Harris Lipman - Chartered Accountants and Insolvency Practitioners2013-05-25T23:53:39ZHarris Lipman LLPCopyright 2013, Harris Lipman LLPSPHPBLOGSavers Not Put Off By Low Rates According to the BBA, people are saving because of low consumer confidence, which is depressing demand for new borrowing. Personal deposits with the major banks rose by 5.5 per cent in the year to the end of April, taking the total to £721bn, while repayments outstripped new borrowing on unsecured loans and overdrafts by 6.7 per cent in the year.
However, the total level of saving is still below the £779bn owed in mortgage borrowing to the major banks, although this level dropped slightly in the year to the end of April.
According to the BBA, the level of mortgage borrowing remains steady because of the various Government schemes helping people to get mortgages, such as the Funding for Lending Scheme (FLS), which has recently been extended to January next year.
Meanwhile, the BBA, CBI and EEF, “as UK bodies representing both the users and providers of financial services in Europe” have written to the President of the European Council calling for the current proposals for the financial transactions tax (FTT) to be substantially reconsidered.
The business bodies argue that the FTT is fundamentally a tax on growth, which poses a risk to Europe’s ability to recover from the economic problems it faces and will increase unemployment, reduce investment and raise the cost of doing business across Europe.
They go on to say that the FTT will not be a tax on financial institutions, but on the consumers of their services and that it will very quickly feed through into higher costs for households and businesses since virtually every aspect of their financial activity will be impacted.
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130524-1117252013-05-24T00:00:00Z2013-05-24T00:00:00ZTax Turning Point At the Brussels meeting, ministers from all the member states agreed that there should be "automatic information exchange between tax authorities" to monitor the situation and also resolved that governments should share information on who really owns and controls every company.
In the run up to the UK’s leadership of the G8, and in the face of sustained public and political pressure over the rate of tax paid by multinationals, the Prime Minister continued his push for a crackdown on tax avoidance by insisting that it be discussed at the meeting
At the press conference afterwards he said that there is now real momentum behind the issue to support growth in our economies and described the agreement as a turning point in breaking down corporate secrecy.
Earlier in the day Mr Cameron had been forced to defend himself from accusations by Labour leader Ed Miliband that Google’s tax planning had not been addressed with the firm’s Chief Executive Eric Schmidt at a meeting on Monday.
However, the Prime Minister said that he had raised the issue “very directly” with Mr Schmidt and said that it was more important to take action on tax avoidance than talking about it.
He added that there was now a real chance to see international action to see if the problem of tax avoidance could be fixed, while German chancellor Angela Merkel said that the summit had achieved more on the issue than had been accomplished in years.
She added that the meeting had delivered a clear signal against tax evasion and against legal tax avoidance, making a potential breakthrough possible.
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130523-1200592013-05-23T00:00:00Z2013-05-23T00:00:00ZHidden Assets Oxfam estimates that some £18.5tn is being held for individuals in tax havens, claiming that tax evasion is costing EU states around £0.85tn a year. Moreover, around a third of this cash is being held in British Overseas Territories and crown dependencies.
Oxfam’s Head of Development Finance and Public Services, Emma Seery, said that the figures put the UK at the centre of a global tax system that is “a colossal betrayal of people here and in the poorest countries.”
Ms Seery added that now is the time for the Government to put its tough talking into action, otherwise its stance on tax threatens to make a mockery of the UK’s hosting of the G8 Summit in Northern Ireland next month.
However, a Treasury spokesman refuted Oxfam’s claims and said that the Government strongly supports tax capacity building in developing countries and that the Prime Minister wrote to the Overseas Territories and Crown Dependencies only this week asking for more transparency in their financial dealings.
Meanwhile, it has been reported that HMRC could soon be allowed to gain access to the overseas bank accounts of all British citizens to check they are not hiding money from the tax office, under an EU-wide agreement which Mr Cameron is proposing.
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130522-1115302013-05-22T00:00:00Z2013-05-22T00:00:00ZSurprise Dip In Inflation The fall was driven by lower fuel costs and airfares, with petrol and diesel prices falling by 2.1p and 3.9p a litre respectively although the cost of food rose after damage to crops over the unseasonably cold winter.
In fact, food prices have risen by 40 per cent since the start of the financial crisis and the recent extended period of cold weather has damaged yields, putting even more pressure on the price of fruit and vegetables.
