Ronald Gould, European Chairman of Compliance Science
The UK Government had faced a growing internal conflict between pro and anti EU factions for some time. As part of their election manifesto, they proposed a referendum to undercut the anti-EU people thinking the outcome was easy. This was only done to deal with some internal party politics – the final impact far transcends party politics and represents the classic “unintended consequence”. The proposal put to voters was simple, “do you wish to remain or leave the EU?”. One box on the ballot paper to tick, nothing more. The debate leading up to the referendum was raucous, spirited, passionate and in the end, shocking. It exposed massive discontent with the EU and politics as usual, especially regarding unrestrained EU immigration. We now understand that these feelings are evident across the EU as well but more on that later.
As a result of the voting results, the current UK Prime Minister, David Cameron, has announced his intention to resign. The Conservative Party will elect a new leader. As the governing party, the new leader will automatically become the new Prime Minister and that is likely to happen before October, possibly earlier. Nothing much will happen before then although there will be lots of discussions behind the scenes and much jockeying for leadership positions. Cameron had an uncomfortable meeting with EU heads of Government and no doubt tried to use this as a chance to start some informal negotiations, to what effect is anyone’s guess. The level of sorrow and anger toward the UK among this group is strong and does not bode well for our exit negotiations. Pro-Brexit people dismiss this is short term posturing, claiming that we are too important a market for the rest of Europe to ignore. This is simply naïve, as will become increasingly clear.
Exit negotiations are impossible to predict. Some believe that the EU will be very tough on the UK, trying to extract its “pound of flesh” as revenge for leaving. Those who believe this expect the UK to have very difficult terms imposed in exchange for future market access, etc. Others believe that EU leaders now recognise the same issues prevail across the EU and that this may be an opportunity revise the entire EU format. Clearly, the stresses and strains on the EU are massive right now. Populist movements in France, Holland, Sweden, Denmark and Poland (among others) are all pushing for a similar referendum process in their own countries. So EU stability is not a foregone conclusion and the outcomes are hard to predict.
For the financial sector, there are some things we can say with certainty. First, ALL current EU law will continue to apply for the foreseeable future. All laws that have come into force as a result of EU Directives have been transposed into UK law so they will remain unless removed by an act of Parliament. The Treaty of Lisbon is the most recent EU treaty governing membership matters. Under Article 50 of that Treaty, the UK Government must formally notify the EU Council of Ministers of its intention to withdraw from membership. That starts a two year clock during which negotiations on withdrawal occur. That may not be long enough but no one really knows. It now clear that the formal notification will occur until after a new Government is in place in the UK, likely in October. The UK will continue to be a member until completion of the process. It will thus continue to be bound by all existing EU laws and regulations during the transition period. That includes financial regulations. Thus, the new Market Abuse Regulation WILL come into force on 3 July and the FCA will be enforcing those new provisions. The MiFID II provisions (as well as MiFIR) will also come into force in Jan 2018 unless exit negotiations go very quickly. All pre-existing regulation, either in the form of Directives or Regulations, will continue in force as. EU Directives have been transposed into UK law by Parliament so all of those will continue in force until/unless Parliament rescinds them. Financial sector rules based on EU Regulations are in a more ambiguous position as they were not directly transposed into UK laws. Parliament may choose to pass implementing legislation for these and if not, it will need to fill the gaps created by their removal. Given the scope, complexity and importance of these rules/laws/regulations, the process will be massive and by no means quick. Indeed, the fastest way to deal with the challenge may be to pass Brexit transitional legislation that re-confirms all existing laws/rules/regulations from the EU remain in place until later alteration or amendment. Most EU laws relating to financial services have come into force under Directives that have been transposed into UK law. But the overall task is massive – tens of thousands of pages of complex laws to be reviewed before they are either ejected or re-affirmed. It has never been done before but it will not be quick.
UK financial sector firms will loose passporting rights to EU markets unless successful negotiations leave them in. This would have a cost impact on firms, requiring new subsidiaries within the EU from which to market. Banks may well loose their ability to clear the Euro in London, something that would impact jobs as well as local revenues. If the UK is to have any chance of retaining most of its current financial sector clout, future arrangements will need to insure “equivalency” vis a vis the EU. To achieve that position, the UK is likely to retain most, if not all, EU regulations on its own statute books.
