Business News

HMRC gains record revenues with crackdown on tax dodgers

New figures published today show that HM Revenue and Customs (HMRC) secured a record £23.9 billion in additional tax revenue over the last year as a result of increased activity to make sure people pay the taxes they owe. 

The additional tax – which HMRC secures as a result of investigations, on top of the tax collected from those who pay their taxes on time – is up £3.2 billion on the previous year, up £9 billion on three years ago and nearly £1 billion above the target set at Autumn Statement 2013.

More than £8 billion has been secured from large business, over £1 billion from criminals and £2.7 billion from tackling avoidance schemes in the courts. HMRC’s compliance activity has resulted in a number of tribunal wins, and also seen corporation tax and stamp duty land tax loopholes closed, protecting the Exchequer from tax going unpaid.

Exchequer Secretary to the Treasury David Gauke said:

“The government supports the hardworking, honest majority of taxpayers who play by the rules, and is determined to tackle the minority who seek to avoid paying the taxes they owe.

“We set HMRC ambitious targets to increase its yield and the figures published today demonstrate that HMRC is successfully meeting these challenges. It also sends a clear signal – HMRC will pursue those seeking to avoid their responsibilities and will collect the taxes that are due.”

The record-breaking tax revenue comes as HMRC publishes “HMRC fast facts: Record compliance revenues for the UK”.

Providing an overview of HMRC’s compliance activities, the document highlights the actions HMRC has already taken to tackle tax avoidance. These include launching taskforces, publishing the details of deliberate and serious defaulters and challenging tax avoidance through the courts.

The document also provides information on future steps as the tax authority continues its fight against those who try to cheat the system. These include tackling high-risk promoters and employment and offshore tax avoidance and issuing accelerated payments for users of tax avoidance schemes.

Tribunal tears up Next’s tax relief claim

A multi-million pound tax allowance claim made by one of the UK’s largest clothing retailers has been rejected for the second time by a tax tribunal.

Next Distribution Limited, part of the Next Group Plc, claimed Industrial Buildings Allowance (IBA) on £19 million it spent on constructing two buildings used for warehousing and other activities.

Under the now-defunct IBA, businesses could write off some of their construction costs if the sites being built were used to subject goods to a process or to store goods on their arrival in the UK.

HM Revenue and Customs (HMRC) refused Next’s claim for the allowance on the grounds that unpacking bulk deliveries and repackaging them in smaller packages was beyond the scope of the allowance. The company’s appeal against the decision was dismissed by a First-tier Tribunal and that decision has now been upheld by the Upper Tribunal. This decision safeguards about £2.8 million of revenue.

Jim Harra, Director General, Business Tax, HMRC, said:

“HMRC’s decision to reject Next’s claim for this tax relief has now been backed by two tribunals.

“This case shows that, when any business – large or small – tries to claim capital allowances beyond their intended scope, HMRC will challenge it, including through the courts if necessary.”

HMRC secures record £4.6m minimum wage arrears for underpaid workers

Over £4.6 million in wage arrears has been paid to more than 22,000 workers following a successful year for HM Revenue and Customs’ (HMRC) National Minimum Wage (NMW) enforcement teams.

New figures show that, in 2013/14, HMRC:

•conducted 1,455 investigations

•issued 652 financial penalties, worth £815,269

•found arrears in 47 per cent of cases – the highest strike rate since NMW was introduced

•recovered average arrears of around £205 per worker.


Business Minister Jenny Willott said:

“Paying less than the minimum wage is illegal and, as HMRC’s record shows, if employers break the law they will face tough consequences.

“We want to issue a clear warning to employers who fail to pay the minimum wage: under the Government’s new rules you will be named and shamed and face a stiff financial penalty.

“If anyone suspects they are not being paid the wage they are legally entitled to they should call the Pay and Work Rights helpline.”

Examples of underpayment cases where HMRC has taken action in the past year include:

  • A Premier League football club was ordered to pay arrears of over £27,500 to over 3,000 workers after it made deductions for uniforms and travelling time for staff working in hospitality.
  • A social care provider found to have not paid its staff for travelling time and other hours worked was told to repay over £600,000 in arrears of wages to almost 3,000 workers.
  • A recruitment agency was ordered to pay over £167,000 to workers, including some it had classified as unpaid interns.
  • A multi-outlet retailer, which required its employees to attend work before and after opening hours without pay, was ordered to repay almost £77,000 to more than 1,300 workers.

