HMRC: the full story
Here’s our news story about HMRC’s controversial plan to shutter its telephone hotline for half the year:
Closing summary
Time for a recap…
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HM Revenue & Customs has announced it will permanently close its self-assessment helpline for half the year, which will leave some taxpayers unable to speak to the tax authority on the phone.
The phone line will be closed between April and September each year and open only to taxpayers with “priority queries” between October and March, HMRC announced.
The move has been criticised, with the Chartered Institute of Taxation calling it “misguided”. -
Hundreds of jobs could be at risk after the owner of Ted Baker filed a motion to appoint administrators to the ailing high street retailer.
Authentic Brands Group, which bought Ted Baker in 2022, blamed the build-up of “a significant level of arrears” at No Ordinary Designer Label (NODL), the company which trades as Ted Baker.
In other retail gloom…. furniture retailer DFS has cut its sales and profits forecasts for the year, after a drop in orders, and warned that further Red Sea disruption could push some profits into the next financial year.
Japan’s central bank has ended eight years of negative interest rates, by lifting interest rates slightly into positive territory today.
Unilever is to cut 7,500 jobs globally and spin off its ice-cream division as part of an overhaul aimed at saving about €800m (£684m) over the next three years.
The Culture Secretary has said she is “minded to” refer the gulf-state backed takeover of the Telegraph newspaper group for an in-depth investigation amid concerns the deal could threaten free speech.
Economic confidence in Germany has picked up, according to the ZEW institute.
Tax expert Richard Murphy is also unimpressed:
Are HM Revenue & Customs intemnt on making the right amount of tax as hard as possible? https://t.co/6VUfSM6OOq HMRC is closing large parts of its help line system. It seems that they want to alienate people from the tax system.
— Richard Murphy (@RichardJMurphy) March 19, 2024
The New Statesman’s Rachel Cunliffe fears turning off the HMRC phone helplines for six months will be a disaster:
This is going to be CARNAGE.
— Rachel Cunliffe (@RMCunliffe) March 19, 2024
Anyone who calls the HMRC helpline does so as a last resort, because they can't get help online. They wait for hours to speak to someone. £££s at stake.
HMRC's response? Close the helpline for half the year. Disaster incominghttps://t.co/l1Id4r9zGh
Updated
Authentic Brands Group (ABG), has blamed “damage done” to Ted Baker during the time Dutch company AARC had been running its stores and e-commerce business in Europe – a tie-up that ended in January, PA Media reports.
Authentic Brands adds that Ted Baker stores and the retailer’s website would continue to trade once administrators are appointed.
John McNamara, chief strategy and transition officer for Authentic Brands Group, said:
“We wish that there could have been a better outcome for the Ted Baker employees and stakeholders.
“We remain focused on securing a new partner to uphold and grow the Ted Baker brand in the UK and Europe where it began.”
Updated
Hundreds of jobs at risk as Ted Baker 'prepares to appoint administrators'
Hundreds of high street jobs are at risk after the owner of fashion chain Ted Baker moved to push its British operations into administration, Sky News reports.
They say that No Ordinary Designer Label, which is owned by Authentic Brands Group (ABG) and trades under the Ted Baker brand, filed a notice of intention to appoint Teneo Financial Advisory as administrators on Tuesday.
The move is expected to result in store closures and job losses, although the scale of both was unclear, Sky says.
Revealed: More detail here of Ted Baker’s descent into administration, continuing a turbulent run for a fashion brand which was once highly valued by shoppers and stock market investors alike. https://t.co/mGpIsSOlc1
— Mark Kleinman (@MarkKleinmanSky) March 19, 2024
Ted Baker was taken over by ABG in August 2022 for £211m.
Its share price has previously slumped in 2018 amid difficult trading conditions for clothing brands, and a scandal over a culture of “forced hugs” under its founder, Ray Kelvin, which led to his exit from the company.
