Thursday 26 November 2015

Thursday, November 26, 2015 Posted by Hari No comments Labels:
Posted by Hari on Thursday, November 26, 2015 with No comments | Labels:

Autumn Statement: Osborne accused of resorting to stealth taxes on big businesses, wealthy property owners and council taxpayers
The decision to raise £11.6bn from an apprenticeship levy on businesses came under immediate fire from some tax professionals, who suggested it was at odds with the government’s “triple lock” ban on increasing any of the three main taxes. The levy requires employers to pay an additional 0.5 per cent on their employment costs to fund apprenticeships, which makes it very similar to a rise in employers’ national insurance contributions. Other big increases related to council tax, fuel duty, stamp duty, capital gains tax, corporation tax and pensions tax relief. Council taxpayers will pay an extra £6.2bn by 2021 after the chancellor announced that some local authorities would be allowed to raise council tax faster than previously assumed to meet some of the costs of social care and policing. One of the biggest increases was £3.8bn of higher stamp duty on buy-to-let property and second homes. Another £1.2bn will be raised from property owners by bringing forward payments of capital gains tax on residential property to within 30 days of completion. FINANCIAL TIMES

Autumn Statement: Grants for student nurses scrapped, replaced with loans
The change has been announced as part of the government's Spending Review as it wants to "modernise" the way healthcare students are funded. The cap on the number of student nurses is being abolished too, so more people will be able to train each year. The Royal College of Nursing (RCN) is concerned, saying "student nurses shouldn't have to pay for it". The government argues that by abolishing the existing cap it will mean that far more people will be able to start training. At the moment universities only have a certain number of places to offer. The government says that over half of all applicants are turned away. It says the removal of the cap means up to 10,000 new training places will be created over the course of the parliament. But the Royal College of Nursing says the ring-fence to nursing student funding has now been removed, adding: "a precious link between the NHS and its nurses is potentially at risk, making it harder to plan for the future workforce." BBC NEWS

Young 'to be poorer than parents at every stage of life'
The study, by the Institute for Fiscal Studies (IFS), said that households actually grew richer during the financial crisis. But the reason for that growth between 2006-12 was the increase in pension values over the period. And the slow rate of growth in overall wealth suggested that young people would lag behind earlier generations. Households aged between 45-54 saw the biggest increases in their pension wealth which rose on average by £38,000 over the period. The IFS said: "Even with these increases in average wealth, working-age households are at risk of being less wealthy at each age than those born a decade earlier." Among households aged 25-34, one third expected the state pension to be their largest source of income after retirement. Despite new legislation that automatically enrols workers into workplace pension schemes, nearly half (44%) did not expect to receive any income from a private pension. Rowena Crawford, a Senior Research Economist at the IFS, said: "It is striking how many individuals do not expect private pensions to have a role in financing their retirement, let alone be their main source of income... It will be interesting to see how these attitudes change as auto enrolment into workplace pensions is rolled out." BBC NEWS

RBS scraps bonuses for retail staff in bid to stem mis-selling
Royal Bank of Scotland is scrapping bonuses for 20,000 staff in an attempt to avoid future mis-selling scandals. Instead, those who work in NatWest and RBS branches as well as those who work in customer service in call centres are being given pay rises intended to compensate them for the loss of bonus potential. Union officials urged other financial institutions to follow the move by the 74% taxpayer-owned bank, which like rivals has been embroiled in the payment protection insurance mis-selling scandal. Rob MacGregor, Unite’s national officer for finance, said: “Unite has long campaigned to end the hard sell in retail banking and here we see RBS moving away from sales target-based bonuses, resulting in a pay rise for the majority of retail staff. It is time for other banks to follow suit and end the hard sell.” The sales and bonus culture in banks was highlighted by a £28m fine on Lloyds Banking Group in 2013, after one employee was found to have been so desperate to ensure he did not get demoted or miss out on his bonus that he sold himself one of the financial services products. GUARDIAN

