in the spotlight

In the spotlight: Our monthly news round-up (March 2018)

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Rouse Partners

Now it is easy to keep up-to-date, with our monthly ‘In the Spotlight’ news round-up – a hand-picked summary of key tax news and industry developments. If you have any questions on how any of these affect you personally, please do not hesitate to contact us.


CFOs should watch for UK trade agreements – A recent survey by Thomson Reuters has revealed that many CFO’s are adopting a wait-and-see policy with regards to the Brexit negotiations. Among those who have started to do some type of strategic planning, the most common what-if scenario being evaluated is what to do if the UK fails to reach a deal with the EU. The survey revealed that 38% of CFOs in Europe and the UK already have planning in place for the “no deal” scenario. (Source:

CBI issues customs plan warning – The CBI has warned that the government’s plans for post-Brexit customs arrangements were unworkable and costly for British business. The CBI is calling for the government to keep Britain inside the existing customs union with the EU stating that maintaining “frictionless trade” is the number one priority for British business since the EU is the UK’s largest export market for goods, accounting for 48% of total exports (£145bn), or 7.4% of GDP. Referring to the Irish border question, the CBI said SMEs could face additional costs of over €1m for sending only a modest number of consignments across the border each year. (Source: The Times, 07/02/18)

Post-Brexit economic analysis leaked – The entire Treasury forecast for the UK’s economy post-Brexit has been revealed. Last week, portions of the analysis were leaked, leading to criticism of Whitehall officials who were accused of fiddling the figures to make Brexit look bad. The full 15-year impact paper claims growth would be slower compared to current forecasts. Three scenarios were modelled: staying in the single market and customs union; a limited free trade deal; and a no-deal scenario. In each scenario, growth would be lower, by 2%, 5% and 8% respectively, than currently forecast, however, the government says the studies do not cover all outcomes. (Source: BBC News, 08/02/18)

Companies face VAT border costs in hard Brexit – The European Commission has warned UK exporters that a “hard” Brexit will mean VAT becomes payable upfront at the border and British importers would no longer be able to claim refunds for foreign tax using electronic systems. (Source: Financial Times, 12/02/18)


Isa bonus worth £1k – Prospective first-time buyers who are currently saving into a Help to Buy Isa could boost their savings by £1,100 if they transfer into a Lifetime Isa before the start of the new tax year. (Source: The Daily Telegraph, 01/02/18)

How to appeal your tax return fine – The Telegraph offers readers a guide to appealing their fine if they have been stung for filing their tax return late. The paper notes that a recent tribunal case ruled in favour of a small property business which had filed its return two weeks late, with the judge stating that fines for late payment might be valid only if issued by a human being as opposed to an automatic process. (Source: The Daily Telegraph, 03/02/18)

IHT confusion reigns – The Times’ Carol Lewis says parents and grandparents are being deterred from helping their children and grandchildren financially because they are confused by IHT rules. A survey by Brewin Dolphin found that one in three people don’t know how much they can gift without incurring IHT. HMRC took more than £5.3bn from people’s estates in 2017 and projections from the Office for Budget Responsibility suggest that a further £1.2bn will be collected by the end of this tax year. Meanwhile, the Independent reports on research by Direct Line Life Insurance which shows millions of cohabiting couples mistakenly believe that they would automatically receive their partner’s money, property and pension if they died. (Source: The Times, 17/02/18)

HMRC highlights Apple iTunes scam – HMRC is urging more retailers to share details of an iTunes scam with staff so they can help prevent vulnerable people from being tricked by fraudsters. Crooks have been cold-calling people pretending to be from HMRC demanding they pay tax debts with Apple’s iTunes vouchers. (Source: Independent i, 10/02/18)

Savers use pension pots to shelter wealth – The Telegraph reports that billions of pounds are bypassing IHT as savers exploit a lesser-known advantage of the “pension freedoms”. In the 2016-17 tax year as much as £2.1bn was held in drawdown accounts by under-55s, suggesting it was inherited. This represents a rise of about a third on the previous year, when £1.6bn was inherited. (Source: The Daily Telegraph, 17/02/18)

Savers to be discouraged from raiding pensions – Pension firms are stepping up efforts to ensure savers are aware of the risks of withdrawing money under the Government’s pension freedoms. Under new plans, savers will be shown how much they can “safely” take from their pension without running out, and those who ignore the warning and withdraw large chunks of money will be asked to tick a disclaimer box to confirm that they understand the risks involved. (Source: The Sunday Telegraph, 11/02/18)