The company was then hit by the emergence of an accounting error and a string of profit warnings, before its core market for suits and outfits for social events was hit by the Covid-19 pandemic.
Updated
HMRC’s decision to push inquiries online for half the year is being criticised by tax experts, who fear the move has come too soon and will lead to confusion for taxpayers.
Gary Ashford, from the Chartered Institute of Taxation, said (via the BBC):
“There’s no escaping the fact that tax is complicated, and people sometimes need reassurance that what they are doing is right.”
Ashford added:
“We are concerned there may be an increase in how many will include estimates or errors because of the inability to seek clarification from HMRC.”
Updated
HMRC adds that the decision to downgrade its telephone helplines follows a “successful seasonal pilot” last summer, when calls to the Self Assessment helpline were directed to the department’s online services for three months.
After “a brief initial spike in calls when the helpline reopened”, calls quickly returned to expected levels, the tax authority reports today.
HMRC: This will help modernise the tax system
HMRC says its push towards online self-service for Self Assessment and VAT is “a vital element” of the modernisation of the tax system.
Angela MacDonald, HMRC’s Second Permanent Secretary and Deputy Chief Executive, said:
Online services have transformed our lives and often provide a better service for managing tax – they’re quicker, easier and always available.
Changing our services to encourage customers to self-serve online wherever possible will allow our helpline advisers to focus support where it is most needed - helping those with complex tax queries and those who are vulnerable and need extra support.
We must maximise every pound of taxpayers‘ money. Embracing online self-service allows us to help more customers and improve our customer service levels without spending additional public money.
"Great shame" that HMRC to close helpline for six months a year from April
HM Revenue and Customs (HMRC) is closing down much of its telephone help services for months, as part of a push to make peope use its website instead.
The tax authority has announced that:
between April and September, the Self Assessment helpline will be closed and customers will be directed to self-serve through HMRC’s highly-rated online services
between October and March the Self Assessment helpline will be open to deal with priority queries – customers with queries that can be quickly and easily resolved online will be directed to HMRC’s online services
the VAT helpline will be open for 5 days every month ahead of the deadline for filing VAT returns – outside of this time, customers will be directed to use HMRC’s online services
the PAYE helpline will no longer take calls from customers relating to refunds – customers will be directed to use HMRC’s online services
HMRC advisers will continue to always be available during normal office opening hours to support customers who cannot use online services or who have health or personal circumstances that mean they need extra support
all other helplines will continue to operate as they do currently
Chair of the Treasury Select Committee Harriett Baldwin MP isn’t impressed, saying:
“It is a great shame that HMRC have decided now is the time to essentially close down any avenues for people to contact them over the phone for huge parts of the year. I say once again, these are well-meaning people just trying to get their taxes right.
“We’ve heard time and time again that every effort is being made to direct people to resolve issues online. The Committee welcomes efforts to make the tax system more efficient but HMRC has not yet demonstrated that the department or the public are ready to make such a monumental change to how they resolve tax issues. This should not be forced upon taxpayers until there is evidence that people know how to do their taxes on HMRC’s incredibly complex website.”
A report last month showed that customer service levels at HM Revenue and Customs have sunk to an “all-time low”, with customers suffering long call-waiting times due to high demand….
Updated
Government minded to refer UAE-Telegraph sale to Phase 2 probe
Newsflash: the UK’s culture secretary is minded to refer the takeover of the Telegraph newspaper by an United Arab Emirates-backed consortium to a full-scale review by competition authorities.
In a written statement Lucy Frazer, Secretary of State for Culture, Media and Sport, says she has considered the views of regulators Ofcom and the Competition and Markets Authority (CMA), adding:
On the basis of the regulators’ assessments, I can now confirm that I am minded to refer this merger to a Phase 2 investigation on the grounds of the need for accurate presentation of news and free expression of newspapers.
A phase 2 investigation could probably take several months, meaning the deal could be scuppered by new legislation to ban foreign state ownership of newspapers.