Jennie Granger, Director of Enforcement and Compliance at HMRC, said:

“Paying the National Minimum Wage is not a choice – it’s the law. HMRC will continue to ensure that workers get at least the wage to which they are legally entitled.

“Where an employer ignores these rules, we will ensure that any arrears are paid out in full and the employer is fined. Rogue employers be warned – we will find you and you will pay.”

Lights out for electrician jailed for VAT fraud

An electrician from Surrey who fraudulently claimed over £1.5 million in VAT repayments to fund a lavish lifestyle has been jailed for three years and eight months.

Melvyn Horton, 58, used fake invoices to make multiple false claims for VAT refunds to HM Revenue and Customs (HMRC). He then used the money to take expensive holidays and fund private schooling.

Horton, who ran Cobham Electrical Ltd, was caught after HMRC officers found that he stole the identities of seven companies to create fake sales and purchase invoices, and then submitted the fraudulent repayment claims to HMRC between 2009 and 2013.

Andrew Sackey, Assistant Director, Criminal Investigation, HMRC said:

“Criminals like Horton who take a positive decision to steal from the tax system and, ultimately, from every honest taxpayer in the UK must pay the price. In this case as well as being sent to jail, we are now looking to recover the profits of his criminal conduct.

“We take this type of crime extremely seriously and ask anyone with information about people or businesses involved in this type of fraud to call the Customs Hotline on 0800 59 5000.”

Horton fraudulently received £1,533,598.82 in VAT refunds. He was arrested at his home in Surrey in June 2013 and later charged. When HMRC challenged Horton he admitted committing VAT fraud and on 30 May 2014, he pleaded guilty to withdrawing £82,000 from his bank account after he was arrested – money he had obtained committing the fraud.

Horton was sentenced on 6 June 2014 at Guildford Crown Court to three years and eight months imprisonment and disqualified from being a company director for 15 years. Confiscation proceedings are in place to reclaim any financial gain.

HMRC responds to PAC report

HM Revenue and Customs (HMRC) has responded to today’s Public Accounts Committee (PAC) report on its Annual Report & Accounts 2012-13.

“HMRC strongly disputes the conclusions in the Public Accounts Committee report and challenges the Committee’s selective and misleading use of figures.

“HMRC seeks to collect the tax that is due from all taxpayers, so that everyone pays their fair share in accordance with the tax laws passed by Parliament. We have secured more than £50 billion of additional tax from our compliance work since 2010, including £23 billion from large businesses. We have carried out 2,345 prosecutions for tax evasion in the last three years, including of high-profile accountants and lawyers, have halved the number of disclosed tax avoidance schemes and have protected more than £2.4 billion from marketed tax avoidance schemes this year alone.

“As a result of HMRC’s sustained efforts, the tax gap – the proportion of taxes that are due which are not collected – has fallen from 8.3% in 2005/06 to 7% in 2011/12. If the tax gap had remained at the level it was at seven years ago, we would be collecting £7 billion less each year.

“HMRC’s methodology for measuring the tax gap is robust and has been endorsed by the IMF. Contrary to what the PAC report says, the published tax gap does include a measure of the tax lost from avoidance, as well as evasion, but it can only measure non-compliance with existing tax law – it cannot estimate how much tax might be due if tax laws were different.

“HMRC can only bring in the tax that is due under the law and we cannot collect what is not legally due, however much the Committee might want us to. The Public Accounts Committee already knows that we cannot prosecute multinational companies for activities that are lawful within the international tax framework and has itself acknowledged that the kinds of international tax planning by large businesses that it has reviewed are lawful.

“We do not hesitate to take large businesses to court if necessary to secure the tax they owe and would consider prosecution in any case where we suspect that we have been misled or information had been withheld from us. We secured eight court wins against large businesses in the first half of this year alone, protecting over £1 billion of tax from avoidance.

“The Controlled Foreign Companies rules protect the UK from tax avoidance through the artificial diversion of profits by UK groups to subsidiaries in countries with very low rates of tax. The rules were enacted by Parliament after extensive public consultation and Parliamentary debate. In his recent Autumn Statement, the Chancellor announced a proposal to strengthen the Controlled Foreign Company rules, which will be put to Parliament in the 2014 Finance Bill.

“The Committee’s unjustified criticism is not a fair reflection of the dedication of our 65,000 staff, whose work has helped the UK achieve one of the best levels of tax compliance in the world. And it risks undermining the confidence that the compliant majority of UK taxpayers have in the excellent work they do.”

