in the spotlight

In the spotlight: Our monthly news round-up (October 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.


Stride assures small firms as HMRC advises on no-deal Brexit – British companies trading with the EU have been sent a letter from the HMRC advising them on how to deal with the complexities of a no-deal Brexit. Small businesses could find themselves having to apply new customs, excise and VAT procedures to their goods and having to fill out customs declarations for the first time. (Source: The Times, 17/09/18)

Finance firms could gain from VAT loophole – Philip Hammond is facing a multibillion-pound hole in his budget projections as City businesses use Brexit to reduce their tax bills. Treasury officials have warned that unless there is a change to the law after Britain leaves the EU, the government could lose £7bn in corporate VAT receipts. It is feared that after Brexit firms could take advantage of a loophole allowing financial services businesses to claim back domestic VAT for the services they provide to individuals and companies outside the EU. (Source: The Times, 11/09/18)

A third of investors say UK more attractive post-Brexit – A survey of deal makers by Stephenson Harwood reveals that 88% of them see the UK as at least as attractive as it was in spring 2016, while 32% say it is more attractive as an investment destination. Just 1% said they were not planning on doing a deal in the UK in the next two years because of Brexit. The UK’s quality of technology and intellectual property, macro-economic stability and a skilled labour force were the top reasons given for the UK remaining an attractive market. Head of corporate finance at Stephenson Harwood Duncan Stiles said: “This report reflects our own experiences and confirms investor confidence in the market. We continue to see strong levels of deal activity despite the uncertainty surrounding Brexit. It’s a really encouraging landscape. The investors that we surveyed clearly see the UK as assisting their growth and talent agendas.” (Source: City AM 20/09/18)

…but only 1 in 10 small firms planning for Brexit – According to the Federation of Small Businesses, only one in seven small firms have begun any planning for a no deal Brexit – despite 41% believing crashing out of the EU without a deal will hit their company. A further 10% said that a no deal scenario next March would benefit them. Mike Cherry, the FSB’s national chairman, said: “It is deeply troubling that the prospect of no deal is seeing many small firms shelving business decisions, pausing investment and, more drastically, thinking about cutting staff.” (Source: The Independent 19/09/18)

BoE holds rates over ‘greater Brexit uncertainty’ – The Bank of England has left interest rates on hold at 0.75% as expected but flagged “greater uncertainty” around the Brexit negotiations. The Bank’s Monetary Policy Committee voted 9-0 to leave rates unchanged. The Bank’s regional staff reported that businesses were cracking down on costs and holding back on investment ahead of Brexit. However, it raised the forecast for UK economic growth in the third quarter from 0.4% to 0.5%, partly due to stronger consumer spending over the unusually warm summer. (Source: Financial Times, 14/09/18)

No deal would be opportunity for ‘tax incentives’, says Javid – The Home Secretary reportedly called last week for a no-deal Brexit to be used as an opportunity to introduce new “tax incentives” to boost the economy. Sajid Javid’s comments during a Cabinet meeting will be seen as a rebuke of Philip Hammond’s insistence the Treasury could not afford tax cuts, the Sunday Telegraph suggests, while EU leaders will be alarmed at the idea the UK will transform into a low-tax economy luring business away from the Continent. (Source: The Sunday Telegraph, 16/09/18)


HMRC sends out thousands of warning letters to taxpayers – Taxpayers with overseas links have received final warnings from HMRC urging them to declare any “overseas income or gains” by the end of September to avoid paying higher tax penalties. Do you need to make a disclosure for tax on offshore matters? You can find out more about our service to assist you here. (Source: Financial Times, 01/09/18)