Fraser explains that Ofcom has found that the deal could operate against the public interest, and allow the influencing of the accurate presentation of news and free expression of opinion in the Daily Telegraph and the Sunday Telegraph newspapers.
Fraser says she will give the relevant parties until 25 March to make representations before reaching a final decision.
Updated
Harvey Nichols to axe dozens of jobs in head office overhaul
Harvey Nichols has launched a major shake-up of its operations, with plans to cut dozens of head office jobs, PA Media reports.
The historic department store chain said less than 5% of workers are at risk of redundancy as result.
It understood this will affect around 60 London-based employees, subject to a consultation process.
Over at the high court, Tesco has lost an appeal against a ruling that its blue and yellow Clubcard loyalty scheme logo infringes a trademark held by rival Lidl.
The UK’s largest supermarket chain had appealed against a ruling in April 2023 that it had infringed Lidl’s trade marks, committed passing off and infringed Lidl’s copyright in the Mark with Text as an artistic work.
Today, three high court judges upheld the original ruling
But Tesco did have some success, it has won its appeal against the finding that it infringed Lidl’s copyright on its logo, which shows a yellow circle edged in red on a square blue background.
One judge explained that:
“Tesco have not copied at least two of the elements that make [Lidl’s logo] original, namely the shade of blue and the distance between the circle and the square.”
The yen has also slipped against the pound today.
Sterling has risen by 0.5%, to 190.7 yen to the pound, near the eight-year high of 191.32.
Updated
For the first time in almost two years, investors do not see a recession in Europe on the horizon, according to Bank of America’s latest survey of Fund Managers.
It found that a net 21% of respondents expect a stronger economy in Europe over the coming twelve months, up from a net 11% that expected a further weakening last month.
BofA adds:
The share who thinks US growth will stay robust, helped by resilient consumption, stands at 58%, little changed from last month but up from 28% in January.
62% think a soft landing is the most likely outcome for the global economy, with 23% in the no-landing camp, up from 19% last month and 6% in December.
In the crypto world, bitcoin is having a choppy day – it’s down over 6% at $63,250.
Crypto exchange BitMEX is investigating why bitcoin experienced a flash crash on its platform, which briefly knocked it down to $8,900
BitMEX says it is looking into some unusual trading activity, and says there were some some unusually large sell orders…..
“Bitcoin down to $8,900 on BitMEX?" Well, not quite the whole picture.
— BitMEX (@BitMEX) March 19, 2024
Yes, we are investigating potential misconduct by traders on our Bitcoin-USDT Spot market (👀Did you even know we offer Spot trading?)
However, this incident had NO impact on our billion-dollar derivatives… pic.twitter.com/qWXXnyQxjw
Bitcoin momentarily slams through the floor to $8,900 on BitMEX
— jamiemcintyre (@jamiemcintyre21) March 19, 2024
According to media reports, one incredibly wealthy individual sold over 400 bitcoins at once causing the momentary market plunge.
What does it say if Bitcoin can fluctuate like this? pic.twitter.com/S8RSRCudWu
The foreign exchange market has thumbed its nose at the Bank of Japan, by pushing the yen down below 150 to the dollar, says Kit Juckes, strategist at French bank Société Générale, who adds:
I’m disappointed by the market reaction to the BoJ, because there’s a good chance this eventually proves to be a pivotal moment for Japan and the BoJ.
Deflation is over, real wages are rising, and maybe the equity market appreciates the long-term implications in a way the FX market doesn’t.
Economic expectations for Germany "significantly improving" as rate cut hopes build
Economic confidence in Germany has picked up, even though conditions in Europe’s largest economy remain tough.
Economic institute ZEW has reported that this Indicator of Economic Sentiment for Germany has risen to 31.7 points in March, up 11.8 points on February.