Wealthy parents restrict cash – Around two-thirds of wealthy parents restrict the amount of cash their children have access to so they have a better understanding of money, according to a survey by Lloyds Private Bank. The poll was carried out among parents aged over 50 with assets of more than £250,000 including pensions but excluding any additional property wealth. Nearly seven in ten parents (68%) said they have educated their children about finance, business and investments. (Source: The Sun, 11/02/18)

Gig economy workers to receive holiday and sick pay – The government is to give gig economy workers new rights including holiday and sick pay for the first time. Its Good Work plan is in answer to last year’s Taylor Review which recommended changes in conditions to reflect modern working practices. The right to holiday and sick pay will be enforced for the first time by HMRC. The government will also ask the Low Pay Commission to consider a higher minimum wage for workers on zero-hour contracts, and says it may also repeal laws that allow agencies to employ workers on cheaper rates. (Source: BBC News, 27/02/18)

New EU probe into tax evasion launched – A new committee of MEPs is to open an investigation into financial crime, tax evasion and tax avoidance, “with particular attention given to the crown dependencies and overseas territories”. The move by the European parliament comes after members insisted not enough had been done following the Paradise Papers revelations “to secure tax justice in Europe”. The Guardian states that the Taxe 3 inquiry, as it will be known, marks the first overt threat from the EU to the UK’s network of offshore tax havens. The terms of reference of the inquiry also say it will “assess national schemes providing tax privileges for new residents or foreign income” – the UK’s “non-dom” loophole – the sale of residency or citizenship in so-called “golden visa” schemes, and the effect of tax avoidance and evasion on the digital economy. (Source: The Guardian, 09/02/18)

Tax and pension hopes raised for 3m unmarried couples – Cohabiting couples could be in line for substantial gains if they are allowed to enter a civil partnership. A civil partnerships Bill, which is progressing through parliament, would if passed allow couples to apply for billions of pounds worth of tax and benefit payments. Currently, heterosexual couples only have the option of marriage, whereas same-sex couples have the choice to form a civil partnership or get married. “Millions of couples who live together could potentially benefit to the tune of several billion pounds if they were able to register a civil partnership,” said Sir Steve Webb, director of policy at Royal London. “The biggest areas where they could gain include new rights under company pension schemes. This reform is long overdue and would stop these couples being treated by the state as second-class citizens.” (Source: Financial Times, 10/02/18)

Divorced couples hit by stamp-duty surcharge – Divorcing couples are paying extra stamp duty when trying to buy a new home as they are unaware that the government reformed rules so couples who obtain a court order can escape the second homes surcharge. (Source: The Times, 24/02/18)

US tax filing for expatriates – In keeping with the US tax obligations for US expatriates living in the UK, Meghan Markle will have to pay tax to the US International Revenue Service on any allowance she is granted from the Royal Family after she weds Prince Harry. Ms Markle will have to file an expatriate tax return until she is granted UK citizenship – usually after five years of living in the UK. (Source: Sunday Express, 04/02/18)


Weaker sterling boosts UK firms – UK companies that reported full-year results in the final quarter of last year raked in revenues of £116.6bn, over 12% higher than the same quarter the previous year. The earnings boom was spurred by a stronger global economy and a weaker sterling relative to the euro and US dollar, according to a report from The Share Centre. Many businesses are also enjoying a strong start to 2018, with buoyant order books expected to drive economic growth over the coming months, according to another recent survey. (Source: The Daily Telegraph, 12/02/18)

Companies unprepared for lease accounting standard – There have been concerns that companies are at risk of being caught unprepared for the new lease accounting rules under IFRS 16 which come into effect next January – particularly those in the retail, real estate, airline, transport and energy sectors. The new rules require most operating leases to be recorded on balance sheets, whereas previously only finance leases were recognised. Firms with large numbers of operating leases, from retailers to airlines, are especially in the firing line. The first step will be understanding the scope of change approaching, and anticipating the effects on balance sheets, cash flow statements and beyond. From there, it will be a case of preparing comparatives and aiding a smooth transition. (Source: CCH Daily, 23/02/18)

Manchester businesses make most R&D claims – New research suggests Manchester is the most prolific city for business innovation in the UK, with it seeing the most claims for R&D tax relief. Over 1,100 claims were made compared with 290 claims by firms in Edinburgh – the second highest figure. Whilst more businesses are beginning to claim R&D tax relief, far too many SMEs still don’t realise that they qualify. Most don’t realise it’s not just a new scientific formula or a jet engine but a piece of software, a manufacturing process or even a new innovative restaurant dish. (Source: The Scotsman, 24/02/18)

