FRC publishes new Corporate Governance Code

FRC publishes new Corporate Governance Code

The Financial Reporting Council (FRC) has published a revised Corporate Governance Code, which ‘emphasises the importance of positive relationships between companies, shareholders and stakeholders’.

The new Code states that relationships between companies, shareholders and stakeholders are ‘at the heart’ of long-term growth in the UK economy, and beseeches businesses to ‘create a culture which aligns company values with strategy’.

A number of changes have been made to the Code, including a new provision to promote board engagement with the workforce in order to understand employees’ views, and an emphasis on the need to refresh boards and carry out succession planning.

‘To make sure the UK moves with the times, the new Code considers economic and social issues, and will help to guide the long-term success of UK businesses,’ said Sir Win Bischoff, Chairman of the FRC.

‘This new Code, in its new shorter and sharper form, and with its overarching theme of trust, is paramount in promoting transparency and integrity in business for society as a whole.’

The Institute of Directors (IoD) praised the new Code. Dr Roger Barker, Head of Corporate Governance at the Institute, stated: ‘The IoD welcomes the publication of the revised UK Corporate Governance Code, particularly its engagement with a wider range of stakeholders, including the workforce, as well as encouragement of more long-term oriented business behaviour and recognition of the board’s role in overseeing a company’s purpose and culture.’

The new Corporate Governance Code can be read in full here.

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Government urged to ‘pick up the pace’ in regard to Apprenticeship Levy reform

Government urged to ‘pick up the pace’ in regard to Apprenticeship Levy reform

The Confederation of British Industry (CBI) has urged the government to ‘pick up the pace’ in regard to its reform of the Apprenticeship Levy initiative.

Introduced in April 2017, the Apprenticeship Levy has changed the way in which apprenticeships are funded: larger employers are required to invest a percentage of their annual pay bill in apprenticeships. The Levy is 0.5% of the pay bill, but there is an annual allowance of £15,000. It is reported and paid using the Pay as You Earn (PAYE) process.

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The CBI’s statement comes following the recent publication of the latest Apprenticeship Levy statistics, which have revealed that, between August 2017 and April 2018, there were 290,500 apprenticeship starts – a fall of 34% when compared to 2016/17’s figure of 440,300.

The government is committed to achieving its target of creating three million apprenticeships in England by 2020.

Commenting on the statistics, John Cope, Head of Education and Skills at the CBI, said: ‘This stark drop in apprenticeship starts serves as a reminder that the Apprenticeship Levy is not working as intended. If we don’t significantly reform the Levy quickly, companies will find it harder to invest in the quality apprenticeships and skills training they value so highly.’

Meanwhile, the Institute of Directors (IoD) also warned that, if take-up of the Levy continues to be low, it ‘does not look possible for the government to meet its target’. The IoD added that ‘it’s now time for the government to rethink its approach and work with businesses’ in order to successfully reform the Levy.

Business groups respond to publication of Brexit White Paper

Business groups respond to publication of Brexit White Paper

Business groups, including the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Institute of Directors (IoD) have responded to the government’s recent publication of its Brexit White Paper.

The 104-page document is divided into four chapters, which focus on security, economic partnership, co-operation and institutional arrangements.

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A commitment to build a ‘new relationship that works for both the UK and the EU’ has been outlined by the government within the White Paper, alongside proposals for future trade arrangements.

Responding to the publication of the Paper, the CBI stated that many of the government’s intentions in regard to Brexit are ‘reassuring’. Carolyn Fairbairn, Director General of the CBI, said: ‘The Brexit White Paper reflects much of the evidence that business has been highlighting since the Referendum.

‘Businesses on both sides have been asking for frictionless trade between the UK and the EU, and shared rules could go a long way towards delivering that. It is now the EU’s turn to put economics before ideology on these proposals.’

Meanwhile, Stephen Martin, Director General of the IoD, said that EU negotiators ‘now have specific details to build upon’, and urged them to ‘respond constructively’.

The BCC, however, gave a decidedly lukewarm response. Dr Adam Marshall, its Director General, commented: ‘Businesses still need clear and detailed answers on many of the practical, real-world questions they face. Many of these answers can only emerge through negotiations – so it’s time for the two sides to crack on and get to a deal.’

