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Yours for a pound: The firms sold on the cheap

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DIY chain Homebase has been sold for just £1, after its Australian owner Wesfarmers decided to abandon its disastrous foray into the UK.

Wesfarmers paid £340m for the retailer two years ago, but losses and other costs will bring its total bill to about £1bn.

The chain is being bought by restructuring specialist Hilco, which rescued music chain HMV in 2013.

The £1 price tag reflects the company’s negligible value, but Homebase is far from being the first firm to be sold for £1 by an owner wanting to ditch a loss-making business.

Here are a few more:

BHS

In 2015, Sir Philip Green sold the BHS department store chain for £1 to an investment vehicle called Retail Acquisitions run by Dominic Chappell.

BHS, which collapsed the following year, was part of his Arcadia Group that includes TopShop, Burton and Evans.

The decision proved to be ill-fated for Sir Philip: last year the Pensions Regulator said he sold BHS to avoid responsibility for its insolvent pension schemes if the firm went bust. Continue reading “Yours for a pound: The firms sold on the cheap”

Oldham bus firm first to be fined for pension law breach

A bus company has become the first UK firm to be sentenced for failing to enrol staff on a pension scheme.

Stotts Tours of Oldham, Greater Manchester, should have begun pension contributions for staff from 2015, The Pensions Regulator (TPR) said.

The firm and its managing director Alan Stott previously admitted wilful failure to comply with pensions law.
They were ordered to pay more than £39,000 at Brighton Magistrates’ Court.

District Judge Teresa Szagun said: “Initially Mr Stott’s attitude was to bury his head in the sand. This later left him in a position where he was out of his depth.”

The fines and court costs come on top of £14,400 in civil fines already owed for failing to comply with the law on automatic pension enrolment.

Stotts Tours must also pay an estimated £10,000 in backdated pension contributions for its staff, as well as ongoing contributions. Continue reading “Oldham bus firm first to be fined for pension law breach”

The year in business: A review of 2017

The year 2017 saw a burst of optimism among American investors and consumers, despite the turmoil sparked by President Trump’s first year in office.

The President strode from one political storm to the next as he took an axe to many of the policies of the Obama administration, but – on the economic front – the waters could hardly have been smoother.

Annual economic growth has been a healthy 3% while the United States stock market is up around 25% on the year. It is true that the dollar is down roughly 10%, which makes the real rise in share prices a little less impressive, but the improved confidence of many Americans is impossible to deny.

According to the US economist Irwin Stelzer of the Hudson Institute, it is the low unemployment rate of 4.1% that is the key factor. “There are six million unfilled jobs in the United States at the moment,” he says. “There are labour shortages, wages have started to creep up a little bit after a long period of being flat; and that makes people cheerful, makes consumers cheerful, makes consumers confident.” Continue reading “The year in business: A review of 2017”

Companies House rejects 50 potentially offensive names

Almost 50 company names have been rejected over the last year because they were deemed potentially offensive.

The list of proposed company names rejected by Companies House included Blue Arsed Fly Designs Ltd, Fanny’s Kebabs Ltd, Titanic Holdings Limited and Wags to Bitches Limited.

Some of the names may have been incorporated later if justification was given and accepted by Companies House.
A spokesperson said “the index of company names is a publicly available statutory register and it’s important that it is not abused by being used to register offensive names.” Continue reading “Companies House rejects 50 potentially offensive names”

Costly ISA inheritance loophole to be closed

A costly ISA loophole which has prevented spouses from inheriting the full amount of their deceased partner’s individual savings accounts (ISA) tax-free is set to be closed by the government.

Since 2015, married couples and civil partners have been able to inherit their partner’s Isas upon their death. But a gap in the rules meant that none of the growth in assets built up between the partner’s death and the point that the estate was finalised – a process that can take years – could be inherited free of tax.

For someone with a £1m portfolio in a stocks and shares ISA growing at 5 per cent per year, that growth could be worth about £160,000 over three years, according to Hargreaves Lansdown. It would not be possible to put this sum back into an ISA wrapper after being inherited, meaning the spouse could incur a tax liability covering the whole three-year period.

From April 2018, following an amendment to the ISA rules this month, a deceased partner’s ISA will remain sheltered from tax and will be passed on in its entirety to a spouse or civil partner tax-free following the administration of the estate, potentially saving thousands of pounds that could otherwise have been lost.

Under current rules, partners can inherit Isas, but rather than receiving the cash or investments inside them, they receive an extra ISA allowance equivalent to that amount. This is known as an additional permitted subscription allowance.

From next year, when an investor dies the ISA will be reclassified as a “continuing account of deceased investor” or a “continuing ISA”. No money can be paid into it from this point, but it will continue to benefit from the tax advantages of an ISA, so growth inside the wrapper will remain tax free. This status lasts until either the administration of the estate is complete, the ISA is closed, or three years have passed since death – whichever is soonest. The surviving partner will also be able to put the entire amount back into their own ISA.