The new UK Government will want to establish as much calm as possible and as quickly as possible but I expect much market volatility in light of new developments over the next several months. This will be a period in which firms will need to look not at the next two years but well beyond, in order to determine the kind of business model that will work most effectively in the new non-EU world.
Five features that decrease the value of your home
When you’re preparing to sell your house or flat you might think of various steps you could take that might increase its value, such as converting unused space to a new room. But another important factor you need to consider is how certain existing features might actually decrease the value of your home, making it harder to find a buyer at the price you’re seeking.
Several features large and small can have a negative impact on your home’s value
Homeowners looking to sell their properties need to make sure that their house or flat looks as best as it can before potential buyers come to visit on viewings. A tidy and well-maintained house will help increase the overall perceived value of the property.
But there are sometimes issues with homes that can decrease the total value of your home, at least as far as prospective buyers are concerned. And as the home buying experts at LDN Properties know, some of these features might not be immediately obvious as the reason why you’re not able to find a buyer at your current asking price.
When you’re ready to sell your house or flat, check the list below to see whether the property has any of the features that might be lowering its value below what you’d like to get in a sale.
Five features that can decrease the perceived value of your property
Some features at a home will be incredibly unique, such as the recent story about a house that’s struggling to sell because it’s located next to a graveyard – and the plan for trying to finally secure a buyer is to give the buyer a free burial plot. There’s not much that particular homeowner can do to solve their issue, but it’s also a problem very specific to their home.
In contrast, there are a number of common features at houses and flats that can reduce their vale. The following list includes five property features that can decrease the total value of your home, making it harder for you to sell at the price that you might want or need:
Outbuildings in poor condition
Although a well-kept greenhouse, garage or shed can be attractive to buyers, they can also be major turnoffs if they are in poor condition. If you have an outbuilding on your land that is in such a bad state that demolition is the only solution, this will detract from your home’s value.
Cluttered and dirty rooms
If the rooms in your house are cluttered with furniture and other items, or they are dirty, or both, this will be a turnoff to many buyers who come to see the house on viewings. If your house is full of clutter it will make the rooms look smaller than they actually are, which will make visitors think the space is worth less than what you are asking.
Having a swimming pool is not a common feature at many homes, but it is one that can be a significant negative attribute despite some people seeing it is a luxury perk. That’s because the cost of maintaining a swimming pool is very high, and it’s something many people don’t want to take on when they’re looking at buying a property.
First impressions always matter, and that’s the case when selling your home. If you have a garden and it is overgrown with weeds and other mess, it will not be appealing to buyers who come to visit on viewings. Having an untidy garden can make people think that your home is worth less than it actually is, making it harder for you to secure a sale.
If your home has a structural problem it can devalue your house, possibly by thousands of pounds depending on the scope of the problem. Among the various features that would be considered structural problems are leaks, subsidence, the presence of the invasive species Japanese knotweed, and other issues that will lower your property’s overall value.
Make changes to your property if you have any of the listed negative features
If your house or flat has any of the above features, you should consider ways that you could address them in order to prevent the value of your property being impacted.
For some projects that might be relatively easy, for example by tidying up the garden or by removing clutter from rooms around the house. Other larger-scale fixes will cost you significant time and money, such as removing a swimming pool if there’s one at your home.
Only do the corrective work for which you have the time and money, and don’t overextend yourself. But do make changes to your home if you have any or all of the listed features, because your priority should be getting as much money for selling your home as possible.
This is a Sponsored Feature.
Do you know where the tax risks are in your business?
By Simon Crookston, Corporate Tax Partner at Crowe UK
Many tax and finance professionals will have noted a trend in recent years, whereby there is greater emphasis on the processes and controls in place to ensure good tax governance.
As a consequence, many large and owner managed businesses are increasing their focus on tax governance, ensuring robust processes and controls are in place; the emphasis is now on ‘how’ tax compliance is dealt with and making sure the right amount of tax is paid at the right time.
The on-going COVID-19 pandemic has accelerated this process, as finance teams have been forced to proactively manage their cash flows, while also reassessing the robustness of their working practices, systems and controls. In some instances, processes and controls based around physical proximity of staff have been shown to be out of date and in need of re-designing.