Issued by HM Revenue & Customs Press Office


One in three could be paying wrong tax

One in three taxpayers could be paying the wrong amount of tax, new research   has found.

A series of blunders by HM Revenue and Customs (HMRC) has meant that one in   three taxpayers may not be paying the right amount of tax, according to   research by UHY Hacker Young, the national accountancy firm.

The research found HMRC employees have made a number of “basic errors”. One of   the most common mistakes being HMRC failing to tax employee benefits, such   as company cars and private health cover.

This has resulted in millions of people underpaying their tax by thousands of   pounds because they have been given the wrong tax code.

In 2012 the accountacy firm carried out similar research, which involved   analysing hundreds of pay as you earn (PAYE) tax codes sent to its clients   to see how many were incorrect. The research   found about a quarter were incorrect, but a year on the amount of errors   have increased to around 37pc, said the firm.

Roy Maugham, tax partner at UHY Hacker Young, said errors in the amount of tax   taken out of pay packets by HMRC are a concern because most taxpayers do not   realise they have received more money than they were otherwise entitled to.   A couple of months later when HMRC realise the mistake they have made   taxpayers are hit with an unexpected tax bill, which can end up being a   significant sum.

For others the mistake will lead to them receiving a rebate for paying too   much tax.

“Underpaying tax is more of a problem than people realise as it can be a shock   to an individual’s cash flow when HMRC moves to claw it back,”   said Mr Maugham. “The majority of people will have forgotten to make an   allowance for this, and so their finances might be strained.

“Mistakes most frequently occur when someone has several sources of income,   for example income from an investment as well as a salary and benefits from   their employer, or where they have received a large one-off sum such as a   dividend payment.”

There has been a number of tax code errors since HMRC introduced a new   computer system in 2009. For the first time, it combined information on   National Insurance contributions and PAYE.

A spokesman for HMRC said: “The numbers being cited are not correct, accuracy   of PAYE coding notices is now 99pc. The vast majority of people are paying   the right tax at the right time through PAYE.”



Passing on your business? Keep tax bills down

Want to pass your business down to the next generation? Plan ahead to cut your   tax liability.

If you thought inheritance tax planning was difficult enough when only a   family home was involved, think again. When families own businesses, the   complexities are far greater.

Almost half of British small business owners hope to pass on their business to   their children, according to research from Close Brothers Asset Management.

But although people are considering succession plans, many are not aware of   the tax implications.

There are three million family businesses in Britain, according to the   Institute for Family Business, and each year some 100,000 family firms are   thought to pass from one generation to the next.

Amalia Brightley-Gillott, the editor at Family Business Place, which promotes   family businesses, said: “I don’t think anyone starts a business   planning to pass it on to their children, but as it grows you want   continuity and customers to know that the same values and family will be   involved.”

Gary Heynes, a partner at Baker Tilly, the accountancy firm, said: “The   starting point is looking at the business entity, how the business is   structured, as that changes the rules slightly.”

Trading businesses qualify for 100pc relief from inheritance tax under a   system called business property relief. To qualify, the business must be an   unlisted company – or one listed on the junior Alternative Investment Market   (Aim) – and must have been trading for at least two years.

A similar relief for agricultural property and land, agricultural property   relief, covers farmland and farming businesses, but it has to be a trading   farm to qualify – keeping chickens in your garden is unlikely to pass muster   with the taxman.

“This means that if you fully own a company and you were to die, the   shares could be left to the next generation entirely free of tax, and that   is incredibly valuable,” said Mr Heynes. “A lot of people miss out   because they don’t realise the criteria; they have too much in investment,   for example.”

A non-trading company, such as an investment company or a company that   receives property rental income, does not qualify for the relief.

Patrick Haines, regional head of advice at Close Brothers Asset Management,   said: “Tax planning is intrinsic to the success of passing on a   business, and understanding the tax implications involved in operating and   passing on a business can help protect wealth for retirement – in addition   to the use of tax-efficient personal savings.”

Harvey Bowden and his wife, Ann, are preparing to hand their successful water   softener business, Harvey Water Softeners, based in Woking, Surrey, to their   youngest son, Casey.

“We thought about what would happen to the business constantly as the   years went by, but none of my children expressed an interest until about   four years ago,” Mr Bowden said. “We always had the idea that we   would either sell or pass the business on.”

