Thursday 18 August 2016

Thursday, August 18, 2016 Posted by Hari No comments Labels:
Inheritance tax, and how the Dukes of Westminster avoid it on their £9bn fortune
Clever use of trust structures enable the Grosvenor family - whose head is the Duke of Westminster - to pass assets down the generations without attracting inheritance tax, accountants say. The Grosvenors' property fortune is estimated at £9bn. Yet the death of Gerald Cavendish Grosvenor, the sixth Duke of Westminster, and the inheritance of his title by his son Hugh, is not expected to trigger vast death duties. This is because successive generations are "trustees" rather than direct owners of the assets. According to the Grosvenor Estate's own description of its structure, the six trustees (of whom the late Duke was chairman) "hold the assets of the group for the benefit of current and future members of the Grosvenor family". Income and other benefits can be paid out to beneficiaries, who may or may not include the trustees, and who will be taxed on them as normal. Peter Legg, a chartered tax adviser and founder of IHT Planning Matters, said: "Here it would appear that shares in the businesses are owned by family members as trustees, not as individuals." This puts the assets at arms' length and effectively eludes death duties. The Grosvenor property empire includes swathes of London's most prestigious streets and squares, in Mayfair, Belgravia and Chelsea. TELEGRAPH

Takeaway firm Deliveroo abandons plan to force ‘absurd’ new contract for staff
Deliveroo riders have been celebrating after the company confirmed it would not force them to sign new contracts agreeing to a trial pay scheme that could see them earn barely half the National Living Wage. The takeaway firm offered concessions in its pay dispute with workers after staff staged a protest and politicians waded into the row. Deliveroo confirmed it will allow riders to work under their previous pay agreements instead of participating in a trial pay scheme, which pays  £3.75 per delivery rather than the current terms of £7 an hour and £1 per delivery. Riders who have already signed the new contract terms will no longer be bound by it, the union said. The new voluntary trial scheme is due to start on Wednesday. Employees who participated in the six-day strike were also told that there would be no threats of job losses or other victimisation against workers who demanded a guaranteed hourly wage, according to the Independent Workers Union of Great Britain (IWGB). “This strike has exposed Deliveroo and their disingenuous methods for what they really are. A week ago Deliveroo were forcing us to sign a new contract under the immediate threat of losing our jobs, and on the false pretence it was a trial," Tom Hobbert, a Deliveroo courier who took part in the strike, said. Final decision on pay will be taken at the end of the trial scheme on 14 September. At this stage 280 of the 3,000 Deliveroo riders in London are participating in the trial. On Sunday, the Department for Business, Energy and Industrial Strategy insisted Deliveroo employees must be paid the national living wage of £7.20 an hour unless a court or HM Revenue and Customs defines them as self-employed. The National Living Wage of £7.20 for everyone aged over 25 years old – hailed as the new minimum wage – was announced by the former Chancellor George Osborne in April this year. Yet nearly 200 employers have been recently named and shamed for failing to pay that minimum wage to their workers. INDEPENDENT

Tax avoidance: Accountants face tougher penalties
Accountants or advisers who help people bend the rules to gain a tax advantage never intended face tougher fines under new penalties proposed by the Treasury. A fine of up to 100% of the tax that was avoided - including via off-shore havens - has been suggested in the new rules, published for consultation. Currently those who advise on tax face little risk, while their clients face penalties only if they lose in court. The rules would "root out" tax avoidance at source, the Treasury said. The avoidance it's trying to root out involves bending the rules to gain a tax advantage that Parliament never intended, an abuse which costs nearly £3bn a year. The new rules come after the government set up a new task force to investigate allegations of tax-dodging and money laundering in light of the Panama Papers leak, which lifted the lid on how the rich and powerful use tax havens to hide their wealth. Following the Panama Papers scandal the five largest economies in the European Union, the UK, Germany, France, Italy and Spain, agreed to share information on secret owners of businesses and trusts. Richard Murphy, a chartered accountant and academic at City University, told the BBC it was unlikely that cases would come to court, but that the threat of fines would act as an "amazing deterrent" to advisers which would prevent them offering advice on tax avoidance. He said this was partly because it could put at risk their ability to get professional indemnity insurance, which they need to continue their work. "Lawyers and accountants will not take the risk of selling these schemes," he said. "There's a risk of a 100% fine so they'll think they can't afford to do it. Every honest accountant will be jumping for joy this morning that those who have been selling these schemes will be put out of practice." He said that the tax system loses around £10bn per year as a result of tax avoidance, well above the £3bn a year the Treasury says is lost. BBC NEWS

