This weeks news includes; Football clubs raided in HMRC tax investigation, BT acquisition gets CMA approval, Netflix breaks into China, Uber offers workers sick leave insurance.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Click on the links for full stories.
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Opinion articles of the week:
- BBC News asks What does French result mean for Brexit?
- Business Insider claims that Brexit won’t lead to London exodus: Frankfurt is ‘too small’ and ‘tax is too high’ in Paris.
- City A.M looks at claims the UK has enough “untapped… trade potential” to offset possible EU export losses as a result of Brexit.
- Business Insider looks at claims that Loss of EU workers after Brexit would be a ‘huge blow’ to Britain’s small businesses.
1. WEST HAM AND NEWCASTLE FOOTBALL CLUBS RAIDED BY POLICE IN HMRC INVESTIGATION
West Ham and Newcastle football clubs have been raided by police this morning as part of an HMRC tax fraud investigation spanning England and France. Several people have been arrested in connection with the probe, including Newcastle managing director Lee Charnley, according to reports.
HMRC said it had deployed 180 officers across the UK and France today in connection with an investigation into a suspected £5m income tax and national insurance fraud within the professional football industry. The BBC has reported around 50 HMRC officers raided West Ham’s offices at the London Stadium at 8am.
“Investigators have searched a number of premises in the North East and South East of England and arrested the men and also seized business records, financial records, computers and mobile phones,” HMRC confirmed.
HMRC added: “This criminal investigation sends a clear message that, whoever you are, if you commit tax fraud you can expect to face the consequences.
Both West Ham and Newcastle have strong links with the business world. Newcastle is owned by Sports Direct boss Mike Ashley, and businessman David Gold – father of Ann Summers founder Jacqueline Gold – co-chairs West Ham, while Karren Brady serves as vice-chair. (City A.M)
2. BT’S TAKEOVER OF BELGIAN COMPANY IP TRADE CLEARED BY CMA
BT’s takeover of Belgian trading floor communications company IP Trade has been cleared by the UK’s Competition and Markets Authority (CMA). The body said that it would not be referring the deal to an in-depth, phase two investigation.
The CMA announced it would be investigating the acquisition, by BT’s global services division, last month.
After gaining CMA clearance for the deal, a BT spokesman today said: “BT voluntarily submitted notification of the IP Trade acquisition to the CMA for their review and consideration and we are pleased that the deal has been approved.
On announcing the deal in February, BT’s global services chief executive Luis Alvarez said:
Our customers will appreciate the way we will bring together BT’s Cloud of Clouds portfolio strategy, products and expertise, managed services capability and global reach with IP Trade’s open software platform and range of devices and applications. (City A.M)
3. LUXURY GOODS GIANT LVMH GRABS FULL CONTROL OF CHRISTIAN DIOR
The French luxury group LVMH, led by billionaire Bernard Arnault, is to take full control of Christian Dior, in a complex €12bn (£10bn) deal that reunites the fashion house with the perfume and other Dior brands.
The Arnault family, which holds a controlling stake in LVMH, owns 74.1% of Christian Dior, one of the world’s top fashion houses. The family said it wants to buy the remainder for €12bn, or €260 a share. It will then sell Christian Dior Couture to LVMH for €6.5bn.
LVMH, the world’s largest luxury company, owns Christian Dior perfumes and beauty after a deal in the 1960s to raise capital for the then-struggling brand. The latest transactions will bring the whole Christian Dior brand under one roof, from fashion to fragrances.
Arnault, France’s richest man and chief executive of LVMH, which was formed from the 1987 merger of fashion house Louis Vuitton with champagne and cognac producer Moët Hennessy, hailed the deal as an “important milestone” for the group.
He said the transactions demonstrated his family’s commitment to LVMH and would result in “the simplification of the structures, long requested by the market, and the strengthening of LVMH’s fashion and leather goods division thanks to the acquisition of Christian Dior couture”.
