The news will come as a blow to the Chancellor George Osborne. However, IMF had some advice for the Chancellor - ease the pace of deficit reduction in the event of any further downturn in activity.
The IMF signalled that Mr Osborne should also look to lowering his growth forecast for 2012.
When making tax and spending judgments, the Chancellor is currently guided by economic forecasts from the independent Office for Budget Responsibility. However, they have in the past proved to be over-optimistic.
The IMF also said the Chancellor may need to slow down the pace of his deficit reduction plans, although he has so far resisted in doing so.
The UK was hailed by IMF as one of the three big developed economies at risk of a double-dip recession, with the IMF World Economic Outlook claiming the global economy was entering a “dangerous phase”.
"Although the recession has ended, many economies continue to operate far below pre-crisis trends. Output losses relative to trends are largest for economies that were at the epicentre of the crisis, such as the United States and the United Kingdom," said the IMF.
The fund predicts that global GDP will expand "at an anaemic pace of 1.5 percent in 2011". And it believes global growth will shrink to 4 percent in 2012 from 5 percent in 2010 on factors such as "major financial turbulence in the eurozone".
"Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing," the IMF said.
The IMF's World Economic Outlook pinpointed the Japanese tsunami and the rise in oil prices prompted by the unrest in north Africa and the Middle East as two shock events to hit the international economy in 2011.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 676 )Speaking at today’s Liberal Democrat conference in Birmingham, Business Secretary Vince Cable has vowed to tackle “the escalation of executive pay”.
Mr Cable said he wants an end to “payouts for failure” and that executive pay needs to become “more transparent” as it is often not linked to share values.
The Business Secretary proposed that shareholders should have more say on the wages executives receive. One option would be a discussion paper that would be aimed at limiting multi-million pound pay deals. Companies could also be required to set out the criteria used to determine pay and perks and putting employee representatives on remuneration committees.
“Further discussions” will take place regarding the paper being published next month, Downing Street said.
The Business Secretary also spoke of his regret for not doing enough to curb bank bonuses and said there needed to be a “narrowing of inequalities”.
Mr Cable also told the conference that he was consulting on the best way to tackle the escalation of executive pay, saying that it has “lost any connection with the value of shares, let alone average employee pay.”
He said: "It is hard to explain why shareholders can vote to cut top pay but the managers can ignore the vote.
"And surely pay should be transparent; not hidden from shareholders, and the public. I want to call time on pay outs for failure."
Earlier today, the Mr Cable told the BBC: "Executive pay has increased by over 400 percent over the last decade at a time when share prices haven't increased at all and basic pay of most employees hasn't increased at all."
Details of each executive board member's salary, pension, bonuses, and shareholdings are recorded but in separate parts of the annual report at present.
However, in October 2012, changes to the reporting requirements for all stock exchanged-quoted companies will come into force. They will be brought together in one table under the new system, with a total figure given to shareholders for the first time.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 518 )Under a strict new system, HMRC are issuing tougher penalties that could hit people who fail to submit their tax return on time.
Late tax returns could lead to people facing a fine of up to £1,600, whether or not they have extra tax to pay.
Approximately10 million people in the UK must submit a self-assessment return each year. These include the self-employed, company directors and those with many incomes; however, they could now be hit with the hefty fine if they are late in submitting the return, even though many believe they have no extra tax to submit.
October 31 is the deadline for paper returns, and 31 January is the latest people can submit their tax returns online.
The cost of the fine has accelerated under the new stricter system - filing a late return previously only resulted in a £100 fine.
The new stricter system outlined by HMRC will still see taxpayers receive an initial £100 fine for filing after 31 January, however, if the file is not paid for the next three months an additional £10 per day will be added, up to a maximum of £900.
If the return has still not been filed for a further three to six months, HMRC will issue the taxpayer with a £300 fine or five prevent of the tax that is due – in other words, whichever is higher.
For returns that are not filed between six months and 12 months another £300 fine will be issued or again five percent of the tax owed. In the more serious cases, the taxpayer could potentially be fined 100 percent of the tax owed.
