Business leaders have welcomed a government climbdown on the taxation of companies' foreign profits, but said that there was still more work to do before both sides could reach an agreement that would pave the way for a new tax policy, The Times reports.
The Treasury outlined its reversal on its controversial tax proposals in a letter sent to the CBI and made public yesterday. Jane Kennedy, the Financial Secretary to the Treasury, said that the Government planned to make dividend payments on foreign profits exempt from UK tax. She said that plans to police the exemption would be dropped in the existing form.
However, she said that the cost to the Treasury, estimated at hundreds of millions in potential lost tax take, meant that firm proposals could not be drawn up in time for next year.
“Based on these estimates, my current view is that the fiscal risks are too great to enable us to introduce a dividend exemption in next year's Finance Bill,” she wrote.
HEDGE FUNDS MAY have made more than £1bn from shorting shares in HBOS, whose £4bn rights issue faced intense pressure from investors betting on the share price falling, according to The Independent.
Almost 15%, or about 550m, of the bank's shares are out on loan, according to Data Explorers. That stock will mainly be lent to funds who have sold the shares expecting to buy them back cheaper.
HBOS's last closing share price before the cash call was announced was 495.24p, but the shares plunged during the rights issue process. At the closing price of 264.5p yesterday, short funds who bought at the closing price before the cash call was announced on 29 April would have made 230.74p a share, or a total of £1.27bn.
THE CITY WATCHDOG has laid out plans to allow banks to tap the Bank of England for emergency funding without informing the market, in a move which might avoid a repeat of the run on the bank which led to the collapse of Northern Rock, The Telegraph reports.
Under the European Union's market abuse directive, regulated firms have to disclose price sensitive information. However, the Financial Services Authority yesterday said there were potentially situations where banks would be allowed to keep it secret if they had applied to the Bank.
The main case for an exception would be if disclosure could panic investors and lead to fears for a bank's solvency, the regulator said. The FSA laid out a series of proposals in a consultation document. It invited industry groups to respond by September 30.IFAonline
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