Germany Zew Economic Sentiment Indexhttps://t.co/2TOP8G26fS pic.twitter.com/d9IHiis13X
— TRADING ECONOMICS (@tEconomics) March 19, 2024
However, its indicator for Germany’s current economic situation barely changed, rising by 1.2 points to -80.5.
Germany is on the brink of recession; its economy shrank by 0.3% in the final quarter of last year, having stagnated for the previous six months.
Despite that, ZEW president professor Achim Wambach says hopes of lower interest rates are lifting confidence:
“Economic expectations for Germany are significantly improving. At the same time, more than 80 per cent of those surveyed anticipate that the ECB will cut interest rates in the next six months.
This could explain the more optimistic outlook for the German construction industry. The German export sector benefits from the increased economic expectations for China as well as the expected depreciation of the dollar against the euro.
Meanwhile, the assessment of the economic situation remains at a very low level. This development somewhat diminishes the increased economic expectations.”
Updated
Back in the UK, housebuilder Crest Nicholson has guided that it could construct 10% fewer homes this financial year.
Crest Nicholson says it expects to complete between 1,800 and 2,000 homes in the 2024 financial year, down from 2020 in 2023, citing “the low level of reservations in the first two months of the financial year”.
Sales prices are expected to remain stable this year, it adds.
Crest Nicholson adds that it has discovered build defects at four sites, which will cost up to £15m to fix.
The head of Japan’s biggest business lobby has welcomed today’s rise in interest rates, saying he Bank of Japan has made “the appropriate policy decision at the appropriate time.”
Masakazu Tokura, chairman of Keidanren, told reporters:
“I think the BOJ has caught the indications that a virtuous cycle between wages and prices has started.”
DFS cuts guidance after furniture demand weakens
Sofa retailer DFS has warned that demand has weakened, as it cuts its sales and profit targets for this year.
DFS told shareholders that market demand has weakened significantly over the last two months, with orders across the market down 16% year-on-year in January and February.
DFS says its gross sales have fallen by 5.6% year on year, with orders down 1.1%, a sign that consumers are cutting back on big-ticket items.
As a result, it has cut its guidance for pre-tax profits this year by £10m, to £20m-£25m.
Its revenue forecast has been cut by up to £65m, to £1bn to £1.015bn, although this excludes the risk of more delays to shipments in the Red Sea.
DFS adds:
If the Red Sea issues continue through to our year end, potential delivery delays could result in up to £4m of profit being deferred into our following financial year.
Bank of Japan: What the experts say
Reaction to today’s landmark interest rate rise in Japan is pouring in.
The Saxo Strategy Team say:
The Bank of Japan has entered a new era as it scrapped negative interest rates and yield curve control, while also ending its ETF purchases.
The central bank has set the short-term interest rate at between 0-0.1% in its first rate hike since 2007, although comments suggested that they expect accommodative conditions to persist for some time which is a signal that concurrent rate rises are unlikely.
The fight against the risks of deflation in Japan is officially over, explains Susannah Streeter, head of money and markets at Hargreaves Lansdown:
Aimed a conquering falling prices, ultra-loose monetary policy has been in place since 2016 and the Bank of Japan has been ultra-cautious about shifting stance, even though core inflation has been running at 2% over the year.
But now that Japan’s biggest companies, through a negotiated deal with the largest industrial union, have agreed to raise wages by 5.28%, and consumer price inflation hit 2%, the Bank has finally judged it prudent to make a move.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:
We expected – at the start of this year – that March would bring a Fed rate cut. It brought a BoJ rate hike instead.
Yes, the Bank of Japan (BoJ) scrapped its negative rate policy, raised the rates from -0.10% to 0%, ditched its YCC policy and ended the purchases of ETF and Japanese real estate investment trusts. However, the bank said that it will continue to purchase sovereign bonds with ‘broadly the same amount’ and that the policy will remain accommodative for now.