Hammond U-turns on Class 2 National Insurance pledge – Chancellor Philip Hammond has scrapped the Government’s pledge to abolish Class 2 National Insurance contributions. The move, to raise an extra £435m a year, would have provided a tax break for 3.4m self-employed people. “A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially,” he said. Sam Dumitriu however, head of research at the Adam Smith Institute, complained that it is a stealth tax rise: “Philip Hammond didn’t win the argument in Parliament on raising Class 4 Nics. As a result, he is going back on the scrapping Class 2 as a backup,” he asserted. Elsewhere, Mike Cherry, chairman of the Federation of Small Businesses, said: “The self-employed community has been let down today, missing out on a promise to reduce their tax burden. This raises serious questions once again about the Government’s commitment to supporting the self-employed. The move is extremely disappointing and flies in the face of tax simplification.” (Source: Financial Times 07/09/18)

HMRC inform pensioner he’s dead – A retired Royal Navy chief petty officer has spoken of his surprise at receiving a letter from HMRC telling him he had died. Ronald Pomeroy, of Portsmouth, commented: “HMRC has told me that they are sending somebody round to see me – presumably to check my pulse.” (Source: Daily Star, 24/09/18)


Budget predictions begin – The Times looks ahead to next month’s Budget, speculating on the areas where Philip Hammond could tinker with policy. It suggests the tapering of the annual pension allowance is likely to be abolished and replaced by a straight cap at, say, £125,000. The nil-rate residence band for IHT could also be scrapped, but tampering with stamp duty looks less likely. The government also plans to increase the personal allowance from £11,850 to £12,500 by 2022. (Source: The Times, 29/09/18)

HMRC releases R&D statistics – New statistics from HMRC reveal that there have been 39,960 R&D tax credit claims for 2016-17, of which 34,060 are in the SME R&D scheme. In the same period, £3.5bn of R&D tax relief support has been claimed, corresponding to £24.9bn of R&D expenditure. A breakdown of the statistics show that R&D claims are concentrated in companies with a registered office in London, the East of England, or the South East. Between the launch of the R&D tax credit scheme in 2000/01, and 2016/17, over 240,000 claims have been made and £21.4bn in tax relief claimed. You can find out more about how we can assist with making a R&D tax claim here. (Source:, 29/09/18)

Slow roll-out damages MTD’s benefits – HMRC has admitted that its Making Tax Digital programme will end up costing businesses more than it saves them. Original forecasts said the scheme would save businesses £100m a year from 2021 but its annual report reveals there will be no cost savings and the extra work will end up costing firms £37m a year. HMRC said the change to its forecast was due to the fact that only companies with turnover of more than £85,000 will have to file returns digitally, whereas, initially, it was to include all businesses. Most of the savings from the scheme would have been made by companies below this threshold, HMRC said. Because of the slower roll-out, HMRC also expects MTD to generate £440m less in additional tax revenue by 2020-21 than first predicted. But it claims the scheme will still generate £1bn in additional revenue by 2023. (Source: The Mail on Sunday 02/09/18)

SMEs still struggle to find finance – The Sunday Times says companies looking for finance are still struggling to secure loans, despite big banks insisting they are committed to lending to small businesses. Figures from UK Finance show the outstanding balance of loans and overdrafts to small businesses by major lenders fell by 6.9% to £87.2bn across the country between the final quarters of 2015 and 2017, with small business lending in parts of Yorkshire falling by 27.5% in just two years. (Source: The Sunday Times, 09/09/18)


Mixed-use property buyers advised to challenge HMRC – Homebuyers who have been told by HMRC that they were wrong to have paid the lower “mixed-use” tax rate that is designated for property or land with a joint commercial and residential use have been advised to challenge the taxman. The Revenue believes some wealthy property owners are exploiting the mixed-use definition by insisting that parcels of commercial land are bundled on to the sale of multimillion-pound properties to lessen stamp duty. However, an article in the Times suggests HMRC may be attempting to alter long-held definitions as to what does and does not constitute residential land. (Source: The Times, 08/09/18)

£80m saved in stamp duty by first-time buyers – According to the latest data from HMRC, almost £80m has been saved in stamp duty by first-time buyers in London and the South-East since the tax was scrapped on properties costing less than £300,000. Stamp duties helped raise the Treasury a total of £12.9bn in the last financial year, up 10%. With an average of £8,400 on each deal, just under £9.3bn stamp duty was paid on residential purchases nationally, up 8%. (Source: Financial Times, 30/09/18)