Sports Direct warehouse workers to receive back pay
Thousands of Sports Direct warehouse workers are set to receive back pay totalling about £1m after the retailer admitted breaking the law by not paying the national minimum wage. The sportswear chain and its employment agencies are also facing fines of up to £2m imposed by the Department for Business, Energy and Industrial Strategy (BEIS) after they were found to have been underpaying some of the country’s lowest-paid workers for four years. The move, which follows an undercover Guardian investigation last year that exposed how Sports Direct workers were being paid less than the legal minimum, is to include payments backdated to May 2012 and could be worth up to £1,000 for some workers, trade union officials estimate. The agreement, which is understood to have been struck between the union Unite, the retailer and HM Revenue & Customs, includes about 200 workers directly employed by Sports Direct and around 3,000 staff hired through temporary employment agencies. Two agencies, The Best Connection and Transline, provide most of the labour in the company’s warehouse in Shirebrook, Derbyshire. Those familiar with the deal, however, say that 1,700 Transline agency workers may initially receive just half the back pay they are owed when payments begin from the end of the month. This is because the agency is refusing to refund unpaid wages from before it took over contracts from a rival agency, Blue Arrow, two years ago. Steve Turner, Unite’s assistant general secretary, said: “Investors and customers alike should not be fooled into thinking that everything is now rosy at Sports Direct’s Shirebrook warehouse. Transline, one of the employment agencies involved, is disgracefully still trying to short-change workers by seeking to duck its responsibilities.” GUARDIAN

Two in three families are left stuck on high energy bills after energy watchdog let power giants off over £2bn rip-off
After a two-year investigation, Ofgem announced a crackdown that was supposed to tackle power firms’ poor treatment of loyal customers. But the reforms, all of which were suggested by the powerful Competitions and Markets Authority (CMA), will only curb high prices for four million customers with prepayment meters, who will see their costs fall by around £75 a year from next April. Britain’s remaining 24 million households were instead told they would benefit from a range of measures to boost competition between suppliers. Yet energy experts said the new rules would only make matters worse. They said that one of the proposals - giving firms access to a database of households who don’t switch deals - would only lead to customers being bombarded with junk mail. And they warned that households were in danger of being baffled by hundreds of new offers under plans to remove a ban on each supplier offering more than four tariffs. Price comparison websites are also expected to be given the green light to push customers towards some deals, while hiding others that earn the site less in commission. According to the report, 66 per cent of households are on their supplier’s most expensive deal and overpay by as much as £300 a year. DAILY MAIL

Brexit bazooka: Bank of England cuts interest rates to record low of 0.25% and puts £170bn behind emergency cash for financial system
The Bank of England cut interest rates for the first time in more than seven years to 0.25 per cent today - and delivered another £60billion of quantitative easing, a funding scheme that could amount to £100billion and £10billion of corporate bond buying. The widely-expected rate cut was voted for unanimously by the monetary policy committee and will deliver a boost to borrowers through cheaper mortgages and loans but hit savers who are already suffering from historically low rates. Christopher Metcalfe, investment leader, UK Equities, Newton Investment Management, warned: 'The price of credit for firms is already low and it is difficult to imagine if businesses are scared or unwilling to invest in the wake of Brexit at 0.5% interest, whether a further to 0.25% will induce them to invest.' Policymakers also decided to pump extra money into the economy through the Bank's government bond-buying quantitative easing programme, now totalling £425bn, and also buy up to £10billion of UK corporate bonds. A new Funding for Lending style scheme worth up to £100billion was also announced. DAILY MAIL

Watchdog's banking tech reform 'not enough'
A shake-up in UK retail banking has been criticised by consumer groups and economists as not going far enough. The Competition and Markets Authority (CMA) concluded that new phone-based apps could show customers which banks may offer the best account. Banks will also have to set maximum monthly fees for unarranged overdrafts. The CMA decided against a cross-industry cap, leaving individual banks to set their own charges. Alex Neill, director of policy and campaigns at Which?, said: "It is disappointing that the monthly charge cap is not actually a cap and banks will be allowed to continue to charge exorbitant fees for so-called unauthorised overdrafts, rather than protect those customers that have been identified as among the most vulnerable." Andrew Tyrie MP, chairman of the Treasury Select Committee, said: "The CMA is relying on the rolling out of new technology to do the heavy lifting on competition. But many customers will not have the tools or skills to do this. Customers are also - understandably - wary of the data-sharing required for this to be effective." Diane Coyle , Professor of Economics at the University of Manchester, questioned whether the new measures would increase the rate of switching. "There's a lot of reliance being placed on more information, but consumers will need to give all of their transaction information to third-part providers, and there's the trust question ... do you really want another party to be able to see all the transactions that you make in your bank account and be able to tell other potential competitors about that?" she told the BBC. BBC NEWS