Ensuring that there is tax integrity within your business is now critical and reflects the wider changing climate in which businesses and tax advisors now operate. Factors influencing this trend include:
- significant amounts of change in the tax regime, both domestically and internationally
- digitisation and new technologies leading to new business models and ways of selling goods and services to customers
- tax authorities focussing on the use of technology to provide real time reporting, for example Making Tax Digital for VAT and Coronavirus Job Retention Scheme claims to HMRC
- finance departments being tasked with providing certainty over the integrity of all taxes
- the implementation of the corporate criminal offence regime, which potentially carries an unlimited fine for all businesses that fail to implement reasonable procedures to prevent the facilitation of tax evasion
- the recent DAC 6 EU regulations requiring the reporting of tax schemes
Tax has also become a reputational risk to businesses. Organisations now operate in a world where tax is considered a moral issue and is front page news. Consequently, many boardrooms and owner managers are focused on ensuring that they do not face negative publicity from their tax affairs.
This trend is expected to continue with increased scrutiny by the media of the taxes paid and claims made by companies in the wake of the COVID-19 pandemic and the punitive measures being taken by HMRC to challenge tax evasion and difficult economic times.
Robust processes and controls can also make it easier for your business to adapt to change. This could be change within the business such as new supply chains or entering new markets, or it could be change driven by external factors, such as changes in tax legislation or events such as Brexit.
The impact of poor governance
Over the last few years HMRC’s powers have increased with the introduction of new information and data gathering powers and with the greater use of technology to identify those people and organisations who are understating and underpaying their tax liability.
As well as receiving information from overseas tax authorities, HMRC’s Connect Computer System, which is essentially a supercomputer, draws huge amounts of data and information from numerous sources including tax records, online platforms, social media information, government departments and websites, bank data and web browsing information to build up a complex ‘tax picture’ on organisations and individuals.
With such a rich source of data HMRC have the ability to evaluate and determine if there are inconsistencies in the tax information which is declared as part of return filings.
As a consequence, those businesses that have received HMRC enquiries over the last couple of years which lead to adjustments, enter into tax planning schemes or take a more aggressive approach to minimising their tax are generally considered to be of higher risk from a tax authority perspective.
Where an enquiry is opened this will typically lead to additional management time being required to justify to HMRC the tax positions taken. If HMRC are successful at arguing that tax adjustments are required then this could lead to the organisation suffering penalties and late payment interest.
We are consequently seeing an increasing number of businesses recognising the merits of keeping a “risk register” of known tax risks that the business is managing. This can help to mitigate or negate the risk of unexpected tax costs, as well as demonstrate to HMRC that the business is proactively assessing and complying with its tax obligations.
As HMRC’s internal machinery and enquiries in relation to corporate criminal offence start to further bite, this will become of increasing importance. Areas of particular focus may include those organisations which have overseas employees, operate in different countries, operate in high risk sectors, have sales teams with lots of discretion or have sales based reward structures.
Some recent examples
A starting point to undertaking a tax governance risk assessment is typically to assess the business’s overall tax risk covering a number of areas. These will typically consist of looking at the business’s: inherent, corporate, vat, employee and international tax risk, to build up an overview profile of the business’s main areas requiring further attention and consideration.
Over the last couple of years we have assisted a number of clients across various sectors with their governance, systems and processes reviews. Some examples of recent reviews include:
|Business overview||Steps and benefits|
|Vehicle equipment manufacturer
· Expanding rapidly in Europe and globally with 70% of the businesses sales from overseas.
· The rapid expansion led to some tax integrity concerns around the business’s VAT, corporate tax and employment tax obligations being able to keep pace with commercial expansion of the business.
|· A supply chain review was undertaken to identify and document where potential VAT supply chain problems existed so action could be taken.
· Identification and rectification of permanent establishment issues that had potentially been created.
· Business education programme on how to proactively identify and manage tax integrity matters for future expansion opportunities.
|Independent boarding and day school
· The school required an employer compliance review to get comfort that the organisation had appropriate processes and controls in place to correctly account for all employment taxes due.
|· Identification of risk areas and establishment of a remediation plan as to how the organisations processes and controls could be improved.|
· Had concerns over its UK VAT and employment taxes position.
· Required an independent review of their processes and controls to ensure the group was correctly accounting for the taxes due.
|· Identification of potential risk areas.
