Business news 21 June 2024

Some of the business news that we thought would interest our members.

James Salmon, Operations Director.

TAX

HMRC’s compensation payments rise
Complaints to HMRC rose by two-thirds last year as customer service hit an all-time low. Nearly 34,000 taxpayers complained about long waiting times, a 65% increase from the previous year. However, only 4,742 received compensation, with an average payout of £136 for delays and £371 for escalated complaints. HMRC paid a total of £718,000 in compensation, up from £371,000 the previous year. Graham Boar, of accountancy firm UHY Hacker Young, says: “Successfully getting meaningful compensation from HMRC for a delay is a very admin-intensive process. Many customers simply give up trying to secure the compensation they deserve.”

Labour to impose VAT on private schools in first Budget
Rachel Reeves, the shadow chancellor, will impose VAT on private schools within weeks if the party wins the election. The measure is expected to be included in her first Budget, which may be released in September. The policy aims to raise £1.5bn annually to fund the recruitment of specialist teachers in state schools and mental health support in all schools. Private schools would be charged 20% VAT and lose the 80% relief they currently receive on business rates. However, children with an Education, Health and Care Plan (EHCP) would be exempt from the tax hike.
  

UK tax gap nears £40bn
New data from HMRC reveals that Britain’s tax gap has climbed to £39.8bn for the 2022 to 2023 tax year, up from roughly £38.4bn in 2021 to 2022. Both the Conservatives and Labour promised recently to raise billions by clamping down on tax avoidance and evasion. But tax expert Richard Murphy says the tax gap is likely to be closer to £100bn and Labour’s plan to target wealthy tax dodgers ignores tax avoidance among small businesses.
  

INVESTMENT

Reeves: Britain will be a safe haven for investment
Britain will be a “safe haven” for international investment, according to Rachel Reeves. The shadow chancellor told The Times CEO Summit yesterday that the Labour Party plans to hold an international investment summit within 100 days if it wins the upcoming election. Reeves aims to convince multinationals that the UK offers a more stable and predictable environment compared to neighbouring countries facing political “turbulence”. Reeves wants the UK to be seen as a secure place to invest, where government and business work together to exploit opportunities. Reeves reassured businesses that the party’s plans to enhance workers’ rights would not hinder flexibility or prohibit certain employment contracts. She also targeted an annual growth rate of 2% for the UK economy, aiming to improve living standards and public services.

PENSIONS

Some state pension recipients already paying tax, report suggests
A report suggests that some state pension recipients in the UK are already paying income tax, despite a Conservative pledge that it would remain tax-free. Pensions consultancy LCP has found that the amount people receive in the state pension varies, meaning some already pay tax on it. LCP partner Sir Steve Webb, who is a former Liberal Democrat pensions minister, said: “We estimate that around 2.5m pensioners, or more than one in five of all pensioners, have state pensions in excess of the income tax threshold. These pensioners would overwhelmingly continue to be taxpayers even if future policy linked the income tax allowance to increases in the headline rate of state pension.”

FIRMS

Interpath in talks to buy KPMG French unit
London-based advisory firm Interpath Advisory is in advanced talks to acquire KPMG‘s restructuring division in France, with a deal expected as soon as next month. This acquisition would mark a significant move for Interpath, which was spun out of KPMG three years ago. The French unit employs over 100 people, and the price of the deal remains unclear. Interpath Advisory, backed by HIG Europe, has previously worked on high-profile projects, including advising Ineos Sport on cost-efficiency measures at Manchester United Football Club.
 

KPMG to cut further 200 UK jobs amid market slowdown
A prolonged slowdown in demand for some services and high retention rates have prompted KPMG to cut a further 200 jobs in the UK.