Thursday 4 August 2016

Thursday, August 04, 2016 Posted by Hari No comments Labels:
Student debts wipe out most graduate pay premiums
Politicians should stop using a "carrot of higher graduate earnings" to justify raising student fees or freezing repayment thresholds, say campaigners. Those who do "should be charged with gross mis-selling", says Angus Hanton, co-founder of the Intergenerational Foundation (IF) lobby group. Having to pay back student debts will wipe out any graduate premium for most professions, claims the IF in a report. The report points out how successive governments have used the graduate "pay premium" to justify them. The premium is the amount of extra money it is estimated a degree can help graduates to earn over the course of a lifetime. The report says that in 2002, ministers put it at £400,000, but recent estimates have been more modest at about £100,000. There are wide variations between the sexes and between subjects and institutions, it adds. It argues that, while for somebody who gets an Oxbridge first, the premium figure of £400,000 "may still hold true", it is much lower for non-Oxbridge graduates. "The increasing number of graduates... is further undermining the value of a degree," it adds, with some previously low-to-median paid posts now requiring degrees. "Our research proves that the current £100,000 graduate earnings premium so often touted equates to an 'annual bonus' of just £2,222 over 45 years of work and is wiped out once National Insurance and income tax are taken into account. "Furthermore, the premium is simply not enough to cover the interest accruing on the average loan. "The current system is fuelling a self-perpetuating debt-generating machine which short-changes young people," argues Mr Hanton. The authors say a graduate who borrowed the maximum for tuition fees and maintenance would, with interest, owe £53,000 after three years. In addition, unlike most ordinary loan agreements, the terms and conditions of student loans can be changed "at any moment without debate and without notice", they add. They point out that the government has already broken a promise that the income threshold for repayments would increase with average earnings from April 2017. Instead, it will be frozen at £21,000 for five years, then Chancellor George Osborne announced in November 2015. BBC NEWS

Councils must resume house building role, says LGA
Councils should be given the chance to resume their "historic role" as house builders to ease an affordable housing crisis, their lobby group says. The fall in home ownership among the young and rising rental costs has led to some calls for councils to step in to increase the supply of homes with a new building programme. Between the late 1940s and late 1950s councils built more homes than the private sector. Local authorities were building 100,000 homes a year up to the late 1970s, but the election of Margaret Thatcher's Conservatives in 1979 led to a fall in housebuilding by local authorities. In the year to the end of June, local authorities built 1,500 homes in England out of a total of 131,370 - that is just over 1%. The need was even greater following the economic uncertainty caused by the UK's vote to leave the EU, the Local Government Association (LGA) said. Peter Box, LGA housing spokesman, said: "The private sector clearly has an important role to play but the reality is that it cannot build the homes we need on its own, and will likely be further restricted by uncertainties in the months and years ahead." A separate report from the Centre for Economics and Business Research suggests that "tremors" from the vote to leave the EU will not prevent the average UK home costing about £40,000 more in five years' time. This would push up the average UK house price from £194,000 in 2016 to £234,000 in 2021, it predicted. BBC NEWS

IMF admits disastrous love affair with the euro and apologises for the immolation of Greece
The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory. This is the lacerating verdict of the IMF’s top watchdog on the fund’s tangled political role in the eurozone debt crisis. The three main bailouts for Greece, Portugal and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000pc of their allocated quota – more than three times the normal limit – and accounted for 80pc of all lending by the fund between 2011 and 2014. In an astonishing admission, the report said its own investigators were unable to obtain key records or penetrate the activities of secretive "ad-hoc task forces". “Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located. The IEO in some instances has not been able to determine who made certain decisions or what information was available, nor has it been able to assess the relative roles of management and staff," it said. A sub-report on the Greek saga said the country was forced to go through a staggering squeeze, equal to 11pc of GDP over the first three years. This set off a self-feeding downward spiral. The worse it became, the more Greece was forced to cut. The result is that nominal GDP ended 25pc lower than the IMF’s projections, and unemployment soared to 25pc instead of 15pc as expected. “The magnitude of Greece’s growth forecast errors looks extraordinary,” it said. The injustice is that the cost of the bailouts was switched to ordinary Greek citizens  – the least able to support the burden  – and it was never acknowledged that the true motive of EU-IMF Troika policy was to protect monetary union. Indeed, the Greeks were repeatedly blamed for failures that stemmed from the policy itself. This unfairness – the root of so much bitterness in Greece – is finally recognised in the report.  “If preventing international contagion was an essential concern, the cost of its prevention should have been borne – at least in part – by the international community as the prime beneficiary,” it said. TELEGRAPH

Maintenance grants scrapped for poorest students
From Monday, the grants, worth about £3,500, will be replaced with additional loans that will have to be paid back at the end of an undergraduate course, once graduates earn more than £21,000. Sorana Vieru, National Union of Students (NUS) vice president, told BBC Breakfast: “It’s a disgraceful change that basically punishes poorer students simply for being poor, so they have to take a bigger loan than those students from privileged backgrounds. The change, announced by the then chancellor, George Osborne, in 2015, was opposed by Labour, which said it would hit those from low-income homes the hardest. Speaking in January, Jo Johnson, the universities and science minister, said the maintenance grant change “helps balance the need to ensure that affordability is not a barrier to higher education, while ensuring that higher education is funded in a fair and sustainable way”. GUARDIAN

