More than a third of self-assessment taxpayers are under-reporting how much they owe the government | City A.M.
More than a third (36 per cent) of self-assessment taxpayers under-report their taxes, according to research by the Institute for Fiscal Studies (IFS) out today.
Most underpayments are less than £1,000. However, a small proportion of people owe more than £10,000 and represent close to half of the tax revenue that is unpaid. The average tax owed by people not paying their due is £2,320.
Read more: Here’s how much banks paid to the taxman over the last year
The IFS said a significant amount of the revenue that is missing could be brought into the government’s coffers through audits. If all of the 10m taxpayers who self-assess their taxes were audited by HM Revenue and Customs (HMRC), this would bring in £8.3bn.
“HMRC has improved its targeting of non-compliant taxpayers, increasing the revenue raised per targeted audit conducted. However, the decline in the number of such audits reduced the total revenue raised from audits from a peak of £1.17 billion in 2002, to just over two-thirds of that by 2009,” the IFS said.
However, the researchers cautioned that after a few years without audits, those who under-reported their taxes would fall back into failing to pay.
Arun Advani, research fellow at the IFS, said: “Audits bring in tax directly, but also change taxpayers’ behaviour. Audits work not because they scare people into complying in future years, but because they give HMRC more information about people’s incomes. The change in behaviour actually brings in more than the original audit.”
Read more: The Conservative plan to hike taxes without you noticing
Industrial giant RHI Magnesita shrugs off Brexit with new listing on the London Stock Exchange | City A.M.
Refractory products maker RHI Magnesita will launch a premium listing on the London Stock Exchange tomorrow in a vote of confidence for the City post-Brexit.
The listing comes after a merger today between Austria’s RHI and its Brazilian rival Magnesita, which together will generate revenues of around €2.5bn (£2.2bn). They expect to become an industry leader with a market capitalisation of more than £1bn.
RHI Magnesita makes bricks that line industrial furnaces to protect the expensive machinery from extremely high temperatures with heavyweight customers including Arcelor Mittal, Thyssenkrupp, BHP Billiton and Rio Tino.
Read more: The chief executive of the London Stock Exchange Group is stepping down
Stefan Borgas, chief executive of RHI and designated boss of RHI Magnesita, told City AM the two companies had outgrown their capital markets in Austria and Brazil. They looked to London because they felt the market had a good understanding of the industry, and many of their clients and rivals were listed on the LSE.
However, Brexit came up as a concern.
“We asked ourselves is this the right time now to come to the UK?” Borgas said.
“We took a deep dive,” he said, explaining that he believes London’s stock market will “not be affected at all” by Brexit.
“London’s an extremely international market and we believe it will continue to be.”
Yesterday was RHI’s final day of trading on the Vienna Stock Exchange, and its shares closed at €35.90.
Following the merger and listing, RHI Magnesita plans to continue growing through expanding its product portfolio, boosting its presence in neglected regions like China, southeast Asia, Africa and Russia, and putting funds made available through synergies towards new technologies.
Read more: En+ has priced its $8.5bn London float
Industrial giant RHI Magnesita shrugs off Brexit with new listing on the London Stock Exchange | City A.M.
Refractory products maker RHI Magnesita will launch a premium listing on the London Stock Exchange tomorrow in a vote of confidence for the City post-Brexit.
The listing comes after a merger today between Austria’s RHI and its Brazilian rival Magnesita, which together will generate revenues of around €2.5bn (£2.2bn). They expect to become an industry leader with a market capitalisation of more than £1bn.
RHI Magnesita makes bricks that line industrial furnaces to protect the expensive machinery from extremely high temperatures with heavyweight customers including Arcelor Mittal, Thyssenkrupp, BHP Billiton and Rio Tino.
Read more: The chief executive of the London Stock Exchange Group is stepping down
Stefan Borgas, chief executive of RHI and designated boss of RHI Magnesita, told City AM the two companies had outgrown their capital markets in Austria and Brazil. They looked to London because they felt the market had a good understanding of the industry, and many of their clients and rivals were listed on the LSE.
However, Brexit came up as a concern.
“We asked ourselves is this the right time now to come to the UK?” Borgas said.
“We took a deep dive,” he said, explaining that he believes London’s stock market will “not be affected at all” by Brexit.
“London’s an extremely international market and we believe it will continue to be.”
Yesterday was RHI’s final day of trading on the Vienna Stock Exchange, and its shares closed at €35.90.
Following the merger and listing, RHI Magnesita plans to continue growing through expanding its product portfolio, boosting its presence in neglected regions like China, southeast Asia, Africa and Russia, and putting funds made available through synergies towards new technologies.
Read more: En+ has priced its $8.5bn London float
New York taps Transport for London’s contactless expertise for public transport revamp spanning the subway, rail and buses | City A.M.
