Citizens Advice slams mobile phone firms’ extortionate exit fees
Mobile phone users are being hit with exit fees of up to £800 to escape contracts that are failing to deliver a decent handset or promised coverage. Customers are being let down because there is no clear information on who is responsible if they have a problem with their phone, according to Citizens Advice. It says that in some cases people are paying for contracts that promise high-speed 3G or 4G services, yet the networks do not have enough masts to ensure it is delivered. Those who then feel they have been misled are told they must pay an exit penalty fee.
Citizens Advice said the average length of a phone contract has increased to a typical period of 24 months, which means any fee for leaving has also risen. It also says mobile networks and the Government have failed to deliver on a promise to cap the charges faced by those left with a huge bill when their phone is stolen.
Complaints about mobile phone services are the fourth-biggest issue advice bureaux deal with, behind second-hand cars, building repairs and energy firms.
Fraudsters sell on pension pot details for five pence a time
An investigation has been launched into fears that pension pot details belonging to millions of people are being sold and are potentially ending up in the hands of criminals. According to the Daily Mail, pensioners’ salaries, the value of their investments and the size of their pensions are being sold for as little as five pence, without their consent. The financial details are allegedly being bought by fraudsters and cold-calling firms. The newspaper claims its reporters were sold pension pot details for 15,000 people without any checks on who they were and why they wanted the data.
The information commissioner has launched an investigation into the claims and said it would be speaking to the pensions regulator, the Financial Conduct Authority and police. Christopher Graham, the commissioner, said the companies or individuals involved will face serious consequences if they are found to have breached the Data Protection Act. “If it’s a breach of the Data Protection Act then the companies involved are facing serious civil penalties of up to £500,000,” he said.
Study reveals the huge scale of british firms’ tax avoidance
Almost a quarter of British firms are paying lower taxes than the rates demanded by the countries in which they operate, an international study has suggested. The analysis of more than 1,000 listed global companies found a tax gap of £56 billion from firms using tax havens and loopholes to reduce their liabilities. By comparing the overall tax payments of the companies against the corporation tax rates levied in the countries where they did business, the investment research group, MSCI, was able to determine how many were effectively avoiding tax. In the UK, 16 of the 71 businesses surveyed had a tax gap of more than 10%, it said.
MCSI has warned that companies face the prospect of falling profits if tax loopholes are closed, as well as risk to their reputation if they are exposed for minimising tax. In addition, global companies such as Google, Amazon and Starbucks are being investigated by EU authorities over tax arrangements with European governments.
Brokers’ salaries highlight problem of earnings inequality
The huge influence of financial services over the economy has been spelled out as City brokers took the top spot in the official list of highest earners. According to the 2014 ONS (Office of National Statistics) annual salaries survey, brokers pocketed around 40 times more than those at the bottom of the list – the people responsible for keeping children safe on the way to school. Lollipop crossing patrols earned around £3,400 a year, but at nearly £134,000, the average pay of Britain’s estimated 16,000 financial brokers eclipsed even their closest pay rivals.
The average pay of the pillars of British business, chief executives, only managed second place with an average £107,703 in 2014. Aircraft pilots, at number three, earned £90,146, which was about 10% more than sales and marketing directors in fourth place on £82,962. The overall average wage of the estimated 21 million people included in the survey was £27,271.
As to farmers, as might have been expected, they ranked well down the list at 213 with an annual salary in 2014 of £22,700 – down by 6% on the previous year.
HMRC gets tougher on incorrect tax returns
The Revenue is increasingly likely to conclude that where tax returns are incorrect, the taxpayer has acted deliberately rather than by mistake, according to the latest penalty figures. This means more and higher penalties for those whose returns are inaccurate. The suspicion among some accountants is that HMRC officials are pushing cases of genuinely innocent errors into the ‘deliberate’ category to draw in more fines.
