Business news 1 June 2024
Some of the business news that we thought would interest our members.
James Salmon, Operations Director.
New HMRC fraud and error taskforce to clawback Covid payments
A new HMRC fraud and error taskforce has been established in a bid to recover overpayments made to UK taxpayers during the pandemic. The £100m Taxpayer Protection Taskforce of 1,200 HMRC staff will combat fraud and aims to recover up to £1.5bn from fraudulent or incorrect payments for the 2022/23 financial year. HMRC is also working with enforcement bodies, including the National Investigation Service (NATIS), to investigate serious cases of fraud. So far, NATIS investigations have led to 49 arrests related to Bounce Back Loan Scheme fraud, while the Insolvency Service has achieved director disqualifications, bankruptcy restrictions, and company wind-ups. “Fraud is totally unacceptable, and we’re taking action on multiple fronts to reclaim money stolen from the taxpayer,” said HMRC.
HMRC Pandora Papers ‘nudge’ letters draw meagre response
A campaign launched by HMRC to encourage UK taxpayers named in the Pandora Papers leak to declare overseas income and gains has resulted in just 14 disclosures, data obtained by the think-tank TaxWatch show. Claire Aston, director of TaxWatch, said: “While it’s too early to know how much UK tax is due on these assets hidden overseas, there’s a public interest in these figures and scrutiny of HMRC’s approach to offshore non-compliance.”
TAX
Labour’s VAT on fees ‘inhumane’ for children forced to leave
The headmaster of Brighton College has said Labour’s imposition of 20% VAT on school fees would be inhumane for children forced to leave. Richard Cairns said the move would be particularly damaging to pupils in the middle of their GCSE or A-level courses as they would unlikely find a local state school teaching the same syllabus. He added: “Of course, the most responsible and humane approach of all, if VAT is indeed deemed necessary, would be to impose VAT only on the fees of any child who joins an independent school in the future. That way, parents and children would be embarking upon that journey eyes wide open.”
Buyback tax would fund free school meals, Lib Dems say
The Liberal Democrats have proposed a 4% levy on share buybacks to raise £1.4bn for a universal free school meal program for primary school children. The plan would initially extend free school meals to all 900,000 children living in poverty, with the aim of providing meals to all primary school children as the public finances stabilise. The proposal, similar to the US excise tax on buybacks, would target FTSE 100 listed corporations.
Tory and Labour tax avoidance crackdown is ‘tall order’, say experts
Experts from the ATT and the CIOT warn that political pledges to raise billions from a crackdown on tax avoidance would be very difficult to fulfil and overestimate the level of avoidance.
CORPORATE
Flutter CFO resigns ahead of US listing
Flutter’s UK-based chief finance officer, Paul Edgecliffe-Johnson, has resigned from his role as the gambling group shifts its primary listing to the US. Edgecliffe-Johnson cited concerns about spending time away from his family due to the move. He played a key role in Flutter’s transition to the US listing. Rob Coldrake, the former international finance boss, has been appointed as his replacement. Flutter’s move to the US comes as the company aims to tap into deeper pools of investor cash. The company’s FanDuel business has seen significant growth in the US, with over 50% market share. Flutter will maintain a secondary listing in London but will no longer be part of the FTSE 100.
PENSIONS
Doctors quit NHS in fear of Labour’s pension tax raid
Labour’s plan to reintroduce the pension lifetime allowance is prompting senior medics to leave the NHS, according to the British Medical Association. Jeremy Hunt, the Chancellor, abolished the £1,073,100 limit last year, in an effort to stop experienced NHS staff quitting the workforce to avoid tax bills. But shadow chancellor Rachel Reeves vowed to reverse the move leaving doctors “really anxious”. Dr Vishal Sharma, the BMA’s pensions committee chairman, said: “The biggest challenge to getting the NHS waiting list down is not enough staff. If there is one policy that is going to make that worse, it’s this one.”
Retirees urged to be cautious over pension tax changes
Financial advisers are urging wealthy savers to resist a knee-jerk reaction to Labour plans to reinstate the pensions lifetime allowance indicating that there should be reasonable notice before the change is made.