Casey Bowden, now 32, joined the business in 2004 and became a director three   years ago. He currently owns 2.5pc of the shares and the family have decided   to grow this share to 49pc through his bonus over the next decade. The   remainder he will inherit on his father’s death. His two elder brothers will   each own 2.5pc of the business.

Harvey Bowden said: “If my children hadn’t been keen, I would have sold –    it gets to the point when the strain outweighs the reward. Now Casey has   started to take the strain.”

Harvey Water Softeners also owns rental properties, so as part of the   succession plan the family is splitting out the property arm, which will be   run by son Roy, aged 33, so the water softener company qualifies for   business property relief.

Patricia Mock, a tax partner at Deloitte, said business owners should also be   aware that business property relief might not apply if they die within seven   years of gifting the company to their children. If the children have sold   the business during that time, for example, the windfall could be subject to   inheritance tax. Additionally, business owners can’t put additional assets   into the company, known as excepted assets, to try to get around inheritance   tax.

Capital gains tax (CGT) is another interesting factor because gifting business   assets means they can be exempt from the tax. If a parent has built a   business worth £10m, for example, they could pass it down to their child and   pay no capital gains on the value. However, the tax is only deferred. If in   this example the child later sells the shares for £20m, they would pay   capital gains tax on the full £20m gain.

That’s important because of entrepreneur’s relief. Capital gains tax is   usually 28pc, but there is a special 10pc rate which applies to businesses   up to a value of £10m. For a business worth £10m, this could mean a total   saving of £1.8m if the whole business changes ownership.

In some circumstances, said Ms Mock, this means it might be better not to   defer capital gains. Again to use the example above, it would mean the   parent and child each pays 10pc on their £10m gain, instead of the child   paying 10pc CGT on the first £10m and the full 28pc rate on the rest.

“Although gains can be held over, it is not always the best answer,”   she said. “It is also worth keeping track of share ownerships   fragmented around families in this situation – you need to hold 5pc for at   least a year to qualify for entrepreneur’s relief and you need to work for   the company, as an employee or an office holder.”

Parents stepping away from the business should think about whether the   business should pay into their pension fund, how they will manage proceeds   from a sale during their retirement and whether they could retain shares in   the business to pay a dividend.

Mr Heynes said: “There is no simple answer. Individuals must think about   where the business will go on their retirement and who will benefit from its   value. When you have made those more emotional decisions, discuss with your   accountant about how to manage the process.”



UK inflation falls to 2.2% in October

The UK’s inflation rate, as measured by the consumer prices index (CPI), fell to 2.2% in October from 2.7% the month before.

The surprise fall saw CPI inflation drop to its lowest rate for more than a year, and eases pressure on the Bank of England to raise interest rates.

The figure was below forecasts of 2.5% and is the lowest since September 2012.

The Office for National Statistics said the fall was driven by the biggest drop in transport prices since July 2009.

It said transport prices fell by 1.5% between September and October.

One major transport cost factor came from fuel price cuts at many major supermarket chains engaged in a price war.

There were also downwards price movements on some air fares.

Inflation target

Another inflation fall came in education costs, with the impact of rising tuition fees being smaller than at the same time a year previously.

And food inflation fell too, from 4.8% to 4.3%.

“Falling petrol and diesel prices seem to have done the most to drag the inflation rate down, and the ongoing softness in Brent crude prices means there may be a little more of this to come in the months ahead,” said economist Rob Carnell at ING.

“There was also some price softness in furniture and household items too.”

A separate measure of inflation, the retail prices index (RPI), fell from 3.2% in September to 2.6% in October.

The drop in the inflation rate means the Bank of England is considerably closer to its inflation target of 2%, which it has exceeded since December 2009.

However, recently announced price rises by most of the UK’s large energy firms have yet to take effect and will have an inflationary impact in the coming months.

The Bank will publish its latest inflation forecast on Wednesday.

“The Bank of England’s forward guidance states that a hike in interest will not be considered until unemployment drops below 7%,” said economist Chris Williamson at Markit.

He said the Bank’s forecast was likely to “bring forward when the Bank expects this to happen from late 2016 to perhaps late 2015, given the recent flow of stronger than expected economic data”.


Business Confidence 'At New Low'

UK business confidence has fallen sharply but there will be no recession, the Institute of Chartered Accountants in England and Wales (ICAEW) has said.


Its Business Confidence Monitor (BCM) fell from -7.2 in the first quarter of 2007 to -19.7 in the second period.