New York is set to roll out a contactless fares system across its public transport network, derived from the one developed by Transport for London (TfL).
TfL is setting up a new consulting arm to provide its expertise to operators around the world, and in the newest instance of the transport body looking to share its know-how, New Yorkers will soon be reaping the benefits of a system with tech similar to that used in London.
Last July, transport payments firm Cubic struck a deal with TfL worth up to £15m, agreeing a licence for use of London’s contactless ticketing system worldwide.
Read more: Transport for London sets wheels in motion for new trading arm
And New York’s Metropolitan Transportation Authority announced this week it had approved a contract awarded to Cubic, to phase in the new fare payment system to make travel easier across its transit and commuter rail systems, and marking a move away from the MetroCard.
The shift away from the MetroCard will be phased in over five years, with customers first being able to use contactless open payment options from mid-2019.
Users will be able to use the likes of Apple Pay, or a contactless bank card at turnstiles and buses across New York, though the MetroCard won’t be retired until the new system is fully operational.
“The move to a truly 21st century method of payment represents a critical step in our overall efforts at modernising the subway system and improving service for all our customers,” said MTA chairman Joseph Lhota.
“The subway, bus and commuter rail network is the lifeblood of our regional economy and major upgrades like this help make the system more convenient and efficient for the millions of New Yorkers who use it every day.”
TfL has a long-running relationship with Cubic, having worked together to introduce the Oyster card system back in 2003, and working with the UK card industry to make TfL the first public transport provider to accept contactless payment cards.
That system was launched on London buses in December 2012, before being rolled out to incorporate the Tube and rail services in September 2014.
Mike Brown, commissioner for Transport for London (TfL), said:
It’s great to hear that New York will be introducing contactless payments, similar to that introduced on the Tube and buses in London, to help its customers travel more conveniently.
This system has completely transformed the way people pay for travel for public transport in London, with over a billion journeys already made since it was first introduced in 2012.
Read more: Londoners can now collect top ups for the Oyster card anywhere
Heathrow boss John Holland-Kaye calls London airport ‘a critical national asset’ as profits and revenues rise
Heathrow’s boss said today it had become “a critical national asset” as London’s biggest airport posted rising revenues and profits for the nine months ended 30 September.
The results come in the same week the government reopened a consultation into Heathrow expansion for the public to view fresh evidence.
Read more: London airports will be completely full by the 2030s
The figures
Heathrow’s pre-tax profit rose 13.4 per cent to £229m from £202m this time last year, while revenue edged up 3.2 per cent to £2.2bn.
Adjusted earnings before interest, tax, depreciation and amortisation rose 5.7 per cent to £1.4bn.
For the nine-month period, the airport welcomed 59.1m passengers, a 3.1 per cent rise, after a record summer. Retail revenue per passenger also rose 6.4 per cent to £8.33.
The airport said it had delivered better value for passengers over the period too, as charges fell 2.1 per cent.
Why it’s interesting
Earlier this week, the government reopened the consultation into the expansion of the airport, to allow the public to review fresh data on air quality, and revised aviation demand forecasts that reveal London’s five main airports will be completely full by the 2030s. Four of them will be full within a decade.
Transport secretary Chris Grayling said the forecasts reveal the need for more runway capacity is “even greater than originally thought”, adding that his department remained on track to publish final proposals in the first half of next year for a vote in parliament, despite the extra consultation period.
MPs had originally been expected to vote on the draft national policy statement late this year or early next, but that was pushed back to the first half of 2018 after the snap General Election.
What the company said
John Holland-Kaye, chief executive of Heathrow, said:
A strong performance over the summer – record numbers of passengers visiting Britain, double-digit growth in exports, strong global investor support and better service and value for passengers – shows what a critical national asset Heathrow has become.
Heathrow expansion is not a choice between the economy and the environment – it must deliver for both.
In post-Brexit Britain, it will connect our whole country to the global growth markets of tomorrow and a robust package of environmental commitments will help us expand responsibly. We are now getting on with delivering it.
Read more: Heathrow facing Christmas strike threat as workers back industrial action
Financial watchdog publishes IPO research reforms, but is criticised for its limited focus
Investors in London stock market floats will now have access to independent analyst research about the company which is listing, under new rules published by the Financial Conduct Authority (FCA) today.
The watchdog has announced a set of reforms which will mean investors no longer have to rely on the advice of analysts at a bank which is helping the company to list.
The reforms have been widely welcomed, although some market players seemed unsure as to whether increased access to research would actually make the initial public offering (IPO) process “fairer”.
Read more: The Financial Conduct Authority launches consultation over plans to reform IPO process
“There is an implicit assumption that publication of unconnected analyst research will help to price shares more ‘fairly’,” said Nicholas Holmes, of law firm Ashurst.