House prices pick up – UK house prices picked up last month, rising at the fastest annual rate since November, according to the Halifax. In the three months to August, prices climbed by 3.7% from a year earlier, up from 3.3% annual growth in July. However, the monthly change was just 0.1%, leaving the average cost of a house little changed at £229,958. Russell Galley, managing director of the Halifax, said low interest rates and a “constrained” supply of homes for sale were supporting prices. He added that household finances were being helped by “a low unemployment rate and a gradual pick-up in wage growth”. (Source: The Times, 08/09/18)


Brexit stunting British manufacturing growth – Growth in British manufacturing has slowed as exports cooled, according to fresh data from the Confederation of British Industry (CBI), to the lowest since May. Anna Leach, CBI Head of Economic Intelligence, said: “While manufacturing order books remain strong and output is still growing, Brexit uncertainty continues to cloud the outlook. Heightened fears of a ‘no deal’ Brexit scenario have prompted some firms to move publicly from contingency planning to action.” Source: City AM, 25/09/18)

Manufacturers desperate for a deal – One in six manufacturing companies in Britain say their businesses would be “untenable” in a no-deal Brexit scenario. A study by ComRes for trade association EEF said 16% of companies would have to close or relocate out of the UK if they faced WTO levies and border checks on goods. Stephen Phipson, EEF chief executive, said companies are “desperate” for the Government to negotiate an exit deal. (Source: The Daily Telegraph, 21/09/18)


France seeking to lure UK fintech jobs – Delphine Gény-Stephann, the French junior economy and finance minister, has launched a new government-backed tech incubator to lure thousands of UK financial technology jobs to France. The incubator offers companies support with funding and strategies, and also offers foreign companies “relocation packages”. (Source: The Daily Telegraph, 19/09/18)

Degree apprenticeships offer students a debt-free future – The Sunday Times’ Good University Guide says the number of degree apprenticeships is set to explode, with more than 14,000 predicted to be available for students entering university in September 2019. (Source: The Sunday Times, 23/09/18)

Wages growth hits three-year high – ONS data shows wages, excluding bonuses, rose at their fastest pace for three years during the three months to July. The 2.9% increase was only the second time since July 2015 that the level has been reached, and earnings have now outstripped inflation for four months. (Source: Financial Times 12/09/18)


New SFO boss champions tech to tackle fraud – Lisa Osofsky, new head of the Serious Fraud Office, has pledged a hi-tech strategy to make Britain “inhospitable” for sophisticated criminals. In her first speech as boss, she said: “My approach will be proactive, and this means working with more and more of you, from intel to inception to investigation to trial to recovering the proceeds of crime,” before going on to champion increased use of artificial intelligence to prepare cases, and a new focus on using information provided by charities and other “non-governmental organisations” and the increased use of deferred prosecution agreements. (Source The Times 04/09/18)

Support growing for EU tax on global tech firms – France’s finance minister has signalled that support is growing for a European Union plan to tax the revenue of large technology companies. At a meeting of EU finance ministers in Vienna, Bruno Le Maire suggested adding a “sunset’’ clause that would allow the European Commission’s planned revenue tax to be automatically phased out once a global scheme is ready. “Lots of countries have changed their position,” said Le Maire, highlighting what he called “constructive” statements from the UK, the Netherlands and Luxembourg. (Source: Bloomberg, 09/09/18)


Retail sales rise – Retail sales volumes rose 0.3% in August, according to fresh figures from the Office for National Statistics, up 3.3% on August last year on the back of increases across all sectors except food, clothing and petrol. (Source: Financial Times, 21/09/18)

Growth in hotel industry predicted – The Yorkshire Post discusses a recent report which forecasts a total deal volume for the UK hotel sector of around £6.8bn by the end of the year, a 40% increase from 2017. However, it predicts hotel trading growth will flatten in 2019 due to economic uncertainty, weak business travel demand and an influx of new rooms. (Source: Yorkshire Post, 20/09/18)

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