The fall will therefore help consumers and also gives the Bank of England more room to manoeuvre on monetary policy, although the Bank is predicting that inflation will rise again over the summer, partly because the period of falling fuel prices will come to an end.
Chief Economist at the British Chambers of Commerce, David Kern, welcomed the news, saying that the drop in inflation will ease the pressures facing businesses and consumers.
He added that, although there are still risks that inflation may edge up in the next few months, it is unlikely that the country will see an increase to 3 per cent, or even higher, as previously feared.
It is the Chambers’ view that the economy needs a period of falling inflation so that domestic demand can stabilise as exporters are hampered by global challenges, particularly in the Eurozone.
However, the impact of the news saw the pound fall from $1.5212 to $1.5184, while the Euro rose from 84.58p to 84.67p.
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130521-1102522013-05-21T00:00:00Z2013-05-21T00:00:00ZTax Transparency Mr Cameron wrote to 10 crown dependencies and overseas territories, such as Bermuda, Gibraltar, the Cayman Islands, Jersey and the Isle of Man, all of which operate low-tax regimes, saying that while he backs their right to be low tax jurisdictions, the rules need to be set and enforced.
The Prime Minister is to push for an agreement on clamping down on tax evasion and avoidance at the G8 summit and has said that he wants the group of countries to “knock down the walls of company secrecy”.
In his letter Mr Cameron said that this is the critical moment for the overseas territories and crown dependencies, some of which have been described by the Government as having “complex tax arrangements”, to continue to work in partnership with the UK in taking the lead on tax information exchange and beneficial ownership.
Because they operate low tax regimes and have lighter regulations, many of these territories have become very attractive to international businesses, but the lack of transparency in their tax dealings has led to suspicions that they are being used to evade tax.
Mr Cameron welcomed commitments by the territories to exchange tax information but said that its quality and accuracy needs to be improved to find out who “really owns and controls each and every company”.
He has asked the territories to sign international protocols designed to allow tax information to be shared more easily between countries and to provide fully resourced and properly managed centralised registries that are feely available to law enforcement and tax collectors.
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130520-1109402013-05-20T00:00:00Z2013-05-20T00:00:00ZPleasant Surprise Or Unwelcome Shock Having recalculated earnings in its annual PAYE End of Year Reconciliation process for 2012-13, the department has now begun the laborious task of contacting the people who either under or over paid. However, as there are so many people to speak to, some taxpayers will not find out whether they are due a refund or have to fork out more money until October.
Of the 5.5 million people, some three and a half million are due a refund of between £350 and £500, while the balance will be asked to make up an average shortfall of between £400 and £500, although the taxman has said he is happy to wait until the 2014-15 tax year for it to be repaid.
A spokesperson for HMRC said that around 85 per cent of PAYE taxpayers pay the right amount of tax throughout the year but if their circumstances change during the 12 months, such as if they move jobs, then a recalculation has to be made.
He added that this is the normal process that the PAYE system has used since it was set up some 70 years ago. Of course, the hope is that with the introduction of reporting payroll information in real time, commonly called RTI, which started for most employers this April, these recalculations should be a thing of the past. It could be interesting to see whether the taxman needs to get in touch this time next year.
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130517-1042162013-05-17T00:00:00Z2013-05-17T00:00:00ZRecovery In Sight The Bank’s Governor Sir Mervyn King said that inflation should drop to its target of 2 per cent within two years, whereas the previous prediction was for inflation to fall to 2.3 per cent in the same period.
As a knock-on, economic growth is likely to be higher than 1 per cent, which is up from the Bank’s previous prediction of 0.9 per cent, although the underlining picture remains “weak by historical standards”.
Sir Mervyn said he was happy to be able to announce the news as his parting shot, as he hands over the Governor’s mantle to Canadian Mark Carney in just over six weeks.
He also supported Chancellor George Osborne’s economic strategy, saying that the UK “would be well into recovery” had global growth been around trend and attacked the International Monetary Fund’s “quibbling” over the Chancellor’s austerity programme.
Meanwhile data from the Office for National Statistics (ONS) showed that while unemployment rose by 15,000 in the first quarter of 2013 to 2.52 million, the number of people claiming Jobseekers’ Allowance fell by 7,300 last month to 1.52 million.
In addition, average earnings, excluding bonuses, grew by just 0.8 per cent over the year, which is the lowest rate of increase since the ONS began reporting the figure in this current format 12 years ago.
