HMRC formally opens Manchester hub
The latest regional HMRC hub has opened in Manchester and will accommodate 3,000 staff in a purpose built facility
The Manchester Regional Centre and UK government hub is located at Three New Bailey and was formally opened by HMRC chief executive Jim Harra on 12 October 2022.
The office’s distinctive red-brick weave references the area’s industrial heritage buildings and contains meeting rooms named after computer pioneer Alan Turing and Factory Records founder Tony Wilson, and landmarks including The Bridgewater Hall.
Harra unveiled a plaque, which is the first mounted in a HMRC building to bear the government department’s changed name, His Majesty’s Revenue and Customs, following the accession of King Charles III to the throne.
Jim Harra, HMRC’s chief executive, said: ‘Three New Bailey is a landmark building and will enable HMRC staff to work together in an inspiring modern environment which prioritises inclusive design.
‘I am delighted to formally declare our Manchester Regional Centre open.’
The seven-storey building will house around 3,000 HMRC staff, including those whose work focuses on customer compliance and borders and trade. It is also home to a team from the Valuation Office Agency.
Three New Bailey has been built using HMRC’s inclusive design guide, with features including step-free access to all levels and workspace finishes which balance colours and reduce glare for neurodiverse and visually impaired staff.
The opening ceremony was attended by Sir Dermot Turing, the nephew of Alan Turing.
Moving to regional centres will save around £300m cumulatively up to financial year 2025 to 2026 and will deliver annual cash savings of £74m in financial year 2025 to 2026.
HMRC’s other regional centre locations are Belfast, Birmingham, Bristol, Cardiff, Croydon, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham, Portsmouth and Stratford in east London.
- Published in HMRC
Kwarteng sacked as Chancellor, replaced by Jeremy Hunt.
Jeremy Hunt has been named as Chancellor, replacing Kwasi Kwarteng who has been sacked by the PM after five weeks in the job
The former health minister under former Prime Minister Boris Johnson, Jeremy Hunt is understood to be taking over the most senior role in the government.
In his resignation letter to Liz Truss, Kwarteng wrote: ‘When you asked me to serve as your Chancellor I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.
‘As I have said many times in the past weeks, following the status quo was simply not an option. For too long this country has been dogged by low growth rates and high taxation – that must still change if this country is to succeed.’
He added that it was important to continue to commit to the growth plan set out on 23 September and said ‘the medium term fiscal plan is crucial to this end’.
In addition, Chris Philp, chief secretary to the Treasury has been moved to the Cabinet Office. Both have only been in post since 5 September.
Philp has been replaced by Edward Argar with immediate effect. He was previously paymaster general and minister for the Cabinet Office from 6 September 2022 to 14 October 2022.
Under Johnson’s government he was minister of state at the Department of Health and Social Care between 10 September 2019 and 6 July 2022. He was elected as Conservative MP for Charnwood in 2015.
Within weeks of being appointed, Kwarteng set out a raft of tax changes in the mini Budget on 23 September, which were not costed and led to financial stability as the City opposed the measures. At the time, he cancelled the rise in corporation tax from 19% to 25%, as well as cutting the higher rate of tax to 40p, which was quickly reversed, and knocking 1p off the base rate to 19% from April 2023.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said: ‘Parachuting Jeremy Hunt into number 11, who was a key supporter of her rival for the leadership, Rishi Sunak, shows how desperate the Prime Minister is to build bridges with the wider Conservative Party.
‘It shows a growing awareness that concentrating group-think in a small cabal of fervent fans might have been partly to blame for the political and economic debacle the government has experienced.
‘Jeremy Hunt also campaigned against Brexit so there will be hopes the new Chancellor will adopt a more reconciliatory approach towards the EU when it comes to any cabinet discussions on the direction of travel for trade talks.’
- Published in Uncategorized
UK councils face £7.3bn black hole
One in six English councils could run out of money as early as next year with a lack of investment in finance, procurement and digital transformation
According to data from Grant Thornton’s Financial Foresight tool, councils face a £7.3bn black hole by 2025/26, an increase of £4.6bn since the beginning of this year.
Following the cost of living crisis, including the war in Ukraine and a global pandemic, the financial sustainability of local public services continue to erode.
Without additional income, councils will need to save over £125 per head of population by 2025/26.
This is more than the combined average spending per head on areas such as homelessness, sports and leisure facilities, parks and open spaces, alongside libraries, waste collection and disposal, and recycling (£121.19).
Philip Woolley, head of public services consulting, Grant Thornton UK LLP, said: ‘Local government has faced unprecedented demands and pressures over the last decade and without action from both central government and councils, in the face of these inflationary pressures, the list of authorities in need of exceptional support looks set to grow quickly.
‘The additional Covid-19 funding – while critical to support immediate challenges – has not addressed underlying systematic issues or the precariousness of councils’ financial sustainability in the face of economic instability.