It says the slowdown in the economy has spread to all sectors, to firms of all sizes and across all regions of the UK. But the ICAEW predicts that although it is a time of economic uncertainty, there will be no recession.

Cash Crucial


The ICAEW received responses from 984 chartered accountants in England, Wales and Scotland.


Robin Fieth, ICAEW executive director, finance and operations, said: "Loss making businesses can survive, but businesses that run out of cash will not."


The property sector saw confidence decline to the lowest level ever recorded for any sector and now stands at -47.0.


In addition construction fell to -24.2, also reflecting the current property market downturn.

UK Unemployment Rises By 14,000

UK unemployment rose by 14,000 to 1.61 million in the three months to March, official figures show.


The number of people claiming Jobseeker's Allowance climbed by 7,200 to 806,300 last month, the Office for National Statistics (ONS) said.


Analysts warned the figures may indicate that global financial problems were hitting the UK and could impact the labour market in coming months.


The unemployment rate was unchanged at 5.2% in the three months to March.


The figures come amid signs that the UK economy is slowing. At the same time, inflation has picked up, driven by higher food and fuel costs.

"Jobless claims show the labour market is starting to weaken," said Chiara Corsa, an analyst with Unicredit.


"I do expect further deceleration in the pace of job creation as the economy has already started a below-trend journey."


The region where the unemployment rate was the highest was the North East, at 6.3%, followed by the North West. The South West had the lowest rate of unemployment at 3.6%.




The data also showed that total employment climbed by 117,000 to 29.5 million in the three months to March.


Average earnings rose by 4% in the year to March, given a boost by worker bonuses.


The wage data will highlight the challenge facing the Bank of England as it tries to boost economic growth, while also tackling rising costs.


"Earnings were higher than expected, but it's nothing to get too concerned about," said Alan Clarke of BNP Paribas.


He added that the main message was "a softening in labour market conditions that we haven't seen until now".


On Tuesday, the ONS said UK consumer inflation reached its highest level in 13 months driven by high food and fuel costs.


"Given that the labour market is now loosening, we think that wage growth will remain well-contained in the coming months," said Nick Kounis, an economist at Fortis.


"As such we do not see the labour market as an important risk to inflation at this juncture, which is good news given that there are plenty of other inflationary headwinds facing the economy."

UK Inflation Jumps to 3% in April

UK consumer inflation reached its highest level in 13 months driven by high food and fuel costs, according to the Office for National Statistics.


The Consumer Prices Index (CPI) hit 3% on a yearly basis in April, up from 2.5% in March. The monthly rate was 0.8%, the biggest leap since May 2001.


According to the figures, the Retail Prices Index rose to 4.2% from 3.8%.


The inflation data would probably stop the Bank of England cutting interest rates in the near term, analysts said.


Analysts had expected CPI to reach 2.6%.


"It was a pretty horrific headline number," said Lee Hardman, an economist at BTM-UFJ.


"It limits the scope for monetary easing from the Bank, it will be hard for them to cut in June."



However, some analysts added that the main drivers of price growth were fuel and food costs, which higher interest rates did little to control or rein in.


In the current climate of slowing economic growth and a weakening housing market it was unlikely that the Bank would hike interest rates as price pressures were not being caused by an overheating economy, the analysts said.


The CPI figure is above the 2% target set by the government, and increases the chances that Mervyn King, the Bank's governor, will be forced to write to the Chancellor to explain the accelerating rate of inflation.


He has to write a letter to the Chancellor if the rate of inflation tops 3%, explaining the reasons behind the increase, the actions that are being taken, and a time-frame for bringing inflation back within target.


The governor has only had to write such a letter once before, and that was on 16 April, 2007.


The Bank "needs to explain why it is cutting rates when inflation is rising; a difficult but not impossible task", said Ian Kernohan, of Royal London Asset Management.


"The major concern remains inflation expectations since, if these remain elevated, the advantages we've enjoyed from low and stable inflation over the past decade may be lost," he added.


"This makes it a political as well as an economic problem."


Budget changes


Of the 12 types of goods measured by the CPI, seven categories saw prices rise in April compared with the previous month. Alcohol and tobacco were amongst the gainers after tax increases set out in the last government Budget.


Another significant reason for the higher inflation data was a sharp increase in electricity and gas bills after the six leading suppliers raised prices.


Higher power and gas costs contributed 0.2% to the increase in the CPI figure, the ONS said.


