Further discussion on Brexit, calls to scrap Corporation Tax, VAT savings at airports, IMF downgrade on UK and more
Scrap corporation tax to reboot Britain – A report from the Adam Smith Institute suggests Britain should abolish corporation tax, inheritance tax and capital gains tax, as part of a series of changes to “reboot Britain” post-Brexit. The think-tank says corporation tax should be cut to 12.5%, then 6.25%, before finally being scrapped altogether. Madsen Pirie, president of the Institute, said that leaving the European Union provided “a unique chance of the sort that occurs perhaps once in a generation”.
PM urged to review HMRC’s self-employment laws – Frank Field, chairman of the Commons Work and Pensions Select Committee, has called on the Prime Minister to launch a probe into the growing use of self-employed workers, following reports that some couriers contracted to delivery firm Hermes are struggling to earn the national living wage. He asked Theresa May, whose first speech in office made reference to people who “have a job but…don’t always have job security” to review HMRC criteria that allow companies to contract work to self-employed individuals rather than hire them as employees.
Airport retailers failing to pass VAT savings on – Almost a year after an Independent investigation into the practice, airport retailers are still not passing on the tax they have been charging on tax-free sales directly to customers. In August 2015, retailers including WHSmith, Dixons Travel, Boots and World Duty Free were criticised for making customers present boarding passes when making purchases and using the information to keep the VAT owed to customers flying outside the EU. John Lewis and WHSmith are said to have moved towards ending the practice but some have yet to offer the “clarity” of a taxable and a tax-free price.
Up to 10,000 City staff needed for Brexit? – Government officials estimate a minimum of 5,000 extra civil servants will have to be recruited to deal with Brexit, costing as much as £5bn over the next decade. Experts say top partners from Linklaters, two of whom have been seconded to the Department for Exiting the European Union, could be charging £5,000 a day. It is noted that PwC, EY and KPMG have also been approached to provide staff. Dominic Cook, associate fellow of the Saïd Business School, Oxford, which trains civil service leaders, agreed that up to 10,000 staff could be needed, including several hundred trade negotiators. “All the top accountancy firms have offered their support,” said Mr Cook, formerly with international law firm Bird & Bird.
Tax phishing warning
The Sun warns readers to be on their guard for phishing emails or texts claiming to be from HMRC ahead of the deadline to make advance payments towards self-assessment bills. The cut-off date is July 31. A spokesman for HMRC says: “We are aware some people have received text messages and emails promising a tax refund. HMRC will never notify you of a tax rebate, offer you repayment, or ask you to disclose personal or financial details by email or by text.”
Small business and enterprise
New legislation cost businesses £2bn last year alone – An independent review of the impact of red tape on UK business by the Regulatory Policy Committee has found the cost of introducing the National Living Wage, combined with increasing the national minimum wage and introducing a charge for plastic bags has hit businesses to the tune of over £1.7bn net, while other measures pushed the total over £2bn. Martin McTague, national policy director of the Federation of Small Business, said the report had identified “crucial gaps in the way the Government measures the cost of regulation on small business. More now needs to be done to get the full picture of the burden of regulation on the UK’s small business community.” The report also warned that small businesses were not receiving an exemption from a new regulation even when entitled to it.
MPs adds weight to business broadband demands – The Federation of Small Businesses has said Tuesday’s report from the cross party Commons’ Culture, Media and Sport Select Committee has again emphasised the need to improve broadband services to small businesses. The committee specifically criticised the poor quality of service levels to small businesses, and the flat level of investment in broadband infrastructure. Gordon Millward, FSB regional chairman, said: “Access to superfast broadband is an ongoing issue, with business premises and business parks continuing to lag domestic rollout. A stretching Universal Service Obligation including small business premises is desperately needed to deliver acceptable levels of speed for all consumers and to put the UK in the digital fast lane”.
Invoice financing rises by 63% – Small businesses have increased the amount of cash they bring in through invoice financing by 63% to £711m in the first quarter of 2016 compared with the same period in 2015. SMEs using invoice finance received an average of £52,000 in the first quarter, up from an average of £32,000 in the same period in 2015, according to the Asset Based Finance Association. Experts say such financing has risen in popularity partly due to the reluctance of conventional lenders to lend money but also because it has proved an attractive way to hedge against currency fluctuations post-Brexit.
UK economy and markets
IMF cuts UK growth forecast
The IMF has cut its forecast for UK growth next year after warning that the decision to leave the EU has damaged Britain’s short-term prospects and “thrown a spanner in the works” of the global recovery. The fund said it expected the UK economy to grow by 1.3% in 2017, 0.9 points lower than a previous estimate made in its April world economic outlook. It said it had cut its forecasts for the global economy due to the likely knock-on effect of the vote on other countries, particularly in Europe. The IMF predicted global growth of 3.1% in 2016 and 3.4% in 2017, both of which are 0.1 points lower than forecast in April. “The vote has caused significant political change in the United Kingdom, generated uncertainty about the nature of its future economic relations with the European Union and could heighten political risks in the European Union itself,” the IMF stated. However, critics say the forecast is a climbdown on predictions of a recession in Britain that were made in the run-up to the EU referendum. Britain’s growth is still expected to outstrip Germany, France and Italy next year.
UK inflation rate hit 0.5% in June
The UK inflation rate rose to 0.5% in June, as measured by the Consumer Prices Index (CPI), from 0.3% in May. The Office for National Statistics (ONS) attributed the rise to higher air fares, fuel and consumer spending.
Saving for a home unlikely to get easier
Analysis in PwC’s annual UK Economic Outlook, due out on Tuesday, reveals that young people need 10 times longer than those a generation ago did to save up for a deposit for a home. In 1990, it took the average couple aged under 40 only two years to save a deposit without help; now they need 19 years. Richard Snook, senior economist at PwC, says things are unlikely to get better, with house-price growth forecast to keep outpacing rises in earnings over the next decade.
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 (EIS). 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, Ruth & Robinson Ltd, Camm & Hooper Ltd and Darwin & Wallace Ltd.