‘Local authorities are also now facing the risk of interest rate rises increasing debt financing costs and the real risk of reduced funding from central government, in response to the current economic turmoil facing the country.’
Through a decade of budget pressures and changing policy demands, much-needed innovation has not been adopted across councils.
In addition, the lack of investment in support functions such as finance, procurement and digital transformation has diminished the local government’s ability to tackle the challenges of the next few years.
While English councils have seen small increases in total reserves following government support during the pandemic, from £24.7bn in April 2020 to £30bn in March 2021, this increase is more likely the result of suppressed demand in areas such as social care, caused by lockdowns.
This latest forecast suggests that the increase in reserves will not offer a significant enough financial buffer to stop financial failure at councils.
Woolley added: ‘We see four key steps to meeting this challenge: clarifying roles and responsibilities of councils, a requirement to develop a financial stability plan that is government backed and locally owned, strengthening local governance and, critically, resolving the long-awaited fair funding review for local government.
‘Without committed intervention from all sides, there is a risk that the sector levels down instead of up.’
The forecast tool has been modelled using a range of evidence-based assumptions including the ongoing impacts of Covid-19 and inflation.
- Published in Uncategorized
Fraud warning for self-assessment taxpayers
Self assessment taxpayers should guard against being targeted by fraudsters as more than 10,000 websites attempt to defraud individuals, warns HMRC
In the 12 months to August 2022, HMRC responded to more than 180,000 referrals of suspicious contact from the public, of which almost 81,000 were scams offering fake tax rebates.
They have also responded to 55,386 reports of phone scams in total, 87% down on the previous year. In April 2020 HMRC received reports of only 425 phone scams. In August 2022 this was 5,913, while it received reports of 10,565 malicious web pages for takedown.
Criminals claiming to be from HMRC have targeted individuals by email, text and phone with their communications ranging from offering bogus tax rebates to threatening arrest for tax evasion. Contacts like these should sound alarm bells – HMRC would never call threatening arrest.
Anyone contacted by someone claiming to be from HMRC in a way that arouses suspicion is advised to check the scams advice on gov.uk.
Taxpayers can report any suspicious activity to HMRC by forwarding suspicious texts claiming to be from HMRC to 60599 and emails to email@example.com. Any tax scam phone calls can be reported to HMRC using the online form on gov.uk.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘Never let yourself be rushed. If someone contacts you saying they’re from HMRC, wanting you to urgently transfer money or give personal information, be on your guard.
‘HMRC will never ring up threatening arrest. Only criminals do that.
‘Tax scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a rebate. Contacts like these should set alarm bells ringing, so take your time and check ‘HMRC scams advice’ on gov.uk.’
Fraudsters target taxpayers when they know they are more likely to be in contact with HMRC, which is why anyone completing self assessment tax returns should be extra vigilant to this activity. There is a risk they could be taken in by scam texts, emails or calls either offering a ‘refund’ or demanding unpaid tax, thinking that they are genuine HMRC communications referring to their self assessment return.
HMRC warned that some taxpayers who have not done a self assessment return before might be tricked into clicking on links in these emails or texts and revealing personal or financial information to criminals.
The deadline for filing paper tax returns for the 2021-22 tax year is 31 October 2022, and 31 January 2023 for those filing their tax return online. Taxpayers who file their return online via gov.uk should not share their HMRC login details. Someone using the details could steal from the taxpayer or make a fraudulent claim in their name.
HMRC is actively tackling the scams and fraudsters who attempt to mimic genuine HMRC activity and messages. The department’s dedicated customer protection team works continuously to identify and close down scams.
HMRC also tackles misleading websites designed to make people pay for services that should be free or low cost, charging to connect people to free HMRC phone helplines. To protect the public, HMRC formally disputes and takes ownership of HMRC-branded internet domain or website names. Since 2017, the department has recovered more than 183 websites hosting low-value services such as call-connection sites, saving the public millions of pounds.
Over the last year the tax authority has also worked with the telecoms industry and Ofcom to remove 48 phone numbers being used to commit HMRC-related phone scams.
- Published in Self Assessment
Unemployment rate falls to 3.5%
The UK unemployment rate has fallen to its lowest level in nearly 50 years, according to the Office for National Statistics
Unemployment rates fell to 3.5% for June to August, the lowest recorded rate since early 1974. In the quarter, the number of unemployed people per vacancy fell to a record low of 0.9%.
Growth in average total pay (including bonuses) stood at 6%, and regular pay was 5.4% among employees from June to August 2022. This was the strongest growth in regular pay seen outside of the covid-19 pandemic period, the ONS said.
However, in real terms the value of regular pay fell by 2.9%, the steepest fall since comparable records began in 2001.
Economic inactivity jumped to 21.7%, an increase of 0.6% from the previous quarter. This was driven largely by students aged 16-24, and those suffering from long-term sickness, aged 50 to 64 years.