Consumers and companies are already feeling the effect of higher costs.


On Monday, data showed that manufacturing output dropped by its biggest margin in six months during April, with firms hit hard by rising raw material costs.

Second Negative Month For Sales

Sales on UK High Streets fell for the second month in a row in April, according to figures from the British Retail Consortium (BRC).


Like-for-like sales fell 1.5% in April compared with the same month of 2007.


But total sales, which include outlets that were not open last year, rose 1.0% in April.


The BRC's Retail Sales Monitor only measures the value of sales from a selection of retailers, but it comes out sooner than the official figures.


It was the first time that the BRC's measure had fallen for two months in a row since early 2005.

Sunny weather


In the three months from February to April, like-for-like sales fell 0.6%.


The BRC's director general Stephen Robertson said he hoped the recent sunny weather would have helped retailers since April.


But he added that these figures gave "further evidence that hard-pressed customers are really watching the pounds".


"With higher fuel and utility bills eating away at people's spare cash, they are concentrating on essentials like food.


"Despite heavy discounting, clothing and footwear were at their weakest for at least eight years and more expensive housing-related goods continue to struggle."

Mortgage Lending Hits 33-Year Low

Mortgage lending to home buyers has hit its lowest level for 33 years, according to figures from the Council of Mortgage Lenders (CML).


Just 47,000 such mortgages were lent in March, taking the total for the first three months of the year to 142,000.


This was the lowest quarterly total since the first three months of 1975.


The CML predicted lending and house sales would fall even further in the next few months because of the credit crunch affecting the banking system.


"House purchase transaction volumes will continue to deteriorate in the coming months as recent approvals data from the Bank of England has shown," said Michael Coogan, director general of the CML.


The figures chime with the latest survey from the Royal Institution of Chartered Surveyors, which said that falls in house prices were now more widespread than at any time since 1978.



In an attempt to overcome the effects of the credit crunch, the Bank of England recently made extra funds available to UK banks to encourage them to start lending to each other again.


Mr Coogan warned that the bank's efforts had yet to have much effect on the London Inter-Bank Offered Rate (Libor), the main interest rate governing the cost of lending between banks.


"Since the introduction of the special liquidity scheme, there has been a slight improvement in credit market conditions with Libor moving in a more helpful direction," he said.


"But Libor still remains high relative to the Bank rate and any improvement in credit market conditions will take time to feed through into the mortgage market," he added.


However, one of the biggest mortgage lenders, the Nationwide building society, cut some of its fixed rate loans for new borrowers by up to 0.3%.


The society said it was responding to the Bank of England's move to restore lending between banks.


Last week though, the Building Societies Association warned that the current blockage in the mortgage market might last for another two years.


First-time buyers


The number of mortgages for house purchase has now fallen by 40% over the past year.


And first-time buyers are continuing to be squeezed out even more than before.


There were 17,800 first-time buyer loans in March, the lowest monthly level on record since monthly figures were first compiled in 2002.


That took the number of first-time buyer mortgages in the first quarter of 2008 to 53,700, which was the lowest quarterly figure since the start of 1975.

House Price Falls 'Are Spreading'

The number of UK surveyors reporting falls in property prices has risen for the ninth month in a row.


In the latest survey from the Royal Institution of Chartered Surveyors (Rics), 82% of surveyors saw prices fall in the three months to April.


That figure was up from 66% in March, with all surveyors in East Anglia, and the North and North West of England, reporting price falls.


There has also been a continued fall in enquiries from prospective buyers.


The number of house sales being completed over the past 3 months has fallen significantly said Rics, with an average of just 18 sales per surveyor


"The real issue is the collapse in the number of housing transactions," said Rics spokesman Ian Perry.


"This has very real implications, not just for the property industry but also the High Street and the wider economy," he added.

Slowdown Spreads


The likelihood of further house price falls has been highlighted by the Council of Mortgage lenders.


It revealed that mortgage lending to home buyers fell in March to its lowest level for 33 years and that both lending and sales would go even lower in the coming months.


There was also downbeat news from two UK house building firms on Tuesday.


Redrow said the number of reservations so far in 2008 was half that seen the previous year. while cancellations of reservations, which had been running at about 20%, had seen "a marked increase" since Easter.


Rival builder Galliford Try said that its annual profits would be at least £60m, but this was below analysts' estimates of about £77m.