UK pensioners ‘pay an average annual tax bill of £3,500’, research reveals

UK pensioners ‘pay an average annual tax bill of £3,500’, research reveals

An analysis carried out by insurer Royal London has revealed that the average annual tax bill for taxpayers over the state pension age totals £3,522.

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Royal London used the Freedom of Information Act to collect data on taxpayers over the state pension age from local authorities in the UK. The last year for which detailed figures were available was for the tax year 2015/16, and the analysis revealed that:

  • 3.87 million men pay an average annual bill of £4,341, while three million women pay an average bill of £2,467
  • more than a quarter of tax-paying pensioners are still in paid work: 1.5 million individuals have employment income, whilst 0.5 million have income from self-employment
  • UK pensioners paid a total of £24 billion in income tax in 2015/16, of which £21 billion came from England, £1.7 billion came from Scotland, £0.8 billion from Wales and £0.4 billion from Northern Ireland.

Commenting on the analysis, Steve Webb, Director of Policy at Royal London, said: ‘Many people might assume that, once you retire, you cease to be of interest to the taxman, but these figures show this is very far from being the truth. The number of tax-paying 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, even after the taxman has had his slice.’

Committee raises concerns over impact of business rates on UK firms

Committee raises concerns over impact of business rates on UK firms

The Treasury Committee has expressed concerns in regard to the impact of the UK’s current business rates system on firms.

In a letter to Chancellor Philip Hammond, Nicky Morgan, the Chair of the Committee, stated that business rates place a ‘financial burden’ on UK businesses, and questioned whether the system is ‘fit for purpose’.

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‘It’s clear that many bricks and mortar stores are struggling to remain competitive against online retailers, with the Chancellor admitting that business rates can represent a high fixed cost for some businesses,’ said Mrs Morgan.

‘We are likely to scrutinise business rates further as part of our Autumn Budget inquiry later this year.’

In response to the Treasury Committee’s letter, the Chancellor ruled out reforming the business rates system, but did admit that the tax has ‘hit the high street too hard’.

Mr Hammond also stated that the government ‘needs to find a better way of taxing the digital economy’, and that it has been ‘making progress’ in regard to this.

HMRC tax investigations into SMEs are ‘too intensive’

HMRC tax investigations into SMEs are ‘too intensive’

New research commissioned by HMRC has revealed that more than half of small and medium-sized enterprises (SMEs) believe that HMRC’s tax investigations are ‘too intensive’.

Insurer Professional Fee Protection (PfP), who undertook the research, found that 52% of SMEs believe that tax probes are ‘too rigorous’, while an additional 56% think HMRC investigations are ‘too costly and time consuming’.

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PfP warned that tax investigations often prove to be disruptive for SMEs, with many resulting in significant professional fees.

Commenting on the issue, Kevin Igoe, Managing Director of PfP, said: ‘Small businesses think they are getting rough treatment from HMRC and are making this clear. [They] are often at the receiving end of lengthy tax investigations, which can be very disruptive. Many of these businesses also do not have the resources at their disposal to manage an inquiry or negotiate with inspectors.’

According to the research, 48% of SMEs ‘do not believe that HMRC’s penalties are fairly distributed’, and many think that small firms are ‘unfairly targeted’.

PfP also revealed that, in 2016/17, HMRC’s investigation teams collected an additional £16 in taxes for every £1 spent on investigatory staff.

Government publishes Finance Bill 2018-19 draft legislation

The government has published draft legislation for Finance Bill 2018-19.

The draft legislation is open for consultation, and ‘continues the government’s commitment to a competitive and fair tax system’.

It includes plans that could potentially affect a range of taxes, from Stamp Duty Land Tax (SDLT) to income tax.

The draft legislation also outlines the government’s approach to the Making Tax Digital (MTD) penalty system, with HMRC outlining its intention to utilise a two-tier penalty model for businesses and individuals who fail to pay their tax on time.

The July publication of the Finance Bill 2018-19 draft legislation forms part of the government’s new fiscal timetable. It hopes that the earlier publication of the legislation will ‘allow more time for scrutiny of tax measures, giving greater certainty and stability to taxpayers’.

Commenting on the draft legislation, Mel Stride, Financial Secretary to the Treasury, said: ‘Britain is one of the best places in the world to do business, and we’re determined to see that continue.

‘This legislation illustrates our commitment to creating an environment in which innovation and enterprise can thrive, while ensuring that everyone plays by the same rules.’

The consultation on the draft legislation will run until 31 August 2018.