Back after a 2 week break – Google tax, Student Loan crackdown, Negative interest rates, and the rise of robo-advice

Tax

Osborne family firm pays no corporation tax – The Sunday Times reports that George Osborne has shared in a £335,000 dividend payout from his family’s wallpaper business, despite the firm having paid no UK corporation tax for the past seven years. Osborne and Little has not paid any UK corporation tax since 2008 partly because it has rolled over losses from previous years and has deferred tax payments.

Justin King hits out over taxes paid by online retailers – Former Sainsbury’s boss Justin King has said the issue of business rates for bricks and mortar stores is a bigger problem for British retailers than the corporation tax scandal the likes of Amazon, eBay and Gap are embroiled in. “Business rates are by far the most significant imbalance in the tax system,” Mr King said. “Business rates for most retail businesses are a much more significant part of the tax burden than any other part of the tax system.”  The outcome of a Treasury review of business rates is expected to be announced with the budget next month.

Swiss move for Duchess  – Several papers note that the Duchess of York has applied to become a resident of Switzerland. She is likely to be entitled to substantial tax benefits from the move.

Brittin: Tax reform must come from governments – Google’s UK CEO Matt Brittin has denied that the company’s tax agreement with HMRC was a “sweetheart deal” and says he agrees that international tax law needs to be reformed and is in favour of simpler, clearer rules. Mr Brittin adds that if the suggestion that products are taxed where they are consumed rather than where they are created was followed, British exporters would end up paying more of their taxes abroad. In an article for the Telegraph, he details HMRC’s audit of Google’s work in the UK and reasserts that Google follows the rules set by governments. Mr Brittin adds that “it is important not only to pay the right amount of tax, but to be seen to be paying the right amount. But changes to the tax system are not Google’s call. Reform must come from governments, not from the companies who are subject to their rules.” Google paid over $3.3bn in taxes last year, most of it in the US, and “pays corporation tax on its UK profit at the standard rate – currently 20% – the same as any other business in Britain.”

Hunt stepped up for student loan defaulters – The Student Loans Company is to team up with HMRC and tax offices abroad to track down graduates who fail to repay their student loans.

Small and medium size enterprises

Lord Turner warning over “indefinite” low rates and P2P lending – Former City regulator Adair Turner has warned that without radical policies the UK economy could be stuck with low interest rates almost indefinitely, and that interest rates may not rise beyond 2% by 2020. Lord Turner also warned about the dangers of peer-to-peer lending: “The losses which will emerge from peer-to-peer lending over the next five to ten years will make the bankers look like lending geniuses. You cannot lend money to small and medium sized enterprises without someone doing good credit underwriting,” he predicted. However, Christine Farnish, chair of the Peer-to-Peer Association and a former member of the FSA, said Lord Turner’s comments are “unfair” and “ill-informed” while Funding Circle co-founder James Meekings added that the platform had “better people looking at small business lending than banks do.”

SMEs chase debts through court – Growing numbers of SMEs are resorting to the law to chase bad debt, according to new research. Ormsby Street found the number of county court judgments brought by SMEs increased by 23% from the first half of 2015 to the second, with the average value of CCJs pursued by SMEs standing at £4,619. Separate research by Bibby Financial Services has found that 14% of UK SMEs see late payments as their biggest challenge. Some 47% wait more than 30 days for payment from customers, with the average waiting time 40.23 days.

UK economy, finance and markets

FTSE crash in 2016 has wiped almost 10% off stocks – The FTSE 100 Index had another bad week, as it plunged to a fresh three-and-a-half year low amid heightened fears over the state of the global economy. Falling oil prices and warnings over growth from the US Federal Reserve put stocks under pressure in the US and Europe while the continuing rout in the banking sector added to the gloom. Gold prices jumped to their highest level in a year as investors sought safe havens. Traders also fear negative interest rates could be on the horizon in the US and UK.

Central banks tear up interest rate plans – Research by Danske Bank indicates that central banks will be forced to tear up their plans following turbulent activity in the financial markets since the beginning of the year. According to the bank’s data, investors now believe there will not be a single interest rate rise from any of the G7 group of central banks this year, while the number of expected rate cuts in 2016 has increased from zero to six.

Buy-to-let surge raising house prices – Surveyors are witnessing a surge of demand from buy-to-let investors, which they expect to push up house prices. The Royal Institution for Chartered Surveyors (Rics) said the number of homes coming onto the market was insufficient to meet demand from landlords aiming to beat the deadline, and that new buyer enquiries rose for the 10th month in a row in January, accelerating for a second successive month. The near-term pressure on prices is, if anything, intensifying despite a higher level of supply, said Rics chief economist Simon Rubinsohn, and how the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen. There are, however, concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite: “Against this backdrop, it is perhaps not surprising that the key Rics indicators point to further rent, as well as house price, increases,” Mr Rubinsohn added.

Other

School fees stretch professionals’ salaries – The Sunday Times highlights that private school fees have more than quadrupled since 1990, with parents who want to send their child to a day school now facing an annual average outlay of £13,194. It suggests many middle-class families where one or both parents work in traditionally high-earning professions, such as accountancy and law, now have to spend up to half their salaries on school fees. By contrast, the average annual fee for a day school in 1990 was £2,985. The average post-tax salary for accountants that year was typically £15,400, meaning they had to hand over only 19% of their after-tax income to cover the fees.

UBS wealth arm considers launching robo-advice – UBS Wealth Management is reportedly looking at offering its clients automated robo-advice, in which customers fill out an online questionnaire and receive investment options based on an algorithm.

Christian Elmes, Partner

Christian Elmes trained at PwC and qualified as a chartered accountant in 1999, before moving to Morgan Stanley (2000-2002) as Associate in the Investment Banking Division (IBD).

He was appointed Director of Finance, Teather & Greenwood Investment Management in 2002 and moved with the Tax Efficient Solutions team to Smith & Williamson in 2004, becoming Deputy head of the department. He left to co-found Enterprise in 2011.

Over the last ten years, Christian has been responsible for developing a number of tax efficient products, particularly Enterprise Investment Schemes. He is able to lead on tax efficient product development from inception through to completion, because of his financial and tax background and commercial experience.

Christian is competent across a broad range of sectors including, leisure and hospitality, media, property and renewable energy.

Christian is a non-executive board member to a number of leisure and hospitality companies, Casper & Cole Ltd, Wright & Bell Ltd, Albion & East Ltd, Camm & Hooper Ltd and Darwin & Wallace Ltd.

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