VW & Suzuki settle four-year dispute

A court ruling has settled a four-year dispute between VW and Suzuki over their failed partnership.
The International Chamber of Commerce ruled that VW should sell its 19.9% stake in Suzuki.
Japan’s Suzuki first requested the sale of VW’s shares in 2011 after a plan to collaborate on new technology failed, but the German firm had refused.
Suzuki’s chairman said it “used to feel as if a small bone were stuck in my throat…I feel so refreshed now”.
“It was a precious experience,” Osamu Suzuki said, ” I learned there are different types of companies.”
Asked about future partnerships with VW he said “you will not remarry someone you have divorced”.
For its part, VW said: “We welcome the fact that there is now clarity. The co-operation between the two companies has now been ended.”
The two companies had agreed to work together on fuel efficient cars but Suzuki accused VW of withholding information it had promised to share, while VW objected to a Suzuki deal to buy diesel engines from Fiat.
As part of the 2009 agreement, VW bought the Suzuki stake as a way of it gaining access to the Indian market for small cars, where the Japanese firm had a leading position.
Suzuki said it planned to buy back the shares from VW at a “reasonable” price, which one analyst told Reuters was likely to be Friday’s closing price of 4,151.5 yen ($34.1).
In a statement, Suzuki said it did not foresee any financial impact on its full-year earnings.

Figures reveal significant increase in UK worker bonues

New figures from the Office for National Statistics (ONS) show that bonuses paid to UK workers have risen to almost the same levels as 2007/08, before the global financial crisis.

During the year 2014/15, the total of all bonus payments in the UK was £42.4bn, a rise of 2.7% on the previous year and in cash terms just 0.1% below the record level reached in 2007/08.

Bonuses in the financial and insurance sector were actually down by £1.5bn on the previous year and still below their pre-downturn levels. But in the rest of the economy bonuses were significantly higher, up 9.7% to £28.8bn, which is £5bn higher than their pre-crisis peak.

According to the ONS, the professional, scientific and technical services industry had the largest increase in bonuses in 2014/15, up £0.9bn on the previous year. Next was the information and communication sector, which saw an increase of £0.5bn.

However, the £1.5bn fall in bonuses in the finance and insurance sector may be partly explained by the timing of bonus payments, because, as the ONS has said: ‘this industry is more prone than others to concentrate their payments into a December-to-March ‘bonus season’, and in 2013, a number of bonus payments were deferred from March into April.

‘Thus the 2013/14 figure in this sector might have been atypically high, with some employees receiving payments both in April 2013 and March 2014, twice within the same reporting period’.

CBI calls for new tax breaks to encourage investment in mid-sized businesses

The Confederation of British Industry (CBI) is calling for the introduction of new tax incentives to boost investment in medium-sized firms.

In a joint report entitled ‘Stepping Up: fixing the funding ladder for MSBs’, the CBI and a major financial advisory firm have outlined a long-term plan for helping businesses achieve their potential.

The report proposes the introduction of new funding vehicles, labelled ‘Long Term Lending Trusts’, which would provide income tax relief to savers investing in long term medium-sized business debt funding.

The CBI said this would work in a similar way to the existing Venture Capital Trust scheme, and would cost the government an estimated £310 million a year. However, it argues that the measure ‘could unlock billions of new long-term loans.’

Commenting, CBI Director-General John Cridland said: ‘Building up a British ‘mittelstand’ of successful medium-sized businesses is mission critical to our economic future. With little recognition, these firms quietly toil away, creating jobs in communities and boosting growth in every corner of the nation.

‘A key part of unlocking their enormous potential is for the Government to fix the funding ladder, filling in the gaps in supply of long-term finance that the UK’s brightest growing firms need to succeed.’

He continued: ‘Incentivising savers to invest in our businesses for the long-run is a win-win. It offers them attractive, alternative investment packages, while helping propel medium-sized businesses along their growth path, boosting the economy as a whole, and enhancing productivity.’

The report also suggests that the Enterprise Finance Guarantee initiative should be adapted to reward lenders for providing longer term loans.

According to the CBI, the ‘forgotten army’ of Britain’s medium-sized businesses account for 1.8% of companies, but generate almost a quarter of private sector revenue and employ 16% of the working population.

Increase in Income Tax receipts sees first July surplus for 3 years

Government borrowing was in surplus by £1.3bn in July, figures from the Office for National Statistics (ONS) have shown.