“It is at least questionable as to whether the proposed changes will lead in practice to a substantial increase in the volume or quality of independent research.”
Independent researchers will, from next July, have access to company information and to the management team of the share issuer before the connected bank publishes its own report.
Tom Vita, a partner at law firm Norton Rose, noted that the changes would heat up debates about an issuer’s true valuation — a positive development. But he added that it would also “inevitably lengthen IPO timetables, increasing execution risk for companies coming to market”.
Read more: The Financial Conduct Authority wants to alter the IPO process – potentially changing how the blackout period works
Ashurst also said it was “interesting” that the FCA’s reforms focused solely on analyst research, and did not address the wider “fundamentals of IPO pricing”.
Some suggestions raised in the government’s 2014 Myners Report included setting a wider price range for IPOs, and allowing this range to be shifted.
The latest developments are part of a focus by the FCA on reviewing the UK’s capital markets to ensure they are attractive post-Brexit.
It follows the regulator’s controversial suggestions to loosen rules for state-backed IPOs, allowing certain companies (such as oil giant Saudi Aramco) to float a smaller portion of the business and qualify for a premium listing with less onerous disclosure and regulatory rules.
Read more: Saudi Aramco IPO: Institute of Directors urges City watchdog against bending listing rules for London mega-float
London’s latest private equity firm FPE Capital closes its debut fund at £100m to focus on smaller UK businesses
The UK's private equity market is continuing to grab attention as FPE Capital, a new firm which will focus on smaller UK businesses, has closed its first institutional fund at £100m.
The firm has spun out from Stonehage Fleming, a business which makes investments on behalf of high-net-worth individuals and families.
FPE will target businesses with an enterprise value of £20m to £50m, which have never received money from institutional investors before, and will help businesses to improve their management teams, processes and IT systems.
Read more: UK private equity is heading for its strongest year since the financial crisis with £12bn of buyouts
“We're focusing on things like software, business services and data and information businesses, where you can really take them international and significantly grow the top-line without a huge amount of capital required for fixed assets or working capital,” said FPE managing partner David Barbour.
When part of Stonehage Fleming, the FPE team worked relatively independently from the main firm and raised a fund largely from external individuals and family offices.
FPE has kept up its relationships those investors and its former parent – 15 per cent of the capital in the new fund came from high-net-worth and entrepreneurial clients.
“They are a really important part of the network which helps us to source deals and help companies with connections to clients and suppliers,” said Barbour.
The fund has already made two investments, in human resources software business Questionmark and media support services business Masstech.
According to Barbour, these businesses – which were bought at “highly attractive valuations” – helped convince investors that lower end of the UK's market was ripe for the taking.
“Investors are all well aware of the strain in valuations, which are going up in the mid market and the top of the lower mid-market because of two key things,” he said.
“One is there's a lot of capital there, and the second is there's much more debt available in the middle market and people are leveraging up deals.
The largest investor in the fund is a US university endowment, though the majority of the money comes from UK-based firms.
Read more: There's a “challenging investment environment” ahead for private equity, warns Partners Group
Mayor-backed London venture capital fund has helped create 700 jobs across the capital
Five years on from when MMC Ventures established its London-focused fund, the venture capital firm has revealed it has pumped more than £100m into businesses and helped create over 700 jobs.
The MMC London Fund has invested money into 19 London startups, including short-term retail let marketplace Appear Here, home ingredient delivery service Gousto, and mobile transport ticketing service Masabi.
Read more: Recipe box startup Gousto gobbles up millions more in funding
The fund itself totalled £14m, £9m of which was provided by the Mayor of London’s office. This was designed to be matched by private co-investors, ensuring at least £28m was available for the capital’s businesses, but to date the fund has beaten this target by 700 per cent and attracted £100m from private investors.
“Five years ago, we were challenged by the Mayor of London to create a new kind of co-investment fund to back London’s most promising early-stage technology companies,” said Simon Menashy, Partner at MMC Ventures.
Read more: London is the tech capital of Europe – let’s keep it that way
“So it’s a real pleasure to report on a successful and thriving portfolio, attracting more than £100m of capital and creating hundreds of high-quality jobs in the capital.”
To date, the fund itself has invested £12.5m of its £14m total. Private investors who have contributed alongside the MMC fund include Mayor-backed Funding London, Unilever, MasterCard, global investment firm Mitsui, and venture capital firms Accel, Index Ventures and Balderton Capital.
Already the fund has sold two businesses — holiday house exchange business Love Home Swap and online knitting retailer Wool and the Gang.
Returns from the fund’s investments will be cycled back into funding for future companies.