New system sees business rates appeals plummet – Appeals over business rates have fallen by more than 99% since a new system was introduced last year. Between April 1 2017, when the new system for appealing business rates was introduced, and December 31, just 1,210 valuations were challenged in England, a 99.3% fall compared to the same period after the last system change in 2010. The new appeal system places the burden of proof on companies themselves, while new regulations are also being introduced which will issue £500 fines if businesses appeal wrongly. As a result, industry bodies said, thousands of businesses are not bothering to appeal their business rates, and could be paying far more than they should be. (Source: The Daily Telegraph, 16/02/18)

HMRC pursues users of disguised remuneration schemes – Up to 100,000 people face financial penalties as a result of having used Employee Benefit Trusts to avoid paying all or some of their income tax. So-called “disguised remuneration” schemes were generally accepted to be legal in the early 2000s, and operated on the basis that employees’ wages were paid into a trust which would then “loan” them their salary. But HMRC tightened the rules in 2010, issuing a “spotlight notice” to taxpayers and advisers indicating the schemes should not be used and would be considered as tax avoidance. Following a court victory against Rangers FC over the club’s use of similar structures to pay players and managers in the early 2000s, the Revenue is now pursuing others who partook in similar schemes – including some landlords, self-employed people and company directors. Anyone who still has a “loan” outstanding in April 2019 will face a “loan charge” from HMRC. (Source: The Daily Telegraph, 13/02/18)

SMEs have low financial resilience – Research by Aldermore shows small businesses and self-employed people are holding too little cash to help them get over unforeseen events, with 22% of business holding no cash savings at all and 40% holding less than £1,000. (Source: Yorkshire Post, 03/02/18)

HMRC payroll investigations raise £800m – HMRC collected £819m in additional tax through payroll investigations last year – a 16% increase on the additional tax generated in 2015/16. Investigations into the payrolls of large businesses specifically generated £503m in additional tax in 2016/17, up 31% from £383m the previous year, as the Revenue continued to crack down on organisations that wrongly classify workers as self-employed. (Source: Personnel Today, 12/02/18)

Third of small business owners expect to work past 70 – One in three small business owners expects to work past the age of 70, according to a survey by Aldermore Bank. Almost three quarters of owner-managers believe that they will be working beyond 65, although two thirds say that they would prefer to have retired by then. And one in ten respondents to the survey expected never to be able to retire. Furthermore, one in seven respondents said that they would sell their business or property to finance their retirement. (Source: The Times, 12/02/18)

Crowdfunding criticism – The crowdfunding sector is facing criticism for failing to make investors fully aware of the level of risk they face. It follows the collapse of restaurant company Square Pie, which threatens to leave hundreds of “mini bond” holders out of pocket. Rob Murray Brown, founder of the crowdfunding consultancy ECF Solutions, accused Crowdcube of not doing enough to vet companies that pitch to investors, as well as failing to explain the dangers involved. Julia Groves, co-founder of the UK Crowdfunding Association, said some platforms were not up front about their fees and any problems with the companies they feature. (Source: The Sunday Times, 18/02/18)


Construction stagnates in January – The IHS Markit construction PMI declined to 50.2 in January from 52.2 in December, falling short of analyst forecasts which had predicted a reading of 52. Duncan Brock of the Chartered Institute of Procurement & Supply said the “meagre” results were driven by a “surprisingly poor show” from the housing sector, which saw its worst performance since July 2016. (Source: Financial Times, 03/02/18)

Experts expect prices to climb 2% – Property prices will climb 2% this year, according to a quarterly poll of 33 housing market specialists conducted by Reuters. Those polled offered a less optimistic view for the capital, saying prices in London are set to fall 0.5%. Looking ahead to 2019, they forecast that prices will climb 2% nationally and 0.9% in London, while 2020 will see values across the country climb 2.3% as those in London go up 2%. (Source: The Independent, 24/02/18)

Stamp duty receipts hit record high – Stamp duty receipts from residential property reached a record high of more than £9.5bn last year, a 16% rise on 2016. Figures from HMRC showed that 245,000 house purchases were subject to the 3% stamp duty surcharge on second homes and buy-to-let properties in 2017. (Source: The Times, 01/02/18)

…but house buyers hit affordability ceiling – Buyers in the UK are still struggling with affordability as prices continue to rise faster than wages, according to the latest figures from the ONS. The average house price hit £227,000 in December 2017, nearly £12,000 (5.2%) higher than the previous year and 0.2% up on November. (Source: The Daily Telegraph, 27/02/18)