This is the first time that the UK government has spent less than it received in taxes and other forms of income in the month of July since 2012.

The surplus is largely due to an increase in income tax receipts. Some £59.1bn in income was received in July 2015, which is about 4% higher than last year’s figure.

In terms of spending, the ONS says that £3.2 billion was saved on the cost of the ‘day-to-day’ activities of the public sector (the current budget deficit), while £1.9 billion was spent on infrastructure (net investment).

Although the ONS states that annual borrowing has been falling since its peak in the financial year ending March 2010, public sector net debt is still currently at £1.5 trillion (excluding public sector banks), equivalent to 80.8% of GDP.

Chancellor George Osborne said: ‘The recovery is well established, tax revenues are up and we have more than halved the deficit. But with debt over 80% of GDP, the job is not done.’

The ONS said that the £1.3bn surplus was ‘broadly in line with market expectation’.

Lifetime tax liability to average family climbs to £734,240

The average British family will pay almost three-quarters of a million pounds in tax over the course of a lifetime, new research suggests.
According to the Taxpayers’ Alliance (TPA), an average household will pay £734,240 (in 2013/14 prices) in direct and indirect taxes during their lifetime.
The figure, which is based on data obtained from the Office for National Statistics, equates to a 2.3% increase on the amount calculated for 2012/13 (£717,650).
The TPA claims that over a lifetime, the average household pays £253,040 in income tax, some £146,775 in VAT, £92,795 in employee national insurance contributions, and a further £59,955 in council tax.
Commenting on the findings, TPA chief executive, Jonathan Isaby, said: ‘This new analysis shows just how heavy the burden of taxation falls on each and every family across Britain, pushing up the cost of living.’

‘Every arm of local and central government must redouble its efforts to root out unnecessary spending and inefficiency in everything they do, so that not a penny of this extraordinary bill is wasted. Britain’s tax bill is too high – it must come down, and that means cutting out wasteful spending.’
The UK tax system is notoriously complicated, but with sensible tax planning it is possible to minimise your tax liability whilst remaining compliant with government legislation

Withdrawal of ONS surveys to ‘cut business costs’

The Office for National Statistics (ONS) has unveiled plans to change the way it calculates its economic growth estimates, cutting the time businesses need to spend on form-filling.

The ONS intends to partially replace monthly business surveys, which are currently used to estimate growth, with data gathered from VAT returns submitted to HMRC.

Some 45,000 surveys are currently sent out each month, which is thought to cover around 55% of the economy. However, using VAT turnover data should increase this coverage substantially, with around 1.75 million companies required to file VAT returns each month.

The ONS said it expects the number of surveys sent monthly could be reduced by up to half once the transition to the new system is complete.

It says the move will cut its costs by 40%, and result in a 50% reduction in compliance costs for participating businesses, with small and medium-sized firms expected to save the most.

Commenting on the plans, Nick Vaughan, director of national accounts and economic statistics at the ONS, said: ‘These plans are part of a wider ONS agenda to develop new and better sources of data and keep producing the highest quality statistics possible.’

The ONS aims to complete the transition to VAT data by 2020.

New Apprenticeships plan is unveiled

Prime Minister David Cameron has outlined details of how the Government intends to fulfil its pledge to create three million apprenticeships by 2020.

Calling on businesses to invest in their workforce, the Prime Minister revealed that companies bidding for government contracts worth more than £10m will now be required to ‘demonstrate a clear commitment to apprenticeships’.

Mr Cameron also invited employers to give their views on plans to introduce a new apprenticeship levy, which would see employers invest in a training fund.

The consultation on the new levy will run until 2 October 2015, and the measure is expected to be in place by April 2017.

The British Chambers of Commerce (BCC) welcomed the plans. ‘Apprenticeship schemes can play a part in meeting important ambitions to boost skills and drive-up productivity,’ said the BCC’s director general, John Longworth.

‘Government policy is currently too focused on major employers, but equal effort ought to be put on encouraging and supporting smaller businesses to offer apprenticeships,’ he added.

However, manufacturers’ organisation the EEF has raised questions over the proposals.

‘With little detail of the level of the levy, who will be required to pay it and how much government will give back in return, manufacturers have a right to remain sceptical that the levy will create the three million additional quality apprenticeships that we all wish to see,’ commented Terry Scuoler, chief executive at EEF.