The move was welcomed by analysts and investors, and LVMH shares rose more than 4% to €223.55 in morning trade on Tuesday. Paris-based Christian Dior has 198 stores worldwide including one in Mayfair, central London. It posted revenues of €2bn and underlying earnings of €418m last year. (The Guardian)
4. NETFLIX BREAKS IN TO CHINA
Netflix is to introduce original content in China in a licensing deal with local video streaming service iQiyi.com, the U.S. company said on Tuesday.
Netflix has struggled to break into the Chinese market, where streaming services are subject to strict data storage regulations and foreign films and television are routinely censored. Content air times will parallel other regions, a spokeswoman said, who declined to say comment further on the tie-up.
Netflix has played down the possibility of its entry into China in the past year despite its otherwise rapid global expansion. In October co-founder and Chief Executive Reed Hastings said that prospects for a direct streaming service in the country were slim, and the firm had made no progress in obtaining government approvals.
iQiyi.com is one of China’s largest streaming services and is backed by search giant Baidu. In February it raised 1.53 billion to take on local rivals in a hotly contested market. This month Netflix forecast a global increase of 3.2 million subscribers in the second quarter, far outpacing analysts’ estimates of nearly 2.4 million. (CNBC)
5. GOVERNMENT DEFICIT AT LOWEST SINCE FINANCIAL CRISIS
Government borrowing fell by £20bn to £52bn in the year to the end of March, according to official data. That was the lowest level since the financial crisis of 2008, the Office for National Statistics (ONS) said. In Chancellor Philip Hammond’s Budget last month, the Office for Budget Responsibility (OBR) had forecast the deficit would be slightly lower at £51.7bn.
The OBR also predicted that government borrowing would rise again this year as tax receipts fall. The chancellor has said he wants to cut the deficit more slowly than his predecessor George Osborne.
Government borrowing was 2.6% of gross domestic product in the latest financial year, in line with the OBR’s forecast. The hole in the UK’s public finances has shrunk since hitting a peak of nearly 10% of GDP shortly after the global financial crisis. However, economists said that the reduction in borrowing last year was helped by one-off factors.
Higher inflation, an ageing population and rising healthcare costs will continue to put pressure on the public finances, he said. (BBC News)
6. GRANT THORNTON FINED RECORD £2.3 MILLION OVER AUDIT FAILINGS
Accountancy firm Grant Thornton (GT), has been fined £2.3m and severely reprimanded by the Financial Reporting Council (FRC) over failings in its audit of a company called AssetCo.
The regulator said GT, and its partner Robert Napper, had admitted a “lack of professional competence and due care”. This had allowed AssetCo to falsely inflate its value and its share price. Mr Napper was fined £130,000 and banned from auditing for three years, while GT paid £200,000 in additional costs.
The FRC said that the auditors had been deceived by the management of AssetCo, a fire engine manufacturer once owned by British Gas. But the auditors had been at fault by failing to employ the required level of “professional scepticism”.
The FRC said that the failings of GT, and the now-retired Mr Napper, in the audit of AssetCo’s accounts were not deliberate or reckless and did not amount to dishonesty. Even so, the AssetCo audits were so poor that the accountants’ behaviour “fell significantly short of the standards reasonable expected of them”, and showed a “widespread lack of professional competence and due care in the performance of the audits.”
The FRC said that GT – the UK’s fifth largest accountancy firm – and Mr Napper, who had had 23 years experience, were deliberately misled by AssetCo’s management. But if they had been more sceptical of the financial information being given to them they would have uncovered the dishonesty. (BBC News)
7. MCDONALDS OFFERS ALL EMPLOYEES OPTION TO COME OFF 0 HOUR CONTRACTS
The UK boss of McDonald’s has told Sky News that he is to offer all employees the chance to move off a zero-hours contract if they want to.
Mr Pomroy will tell all 115,000 employees of the restaurant chain that they will be given a choice between remaining on a flexible, zero-hours contract or moving to a fixed position that guarantees either four, eight, 16 or 30 hours work per week.