The latter caught traders attention more than the rest. While you would’ve clearly expected to see the Japanese 10-year yield and the yen to rally on the back of such hawkish shift, the USDJPY spiked above 150, the EURJPY rallied past 163 and the 10-year JGB yield is down by almost 3.5%.
Incidentally, the Fed (the US Federal Reserve) announces its interest rate decision on Wednesday afternoon (6pm UK time), with ‘no change’ widely expected.
Shares in Unilever have risen by almost 5% at the start of trading in London – to the top of the FTSE 100 leaderboard.
Traders may approve of its plans to spin off its ice cream businesses, as well as the acceleration of its growth plan.
Matt Britzman, equity analyst at Hargreaves Lansdown, says:
Action is what shareholders wanted to see from the new team at the top, and that’s what’s been delivered today. Ice Cream always looked like the odd one out when you compare it to other product lines, and performance has struggled of late.
It’s not a huge shock to see this move, but it’s something prior management wasn’t able to deliver. Unilever’s not an overly expensive name at the minute so expect markets to react positively to the news, perhaps more due to the decisive action than anything else.”
Unilever to cut 7,500 jobs under restructuring plan
Well, this is grim.
Consumer goods giant Unilever has announced plans to cut 7,500 office jobs worldwide, as part of “a major productivity programme”.
Unilever is also spinning off its ice-cream division, which makes Wall’s, Ben & Jerry’s and Magnum.
It says its productivity programme will cut costs by around €800m over the next three years, by cutting complexity and duplication, standardising processes, and driving efficiencies through “operational centres of excellence”
Unilever, which has been under pressure from activist investor Nelson Peltz to shake up its business, says these proposed changes are expected to impact around 7,500 predominantly office-based roles globally.
Hein Schumacher, CEO of Unilever said:
“Under the Growth Action Plan we have committed to do fewer things, better, and with greater impact.
The changes we are announcing today will help us accelerate that plan, focusing our business and our resources on global or scalable brands where we can apply our leading innovation, technology and go-to-market capabilities across complementary operating models.
Updated
Finally, BoJ governor Ueda was coy about when Japan’s central bank might start to wind down its balance sheet.
That balance sheet has swelled due to its bond purchases conducted to keep long-term interest rates low.
Ueda says:
“We will continue to buy roughly the same amount of bonds as in the past. As for the future, we will at some point eye shrinking our balance sheet given we’ve ended our extraordinary monetary easing. But we can’t specify now when that will happen.”
Kazuo Ueda adds that the BoJ needs to be “mindful” of the risks that inflation is lower, or indeed higher, than it expects.
He says:
“As for downside risks, there are numerous risks surrounding the global economy such as the chance of a negative market shock. There’s also the risk that consumption may not recover as much as expected.
As for upside risk, that would a scenario in which corporate price and wage-setting behavior - which is already changing - makes further dramatic changes. I don’t think the chance of this upside risk materializing is high. But we need to be mindful of such a risk.”
Kazuo Ueda also signalled that the BoJ could raise interest rates higher, if conditions require it.
The BoJ governor says:
“If our price forecast clearly overshoots or, even if our median forecast is unchanged, we see a clear increase in upside risk to the price outlook, that will likely lead to a policy change.”
BoJ governor Kazuo Ueda says there is a higher chance that Japan will hit its target of maintaining inflation at 2%.
He tells reporters:
“The likelihood of inflation stably achieving our target has been heightening, including from January through March ... As a result, the likelihood reached a certain threshold that resulted in today’s decision.
If the likelihood heightens further and trend inflation accelerates a bit more, that will lead to a further increase in short-term rates.”
Core inflation in Tokyo rose to 2.5% year-on-year in February, data released this month shows. However, core inflation (stripping out energy and food costs) slowed.
BoJ holds press conference
Bank of Japan governor Kazuo Ueda is briefing reporters in Tokyo now about today’s interest rate decision.
Ueda points out that the move will only raise short-term interest rates by 0.1%, and pledges that the BoJ will “increase bond buying nimbly” if it sees a sharp rise in long-term rates.