Declining Market


The Rics survey, showing price falls more widespread than at any time since 1978, is further confirmation that house prices in the UK are now declining after a decade-long boom.


The survey found that 68% more surveyors noted a fall rather than a rise in new buyer enquiries, compared with 51% in January.


Other surveys, such as those from lenders including the Halifax and the Nationwide, have reported recently that prices are now lower than they were a year ago.


Rics said that regions where prices had still been rising until recently have now been caught up in the general decline.


In Scotland, which had bucked the UK trend, the house price "balance" also turned negative last month.


Small Falls


The bursting of the house price bubble has been caused by a combination of prices that had reached unaffordable levels, and the effects of the credit crunch which has caused a sudden shortage of mortgage funds.


However, Mr Perry said the scale of house price falls was still "relatively small" compared with past downturns.


"Large numbers of distress sales - either repossessions or sales from those attempting to avoid the repossession process - have not yet appeared in the market place," he explained.


"While mortgage arrears remain low and the employment situation remains strong, the lack of supply will continue to prevent large declines."


Government Figures


Other figures, released by the Department for Communities and Local Government (DCLG) suggest that house prices are still higher than a year ago.


Its survey said that in March, annual property price inflation fell from 6.3% in February to 5.2%.


That pushed up the average house price in the UK to £217,344.


The biggest slowdown has been in Northern Ireland where prices have fallen by 1.2% in the past year, the DCLG said.


In Scotland they have risen by 9.3%, and they have gone up by 5.2% in England and 4.1% in Wales.

Demanding customers pile pressure on SMEs

Over a third of SME owners believe that ever more demanding customers have made it more difficult to run their business, new research reveals. 
According to poll by T-Mobile, the UK’s ‘want it now’ culture is creating new pressures with one in three respondents saying that customers, colleagues and suppliers now expect faster response times.

The report claimed that amid the increasingly challenging environment, businesses could be missing out on £60,000 by failing to make use of "deadtime", the period spent travelling on work business or waiting for meetings to start.

However with more than three quarters of firms which provided staff with mobile devices claiming that their customer response times had improved, the study urged SMEs to exploit the benefits of modern technology.

Derek Williamson, from T-Mobile UK, said: "The rise of the internet has given birth to a ‘want it now’ culture - customers expect an immediate response to every enquiry.

"This is forcing SMEs to operate in a different way, and use all the tools at their disposal to be more productive and efficient.

"The ability to fulfil orders and respond to customers as quickly as possible is of paramount importance, which is why SMEs are starting to recognise that mobile technology can have a significant impact on their bottom line."

Small firms slow to act on age laws

Despite the introduction of new laws allowing employees to carry on working beyond the age of 65, three quarters of small firms have yet to put in procedures to allow their staff to do so.
The study by Lloyds TSB Business and researchers at the Open University found that only a quarter of companies had put in place the ‘right to request’ rules for employees, which make it possible for staff to work beyond retirement age.

Almost half said they were still undecided as to whether they would implement the procedures, while a third claimed they intended to do so.

The most popular reason for employers holding back was the expectation of extra red tape followed by the fear of cost rises and the belief that the changes would not have a significant impact.

Despite the apparent reluctance to encourage staff to work beyond the age of 65, more than a third of respondents admitted they were bracing themselves for a drop in the number of younger workers over the next decade. Amongst larger firms this view was even more widely held, with 57% of firms employing 20-49 people expecting a fall in younger employees.

Stephen Pegge, from Lloyds TSB Business, said: "With skill shortages one of the biggest issues, it’s vital that small firms make the most of the talent older employees have to offer and this may save them money in the long term. Planning ahead now could also avoid costly legal disputes in the future."

Regulatory effects on SMEs ‘not properly considered’

The government does not properly consider the realities of running a small business when making Regulatory Impact Assessments, the Forum for Private Business (FPB) has claimed.

It said that, in a month when proposed changes to rules on paternity rights and measures to address flexible working were being discussed, the effects on small business should be more keenly investigated.

In changes to paternity rules, suggested earlier this month by employment relations minister Jim Fitzpatrick, fathers would be allowed to take six months’ paid paternity leave instead of mothers.

The law is not likely to come into effect until maternity cover is extended to 12 months, which will happen in 2009 at the earliest.

"A small firm with few employees who are highly skilled or have specialist knowledge of their workplace will suffer greatly from the absence of one of their workers," said the FPB.