And a taxpayer who has a year-long outstanding tax return could end up being fined for at least £1,600.
Fines were once cancelled if the taxpayer did not owe money to HMRC because there was no extra tax to pay or because it had been paid, however, this is no longer the case with the new system. Taxpayers will still need to pay the fine.
The stricter system will mean that taxpayers need to be extra cautious when filing their tax return and be aware of any possible penalties that could come their way. They could find themselves receiving a significant penalty, even though they believe they have correctly paid all of their tax.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 2.9 / 639 )Web search giant Google are launching a scheme to help small businesses grow online, with SMEs in Liverpool being the first to benefit.
Around 1,500 businesses in the city are set to receive one-to-one advice during the pilot scheme. Businesses will be advised on building a successful website and how they can maximise their Search Engine Optimisation (SEO).
If the pilot scheme is a success, the initiative will then be launched across the UK.
Google UK’s head of small business initiatives, Raj Saggi, said that this would be the first time Google has focused a great deal of time on one city’s internet economy. And there were also reasons as to why Liverpool businesses were chosen to test out the initiative.
“With Liverpool's strong business networks and sense of community, we believe this is the best city to run such an initiative,” he said.
Matt Brittin, managing director of Google UK, said small businesses were put off because they thought launching online was “too complex and complicated”.
“What we’re trying to do now is go a bit deeper, to try to understand what businesses are doing and how best to aid their growth. We’re coming to spend a significant amount of time working with people in a community and helping people make the most of the internet,” he said.
"It's all about developing the ecosystem. We care about the internet's potential to do good and we think that if we can make it a better place for businesses and consumers, the rest will follow. The UK is good at this stuff. It is the worldwide leader in e-commerce, but it is time to start thinking bigger.
"This is the first time we’ve done this – we’re looking to see what we can learn from it."
Following allegations that Google has become too powerful and predatory, the web search giant is launching various initiatives to shake off the image with Google chairman Eric Schmidt even declaring that the company “loved” Britain. He said that the company would be willing to pay more tax into Great Britain if our tax laws were not so weak.
It will be interesting to see how successful the scheme is in Liverpool and to see if Google will offer their advice to small businesses across the UK.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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( 3 / 668 )A five-year review of the UK tax system by the Institute for Fiscal Studies has warned that the 50p rate of income tax is costing the Treasury up to £500 million a year due to the wealthy storing money overseas.
To escape from paying the higher rate of tax, people who earn more than £150,000 are resorting to legal tax avoidance schemes.
Mounting pressure is already on the Chancellor to axe the 50p rate next year, although the move has been met with criticism, however, this news will add further pressure onto Mr Osborne to relieve high earners from the tax rate.
Paul Johnson, director of the IFS, said: “It looks like the 50p rate may be too high and that it is possible it will reduce tax revenues.
“It could lead to more people investing in tax avoidance, illegally hiding their income or even leaving the country altogether. I wouldn’t have introduced the 50p rate in the first place.”
The IFS also said that the highest rate that could be introduced without tax revenue being reduced is around 40 percent.
In response to the calls to axe the tax, Mr Osborne has also called on HMRC to review the tax rate over the next year and to see what impact it has on the economy. Previous figures released by the Treasury show estimates of £2.7 billion being raised each year by the tax.
The 50p tax rate was introduced by Labour, and currently 320,000 people are hit by the tax, or one per cent of taxpayers, according to HMRC.
The Government is divided on whether to keep the tax on high earners in place. Nick Clegg believes that if it is axed it should be replaced with a “mansion tax” on homes worth more than £2 million.
The IFS claims there are other methods in order to tax the wealthy. Mr Johnson said: “Wealth inequality has grown very strongly over the past few years, so if you are worried about it, inheritance tax is relatively useful.”
The review of the UK tax system, which was done over five years, will not be welcome news for the Chancellor. The IFS said the economy was losing tens of billions of pounds due to the bureaucracy and inefficiencies of Britain’s current tax system.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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