British Business Bank to support £100m in loans to Carillion contractors – The British Business Bank has announced it will provide up to £100m in funding for loans to SMEs affected by the collapse of Carillion. The backing aims to enable smaller firms which may have suffered losses from the Carillion failure to access cheaper finance. Business secretary Greg Clark said: “We want to signal very clearly to small and medium-sized businesses who were owed money by Carillion that they will be supported to continue trading.” (Source: City AM, 04/02/18)

Stamp duty bills bring resurgence in self-build – The Telegraph looks at how building your own home can significantly reduce your tax bill, with VAT relief on self-build projects and potential stamp duty savings making the option very appealing. Stamp duty only needs to be paid on the value of land purchased for the project, not the final value of the property built. (Source: The Sunday Telegraph, 04/02/18)

Demand for capital’s office space defies Brexit fearmongers – Banks, law firms and accountants have joined tech firms in driving continued demand for office space in the capital, defying fears of a Brexit exodus, with leasing activity in central London in 2017 vastly outperforming the previous year. (Source: The Daily Telegraph, 07/02/18)

BoE policymaker hints at rate rise – Bank of England Monetary Policy Committee member Gertjan Vlieghe has said the case for an increase in interest rates has been bolstered by evidence of a pick-up in British wage growth. In a speech in London, Mr Vlieghe said that although “huge uncertainties” remain around how quickly interest rates are likely to rise, economic developments in the past year have suggested a further rise in rates is “likely to be appropriate” soon. (Source: The Times, 13/02/18)

Buy to let

BTL investment plummets 80% in two years – Investment in the buy-to-let market has fallen by £20bn (80%) in two years following the introduction of more onerous tax and mortgage rules. The stamp duty surcharge on additional properties and the phased removal of mortgage interest relief have led to shrinking profits in the sector, while changes to lending restrictions mean some landlords are struggling to get mortgages at all. (Source: The Daily Telegraph, 09/02/18)


UK manufacturing output growth remains robust – Manufacturing order books and export order books remained well above their long run averages in the three months to February, despite losing some momentum from the previous month, according to the latest monthly CBI Industrial Trends Survey. Demand in the manufacturing sector should continue to be buoyed by the lower pound and buoyant global economy, the survey said. However, Anna Leach, CBI head of economic intelligence, added: “With the Brexit negotiations reaching a critical juncture, many businesses are concerned about future barriers to trade and are looking for clarity over the future relationship with the EU.” (Source: The Times, 21/02/18)

Brexit pushed down business investment, says BoE – Analysis by the Bank of England shows businesses spent as much as £7.7bn less on new factories and equipment in the year after the EU referendum because of Brexit uncertainty. The survey of 1,200 companies, published with the Bank’s quarterly inflation report last week, suggests corporate investment was about 3%-4% lower in the 12 months to June 2017 than it would have been – a loss of between £5.7bn and £7.7bn. (Source: The Sunday Times, 11/02/18)

EEF chief: Apprentice levy needs total overhaul – The chair of the EEF manufacturers’ body, Dame Judith Hackitt, will today say the apprenticeship levy has been “disastrous” and needs a complete rethink. Dame Judith will say the levy is “complex” and seen as just another tax on business: “Some employers are near breaking point and government must now listen to what EEF has long said and rethink the entire system from top to bottom.” (Source: BBC News, 20/02/18)


City job vacancy numbers fall as firms wait for Brexit progress – New research from Morgan McKinley shows the number of City jobs vacancies slumped last month by 35% compared with January 2017. The first month of the year tends to see a bounce back on December figures, but the volume of jobs coming to market were the lowest since 2010. The recruiter also said the number of people looking for jobs fell by 27% year-on-year. Hakan Enver, operations director at Morgan McKinley, said: “Professionals looking for jobs are now half of what they were in the January preceding Brexit. It’s startling to see this figure continue its post-Brexit vote freefall so many months after the referendum.” (Source: City AM, 09/02/18)

…but employers struggle to fill vacancies amid jobs boom – Low unemployment has left UK firms struggling to recruit, with record job vacancies in the health and hospitality industries. A total of 823,000 job vacancies were advertised last month, the ONS said, up by 62,000 on the year. Of those, a record 130,000 were in health and social work, and 95,000 in the hotel and food industries. (Source: The Sunday Telegraph, 24/02/18)

Skills shortage pushing up wages – A shortage of skilled workers and low unemployment is starting to drive up earnings with those moving jobs most likely to benefit, according to the REC. IT and computing staff are in the highest demand, followed by engineers and then accounting and financial staff. (Source: The Daily Telegraph, 08/02/18)

