Accountants devise ways to open up FTSE 350 audit market
The Competition and Markets Authority has asked the accounting profession to come up with solutions to improve competition in the auditing market after Big Four firms said plans to split off their audit practices were “unworkable”. Executives from the Big Four, BDO, Grant Thornton and the ICAEW reportedly met up to discuss possible solutions last month and will make suggestions to the regulator on how to get more work to smaller audit firms. David Sproul, chief executive of Deloitte, said: “Measures to effectively limit the audit market share of any one firm need to be carefully considered.” Bill Michael, chairman of KPMG, commented: “You can’t split out audit right now. It would be like trying to create Frankenstein’s monster. You can’t create a reputable audit practice from lots of different body parts, you’ll kill it.” Meanwhile, a spokesman for the CMA said: “We are working closely with the Financial Reporting Council to see what more needs to be done to drive up standards.”
The Times, Page: 39
EY report finds London still the top for financial services
The UK remains the top destination in Europe for financial services investment, today’s UK Attractiveness Report from EY shows, despite Brexit uncertainty bringing down the number of new projects. Omar Ali, EY's UK financial services leader, said: "It would be easy to use 2017 FS investment numbers to predict the end of the UK's global dominance in financial services, but the figures don't show that. Despite all the challenges, the UK is still the most attractive market for FDI in Europe. This is due to several factors, many of which are difficult for any other centre in Europe to replicate - our talent, quality of life, time zone, tech infrastructure and robust regulatory and legal systems. But we can't ignore the drop in investment and forward-looking sentiment - investors are sending a clear message that answers are needed on future trading arrangements, access to skills and the UK's future approach to the economy."
City AM, Page: 8
Could litigation over a flawed audit collapse a Big Four firm?
The Times’ Patrick Hosking suggests that the Big Four are not as well-built as they might be, with relatively small equity capital cushions to protect them against disaster. Tim Bush, head of governance at Pirc, said: “These firms operate on relatively thin levels of capital. If they were hit with a major claim, who would foot the bill?” The comments follow a slew of fines and litigation from burnt investors. Hosking points out that the Financial Reporting Council currently only regulates audits, not audit firms. “However, in April it said that it would adopt a non-statutory Audit Firm Monitoring Approach. This will involve assessing the financial soundness and risk management of firms, including the level of insurance cover.”
The Times, Page: 39
Appoint a ‘bloodhound’ auditor before investing
Anil Bhardwaj suggests in a letter to the FT that large stakeholders should have the right to employ a “bloodhound” auditor to check a company’s books before they invest.
Financial Times, Page: 10
Pensioners pay £24bn a year in tax
Analysis by Royal London has found that pensioners paid out £24bn a year in tax in the year 2015 to 2016, with pensioners living in England paying £21bn of this. Sir Steve Webb, director of policy at Royal London, commented: "Many people might assume that once you retire you cease to be of interest to the taxman. But these figures show that this is very far from being the truth. The number of taxpaying pensioners has nearly doubled in the last two decades. When planning for retirement it is vital to remember that the tax office will still want a slice of your income, which reinforces the need to put aside enough to secure a decent standard of living." He also said pensioners should brace themselves to pay even more tax if they have to start paying NI.
City AM, Page: 7 Daily Express, Page: 8 Daily Mirror, Page: 14 Yorkshire Post, Page: 4
Raids reduced as robots make probes more efficient
The increased use of artificial intelligence and the expansion of HMRC’s “Connect” computer program has led to a 30% fall in the number of property raids carried out by the taxman, figures suggest. "An increasing number of investigations have started as a consequence of Connect and AI," said Steven Porter, a partner at Pinsent Masons. "It's much more efficient for an officer to sit at a terminal and pull out information than it is to send around the heavies." HMRC officers raided 471 properties in the 12 months to April, compared with 669 a year earlier.
The Sunday Times, Business, Page: 3
New tax making the UK a harder place to do business
City AM looks at how much more complicated the UK tax system has become since the financial crisis. New research from UHY Hacker Young shows that since 2008/9 a total of eight new major new taxes have been levied, including the sugar tax, the diverted profits tax, the bank surcharge and the apprenticeship levy. It’s not just the costs of the taxes but the complexity of the system that should cause concern, the paper says. Darren Grimes of UHY Hacker Young explains: "Every new tax [following] the credit crunch sounds superficially attractive with admirable ends, but every new tax makes the UK a harder place to do business and helps put off inward investment."
City AM, Page: 2
HMRC doubles fines for money-laundering
HMRC almost doubled the fines it handed down for violations of money-laundering rules in the latest financial year, to £2.3m, but campaigners said more needed to be done to deter facilitators.
Financial Times, Page: 2
Cutting business rates is not the solution to high street woes
Paul Johnson, the director of the Institute for Fiscal Studies, says in the Times that abolishing business rates is not the answer to the problems facing high street stores. He suggests that a cut in rates will just lead to an increase in rent, benefitting the biggest landlords in the country. Revaluations need to be more frequent, he continues, and agricultural business should not be exempted from business rates. Taxing the owners of properties rather than the tenants would be a good idea too, he asserts.
The Times, Page: 43
Rates system criminalising firms struggling to cope
Figures from real estate adviser Altus Group show that nearly 200,000 businesses were hauled before magistrates because they were unable to keep up with their business rates payments in 2017-18.
Daily Express, Page: 52
Moneybox breaking the wealth management mould
UK micro-investing app, Moneybox, has secured £14m in funding as it aims to develop new products and help the next generation become better investors. The fintech start-up, which allows people to set up a stocks and shares Isa on their phone in minutes, providing they have online banking, a NI number and £1 to get started, has raised a total of £21.3m to date.
The Daily Telegraph, Business, Page: 5
Barclays lifts unsecured lending limits
Barclays has announced that it is to double its cap on unsecured lending to small businesses from £50,000 to £100,000. The bank is also raising the cap on unsecured overdrafts for firms to £50,000, from £25,000.
City AM, Page: 3
Falling business confidence keeps growth sluggish
The British Chambers of Commerce’s second-quarter survey indicates only a modest pick-up in activity, with confidence falling along with investment intentions. The poll showed that the balance of firms enjoying increased sales picked up slightly in the second quarter, with a balance of 23% of services firms selling more, but forward-looking indicators were weaker, the BCC said. Director-general Adam Marshall commented: "Amid growing international uncertainty, from escalating trade disputes to oil price rises, the UK economy continues to grow at a sluggish rate. Brexit is a key factor, but longstanding structural issues are also holding companies' growth back."
The Times, Page: 41 City AM, Page: 2
Beware the Yes Men
The Independent’s Chris Blackhurst considers what led to the downfall of Sir Philip Green and concludes that he probably surrounded himself with too many “yes men” - advisers who aimed to please rather than help. Blackhurst says PR advisers, accountants and lawyers have failed to adapt to modern truths about reputation and its fragility: “Instant communication means we can form a view that no amount of expert, often expensive, advice can dislodge.”
The Independent, Page: 47