· Formulation of an implementation plan.
· Implementation of changes and submission of appropriate disclosures to HMRC.
What should I do now?
As all businesses are different and dynamic unfortunately there is not a ‘one size fits all’ approach to managing tax risk and the development of robust processes and controls. However, from our experience, here are few example areas for consideration to ensure your processes and controls are robust:
- Do you have a process in place to identify changes in the tax regime that are relevant to your business? Similarly, what is the process whereby the finance/ tax team find out about new developments within the business?
- What systems are used in your tax compliance and is the output provided ‘fit for purpose’ or does it require significant manual manipulation?
- How robust are your accounting and tax processes and procedures and where are the risk areas if the finance team is operating from home or remotely?
- Is remote working increasing your organisation’s vulnerability to cyber-crime?
- What training are the staff involved with taxes given? How often is their knowledge refreshed / kept up to date?
- Who has review and sign-off responsibilities for tax returns to ensure that the numbers to be submitted are accurate and that any payment due is made on time?
- What links are in place with the commercial teams that develop new products or win new business to ensure that new sources of revenue are treated correctly for tax purposes?
- New overseas activities can commonly lead to unexpected tax consequences. What processes are in place to consider the corporate tax, VAT and employment tax implications of undertaking activities abroad? This review should ideally be undertaken before the activities commence.
Clearly, these are just examples and in order to get a good overview of the tax risk areas across your business – a more thorough and detailed review is required.
A starting point is to consider the main tax areas of your business (these are typically corporate tax, VAT, employment tax and international matters) and to undertake a high level risk review of these areas. This can be done by way of a manual review or by the use of a technology tool, such as a Tax Integrity Scorecard, to provide an assessment of the level of tax risk from low – high in each tax area.
A Tax Integrity Scorecard can help businesses understand their UK tax risks and assist them in prioritising where to focus their resources to guard against unexpected tax costs, adverse publicity and to improve tax process efficiencies.
PayPal launches ‘Pay in 3’ buy now, pay later loans to UK in time for Black Friday and Christmas
- PayPal expands its consumer credit solutions through the introduction of PayPal Pay in 3 to UK market
- In the lead up to the busiest shopping season of the year, PayPal supports businesses of all sizes to drive sales, loyalty and increase payment choice for their customers
– all while getting paid upfront
- The latest in a series of steps taken by PayPal to enable UK businesses to adapt to changing consumer demands
PayPal today announced the launch of PayPal Pay in 3, enabling UK businesses of all sizes to offer buy now, pay later payments without taking on additional risk or paying additional fees.
Through PayPal Pay in 3, businesses can offer their customers the option of making purchases between £45 and £2,000 by paying over three, interest-free payments, with seamless automatic re-payments each month. PayPal Pay in 3 will also appear in the customer’s PayPal wallet, so they can manage their payments online or via the PayPal app.
PayPal Pay in 3 will help businesses drive checkout conversion, revenue and customer loyalty, with the option included in the business’s existing PayPal pricing, paying no additional fees to enable it for their customers. PayPal will pay the business or retailer upfront for the full cost of the purchase.
In 2019, there was a 39% year-on-year increase in the proportion of buy now, pay later payments in the UK. This trend is expected to double by 2023.
PayPal Pay in 3 allows companies from start-ups to globally recognised retailers to adapt to this changing consumer behaviour and offer a greater range of payment options. Retailers including Crew Clothing, French Connection, Robert Dyas and Ryman are integrating PayPal Pay in 3, which is available in the UK from late October 2020.
Rob Harper, UK Director of Enterprise Accounts at PayPal, said: “During the coronavirus pandemic, we have seen the number of people in the UK shopping online increase dramatically. At the same time, many more consumers are looking to spread the cost of those purchases. We have developed PayPal Pay in 3 to meet that need, building on our heritage as a responsible lender through PayPal Credit, which we launched in the UK in 2014, and has served more than two million customers to date.
“We will continue to support for UK retailers and businesses through these challenging times by helping them adapt to changing consumer behaviours around how they shop and pay – especially in the lead up to Black Friday and Christmas. PayPal Pay in 3 offers a flexible way for over 24 million PayPal users to shop while providing companies with a tool that helps drive sales, loyalty and customer choice.”
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