The Government took the highly unusual step of introducing retrospective legislation back in February, saying it would close two "aggressive tax avoidance schemes" used by Barclays and applied a new tax to a bond buyback the bank did in December. This could see Barclays having to pay back over £120 million.
Barclay’s chief executive Bob Diamond said in a letter to the Treasury Select Committee dated May 15th but only released this week: "The way in which this situation was handled seems to us to have been completely unwarranted."
Mr Diamond's letter went on to say: "We were ... surprised to be singled out in the way that occurred; not only through a retroactive change of law, but the effective naming of Barclays ... accusing the bank of entering into a 'highly abusive' scheme".
"Unnecessary damage was placed on Barclays reputation just at a time when the focus should be on rebuilding confidence and accelerating growth, not undermining it," Diamond added.
Tax avoidance is not illegal, of course, and Barclays designed the two schemes, one involving not having to pay corporation tax on profits made when buying back its own IOUs, the other involving investment funds claiming that non-taxable income entitled the funds to tax credits that could be reclaimed from HMRC and disclosed both to HMRC under rules that have been in place since 2004.
However, the timing is embarrassing, with the letter being published less than a week after the bank held its “citizenship day”, when it set out its commitments on matters such as tax avoidance.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 1 view ) | permalink |
( 3 / 97 )The government have announced that they are to drop plans to introduce a controversial VAT tax rate on pasties and caravans, in a move which is set to cost the Treasury a reported £70million.
Following a post-Budget consultation on closing VAT loopholes, on Monday night (May 28th 2012) the Treasury announced, in a letter to the Treasury Select Committee Chairman Andrew Tyrie, that it would be modifying its plans to charge VAT on hot food and static caravans.
The U-Turn which has been signalled by the government means that food left to cool naturally will not now be subject to VAT, while static caravans which were set to be charged VAT at twenty-percent, will now be charged VAT at five percent – and the combined changes are expected to mean about £70 million less in revenue for the Treasury.
Treasury sources have said that the £70 million figure is small in comparison to a budget which included a £3.5 billion giveaway to people on low incomes and £2 billion cuts in spending.
Amid criticism from the opposition that the U-Turn showed the government was a shambles, Treasury minister David Gauke defended the changes, saying: We've listened to the case that was put to us. On VAT our aim has always been to remove anomalies.
“One of the anomalies we have sought to remove is the fact you pay VAT on your hot chicken or pie in a fish and chip shop, but you don't in a supermarket.
“What we've managed to do is improve the test so those bakers who produce a Cornish pasty or hot sausage roll and let it cool over the course of the day, they are not going to face VAT.”
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 1 view ) | permalink |
( 3.4 / 134 )The government should do more to encourage private pension funds to invest in public sector infrastructure projects; according to the Confederation of British Industry (CBI).
Within a recently published report, the business organisation has recommended that the Treasury enhance the credit rating of government construction schemes, claiming that such a move will make pension funds, and other private sector investors, more willing to invest.
It is hoped that its report would "act as a catalyst", with CBI director general John Cridland saying: “If we want to see the billions of pounds needed to upgrade our ageing infrastructure and secure jobs and growth for the long-term, the government must make smarter use of limited public finances.
“By underpinning and lifting the credit rating of certain infrastructure assets, it can make them less risky and more attractive to investors.
“If we can capture just a fraction of the £1.5 trillion of capital held in UK pension funds, and invest a further two percent of their total assets in infrastructure, this would make a huge contribution to renewing our energy, transport and other infrastructure.”
Currently pension funds invest around two-percent of their assets in infrastructure but are notoriously reluctant to invest in start-up projects given the risk of construction cost overruns and a lack of regulatory certainty over future earnings.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 1 view ) | permalink |
( 3 / 104 )Amid the escalating Eurozone crisis, the government’s borrowing fell to a record low; helping to reinforce the UK’s safe-haven status.
Figures out earlier this week revealed that the yield on benchmark ten-year UK bonds dipped as low as 1.738 percent during trading this week, before rising again to 1.77 percent – with a lower yield representing a greater demand among investors.
It is believed that that UK has benefited from a “flight of safety” amongst investors who have been increasingly reluctant to buy sovereign debt in countries, considered to be in the greatest financial trouble, including Portugal, Spain, Italy and Greece.
Along with benefiting from a “flight of safety” it is believed that the fall in borrowing reflects a signal from the Bank of England, that it is ready to restart its £325 billion quantitative easing programme later in the summer; providing a guaranteed buyer of bonds.
The UK aren’t the only ones to have benefited, with Germany experiencing a similar fall, as their ten-year gilts fell to a record low of 1.35 percent, before rising to 1.39 percent; although analysts have said that the yield on German bonds could fall to 1.30 percent, if the markets continue to be volatile.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 1 view ) | permalink |
( 2.9 / 96 )A recent report into the insolvency rates of businesses throughout the UK has shown that the financial health of all businesses is heading in the right direction.
The report, whose findings were out earlier this week have revealed that compared to last year, the number of businesses to become insolvent has decreased from over 1,800 last year to just over 1,500 last month.
Along with showing a decrease in the number of firms becoming insolvent, the report revealed that all areas of the UK saw their average financial health score improve from an average of 83.24 in April 2011 to 83.76 last month.
The latest figures make for particularly positive reading for medium sized firms, which have traditionally struggled, as it was shown that these were the most improved during April.
Businesses with fifty-one to one-hundred employees saw the biggest improvement from 0.22 percent April 2011 to 0.10 percent in April 2012.
A spokesperson for the report said of the findings: “The figures show a more stable business environment, with some areas and sectors that have historically seen the highest rates of business failures moving in the right direction.
“Since January 2009, when the average financial strength score of UK firms had fallen to its lowest level recorded, there has been a definite and positive upward trend.
“Combined, these two valuable indicators show how UK businesses are faring and highlight areas where there are opportunities, as well as risks.”
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
[ add comment ] ( 1 view ) | permalink |
( 3.1 / 103 )
Random Entry