Debenhams squeezes suppliers in the run up to Christmas for the second time in three years
Debenhams is controversially demanding a discount from suppliers in return for bringing payment terms closer in line with the industry standard. Sources close to Debenhams claim that the average time it takes them to pay suppliers is around 60 days. However, in 2013, suppliers were asked to extend their payment terms from 90 days to 120 days. The industry average of the top 25 listed retailers is around 42 days. In recent weeks, the department store chain has contacted suppliers asking for a reduction of between 1pc and 2pc on bills in exchange for paying them 30 or 60 days earlier than their current terms. A person close to Debenhams said that it was a “completely optional scheme” that was offered in response to requests by suppliers. But one supplier, speaking on the condition of anonymity, said they felt under pressure to enter the scheme to maintain a relationship with the department store chain. “We’re being asked to shave off the price again,” he said. In 2013, Debenhams sparked an outrage after forcing some suppliers to cut their prices by at least 2pc just eight days before Christmas. The controversial move was dubbed the “Santa tax”. Tesco’s chief executive Dave Lewis recently recently announced that Britain’s biggest supermarket will reduce terms for payment of its smallest suppliers from 45 days to 14 days to help usher in a new era of transparency at the grocer. The 14-day terms are below the food industry standard of 28 days. Unlike its retail rival John Lewis Partnership, Debenhams has failed to sign up to the Government’s Prompt Payment Code, which has been strengthened to promote a 30-day term as standard, with a 60-day maximum limit. The Government is also planning to force big businesses from April next year to publish their standard payment terms and the average time they to take to pay their bills as a matter of public record. TELEGRAPH

Network Rail must sell-off £1.8bn of public assets to fund upgrades
Network Rail has struggled since it became a public body last year. That was a move that immediately turned the funding taps off, because it could no longer borrow cash on the private markets. Instead, its £38bn debt went onto the government's books, and ministers refused to lend bosses any more money. New chairman Sir Peter Hendy came up with the sell-off idea after he was drafted in this summer to rescue the company's disastrous £12.5bn enhancement plan. One critical scheme, the plan to electrify the line from Swansea to London, has been dogged with delays and extra costs. The first budget estimate was £640m. It now stands at £2.8bn. Work on the core part of the line, to Cardiff, should be finished by 2019, Network Rail says. But new, multi-billion pound intercity trains are arriving more than a year before that. It raises the embarrassing prospect of sparkly high-speed trains initially providing a slower service because they can't run on electricity for the whole route. Other all-electric versions could be idle for months. BBC NEWS

Barclays fined £72m for failing to make checks on super-rich customers to win their business on secret £1.9bn deal
The bank arranged and carried out a single £1.88billion transaction for a number of very wealthy clients in 2011 and 2012. Since these clients – each with a personal wealth greater than £20million – were politically exposed, Barclays should have done extra checks on them to make sure the transaction had nothing to do with financial crime. But rather than carrying out extra checks and due diligence, the bank actually carried out fewer. The Financial Conduct Authority, which imposed the fine, said that Barclays turned its back on standard procedures, instead choosing to take on the clients as quickly as possible – and pocketing £52.3million in the process. In fact, it agreed to keep details of the transaction confidential – even within the firm – and agreed to indemnify the clients up to £37.7million if details of the transaction got out. To make matters worse, few people knew of the existence and location of Barclays' due diligence records. They were kept in hard copy and not on Barclays' systems. The fine levied on the bank comprises the £52.3 million it made from handling the transaction as well as an additional £19.8 million penalty. DAILY MAIL

