Category Archives: Economic

Britain, Economic, Government, Politics, Society

Britain’s bright future

BREXIT

IT was twenty-five years ago to the day, on September 16, 1992, when Britain crashed out of the European Exchange Rate Mechanism (ERM) – the prelude to the euro. John Major’s government was humiliated, the pound was devalued overnight by 15 per cent and most economists predicted a protracted slump.

Yet, what happened? The lower pound led to a surge in exports and just three years later the economy was booming.

Following the Brexit result, a similar devaluation of pound sterling has happened and all the indicators are that it’s having the same effect, with figures published over the last few days showing that exports have risen by 9 per cent in the last year.

Despite this, not a day goes by that the BBC, Financial Times or Confederation of British Industry don’t paint an apocalyptic picture of Britain’s future outside the EU. These organisations are constantly talking this country down at the very time it’s crucial we should be showing unity.

For people like Sir James Dyson, arguably Britain’s greatest living entrepreneur, and for many other dynamic business leaders, Brexit is not a problem. It’s a massive opportunity.

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Business, Economic, Government

HMRC investigating some £25billion in unpaid taxes

TAX AVOIDANCE

BIG businesses could be forced to pay up to £25billion of underpaid tax in a major crackdown on avoidance.

Some of Britain’s largest firms are being investigated by HMRC for potentially dodging £24.8billion of VAT, corporation tax and national insurance payments last year.

It is enough to fund the NHS for nearly three months.

The investigations highlight the scale of efforts by powerful companies to avoid paying their fair share.

HMRC’s probes have snowballed as public anger at fat cat greed grows. The amount of suspected uncollected tax from the year to March is 14 per cent higher than the previous 12 months.

It is 31 per cent more than two years earlier.

Law firm Pinsent Masons, which uncovered the figures, say this means the taxman’s large business directorate is taking a more zealous approach. But tax investigations are the first stage in a tug of war between the exchequer and business and there is no guarantee the money will ever end up in Government coffers.

If HMRC experts have suspicions, they can examine a company’s books and then amass enough evidence to demand it pays up.

But many firms refuse and appeal the decision, leading to lengthy wrangling in the courts. Pinsent Masons said: “HMRC is broadening its horizons and putting in a far wider range of transactions under scrutiny. We are seeing an increasing number of challenges to arrangements that would previously have been regarded as routine and perfectly acceptable.

“The figures represent the amount of tax HMRC considers is underpaid. Not all its investigations will actually result in more tax being paid.” It follows a harder stance on tax from the Treasury after a string of scandals including last year’s Panama Papers debacle, when it was revealed that thousands of well-known figures around the world were stashing their money in offshore havens.

In November, Chancellor Philip Hammond announced plans to raise an extra £2billion by 2020 through a crackdown on tax avoidance.

The law firm said the anti-avoidance efforts were aimed at squeezing employers so ordinary families did not feel the pinch.

“The Treasury faces an unenviable choice – either cut public expenditure and services, or squeeze taxpayers for more money.

“Increasing tax revenue through investigations is often the more politically palatable option, particularly when the focus is on large businesses.

“However, HMRC is putting the affairs of more and more companies under the microscope as a result, increasing the costs for those businesses.”

A so-called “Google tax” was introduced in 2015 to try to stop large firms shifting their cash to overseas havens, and big businesses will soon be ordered to publish their strategies for limiting payments to the revenue.

Around two-thirds of all large companies are under investigation at any one time, and disputes can drag on for decades.

The amount eventually handed to the authorities is typically half of what was initially calculated and asked for.

Big firms handed over a record £49.5billion of corporate tax in the last fiscal year, up 12 per cent on the previous 12 months.

A HMRC spokesman said: “Tax under consideration is not tax owed or unpaid, it’s an estimate of what might be at stake if we didn’t investigate.

“By effectively enforcing the rules, HMRC has since 2010 brought in £53billion that would have otherwise gone unpaid and collected over £8billion from large businesses last year alone.”

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Britain, Business, Economic, Government

Leading firms must say how chief executive salaries compare with staff

CORPORATE GOVERNANCE

LEADING companies will be forced to disclose how much their chief executive is paid compared to their average worker . . . and justify the sum.

Business Secretary Greg Clark is due to announce this week that nearly 1,000 listed firms will have to publish the ratio in a crackdown on excessive boardroom salaries.

It is also believed that a new public register will name and shame those whose investors revolt over the pay of bosses.

The plans will be announced as ministers seek to rebut criticism that they have watered down the tough approach promised by Theresa May.

Last year the Prime Minister unveiled radical proposals, such as workers being granted representation on boards, but she has since backed away from these ideas. The plans follow criticism over the high pay of executives following scandals such as the collapse of BHS.

Mr Clark will announce that the Investment Association, the fund managers’ trade body, will oversee the creation of the new register to include any company which faces opposition from at least 20 per cent of shareholders.

Ministers say the publication of ratios between bosses and UK-based workers will shine a spotlight on boardroom pay. It is unclear if the figure for chief executives would be their total package, which averaged £4.5million last year in the FTSE-100, or only their much lower base salary.

Mr Clark is also expected to say that the Government will guarantee workers at listed companies a louder voice in the boardroom by amending the Corporate Governance Code. This will be achieved, according to sources, by designating a non-executive director to represent workers, nominating a director from the workforce or a new advisory council which would have access to board members.

That would meet a commitment made in the 2017 Conservative manifesto although the Government is abandoning a general election pledge to ‘legislate to make executive pay packages subject to strict annual votes by shareholders’.

Companies will also have to produce an annual statement explaining how they acknowledge the interests of workers and wider stakeholders. In addition to the rules to be imposed on big public companies, privately owned businesses, including Sir Philip Green’s Arcadia Group, will become subject to a new voluntary code of corporate governance principles supervised by the Financial Reporting Council.

The proposals will be hailed by ministers as a robust package of reforms designed to make big firms more accountable. They come after corporate governance failings at Sports Direct International and a bitter revolt over a £14million deal for BP chief executive Bob Dudley. This has spurred the Government to pledge a crackdown on boardroom excesses.

The collapse of high street chain BHS after being sold for £1 by Sir Philip was also a factor in hardening public and political opinion against the bosses of big businesses.

This year, there were fewer major protests over the pay of executives at FTSE-100 companies but there was a significantly higher number of revolts over bosses in the FTSE-250 index.

Under Sir Vince Cable, the former Business Secretary and now Liberal Democrat leader, shareholders in public companies were handed a binding say every three years on remuneration policy.

But the annual vote on what directors receive is on a non-binding basis and looks likely to continue that way.

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