Report Makes HMRC Recommendations 
A Treasury Committee report has made a number of suggestions to the HMRC, including making sure that tax disputes with big companies are dealt with in exactly the same way as other taxpayers.

The report by the MPs, although supportive of recent moves by HMRC, such as its campaigns against specific groups of tax dodgers, believes that HMRC should introduce a number of changes, which the MPs believe will help improve public confidence in the organisation.

George Mudie MP, the chairman of the Treasury Committee, said: “Taxpayers must have confidence that HMRC is being even-handed at all times, otherwise rates of voluntary compliance with the tax code could suffer.”

Among the suggestions, the Treasury Committee have said that HMRC should spend less time and effort in trying to calculate how much tax goes uncollected each year; encourage greater voluntary tax paying by the public and offer a general disclosure "facility" for all tax payers, like the one for offshore account holders.

They have also said that HMRC should look to vigorously prosecute people who do not admit to hiding taxable money and assets offshore.

HMRC recently decided that all tax deals worth more than £100m would be handled from now on by a senior official acting as an "assurance commissioner"; and Mr Mudie said of this decision by HMRC: “It is encouraging that HMRC has recognised that its processes for settling tax disputes were flawed and is implementing changes.”

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Quantitative Easing Knocks Value of Final-Salary Pension 
The National Association of Pension Funds (NAPF) has claimed that quantitative easing has knocked £90 billion off the value of final-salary pension schemes.

The quantitative easing policy, which was started by the Bank of England three years ago in an effort to help starve off recession, has made government bonds more expensive to buy, with lower returns for investors; which has had the knock-on effect of making pensions more expensive to fund and therefore increased their deficits.

Joanne Segars, the chief executive at NAPF, said: “Businesses running final-salary pensions are being clouted by quantitative easing.

“Deficits that were already big now look even bigger because of its artificial distortions.

“Firms are legally obliged to fill the deficits, and that diverts money away from jobs and investment, and will lead to further closures of final salary pensions in the private sector.”

NAPF have calculated that the first wave of quantitative easing has increased costs of funding final-salary pension schemes by around £180 billion.

The association have also claimed that the policy’s impact on annuity rates means someone with a £26,000 pension pot retiring today would receive 22% less income than if they’d annuitised four years ago; making them £440 a year worse off.

The National Association of Pension Funds are now calling on the Bank of England and the Pension Regulator to make it clear that rising deficits were artificial.

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Tax Cuts Have To Be Paid For 
On Tuesday night, the Chancellor, George Osborne told the annual EEF Manufacturers’ Dinner that there will be no easing of austerity in this month’s Budget, as any tax cut “has to be paid for.”

With only two weeks to go until George Osborne unveils his Budget and with the Chancellor facing calls for tax reforms to stimulate growth, Mr Osborne’s warning to the EEF that “the days of unfunded giveaways are over – and they’re not coming back in this budget” will come as a disappointment to those who have called for cuts to the Chancellor’s austerity measures.

The Chancellor made it clear during the dinner that although tax changes are likely, he will claw back the lost revenue elsewhere, such as through higher taxes in other areas or via spending cuts.

Mr Osborne told the EEF: “I can tell you: we are not going to put that credibility and stability and low interest rates at risk. Our action is bringing the deficit down - but it is still far too high.

“The days of un-funded giveaways are over - and they're not coming back in this Budget. Everything has to be paid for.”

Whilst the warning that unfunded giveaways are over will have been disappointing to hear, the Chancellor also offered good news to businesses, as he pledged to have a flagship credit-easing scheme to encourage lending to small businesses up and running by March 21.

The National Loan Guarantee Scheme is set to see £20 billion of taxpayers money used to guarantee funding for UK banks, on the condition that the money is lent to small businesses. A detailed announcement is expected next week.

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Banks Failing Small Businesses 
A report published yesterday revealed that the majority of small firms who applied for an overdraft for the first time were rejected.

The SME Finance Monitor report, which was commissioned by banks, found that almost forty percent of cash-strapped businesses were turned down for a first-time loan; whilst many small firms are still struggling to survive – despite the government’s attempts, via Project Merlin, to get banks to increase their lending to small businesses last year.

Along with forty-percent of small firms being turned down for a first-time loan, the report also found that of the firms which applied for an overdraft, fifty-five percent got no facility; and less than a third of businesses received what they asked for and took it.

Labour’s shadow business secretary, Chuka Umunna, admitted that the findings of the report were “worrying” and said: “At a time when we need more people to be starting and growing businesses, it is worrying that more than half of firms applying for an overdraft for the first time last year were rejected.

“Businesses are struggling to get the finance they need and many are being discouraged from applying in the first place.
“This is something that both ministers and the banks need to address urgently.”

Overall Project Merlin’s gross lending target to small firms was £76 billion; yet banks managed to hand out only £74.9 billion – a shortfall of £1.1 billion.

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UK Forecast Cut 
Business lobby group, the British Chamber of Commerce, has warned that growth this year will be slower than previously forecast; but added that the UK will avoid a double-dip recession.

In its quarterly forecast, the British Chamber of Commerce has predicted that the UK economy will grow by 0.6% rather than the 0.8% it had previously forecast, warning that the UK’s economy still faced serious challenges with debt levels that are too high and unemployment set to rise to almost three million by the start of next year.

John Longworth, the Director General of the British Chamber of Commerce has urged the Chancellor, George Osborne, to “pull out the stops” in the budget to help drive growth, saying: “Our economic forecast underlines the need for the Government to deliver a Budget that will bring confidence to businesses.

“Businesses up and down the country are doing their utmost to find new markets and grow their firms, despite the difficult economic challenges they face. Only the private sector will drive recovery and help deliver public services, like education, healthcare and pensions.

“A sustainable recovery depends on creating the right conditions to empower businesses to drive growth. Companies need the best possible environment to generate wealth and create jobs.

“The Government must stick to plan A, but also stimulate growth within the economy. There is room within the current spending envelope for measures that will encourage firms to export, invest and grow.”

The quarterly forecast, from the British Chamber of Commerce, has also warned that growth is likely to be lower than expected in the second quarter of 2012 due to the extra bank holiday in June for the Queen’s Diamond Jubilee; whilst in July and August there could be unusually high growth figures due to the Olympics.

It added that growth from exports and business investment will prevent the UK from falling back into a recession this year, with prospects set to improve further in 2012, when the British Chamber of Commerce predict the economy will expand by 1.8%.

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