Barclays hit by another $150m (£99m) forex fine by the US
Barclays’ trading platform allows the bank to have a “last look” at all trades to make sure it is not losing out as a result of some clients unfairly using ultra-fast systems to trade on market movements before Barclays’ own systems have updated their prices. But regulators found that from 2009 to 2014 the bank had been using this capability to reject some trades when markets genuinely moved against the bank. The New York Department of Financial Services (DFS) found that the British bank would cancel customers’ trades if the markets moved against Barclays in the fractions of a second between the order being placed and the trade taking place. When clients asked about high levels of rejections, the bank would claim that markets were unusually volatile, or simply fail to reply in the hope that the client would stop asking. The DFS found records of discussions between staff members where sales staff were told to “tactfully explain” the problem, or to “just obfuscate and stonewall". In May of this year the DFS fined the bank $485m for trying to manipulate the spot forex trading market, as part of a wider settlement in which Barclays was fined $2.4bn by a series of UK and US regulators. The new fine brings the total paid to the DFS to $635m. In May, Barclays agreed to fire eight workers because of the wrongdoing. TELEGRAPH

TTIP: Jeremy Corbyn, Nigel Farage, Nicola Sturgeon and Natalie Bennett sign appeal to exempt NHS from trade deal
Leaders of almost every major political party in the United Kingdom have signed an appeal not to allow a transatlantic trade deal known as TTIP become the Trojan horse that allows American business interests to take over the NHS. TTIP, or the Transatlantic Trade and Investment Partnership, would free up trade between the US and the EU, by allowing companies from either side of the Atlantic to operate under the same rules. One of its most controversial elements would be the creation of a new supranational court, the Investor State Dispute Settlement (ISDS) through which foreign investors could sue governments, or the EU, over any action or legislation that hurt their businesses. It is feared that an American private healthcare firm which was prevented from buying up part of the NHS would be able to go to the ISDS and claim millions of pounds in compensation from the British government for lost business. The union Unite, the organisers of the appeal, say that they approached the Conservatives asking for support but were refused, and are awaiting a reply from the Liberal Democrats. The War on Want trade campaigner Mark Dearn said: “TTIP negotiations are not going as planned. EU governments would be better off listening to their constituents than continuing with these secret negotiations the people of Europe do not want.” INDEPENDENT

Politicians slam tax-avoiding Pfizer-Allergan merger
Pfizer is doing the largest inversion deal of all time. In a $160-billion transaction, it plans to move its tax address from the United States to Ireland, if only on paper, by buying and merging into Allergan, a smaller, Dublin-based competitor. The combined company will be called Pfizer and will be run by Pfizer's CEO, with executive management staying in New York and extensive operations across the United States, but it will no longer be taxed as a U.S. company. U.S. politicians condemned the deal as a tax dodge. Democrats heaped the most criticism on the New York-based drug maker, with Hillary Clinton accusing Pfizer of using legal loopholes to avoid its "fair share" of taxes in a deal that she said "will leave U.S. taxpayers holding the bag." Republican front-runner Donald Trump, who has called for a corporate tax overhaul, called the deal "disgusting" in a statement, saying "our politicians should be ashamed." More than 50 similar deals have been done over three decades by well-known companies such as Medtronic Plc, Fruit of the Loom and Ingersoll-Rand Plc. Congressional researchers have estimated inversions, left unchecked, will cost the U.S. Treasury nearly $20 billion in the next 10 years. The U.S. Treasury Department last week unveiled new rules to clamp down on inversions, its second attempt to do so since a wave of deals peaked in September 2014. But the latest rules amounted to tweaks of existing law and will not impede the Pfizer-Allergan transaction, tax experts said. Pfizer holds about $74 billion in profits offshore that, thanks to another loophole, it has not brought into the United States to avoid paying the taxes due under America's worldwide corporate tax system. As an Irish-domiciled company, it will have less costly access to those funds. “Pfizer built their business on the back of our research and development tax incentives, our federally supported medical research, our skilled workforce, and our infrastructure," said Democratic Representative Rosa DeLauro in a statement. "We cannot continue to allow Pfizer and other corporations to pretend that they are American while reaping the benefits this country has to offer, yet claiming to be another nationality when the tax bill comes," she said. REUTERS


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