From July to September 2022, the estimated number of vacancies fell by 46,000 in the quarter to 1,246,000 – the largest fall in the quarter since 2020.
Louise Murphy, an economist at Resolution Foundation, said: ‘A tight labour market is delivering stronger pay growth and reducing unemployment to a near 50-year low.
‘High inactivity and strengthening pay growth present huge challenges for monetary and fiscal policymakers as they seek to cool inflation, boost growth and put the public finances on a sustainable footing.’
The UK employment rate stood at 75.5%, 0.3% lower than the previous quarter, which had a notably higher employment rate than other periods. The number of employees decreased in the quarter, while self-employed workers increased.
Martin McTague, national chair, FSB, said: ‘It’s concerning to see that the number of those economically inactive due to long-term sickness is at a record-high – this is a stark reminder that more needs to be done to support people with long-term sickness into employment, which is crucial to our economic growth.
‘Despite the number of job vacancies falling, we’re still seeing an extremely tight labour market with over 1.2 million unfilled jobs across the country.’
Due to economic uncertainty, and rising interest rates and inflation, McTague added that these factors continue to limit small business’ ability to grow.
‘What small firms need now is a holistic approach to skills and training. Maintaining Skills Bootcamps in the long term and enabling small businesses to automate processes by continuing to ensure that R&D tax credits can be claimed without needless administrative hurdles should help.’
- Published in Employment
Chancellor U-turns on plans to abandon 45p tax rate
The Chancellor Kwasi Kwarteng has confirmed that the government has U-turned on its plans to scrap the 45p rate of income tax
Kwarteng announced the U-turn on Twitter this morning, saying: ‘We are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened.
‘It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.
‘This will allow us to focus on delivering the major parts of our growth package’, including the Energy Price Guarantee, ‘to support households and businesses with their energy bills’.
The plan was announced in the tax-slashing mini-budget last Friday, which included scrapping the 45p tax rate, which would cut tax by 5% to 40% for those earning over £150,000 a year.
However, the plan was criticised as unfair amid the current cost-of-living crisis, and required a vote before it could be approved.
Several Tory MPs have voiced their criticisms of the plan, including Grant Shapps who warned that the prime minister would likely lose a Commons vote on the proposal.
Shapps told the BBC: ‘Let’s not muddy the water with tax cuts for wealthy people right now, when the priority needs to be on everyday households.’
The news follows as the tax cuts in the mini-budget was criticised by the International Monetary Fund (IMF) on Friday, which warned it would stoke ‘inequality’ and risked increasing interest rates, as well as benefitting high income earners.
The Bank of England also reacted with a £65bn emergency intervention in temporary and targeted purchases in the gilt market to restore ‘orderely market conditions’ and prevent a ‘material risk’ to UK financial stability.
Jamie Morrison, head of tax at accountancy firm HW Fisher, said: ‘It was a bold move by the Chancellor to cut the top rate of income tax in his mini-budget – and one that has not paid off.
‘Tackling the UK’s cost of living crisis should be the government’s top priority, and it was hard to see how the abolition of the 45p tax rate would have benefitted anyone apart from the UK’s highest earners.’
The pound jumped against the dollar in overnight trading on Monday as reports emerged that the government would abandon the decision to axe the 45p tax rate.
Sterling hit $1.125, recovering to levels before the mini budget, but slumped back in early morning trading to $1.119.
Christy Wilson, associate at Katten UK LLP, said: ‘The removal of the 45% income tax rate was not anticipated before the budget. There was discussion that the Chancellor may announce some amendments to the income tax rates, including the higher rate income tax threshold being moved to £80,000 – but the removal of the 45% tax band was unexpected.
‘Even though the government has maintained since the budget that the tax cuts were the correct approach for economic growth, it is not surprising that the government felt compelled to make some amendments to the announced tax cuts given how serious the backlash to the budget has been.
‘The concerning element of this ‘u-turn’ is that only a couple of days ago Liz Truss and the Chancellor maintained that cutting the 45% income tax rate was the right thing to do, but now they have abandoned these plans. This calls into question other tax cuts that were announced – will these be reversed too?’
Paul Johnson, director of the Institute for Fiscal Studies (IFS), added that the decision to scrap the 45% rate on earnings was the ‘smallest part’ of the mini-budget, representing around £2bn of the £45bn in tax cuts.
‘The direct impact of the government’s U-turn on the abolition of the additional 45p rate of income tax is of limited fiscal significance. At a medium-run cost of around £2bn a year, it represented only a small fraction of the Chancellor’s mini-budgest announcements. His £45bn package of tax cuts has now become a £43bn package – a rounding error in the context of the public finances.
‘The Chancellor still has a lot of work to do if he is to display a credible commitment to fiscal sustainability. Unless he also U-turns on some of his other, much larger tax announcements, he will have no option but to consider cuts to public spending: to social security, investment projects, or public services.’
- Published in Uncategorized