Ueda says:
I don’t think deposits or lending rates will rise sharply from today’s decision.
“We reverted to a normal monetary policy targeting short-term interest rates, as with other central banks. We will choose the appropriate level of short-term rates in line with our economic and price outlook. But in doing so, we need to be mindful that there is some distance for inflation expectations to reach 2%. When we focus on this gap, it’s necessary to maintain accommodative monetary conditions even under a normal monetary policy framework.”
(Thanks to Reuters for the translation).
Updated
Yen weakens to two-week low
Perhaps surprisingly, the Japanese yen weakened after the Bank of Japan raised interest rates today.
The yen fell through the 150 point against the US dollar, down from 149, the lowest in two weeks.
Typically, higher interest rates should support a currency. But the BoJ’s move had been well telegaphed, so perhaps it was priced in.
Kyle Rodda, senior financial market analyst at capital.com, explains:
The Bank of Japan lifted rates for the first time in seventeen years while also dialling back its asset purchases and scrapping its yield curve control program. Despite swaps implying that – at best - five points of the 10-point hike was baked into the market, the reaction was limited, if not slightly paradoxical.
The Yen slid, and the Nikkei popped, the latter taking its lead from the former, which arguably has been sold after a build-up in long positioning going into the event. Nevertheless, the meeting was one of the market’s great non-events, although there could still yet be a response when European and US markets come online.
Updated
Introduction: Bank of Japan ends era of negative interest rates
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s the end of an era in central banking today, as Japan halts its policy of operating negative interest rates.
The Bank of Japan has raised borrowing costs for the first time since 2007, choosing to tighten policy after fears of deflation ebbed.
It is raising Japan’s interest rates from -0.1% to between zero and 0.1%, ending an eight-year stint of negative borrowing costs, brought in to stimulate spending and borrowing.
#Japan raises interest rates for 1st time in 17yrs amid higher inflation & rising wages. BoJ also scrapped its complex yield curve control program while pledging to continue buying long-term govt bonds as needed. It also ended its purchases of ETFs. Nikkei gained 0.7%, 10y… pic.twitter.com/HNSIGqibUr
— Holger Zschaepitz (@Schuldensuehner) March 19, 2024
It has also ended its yield curve control (YCC) policy, under which it has been capping long-term interest rates around zero since 2016.
The move makes the BoJ the last central bank to unwind the ultra-loose monetary policy imposed after the financial crisis.
Announcing the move, the BoJ declared that its goal of hitting 2% inflation in a sustainable and stable manner was in sight, adding:
“It [the BoJ] considers that its large-scale monetary easing measures have fulfilled their roles, including the negative interest rate policy and the yield curve control.”
Several major Japanese companies, including Honda, Nippon Steel and ANA Holdings, have recently handed workers their biggest pay rise in over three decades, which has bolstered policymakers’ hopes that prices will rise sustainably.
The BoJ’s timing is slightly ironic, coming as other major central banks ponder how soon they can risk loosening policy. Both the US Federal Reserve and the Bank of England are expected to leave rates on hold this week.
Markets have taken the news in their stride, with Japan’s Nikkei 225 index rising by 0.66% to close at 40,003 points, up 263.16, today.
Stephen Innes, managing partner at SPI Asset Management, says:
As the Bank of Japan (BoJ) made significant policy changes, crossing what can be seen as a Rubicon in its monetary approach, the moves had been extensively communicated to the market beforehand.
Consequently, the adjustments were largely anticipated, and the markets had priced them in almost perfectly.
BoJ governor Kazuo Ueda is giving a press conference now, to outline the decision, so we’ll have more details shortly…
The agenda
10am GMT: ZEW index of eurozone economic sentiment
12.30pm GMT: US housing starts for February
3pm GMT: Chancellor of the exchequer Jeremy Hunt faces questions from the Economic Affairs Committee
