This Weeks News Headlines

 

IFS: Tax system helps reduce wealth inequality

The Institute for Fiscal Studies (IFS) says the UK tax system helps reduce wealth inequality in the country. The IFS report shows that the top 20% of earners had an income 12 times that of the bottom 20% before taxes and benefits took effect, with this dipping to five times afterwards. While benefits account for the majority of that narrowing of the inequality gap, the role of taxation was noted. Shadow Chancellor John McDonnell said the study shows the Government is wrong to plan tax cuts, commenting: “The IFS has confirmed the importance of taxation and social security in creating a fairer society.” The findings, funded by the government-backed Economic and Social Research Council, contradict an Office for National Statistics report published in 2018 which said the tax system has a “negligible effect on income inequality”. Pascale Bourquin, a research economist at the IFS said: “The tax and benefit system significantly reduces the gap between rich and poor, with benefits playing a particularly big role. However, contrary to the ONS’s claim, taxes do also reduce inequality.”

Source: The Times (27/05/2019)   Financial Times (27/05/2019)   The Guardian (27/05/2019)   The Independent (27/05/2019)   Daily Mail (27/05/2019)

 

One in ten APNs cancelled

The Telegraph’s Sam Meadows reports that some taxpayers are being forced to pay disputable tax bills up front, only to see the demands later withdrawn. Figures show that since HMRC was given powers to serve accelerated payment notices (APNs) on suspected tax avoiders five years ago, 81,000 APNs involving £8.7bn have been issued. Of these 8,600 have later been cancelled. Mr Meadows highlights examples where those handed bills have had to sell their home or take out loans to pay the taxman. Debt charity StepChange said it was concerning that people would consider taking on commercial loans to pay tax debt, while MP Ross Thomson said: “HMRC must ensure that people are given support and advice as they work through any repayment plan.” The Revenue said it has a number of ways to help those who could not afford to pay.

Source: The Daily Telegraph (25/05/2019)

 

Raab: There is room to cut taxes

Tory leadership hopeful Dominic Raab has said he wants to reduce the basic rate of income tax from 20p to 15p and raise the national insurance threshold. He refuted a claim that this could mean a £30bn hit for the Treasury, saying the initial increase was likely to cost £15bn. He told BBC One’s Andrew Marr Show: “We have got £26bn worth of head-room within our deficit target.” He said the “great work” of Chancellor Philip Hammond and previous chancellors means there is what Mr Hammond calls the “luxury of choice” with what ministers do with that head-room, “including cutting taxes for working families.”

Source: The Independent (27/05/2019)  Daily Mail (27/05/2019)   The Daily Telegraph (27/05/2019)

 

1.4m over-60s near IHT limit

HMRC data shows that around 1.4m people over the age of 60 are on the cusp of being liable for inheritance tax. Analysis by insurer NFU Mutual shows that 9% of over 60s have wealth at or just over the tax-free threshold, warning that 54% of these have little understanding of IHT rules. Sean McCann from NFU Mutual said IHT rules are “fiendishly complex, feared by many and understood by few”.

Source: The Sunday Telegraph (26/05/2019)

 

Think-tank: Income tax would boost council funds

The Institute for Fiscal Studies has suggested that councils could charge a local income tax to ease pressures which have seen spending on local services fall by 21% in a decade.

Source: The Guardian (29/05/2019)   The Sun (29/05/2019)

 

Government to consult further on audit reform

The Department for Business, Innovation & Skills has announced it will consult further on sweeping reforms of the audit market. Last month the Competition and Markets Authority recommended new laws to force the Big Four to separate their audit and consulting arms and to require most listed companies to be audited by two different firms. Business minister Greg Clark had told parliament he would bring forward the legislation needed to implement the reforms before the end of this year. However, the Department for Business has now said that while it is still committed to reforming the industry, it plans to consult further before considering any new laws. With Britain’s departure from the European Union clogging up parliament, the ministry might ask the sector to change its practices voluntarily, industry officials said.

Source: Reuters (23/05/2019)

 

Loophole leaves late payment law unfit for purpose

MPs and SME representatives are calling for legislation designed to force large companies to reveal how long they take to pay their suppliers to be rewritten over concerns loopholes mean it is easily sidestepped. This comes after it was shown that not all subsidiaries of large firms are required to follow the duty to report rules. Rachel Reeves, chairwoman of the Commons business, energy and industrial strategy committee, said: “If large companies can exploit loopholes to dodge reporting requirements, it undermines efforts to tackle late payments and protect small businesses.” Ian Cass, managing director of the Forum of Private Business, said that the loophole “makes a mockery” of the legislation, describing it as “unfit for purpose”. Paul Uppal, the small business commissioner, said: “It is disappointing that the regulations are not proving to be as effective as I anticipated.”

Source: The Times (29/05/2019)

 

Fox: SMEs the future of the economy

With the Sunday Times carrying its SME Export Track 100, Secretary of State for International Trade Liam Fox says it marks a “great opportunity” to celebrate the international success of British SMEs. He says that small, dynamic companies “are the future of the UK economy” and export growth. Dr Fox adds: “There is a market out there for every business, no matter its size or sector, but it is crucial that companies are given the support and confidence they need to grow, in order to unlock their economic potential.”

Source: The Sunday Times (26/05/2019)

 

Higher energy prices push inflation above Bank of England target

Rising gas and electricity prices pushed inflation above the Bank of England’s target to 2.1% in April, according to the Consumer Prices Index, its highest level this year. Electricity prices rose at their fastest rate since 2011 last month, though air fares also contributed to the rise in inflation, soaring by more than 30% over the Easter period.

Source: City AM (23/05/2019)    Financial Times (23/05/2019)   The Daily Telegraph (23/05/2019)    

 

 

 

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