PROPERTY
House prices edge back up a market begins rebound
UK house prices have experienced a modest rebound, increasing by 0.4% in May, according to Nationwide. Annually, house price growth has seen a 1.3% uptick since last April, with prices now averaging £264,249. Robert Gardner, Nationwide’s chief economist, said: “The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation.”
Mortgage borrowing rises to highest level since October 2022
Individuals in the UK borrowed a net £2.4bn on mortgages in April, a significant increase from the previous month’s £500m. This surge in mortgage borrowing, the highest since October 2022, indicates that prospective homebuyers rushed to secure lower interest rates. The Bank of England data suggests that the drag on mortgage lending from higher interest rates is fading, with the growth in annual net borrowing has turned positive for the first time in nearly two years. Lenders have been raising mortgage rates since last spring, but the recent reduction in borrowing costs and moderation in inflation have revived activity in the housing market. However, there are signs that demand for homes has plateaued, with mortgage approvals remaining flat in April.
RETAIL
Gatwick harmed by tourist tax, says CEO
Rishi Sunak’s tourist tax has put Gatwick at a competitive disadvantage, according to the airport’s CEO, Stewart Wingate. The removal of tax-free shopping has hindered Gatwick’s ability to attract wealthy passengers and long-haul airlines. Wingate argues that the tax is holding back the airport’s growth and suggests that abolishing the tourist tax would help London retain its status as a global transportation hub.
PERSONAL FINANCE
Brits pile cash into ISAs ahead of rate cut
Bank of England data showed on Friday that British savers put away a record amount of cash into ISAs last month as expectations of a rate cut rise. An extra £11.7bn was deposited into ISAs in April, the highest since records began 25 years earlier. When taking into account the impact of deposits and withdrawals, households put away an extra £8.4bn in savings last month – the largest amount since September 2022. Commenting on the boost to savings, Thomas Pugh, economist at tax consultancy RSM UK, said: “Real earnings are rising rapidly now that inflation has fallen, and household balance sheets are looking stronger. This should set the stage for a revival in consumer spending later this year.”
ECONOMY
Confidence in UK economy reaches three-year high
Confidence in Britain’s economic prospects has risen to its highest level for three years, according to a survey. The Institute of Directors’ economic confidence index rose to a measure of -3 in May, from -10 in April, the highest since September 2021. Business leaders’ investment intentions and headcount expectations also improved. However, export expectations have been declining. Business leaders’ biggest concerns are economic conditions and skills shortages. The cost of energy has fallen down the list of concerns, while compliance with government regulation has increased. Business leaders’ confidence in their own organisations remained stable. Roger Barker, director of policy and corporate governance at the institute, said: “The confidence of business leaders in UK economic prospects … is a welcome fillip for the business community. Green shoots are visible and the direction of travel is positive, but there are no grounds for complacency.”
Tories preside over marked slump in disposable income growth
The Institute for Fiscal Studies (IFS) has revealed that the average Briton would be almost £5,000 richer if living standards had grown at the rate recorded in the years prior to the Conservatives coming to power in 2010. Tom Waters, of the IFS, said: “Poor income growth has been an unfortunate feature of economic life in the UK over the last 15 years. And it has been slow growth for essentially everyone; rich and poor, old and young.” Mr Waters added: “The UK has fallen from being one of the fastest growers prior to the Great Recession, to one of the weakest performers.” The figures come as a study by the NIESR found living standards have fallen 7% since the 2019 election. For the poorest 10th of households, the fall is greater at 20%. Research lead Arnab Bhattacharjee said the bottom 40% of households will not see living standards recover to pre-pandemic levels until 2028.
INTERNATIONAL
ECB expected to cut rates in June
Traders are pricing in a cut to eurozone interest rates next month despite inflation in the bloc climbing to a four-month high. Eurostat data showed Inflation rose to 2.6% in the year to May, up from 2.4% the previous month. A cut by the European Central Bank (ECB) is expected to pave the way for the Bank of England and the Federal Reserve to follow.
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When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
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Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.