“Committed savers and investors have been able to build up sizeable ISA portfolios – sometimes up to £1m or more,” said Sarah Coles, personal finance analyst at Hargreaves Lansdown. “The changes in April will cure these headaches, and iron out what has been a clunky and potentially expensive wrinkle in the rules.”

Source: Kate Beioley, The Financial Times

A Few of the more Bizarre Vat regulations!!

Value-added tax (VAT) is now over 40 years old. VAT expert Colin Corder takes a look at some of the more bizarre rules surrounding VAT and asks if VAT legislation is in need of an overhaul.

VAT was originally touted as the “simple tax” but it has become one of the most complex and illogical.

Legislation and the courts have often struggled to keep up with a changing world and today this middle-aged tax is full of anomalies and inconsistencies.

When VAT was introduced, certain goods and services were considered so essential that it was decided they should be subject to no tax. This was done in two ways: zero-rating and exemption.

In the eyes of UK law, biscuits and cakes are necessities and are zero-rated. However, chocolate-covered biscuits are regarded as a luxury, which means the full rate of VAT is payable.

The great Jaffa Cake debate

For reasons that are not entirely clear or logical, no distinction is made between chocolate-covered cake and cake without a chocolate coating.

All this might have passed us by as a quaint aspect of British legal thinking if McVities, the makers of Jaffa Cakes, had not gone to court arguing that their product was a cake. To prove its case, McVities baked a special 12-inch Jaffa Cake that persuaded the court of its cake-like properties. As a result, no VAT is charged on Jaffa Cakes or other, more traditional chocolate-covered cakes.

gingerbread-man-220181_640An equally eccentric VAT rule applies to gingerbread men.

No VAT is charged if the figure has two chocolate spots for its eyes, but any chocolate-based additions, such as buttons or a belt, mean VAT is payable. So it’s cheaper to buy no-chocolate gingerbread men.

Are you eating in or taking away?

Ever been in a cafe ordering a sandwich and wondered why the cashier is so keen to know whether you’re eating in or taking away?

This is because a takeaway sandwich is zero-rated for VAT, but if you intend to eat it at the premises it is standard-rated. Asking about your intentions helps the retailer calculate the proportion of zero- to standard-rate sales. Some cafes do charge a higher amount to eat in, but most charge the same price and just lose some margin for the eat-ins.

Chancellor George Osborne seriously underestimated the public’s love of the humble pasty when he announced plans to levy the 20% standard rate of VAT on hot, freshly-baked takeaway food as part of the 2012 Budget. A well documented U-turn followed in which the proposal was amended to allow food that was hot but cooling down to continue to be zero-rated.

Hence, pasties, pies and other hot takeaway food are zero-rated unless kept warm in the shop – for example, under a hot plate or in a cabinet, in which case it is standard-rated.

When pastygate blew up in George Osborne’s face , there were some wry smiles in Stockport. Because this is the home of the Jaffa Cake, part chocolatey-orange treat, part tax conundrum.

jaffaAll 1.19bn of these funny little biscuits made every year by McVitie’s are produced in its North-West factory.

But, of course, they are not biscuits. They are cakes. They were deemed to be so 20 years ago by a judge after a long-running and costly dispute over the VAT status of these treats.

In the eyes of the taxman, a cake is a staple food and, accordingly, zero-rated for the purposes of VAT. A chocolate-covered biscuit, however, is a whole other matter – a thing of unspeakable decadence, a luxury on which the full 20pc rate of VAT is levied.

McVitie’s was determined to prove it should be free of the consumer tax. The key turning point was when its QC highlighted how cakes harden when they go stale, biscuits go soggy. A Jaffa goes hard. Case proved.

HMRC under fire for attitude to taxpayers

hmrc

MPs have lambasted HM Revenue & Customs over its customer service, raising fears that its “unacceptable” performance is having an adverse impact on the collection of tax revenues.

Meg Hillier, chair of the public accounts committee said: “It beggars belief that, having made disappointing progress on tax evasion and avoidance, the taxman also seems incapable of running a satisfactory service for people trying to pay their fair share.”

The allegation that HMRC is failing to collect taxes because of a failure to run a decent customer service is incendiary at a time when George Osborne is planning big spending cuts to plug the deficit.

Mr Osborne’s controversial plan to cut tax credits by more than £4bn – thwarted in the House of Lords last week – is even harder for the chancellor to explain if taxes that are due are not being collected.

The cross party committee said it was “unacceptable” that HMRC only answered 39 per cent of calls within five minutes in 2014-15, far short of its 80 per cent target. Continue reading “HMRC under fire for attitude to taxpayers”