In a wide-ranging interview, the fast food boss also revealed that the company would, for the first time, be trialling a delivery service this summer and offered a word on the state of the UK economy – saying it was facing “unprecedented times”.
But it is Mr Pomroy’s decision about zero-hours contracts that is likely to attract the greatest attention.
These contracts have become a hugely contentious political point in recent years, with accusations that some employers have exploited them by refusing to give workers any guarantees about their working routine. (Sky News)
8. UBER TO OFFER INSURANCE TO EMPLOYEES FOR SICK LEAVE
Uber is offering a more security for UK drivers who rely on its app to make a living, with an insurance plan that gives cover if they’re sick or injured. Drivers who have completed at least 500 Uber journeys to date can pay £2 a week, or £104 a year, for the benefits package, which covers them if they’re sick, injured or on jury duty.
Here’s the full breakdown of benefits:
- Drivers can claim up to £2,000 if they’re unable to drive for two weeks or longer if sick or injured
- They can claim the same maximum amount if they lose out on income while doing jury duty
- They’re covered for up to £300 a week for a year if they have an accident while logged into Uber
- Drivers or their families can claim up to £50,000 if they die or are disabled while driving for Uber
Uber has partnered with IPSE, a representative body for freelancers in the UK, for the scheme. Anyone who signs up for the benefits package will also become IPSE members. Another perk is financial advice.
On the face of it, this is a positive move from Uber. If you’re an Uber driver, the company classifies you as self-employed (even if employment tribunals don’t), and so you lose out on income if you’re sick or have an accident. And drivers have to earn not just a wage, but enough money to pay off car financing loans. If you’ve bought a £37,000 Mercedes to drive on Uber’s Exec platform, as one driver did, being sick gets expensive. Paying £104 a year gives you some additional security.
9. LLOYDS SEES STRONG PROFITS
Lloyds Banking Group has announced a first quarter pre-tax profit of £1.3bn, almost double the sum achieved on a year ago, despite a “challenging operating environment”.
The taxpayer-backed bank, which is on the verge of returning to private hands following monthly share sales by the Treasury, said the profit performance was mainly due to a reduction in charges and the economy proving more resilient than expected after the Brexit vote. Underlying profits, which better reflect its day-to-day business performance, rose by just 1% to £2.1bn as interest rates remained low and it continues to focus on UK lending – shying away from more risky activities of the past.
The bank is the latest in a string of businesses to warn of tougher times just this week – with rival Santander UK joining Whitbread and Carpetright in signalling greater caution as higher inflation starts to take its toll on consumer spending.
The bank, now less than 2% owned by the taxpayer, said its pre-tax profit improvement reflected the absence of a £790m charge – booked in the first quarter of 2016 – from its controversial move to buy back expensive bonds from investors.
Lloyds, which is the UK bank most exposed to the payment protection insurance (PPI) scandal, had already announced that the first quarter numbers would include a further provision of £350m. It also said this month it was putting aside £100m to cover compensation for victims of fraud by former HBOS staff. (Sky News)
10. AMAZON TO CREATE 1,200 MORE UK JOBS
Amazon is to create 1,200 new permanent jobs as it opens a new warehouse in Warrington where staff will work alongside the online retail giant’s robots. The US group said the new fulfilment centre, part of a significant expansion across the UK, will take its workforce in Britain to 24,000 by the end of this year.
Amazon will be hiring for a range of new roles including operations managers, engineers, human resources and IT specialists. The Warrington site will be one of two, along with Tilbury, due to open this autumn, which will be equipped with advanced Amazon robotics technology.
The company has already opened one new fulfilment centre this year, Daventry in February, with centres at Doncaster, Warrington and Tilbury to begin operation in the autumn. The Daventry, Doncaster and and Tilbury sites created more than 2,300 new jobs.
Amazon is also opening its first dedicated “receive centre” in Coventry next year, which will act as a central hub to receive and sort millions of products sold by its UK site each year. Recruitment for Coventry, which will create 1,650 jobs, will begin next year. (The Guardian)
