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UK TAX
Weekly News 19th Aug
PwC fined £15m for failure to report suspected fraud
PwC one of the ‘Big Four’ accounting firms, has been fined £15 million by the Financial Conduct Authority (FCA) for failing to report that London Capital & Finance (LCF) might have been involved in fraudulent activities. This is the first time the FCA has imposed a financial penalty on an auditing firm.
LCF, a small bond company, was audited by PwC, which was responsible for verifying the company’s accounts. The FCA stated that during the audit, an LCF executive took an ‘aggressive attitude’ towards the auditors, and the company provided inaccurate and misleading information to PwC.
PwC suspected that LCF might be involved in fraudulent activities but failed to report this to the authorities, and still proceeded to sign off the accounts. The FCA noted that while it does not consider PwC directly responsible for the losses caused by LCF’s collapse, PwC should have acted immediately, which could have provided crucial information to the FCA in a timely manner.
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400,000 could be hit with ‘retirement tax’
Many industry experts have warned that unless changes are made to the triple lock system, over 400,000 elderly people will be required to pay a ‘retirement tax’.
Under the ‘triple lock’ system, state pensions increase annually by the highest of the following three figures: average earnings growth, inflation, or 2.5%. Data from the Office for National Statistics (ONS) shows that from April to June this year, average earnings grew by 4.5%, while inflation hovered around 2.2%.
If a 4.5% increase is implemented, the new full state pension will rise from £221.20 to £231.15 per week, bringing the annual pension to £12,061, which is close to the personal savings allowance.
With a 4.5% increase in the state pension, not only will over 400,000 pensioners be paying income tax for the first time, but more people may also have to deal with HMRC or face end-of-year tax requirements on relatively small amounts.
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UK business confidence at 8-year high
HMRC has issued an urgent scam alert in relation to an increasing number of fake notices targeting small businesses.
A statement issued by HMRC states ‘tax scams come in many forms. Some offer a rebate, others tell you that your tax details are out of date, or threaten immediate arrest for tax evasion. Never let yourself be rushed. If someone contacts you saying they’re HMRC, wanting you to urgently transfer money or give personal information, be on your guard. We will also never ring up threatening arrest. Only criminals do that’.
The UK’s national fraud reporting centre, Action Fraud, also emphasised that these scams are not limited to letters, saying ‘Watch out for these fake HMRC emails, they’ve been reported to us over 700 times this month!’
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UK records growth of 0.6%
Official data from the UK’s Office for National Statistics (ONS) shows that although there was no economic growth in June, the UK economy grew by 0.6% over the past three months.
Analysts suggest that the delay in orders across various sectors of the economy, as businesses waited for the outcome of the UK general election, contributed to this. Additionally, ongoing strikes by NHS junior doctors and long-term international labour disputes (including last year’s strike by the US actors’ union) were also considered factors that led to economic stagnation or slow growth.
Overall, the UK’s GDP grew by 0.6% in the second quarter of this year (April to June). This growth rate ranks second among G7 countries, behind only the United States (0.7%). Japan and Germany have not yet released their GDP data for this period.
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UK retail sales uptick in July, reversing previous trend
According to data from the Office for National Statistics (ONS), UK retail sales saw a slight increase of 0.5% in July. Although this is slightly below economists’ expectations of a 0.6% rise, it still reverses the sharp decline from the previous month.
The growth in July was mainly driven by summer discounts and major sporting events like the Euros, which boosted sales at department stores and sportswear shops. Non-food store sales, which had plunged by 1.9% in June, grew by 1.4% in July, with department store sales increasing significantly by 4%.
Kien Tan, a senior retail advisor at PwC UK, added, ‘Despite perhaps a disappointing performance for parts of the retail sector in July, we do expect further recovery in the short-to-medium term’.
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