Read more: Flower delivery startup Bloom & Wild is set to blossom with millions in fresh funding
Billionaires’ march continues as Asian surge drives 17 per cent increase in wealth
Billionaires across the world piled on more riches with the ultra-wealthy in Asia now outnumbering the traditional leaders, the US, according to research published today.
The total wealth of billionaires worldwide rose by 17 per cent in 2016 to reach $6 trillion (£4.5 trillion), equivalent to more than double the UK’s annual economic output, according to banking group UBS and accountants PwC.
Billionaire wealth grew at double the rate of the MSCI World Index, one of the broadest measures of global company performance, suggesting that the ultra-rich are amassing wealth at a faster rate than the less well off.
Read more: Wealth of the world’s top tech entrepreneurs surpasses $1 trillion
The dramatic increase in wealth followed a five per cent dip in 2015. The reports’ authors noted: “Despite a period of heightened geopolitical uncertainty, the world’s ultrawealthy are flourishing.”
Billionaires in materials, technology, financial services and industrials all accounted for fast growth in wealth, the index found, with rises in commodity prices particularly benefiting billionaires in the mining, steel and oil industries, the report’s authors said. Meanwhile fluctuations in the value of the dollar also provided a boost to non-US billionaires.
The research analysed 1,542 billionaires worldwide, a 10 per cent rise year-on-year. The research covered around 80 per cent of global billionaire wealth, meaning the total number may be higher, the report said.
A new billionaire was created in Asia every two days during 2016, the research found. There are now 637 US dollar billionaires in Asia, compared to 563 in the US.
The combined wealth of Asian billionaires rose by almost a third to reach $2 trillion, although that still lags behind the US where billionaires are wealthier on average. The remarkable surge in Asian wealth was driven by the continued rise of China, which saw economic output grow by 6.7 per cent during 2016, far outstripping the UK, US and other developed economies.
Read more: The wealth of Britain’s billionaires has boomed despite Brexit
Nevertheless, the wealth held by American billionaires still grew by $400bn since 2015, the research shows. US billionaires now hold around $2.8 trillion in wealth.
However, a “significant shift” in the geographic dispersion of wealth will likely see the US overtaken on this metric as well within in a short space of time.
“This year we have seen not only a return to growth for billionaire wealth, but also a significant shift in its geographic dimensions,” said Josef Stadler, UBS head of global ultra-high net worth. “Dramatic growth in Asian wealth shows it could overtake the US in just four years.”
In Europe there were 342 billionaires, with the number staying stagnant in what the report called “the home of old money”. Europe has the highest proportion of “multi-generational billionaires”, indicating a higher prevalence of inherited wealth.
Indeed, the ageing of billionaires indicates $2.4 trillion of wealth will be transferred, either through inheritance or some philanthropy, within the next two decades, the report found.
The report added that the current cycle of rapidly increasing wealth among billionaires will likely end in the next two decades.
Read more: The number of billionaires in London has fallen
New York taps Transport for London’s contactless expertise for public transport revamp
New York is set to roll out a contactless fares system across its public transport network, derived from the one developed by Transport for London (TfL).
TfL is setting up a new consulting arm to provide its expertise to operators around the world, and in the newest instance of the transport body looking to share its know-how, New Yorkers will soon be reaping the benefits of a system with tech similar to that used in London.
Last July, transport payments firm Cubic struck a deal with TfL worth up to £15m, agreeing a licence for use of London’s contactless ticketing system worldwide.
Read more: Transport for London sets wheels in motion for new trading arm
And New York’s Metropolitan Transportation Authority announced this week it had approved a contract awarded to Cubic, to phase in the new fare payment system to make travel easier across its transit and commuter rail systems, and marking a move away from the MetroCard.
The shift away from the MetroCard will be phased in over five years, with customers first being able to use contactless open payment options from mid-2019.
Users will be able to use the likes of Apple Pay, or a contactless bank card at turnstiles and buses across New York, though the MetroCard won’t be retired until the new system is fully operational.
“The move to a truly 21st century method of payment represents a critical step in our overall efforts at modernising the subway system and improving service for all our customers,” said MTA chairman Joseph Lhota.
“The subway, bus and commuter rail network is the lifeblood of our regional economy and major upgrades like this help make the system more convenient and efficient for the millions of New Yorkers who use it every day.”
TfL has a long-running relationship with Cubic, having worked together to introduce the Oyster card system back in 2003, and working with the UK card industry to make TfL the first public transport provider to accept contactless payment cards.
That system was launched on London buses in December 2012, before being rolled out to incorporate the Tube and rail services in September 2014.
Mike Brown, commissioner for Transport for London (TfL), said:
It’s great to hear that New York will be introducing contactless payments, similar to that introduced on the Tube and buses in London, to help its customers travel more conveniently.
This system has completely transformed the way people pay for travel for public transport in London, with over a billion journeys already made since it was first introduced in 2012.