In the tax year 2012-13 penalties were issued to over 5,000 taxpayers on grounds of deliberate actions, such as understating income. In the 2013-14 tax year this rose to almost 15,000. More significantly, the proportion of total penalties issued for ‘deliberate behaviour’ has risen from 9% to 16%, suggesting a trend to define more errors as calculated actions on the part of taxpayers.
Penalties are applied on a scale. At one end are inaccuracies from innocent errors or failure to take reasonable care. The most severe penalties apply where the taxpayer has deliberately provided wrong information, ‘with concealment’. Penalties are a percentage of what HMRC claims is its potentially lost revenue (PLR). Errors from carelessness, where the taxpayer admits them unprompted, might attract no penalty, but HMRC can impose fines of up to 30% of the PLR.
Global debt is back in the spotlight as IMF sounds the alarm
The International Monetary Fund (IMF) has sounded the alarm on the exorbitant levels of debt across the world, this time literally. The theme trailer to its fiscal forum on the “political economy of high debt” plays on our fears with the haunting tension of a Hitchcock thriller. A quote from Thomas Jefferson flashes across the screen in blood-red colours, reading, “We must not let our rulers load us with perpetual debt.”
Public debt in the world’s rich economies fell from 124% of GDP at the end of the Second World War to 29% in 1973, a dream era now long gone. The debt burden has since climbed into an upward spiral to 105% of GDP. The IMF says this is the same as if a war had been fought again on the 1939-45 scale. A baby boom and surging workforce allowed the world to grow out of debt in the 1950s and 1960s without noticing it. No such outcome looks plausible today, concludes the IMF.
Price wars take their toll on suppliers
More than 1,400 suppliers to Britain’s supermarkets face collapse as the brutal price war takes its toll on the industry. New research shows that the number of food and beverage makers in significant financial distress has increased by over 90% in the past year. The findings from Begbies Traynor, insolvency practitioner, highlight the pressure on the food industry. It says this will increase the pressure on the Groceries Code Adjudicator to take action to protect suppliers and prevent larger companies from delaying payments or changing terms.
The research is based on an analysis of legal and financial data. Businesses that are classed as being in ‘significant’ distress are those facing legal claims for unpaid bills or that have suffered a marked deterioration in their credit score. The biggest increase in problem companies was in smaller companies.
UK tax burden nearly a fifth above average
The UK’s tax burden as a share of the economy is almost a fifth higher than the global average, which could stifle entrepreneurship and impede growth, a report claims. Tax revenue adds up to 33% of GDP (gross domestic product), compared with the worldwide average of 28%, according to the accountancy firm UHY Hacker Young.
The UK’s tax level is several percentage points above those of Japan, Israel and Australia, and more than a quarter higher than the United States. Ireland, which has the lowest tax burden in western Europe at 28% of GDP, saw its economy grow by 4.8% last year, compared with 2.6% growth in the UK.
Several major US companies headquarter their international operations in Ireland, which is the top destination for US foreign direct investment, based mainly on Ireland’s favourable corporation tax regime.
Queen drops out of top 300 on rich list
Warner Music owner, Len Blavatnik, is Britain’s richest man with a £13.2bn fortune, according to the Sunday Times Rich List. He’s taken the top spot from brothers Sri and Gopi Hinduja, now worth £13bn.
The total wealth of the richest 1,000 individuals and families in Britain has more than doubled in the past 10 years to £547bn. The Queen, who topped the first list in 1989, has dropped out of the top 300 for the first time. There are now 117 billionaires on the list, up from 104 in 2014, with 80 of them living in London. The highest risers are the retail family headed by Galen and George Weston, who run Selfridges and Primark in the UK. Their fortune grew more than 50% in a year to £11bn.
A personal fortune of £100 million is now required to become one of the thousand richest people in the country, up £15m compared with last year’s entry point of £85m. In 1997, when the list was first published, it took a fortune of ‘just’ £15m to join Britain’s richest 1,000 people.