Home ownership falling in major English cities
The proportion of home owners dropped from 72% in April 2003 to 58% this year in Greater Manchester, it said. West Yorkshire, the metropolitan area of the West Midlands and outer London have also recorded double-digit falls. Explaining the falling rates of home ownership, Matthew Whittaker, chief economist from the Resolution Foundation, told the BBC's Today programme: "What we particularly have seen since 2002-03 is that incomes simply haven't kept pace with house prices, so it's not just that house prices have gone up.” The average first time buyer paid just under £30,000 for their new home in the 1980s compared with more than £150,000 now, the think tank said. The report follows recent data from the government's English Housing Survey showing the total number of buyers has fallen by a third in 10 years, and those who do buy their first home increasingly rely on the bank of mum and dad for help. The Resolution Foundation's analysis of the LFS found that home ownership in England peaked in 2003 at 71% of the population and had now dropped to just under 64%. The think tank also confirmed that the fall in ownership corresponded with a rise in renting from private landlords. The proportion of private tenants rose from 11% in 2003 to 19% last year, it said. In Greater Manchester, the move was more pronounced - rising from 6% to 20% over the same period. While accepting that home ownership was rather a national obsession, it pointed out that those in the private rented sector spent more of their income on housing than their owners, and there was more insecurity in short-term tenancies. BBC NEWS

Carphone Warehouse ad claiming 'UK'S LOWEST PRICES - WE CHECK SO YOU DON'T HAVE TO' is banned
Carphone Warehouse has been forced to pull an advert for its monthly 4G mobile tariff packages, after the UK's advertising watchdog branded it 'misleading.' The Advertising Standards Agency said the small print contradicted the advert's claims, which it found could not be substantiated. Under the advert, the small print said: 'UK's Lowest Price on pay monthly is based on new connections on selected networks on 4G tariffs. UK's Lowest Price correct at time of print and it applies to published prices ... Excludes all online retailers without high street presence and other promotional offers ....'. Text next to a number of phones pictured alongside the advert stated 'AT THE BEST PRICE' and 'AT THE BEST PRICE WE'VE CHECKED.' Further small print at the bottom of the advert said: 'If you find an upgrade or pay monthly deal for less at O2, EE or Vodaphone, we'll match it and pay the equivalent of your first month's standard line rental ....' The offer excluded 'all online retailers without a high street presence', so shoppers were 'likely to be misled' by the advert, the ASA said. The price promise also only applied to three competitors, namely O2, EE and Vodafone, so the advert 'contradicted the overall impression that Carphone Warehouse prices were better than all other retailers', the ASA said. DAILY MAIL

Goldman Sachs fined $36.3m over use of “improperly obtained” confidential documents
The Fed said Goldman Sachs had used documents, obtained by a former Fed employee, to brief clients during presentations. Goldman Sachs has already paid New York regulators $50m over the same incident. The case has highlighted the issue of staff moving between big banks and the agencies that regulate them. According to the Fed, a former Goldman Sachs senior banker Joseph Jiampietro, asked a new, junior employee Rohit Bansal to obtain confidential documents from the Fed, where Mr Bansal had previously worked for eight years. Those documents were then used to advise small and medium-sized banks on the Fed's decision making in 2014. Both Mr Jiampietro and Mr Bansal were sacked after another colleague reported the incident to the compliance department. BBC NEWS

Luxury property tycoon says lavish gifts to brother were for 'love' not tax evasion
Christian Candy has insisted he gave his brother Nick gifts worth more than £200m out of family affection and respect for the dying wishes of their late father — and not as part of an alleged plot to evade tax. The largesse Christian handed to his business partner brother include a penthouse apartment at One Hyde Park, where Nick lives with his pop singer wife Holly Valance; the couple’s future family home, a grade II-listed mansion in Chelsea; and £10m in cash. Loans from Christian’s business empire have also been used, in part, to help Nick buy a £26m, 60-metre Italian yacht called 11-11. The multi-millionaire brothers, who are Conservative party donors, have been forced to provide a rare glimpse into their relationship — both business and personal — as part of a bitter legal dispute over a loan to another property developer, Mark Holyoake. They say Holyoake is making allegations about tax evasion to force settlement of his claim and detract from business problems of his own. Witness statements from Nick and Christian Candy were submitted to the high court in London after questions were raised about how Nick came by his personal fortune, and the role he played in his brother’s CPC Group. A highly profitable property empire, CPC — which takes its name from Christian’s initials — is best known for super-luxe London developments such as One Hyde Park, where the sale of apartments brought in £2bn. GUARDIAN

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