Sir Mervyn also commented on unemployment and revealed that the Bank expects it to fall “by only a little” from the current level of 7.8 per cent over the coming year.
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130516-1113292013-05-16T00:00:00Z2013-05-16T00:00:00ZMore Tax Evaders ‘Named And Shamed’ The original list HMRC, which was published in February, caused an outcry as it focused on small businesses and individuals who between them only owed £1.45m in unpaid taxes and fines, while corporations were perceived as ‘getting away with’ multi-millions.
This time the firms and people on the list owe £4.6m and there are some bigger names including, sending a clear warning that the taxman will come after anyone who deliberately evades tax.
The department is allowed to publish the names under the Finance Act 2009 and is part of HMRC’s approach to combating tax evasion and non-compliance.
Jennie Granger, Director General for Enforcement and Compliance, said that the department will publish the names of tax cheats every quarter and added that anyone who is thinking about avoiding their responsibilities should therefore consider the consequences before they refuse to tell HMRC about their full tax liability.
According to the taxman, publishing these names encourages defaulters to make a full and prompt disclosure and cooperate with HMRC to avoid being named, as all the named defaulters have exhausted the appeals process.
The information may be published once the taxman has carried out an investigation and the person has been charged one or more penalties for deliberate defaults on tax of over £25,000.
However, the department says that information will not be published if the person earns the maximum reduction of the penalties by fully disclosing details of the defaults – the implication being that those who co-operate with the department could retain anonymity.
For more information, speak to London Accountants <a href="http://www.harris-lipman.co.uk/">Harris Lipman</a>
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130515-1059162013-05-15T00:00:00Z2013-05-15T00:00:00ZRise in Housing Demand The latest RICS Residential Market Survey published today (May 14th) suggests that the Government’s Help to Buy scheme has begun to make an impact on the housing market.
Last month, new buyer enquiries rose to their highest level since 2009, with 25 per cent more chartered surveyors reporting that demand for property rose rather than fell.
The jump in enquiries last month, up from 13 per cent more in March, strongly suggests that along with the existing Funding for Lending scheme, Help to Buy is attracting interest, even if the mortgage guarantee element of the product is not due to come into effect until next year.
Help to Buy was announced by the Chancellor, George Osborne, in his March Budget. Under the scheme, the Government committed £3.5bn over the next three years to shared equity loans for new-build homes, allowing buyers to purchase them with a 5 per cent deposit.
The scheme will also guarantee £130bn of mortgages from 2014 for three years, allowing banks to provide more loans to people who cannot save big deposits.
The RICS survey went on to say that, as demand increased so did supply, with new instructions to sell rising in April to a net balance of 8 per cent. With not enough housing to meet increased demand, prices are beginning to improve, and the survey recorded its first positive reading for house prices since June 2010, albeit only marginally, at 1 per cent.
In addition, other good news for the housing market came from the Halifax building society, which said last week that prices had increased by 1.1 per cent in April from the month before, making it the strongest growth since last November.
]]>http://www.harris-lipman.co.uk/blog/index.php?entry=entry130514-1115072013-05-14T00:00:00Z2013-05-14T00:00:00ZSME Report Gets Warm Reception In the report, the peer says that expanding the start-up loan scheme and opening a further £230bn worth of government contracts to micro businesses will help thousands of new firms get off the ground, boost growth and transform the economy.
In this, his second report on expanding the smallest businesses with fewer than 10 employees, which make up 95 per cent of businesses in the UK, Lord Young recommends removing the age cap, currently set at 30, for start–up loans and providing a greater role for business schools in their local economies.
Lord Young also wants to see legislation introduced to abolish pre-qualification questionnaires on contracts under £200,000 and the setting up of “single market” principles that suppliers can expect when doing business with the public sector.
Various business organisations including the Confederation of British Industries (CBI) and the Federation of Small Businesses (FSB) have welcomed the report.
The CBI said that Lord Young rightly identifies that the Government needs to earmark funding to effectively market existing finance and support schemes, as most firms simply do not know what is available, so the new Business Bank will play a crucial role in raising awareness.
The group also supports the recommendation to open up more government contracts to smaller firms by cutting out the requirement for them to complete a pre-qualifying questionnaire, as most smaller firms do not have the capacity to handle this.
However, the FSB questioned whether the schemes were capable of fundamentally changing the small business landscape, and said they might add further complexity to an already crowded business support market.
