time for policy makers to join them.”
Source: City AM (24/07/2020)
Commonwealth entrepreneurs should be able to register firms in the UK as “e-citizens”
The Prime Minister’s former business adviser James Sproule has called on Boris Johnson to allow entrepreneurs across the Commonwealth to register firms in the UK as “e-citizens”, as part of Mr Johnson’s push for a Global Britain. In a report published by the Centre for Policy Studies think tank, Sproule says the move would help entrepreneurs in developing countries draw investment directly while British investors would be given an opportunity to gain the “higher returns” available in developing countries, knowing that their investments would be protected by UK law.
Source: The Sunday Telegraph (25/07/2020)
Cash owed to SMEs rockets
Research by Intuit QuickBooks suggests small businesses have seen a 20-25% increase in overdue payments since the beginning of the pandemic. SMEs were chasing £50bn in late payments before the outbreak started.
Source: Sunday Express (26/07/2020)
UK retail sales and services rebound in June
New data from the Office for National Statistics (ONS) show sales volumes rose by 13.9% in June compared with the month before, bringing total sales across the country close to last year’s levels. Helen Dickinson, chief of the British Retail Consortium, said: “Though a month of growth is welcome news, retail is not out of the woods yet. The pandemic continues to pose huge challenges to the industry, with ongoing store closures and job losses across the UK.” Separately, the IHS Markit/CIPS UK composite purchasing managers’ index jumped to 57.1 in July from 47.7 in June. The manufacturing reading rose to 53.6, up from 50.1, and services rose from 47.1 to 56.6. Chris Williamson, chief business economist at IHS Markit, said: “The surge in activity in July will fuel expectations that the economy will return to growth in the third quarter after having suffered the sharpest contraction in modern history during the second quarter.”
Source: Financial Times (25/07/2020) The Times (25/07/2020) The Guardian (25/07/2020) The Daily Telegraph (25/07/2020)
Pandemic brings split in fortunes
Capital Economics is predicting a K-shaped economic recovery in Britain, with the company’s chief UK economist Paul Dales explaining: “The upward leg is the ‘haves’ who have kept their jobs and the downward leg represents the ‘have nots” who have lost theirs.” Dales continues: “I can’t quite think of any recession which has had such a big difference on people’s incomes. Some people are sitting there with piles of cash in the bank and others will be wondering how they are going to buy food. The aggregate picture disguises a massive difference.”
Source: The Daily Telegraph (25/07/2020)