Data protection officers now ‘hot property’ – The International Association of Privacy Professionals estimates that over 28,000 data protection officers will be needed in Europe and US, plus up to 75,000 more globally, as a result of the incoming GDPR regulations. (Source: Daily Mail, 15/02/18)

Government says it is cracking down on unpaid internships – HMRC has launched a crackdown on unpaid internships amid fears companies are failing to change their practices. The government said that over the last three months it had warned over 500 companies and set up enforcement teams to tackle repeat offenders. HMRC is expected to target sectors such as media, the performing arts and law and accountancy firms and issue guidance to employers. But campaigners say a change in the law is needed to make it easier to report unpaid internships and to introduce tougher penalties for those found breaking the law. (Source: The Guardian, 09/02/18)

Wages set to rise 3.1% – British workers are set for the biggest pay rises since 2008, as the rising minimum wage and staff shortages finally begin to lift wages above inflation. The average private sector employer expects to give staff an extra 3.1% this year, according to forecasts from the Bank of England’s agents. (Source: The Daily Telegraph, 15/02/15)

Uptick in jobless rate a “blip” – The UK unemployment rate rose to 4.4% from 4.3% in the three months to December – the first increase in almost two years. However, the ONS noted that the numbers of people in work continued to rise over the quarter while the number of people classed as economically inactive fell. “The rise in unemployment looks like a blip, although it will still instil some caution on the Bank of England’s MPC,” said Samuel Tombs of Pantheon. (Source: The Times, 22/02/18)


Big tech firms brace for UK tax overhaul – The world’s largest technology firms are set to face much higher UK taxes as the Treasury suggests it will tax companies like Google and Facebook based on sales revenues rather than on profits. In 2016, Google declared UK revenues of £1bn, compared with a profit before tax of £149m, paying taxes of £38m. The Financial Secretary to the Treasury said that tech firms were “generating very significant value in the UK” through “social media platforms, online market places and internet search engines” with a lot of UK users, which is currently not being taxed “fairly”. Some tax experts have voiced concerns that such measures will deter global tech investment in Britain. (Source: BBC News, 23/02/18)

‘Great British firewall’ helps block 54m cyber attacks – GCHQ’s National Cyber Security Centre took down more than 120,000 fake websites last year and blocked 54m malicious online attacks. The NSCS said HMRC was the most faked organisation, with 16,064 sites created by nearly 2,500 attack groups. (Source: Financial Times, 06/02/18)

Bitcoin investors find tax demands are not virtual – Personal investors in cryptocurrencies face tax bills from both the IRS and HMRC, with US authorities likely to class virtual currencies as properties and subject to CGT, while in the UK investors may be deemed traders by HMRC and taxed accordingly. (Source: Financial Times, 06/02/18)

Venture investment in UK fintech more than doubles – New data shows fintechs raised $1.8bn of venture capital investment last year, up more than 150% from $704m in 2016. SME lender OakNorth and Funding Circle were among the top raisings. (Source: Financial Times, 07/02/18)


Consumer spending hits lowest level for five years – Research by Visa shows consumer spending has hit a five-year low. Household spending fell by 1.2% in January compared with 12 months ago, according to the payments business – the first time that there has been a decline at this time of year since 2013. Meanwhile, a survey from NatWest reveals that almost a third of UK households expect their personal finances to weaken over the next 12 months. (Source: The Times, 12/02/18)

Restaurant chains turn to pop-ups – The Sunday Telegraph reports that chain restaurants are increasingly opening pop up branches in an attempt to reclaim their customers. Analysis shows restaurant insolvencies are up by 20% in the past year, as new chains compete with each other on the same street. (Source: The Sunday Times, 25/02/18)

Pressure on restaurant sector increases – Jamie Oliver’s Barbecoa restaurants have been put up for sale just weeks after he announced the closure of 12 of the 37 branches of his Italian chain. Soaring business rates are thought to be to blame for Barbecoa’s problems with rates bills for restaurants across Mr Oliver’s empire rising 28% this year. Growth in the food industry in the next few years is expected to come from independents rather than national chains. (Source: The Daily Telegraph, 19/02/18)

Consumers take a break from coffee – Consumers spent less on drinking in coffee shops and eating out in restaurants over the last three months of 2017 compared to a year earlier, according to a recent study. In contrast, shoppers continued to spend more on experiences like short-break holidays, live sporting events and going to the gym. (Source: Daily Mail, 07/02/18)

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