Business News – 2nd May 2017


IFS: Tax lock not a good policy

The Institute for Fiscal Studies has said election pledges to keep taxes locked were a bad idea and constrained economic management. IFS analysts said a government would be “foolish to tie their hands” by ruling out increases in income tax, NI and VAT because these three taxes contribute almost two-thirds of tax revenues. The comments follow Theresa May’s statement on Sunday that the Conservatives would not raise VAT if they win the election but could not rule out other tax changes unless she was sure they could be delivered. The IFS forecasts that by 2019-20 tax receipts will be at the highest share of national income, at 34.4%, since 1981-82, illustrating the state’s need for room for manoeuvre. Elsewhere, several papers report on IFS analysis showing how the composition of taxes has changed over the past two decades and the share of taxes paid by different groups of taxpayers. For example, the top 10% of earners pay 90% of all tax in the UK and that the highest-paid 1% pay almost a third of all levies set by the Government – compared with 11% in 1979.

BBC News The Daily Telegraph, Business, Page: 4 The Sun, Page: 8 Daily Mail, Page: 14 The Times, Page: 7 Yorkshire Post, Page: 4

Tax calculators can’t keep up with changes

The Independent picks up on a story covered by the Telegraph on Saturday which details how HMRC’s online calculators have not been updated to cope with recent changes to tax allowances, meaning some people could be overcharged. The problem affects two groups of people who have certain combinations of savings and other income. The first is people who earn less than £16,000 a year and who exceed the personal savings allowance. The second is those who have total taxable income of between £27,000 and £32,000 a year, and who also receive enough income in the form of dividends to take them over the additional-rate tax threshold of £150,000. HMRC has admitted that its online systems can’t cope with these two groups, and advises people affected to file paper returns. Nimesh Shah at Blick Rothenberg commented: “The UK’s personal tax system has become littered with numerous thresholds, allowances and reliefs, most of which have been politically driven without any consideration given to the adding complexity. It has got to the point where the Government and HMRC are not far from a complete rewrite of the tax code.”
The Independent i, Page: 1, 4

Lawson: Tax reform “not airy fairy theory”

Lord Lawson has said the PM should drop plans for an energy bill price cap and should be prepared to walk away from EU negotiations, predicting Europe will offer a bad deal. The former chancellor also said the UK should loosen tax rules and simplify the system, which is currently putting SMEs at a disadvantage. The government should “get away” from corporation tax he added: “Small businesses don’t have the opportunity to shunt their profits to whatever jurisdiction in the world has the lowest tax rate. It’s not a question of [being] aggressive, it’s just having a tax system which has as low as possible tax rates and is as uncomplicated [as possible], a degree of simplification. This is not airy fairy theory, because I did it.”

The Daily Telegraph, Page: 6

Labour: New police officers paid for by CGT reversal

Labour has pledged that it will put 10,000 more police officers on the streets and will not cut police funding further. The measures would be paid for by reversing the cut to CGT made in the 2016 Budget. Policing minister Brandon Lewis dismissed the plan as “nonsensical”, saying Labour had already spent the same money three times in other policy pledges.

Financial Times The Independent, Page: 6 Daily Mirror, Page: 7 The Daily Telegraph, Page: 7 Independent i, Page: 8-9 The Sun, Page: 9 The Guardian, Page: 6 Yorkshire Post, Page: 4


Cable calls for mandatory pre-pack referrals
The voluntary system for preventing abuses of pre-pack administration rules is being underused, according to the Pre Pack Pool’s first annual report. The pool reviews pre-pack administrations in which companies are sold to connected parties. The pool was created in 2015 following a review by accountant Teresa Graham and is overseen by practitioner bodies including the Insolvency Service. Sir Vince Cable is now calling for referrals to the pool to be made mandatory, a move Ms Graham says would “destroy a mechanism that has a legitimate place within the insolvency landscape.” Stuart Hopewell, co-director of the pool, said that making referrals compulsory “might also dissuade owners from proposing any potential pre-pack deals and lead to more sales out of liquidation with no scrutiny, leading to potentially greater job losses than with pre-packs, which are known to preserve jobs”. He added that creditors should “push for referral and from experience one of the biggest such creditors is government itself in the form of HMRC.”

The Times, Page: 37


Doubts over impact of gender pay reporting
Analysis of HMRC data by law firm Clyde & Co has found the proportion of UK female high earners has not changed for the past six years. The study reveals only one in four people earning between £43,000 and £150,000 in each of the last six financial years were women. Clyde partner Heidi Watson said: “The stubborn refusal of the percentage of female high earners to shift upwards will disappoint those who hoped a recent focus on the gender gap would make a significant difference to the number of women in senior positions.” From April 2018 companies will need to report on their gender pay gap, but Ms Watson says the new legislation “lacks teeth”.

The Times, Page: 40 The Independent, Page: 14 The Guardian, Page: 11 Independent i, Page: 43

Lloyds denies credit card accounting risk

Lloyds Banking Group has dismissed claims that booking revenue from interest free credit cards upfront is a “ticking time bomb” following reports in the FT that some bank executives thought the practice risky, with one comparing it to the Tesco scandal where the retailer overstated its profits. Lloyds said its business model was based on customers who could pay off debts relatively quickly, adding that it carried forward only about £60m or £70m in revenues from such lending in its accounts.

The Times, Page: 39 Daily Mail, Page: 4


McCrae takes up energy lead at PwC
PwC has named energy taxation specialist Alan McCrae as its new UK oil and gas leader succeeding Alison Baker. McCrae was previously energy tax leader across PwC’s UK, Europe, Middle East and Africa regions.

The Scotsman, Page: 32

Ex-Deloitte director lands top Sky job

Former Deloitte director Renee Hunt has been appointed by Sky as its new director of digital platforms at the company’s Yorkshire technology hub. Ms Hunt was working with Deloitte’s UK Innovation Lab as a programme director.

Yorkshire Post, Business, Page: 14


BCC: Don’t let Brexit overshadow economy
The British Chambers of Commerce has warned politicians that the best Brexit deal “won’t be worth the paper it’s written on” if ministers neglect the economy and fail to address the UK’s skills shortage. The BCC urged all parties to focus on five key areas – Brexit, devolution, the business environment, infrastructure and trade – and urged policymakers to foster a “globally competitive business environment” with a stable tax system and no new upfront taxes on businesses for the next five years. BCC director-general Adam Marshall added that there should be a commitment to delivering “frictionless” future trade arrangements with the EU. In the FT, Helen Brand, chief executive of ACCA, commented: “Government departments have now been heavily distracted by political upheaval since the last general election in 2015, which has led to key policy decisions being drawn out or delayed indefinitely.”

The Daily Telegraph, Business, Page: 3 Daily Mail, Page: 66 The Independent, Page: 58 Financial Times, Page: 2 Independent i, Page: 40 The Press and Journal, Page: 35


Bonuses add up for Revenue staff
Tax staff have been handed bonuses of almost £10m in the last four years, says the Star, with former CEO Dame Lin Homer picking up the top bonus of £17,500 in each of the last two years.

Daily Star, Page: 2

Previous News Pages

Business News – 27th April 2017

Business News – 26th April 2017

Business News – 25th April 2017

Business News – 24th April 2017

Business News – 21st April 2017

Business News – 20th April 2017

Business News – 19th April 2017

Business News – 18th April 2017.