EMPLOYMENT

A human hand needs to guide AI in recruitment
Artificial intelligence (AI) is revolutionising the recruitment process, says Shane Richmond in the Times. With almost two-thirds of employers using AI in some part of the hiring process, the technology is being deployed in various ways, from online assessments to chatbots. AI can analyse job descriptions, compare them with candidates’ CVs, and shortlist the most suitable candidates. It can also predict the traits of successful candidates based on past hiring decisions and employee performance data. However, there are ethical concerns about bias and the effectiveness of these technologies. “The challenge with the ethics of AI is fundamentally a challenge for us as humans,” Paul Henninger, head of UK connected technology at KPMG, said, adding that while AI can be a useful tool in recruitment, issues such as diversity and fairness in the hiring process depend on company policies and principles.

CORPORATE

One-quarter of firms missed deadline to respond to misconduct survey
One-quarter of firms in the UK missed the deadline to respond to a survey on sexual harassment and bullying in the City, according to the Financial Conduct Authority (FCA). The FCA sent out data requests to over 1,000 firms in February to understand the extent of non-financial misconduct. Out of the 261 firms that failed to respond in time, only 36 requested extensions. Imogen Makin, a business crime lawyer at WilmerHale in London, observed: “It demonstrates the difficulty firms have experienced in capturing this data . . . This fact alone, quite apart from the responses themselves, is likely to provoke further scrutiny from the FCA.” The regulator warned that non-compliant firms risked public reprimand, penalties, or even search warrants. “Firms will need to ensure that they reconsider their systems and controls in light of their responses,” said Makin.
 

SKILLS

Investment in skills is crucial to growth – Mayfield
Writing in the Times, Sir Charlie Mayfield, a former chairman of John Lewis Partnership and the UK Commission for Employment and Skills, states that the next government must invest in developing the UK’s workforce and work with business to invest in skills and education. Labour has the right intent, Mayfield say, but unless it executes a sound plan economic growth will be in jeopardy.

ENERGY

Labour will tax North Sea ‘out of existence’ – Ratcliffe
Just days after he came out in support of Sir Keir Starmer, Ineos billionaire Sir Jim Ratcliffe has warned that Labour’s energy policy will render North Sea production “extinct” and lead to increased imports from overseas. He is also sceptical of Labour’s net zero policies describing Labour’s bid to decarbonise the UK’s electricity system within the next six years as “absurd”. Speaking at The Times CEO summit in London, he asked: “Where’s it all [electricity] going to come from?”

ECONOMY

BoE holds rates at 5.25%
The Bank of England has kept interest rates at 5.25%, a 16-year high, with a majority of the Monetary Policy Committee agreeing that further “evidence of diminishing inflation persistence was needed before reducing the degree of monetary policy restrictiveness”. The MPC voted 7-2 in favour of freezing the base rate. Sir Dave Ramsden and Swati Dhingra voted for a 0.25% reduction arguing that the economy needed an injection of demand to keep inflation at the Bank’s target over the medium term. However, the decision was reported as “finely balanced” for members indicating a rate cut is on the way. Despite inflation coming down to 2%, services inflation remains sticky with one-offs such as the increase in the national minimum wage and indexed household bills also deterring members from voting for a cut.

BoE accused of ‘political decision’ to hold interest rates
The Bank of England’s decision to keep interest rates at 5.25% despite inflation falling to target has led to accusations the Monetary Policy Committee was being influenced by politics. Sir Jacob Rees-Mogg, a former business secretary, said: “It is a political decision by the Bank of England. Inflation is now on target and rates need to be cut.” Other leading Tories also questioned the Bank’s justification for holding rates again. The left-leaning think tank the Institute for Public Policy Research also cast doubt on the decision, stating that the Bank had kept rates too high too long and it was holding back the economy. The MPC said services inflation and wage growth both remained too high to warrant a cut at this time.

Why should you become a CPA member!

The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this last one was particularly deadly for suppliers fand we are still seeing elevated insolvencies as businesses struggle.

CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.

Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!

Just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.

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

Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!

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?

CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.

Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.

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.