"It isn’t as easy as just recruiting a replacement for the short-term, business may have to distribute that worker’s responsibilities around the rest of the workforce. That hits productivity and profitability."

It warned that the government’s approach to employment law, "using one rule to suit all", was endangering small businesses.

"Big business has little trouble adapting to such changes in law, with their larger, more flexible workforce and human resource departments," it said.

"For smaller firms there is a much higher degree of difficulty dealing with regulations and coping with their practical implications on the business."

"Good business owners recognise the need for flexibility in the workplace and are willing to find solutions to employees’ needs," said Victoria Carson, FPB campaigns manager. "However, so far the government has failed to understand that different types of companies have varying degrees of flexibility."

Bosses fear public speaking

Despite many having the gift-of-the-gab, most business leaders are scared of public speaking, a new report has found.
The poll by communication agency The Aziz Corporation revealed that almost half of entrepreneurs confessed that presenting to a public audience was the most daunting aspect of the job, while 71% admitted to being nervous about addressing a large conference.

Another 80% acknowledged that they would be similarly anxious if faced with the prospect of a television interview.

In contrast, what would seem much more complex business tasks were considered routine. Just 38% said they found reviewing financial data problematic and only 31% cited difficulties in preparing business plans.

Professor Khalid Aziz, chairman of The Aziz Corporation, said: "Business leaders are, by their definition, successful people. Considering that they are also the public face of their company, and that a major speech or TV interview can make or break their reputation, it is worrying that so many of them fear communication.

"Executives often rise through the ranks as a result of technical expertise and so can find themselves misplaced to deal with communications issues, preferring the more behind-the-scenes number crunching, to the fame of a public persona. Clearly good public speaking requires practice and those in business are not born with that."

Migrants 'wrongly paid tax credits'

Tax credits potentially worth millions of pounds have been paid to immigrants who were not entitled to receive them, it has been claimed.

According to the BBC, which obtained an Inland Revenue document under the Freedom of Information Act, 2,700 migrants were wrongly paid credits between April 2003 and December 2004 because officials were instructed to ignore any claim irregularities.

Benefit office workers were only required to check whether claimants had a national insurance (NI) number. But earlier this month, it was revealed that thousands of workers suspected of being illegal immigrants were given NI numbers.

With tax credit overpayments averaging £1,000 a year, the BBC said it would amount to at least £2.7 million if all 2,700 migrant families had claimed for the entire period covered.

Responding to the revelations, liberal democrat work and pensions spokesman David Laws accused the government of carelessness.

Speaking to BBC Radio 4, he said: "It appears that, from then on for about 18 months, the Treasury was relying on the Department for Work and Pensions to issue National Insurance numbers as a proper check on people's entitlement to work here.

"But we now know that the DWP was not actually putting in place the proper immigration checks.

"The Treasury was relying on the DWP, the DWP was relying on the Home Office and the Home Office doesn't seem to have been doing its job, and as a consequence millions of pounds have been paid out in tax credits, and possibly in benefits as well, which shouldn't have been paid out."

The scandal is the latest to plague chancellor Gordon Brown's flagship tax credit system.

Overpayments have reached around £2 billion for the past two years, while HM Revenue & Customs was recently accused by the treasury select committee of playing down the role it has had to play in errors.

There have also been demands for Dawn Primarolo, the minister responsible for tax credits, to resign from her position as paymaster general.

Workers stressed out over stress

Over a fifth of British employees are concerned about workplace stress, government research reveals.

The Health and Safety Executive (HSE) poll showed only 40% of workers believed the risk of stress in their workplace could be realistically reduced, while just a third said their employer had taken preventive actions to cut stress levels.

HSE chief executive Geoffrey Podger said, "Stress is a major problem in British workplaces and this survey underlines that.

"Stress can occur in any workplace and it is important that both employers and employees recognise the symptoms at an early stage.

"We have produced guidance for employers and the stress management standards can help employers tackle the issue."

The report also questioned workers on health and safety risks.

Slips and trips topped the list of workplace risks staff thought were most likely to be reduced. Slips and trips cost employers around £512 million every year.

On health and safety training, around 73% of employees said they had received instruction in manual handling but only half had been trained in working around moving vehicles. Some 35 workers were killed last year after being struck by a moving vehicle.

The findings were taken from the latest Workplace Health and Safety Survey which surveyed around 10,000 workers.

HSE said it will soon be publishing further analyses with more detailed patterns by industry and assessments of preventive measures within the different risk categories.