News

Online retail giant Amazon is being investigated by the Competitions and Markets Authority (CMA) over concerns its practices could result in a worse deal for customers.

It is understood the investigation will be looking at how Amazon’s operations affecting sellers on its UK Marketplace may be anti-competitive.

This new investigation follows a current European Commission probe looking into similar concerns. With the UK no longer part of the European Union, the original enquiry does not cover issues within our borders.

How Amazon works

Amazon’s Marketplace sells a percentage of products through its own retail business. However, a large proportion are supplied by third-party sellers. Amazon provides services to these sellers, including those that are essential to make sales, such as matching sellers with consumers. It also offers optional services that incur additional fees, such as Amazon’s ‘Fulfilment by Amazon’ service. This handles some aspects of the sales process, including storage, packaging, and delivery.

The CMA investigation will consider whether Amazon has a dominant position in the UK and whether it is abusing that position and distorting competition by giving an unfair advantage to its own retail business or sellers that use its services, compared to other third-party sellers on the Amazon UK Marketplace.

The investigation will focus on three main areas:

• How Amazon collects and uses third-party seller data, including whether this gives Amazon an unfair advantage in relation to business decisions made by its retail arm.
• How Amazon sets criteria for allocation of suppliers to be the preferred/first choice in the ‘Buy Box’. The Buy Box is displayed prominently on Amazon’s product pages and provides customers with one-click options to ‘Buy Now’ or ‘Add to Basket’ in relation to items from a specific seller.
• How Amazon sets the eligibility criteria for selling under the Prime label. Offers under the Prime label are eligible for certain benefits, such as free and fast delivery, that are only available to Prime users under Amazon’s Prime loyalty programme.

No conclusions reached

Sarah Cardell, General Counsel at the CMA, said: “Millions of people across the UK rely on Amazon’s services for fast delivery of all types of products at the click of a button. This is an important area so it’s right that we carefully investigate whether Amazon is using third-party data to give an unfair boost to its own retail business and whether it favours sellers who use its logistics and delivery services – both of which could weaken competition.

“Thousands of UK businesses use Amazon to sell their products and it is important they are able to operate in a competitive market. Any loss of competition is a loss to consumers and could lead to them paying more for products, being offered lower quality items or having less choice.”

The CMA has not reached any conclusions at this stage as to whether or not competition law has been infringed.

Have you ever found yourself in financial distress, struggling to juggle the bills and balance the books? Or perhaps you have supported someone with their debt issues.

The Government is looking for input from anyone who has been touched by severe money problems as it reviews the personal insolvency framework for England and Wales.

Anyone with any experience is being asked to share their views and give evidence on the effectiveness of the framework.

A call for evidence seeking stakeholders’ views and evidence on the framework and whether it serves the needs of debtors and creditors in the 21st century was announced on Monday, 5 July.

The last fundamental review of personal insolvency was carried out 40 years ago. The Government wants to see how the current set-up supports those in financial difficulty and how it is funded.

Fair system needed

Business Minister Lord Callanan said: “Any vibrant economy relies on people spending money, and for many, using credit is an important part of that. However, in situations where people are unable to repay borrowed money, it’s vital that we have a system that is fair to both them and their creditors.

“Our current personal insolvency framework has been in place for many years and so it is only right that we examine whether it works as effectively as it should in today’s world.”

The Government would welcome responses from people who have experienced debt, creditors and their representatives, trade bodies, debt advisers and charities, insolvency practitioners, recognised professional bodies, academics, and any other interested parties. Responses will help to inform the understanding and identify whether reforms are needed.

Peter Tutton, Head of Policy, Research and Public Affairs at StepChange Debt Charity, said: “We know from our clients that personal insolvency remains poorly understood, a source of potential fear and perceived stigma, and in many cases expensive to access at the outset and risky if circumstances change.

“We look forward to using the evidence from our client experience to help inform the review. We would see success as delivering an agreed pathway, supported by Government, towards a personal insolvency framework that works with debt advice to deliver sustainable, affordable and fair debt relief for those who need it, under a well-regulated and effective supervisory regime.”

Submit your responses

Eric Leenders, UK Finance Managing Director, Personal Finance, said: “As part of a highly regulated sector, our members work closely with their customers, and with debt charities, to provide tailored support to those facing into financial difficulty. This support always aims to help customers without the need for insolvency solutions. However, where such solutions are used, they should be accessible, understandable and fair for both borrowers and lenders. As such we welcome this review and will be happy to contribute to the call for evidence.”

Responses for the call for evidence must be received by 24 October 2022.

If you have any concerns about your finances, talk to a member of our team.

In a business context, goodwill could be defined as the amount that a buyer would be prepared to pay for your business over and above the valuation of the business net assets.

Very often, it is the relationships that you have built with your customer base that is the most valuable asset. Buyers will be keen to acquire these relationships and will place greater reliance on this “asset” than any equipment or other on-balance sheet item you may be selling.

How is goodwill valued

There is no fixed formula for valuing goodwill. Its value is finalised by negotiation between buyers and sellers.

There are formulaic methods for including goodwill based on the ability of the buyer to recover their investment, from the business purchased, over a fixed term, say three to five years. Unsurprisingly, buyers of higher risk businesses will want a faster pay-back.

Annual valuations

Although your valuation of your business may be higher or lower than the amount a buyer is prepared to pay there is value on using a consistent process to produce an annual valuation. In this way you can monitor the growth of your business and work at developing those characteristics that will secure a higher price when you come to sell, for example, building an independent management team.

Pensioners on low incomes will find it easier and quicker to apply for or renew their free TV licence under reforms laid in Parliament today.

The legislative change will ease the administrative burden put on eligible over-75s when applying for a free licence. As it stands those affected are required to obtain and share documentation with the BBC to prove they are in receipt of Pension Credit.

As the global cost of living continues to rise due to the economic impact of the pandemic and war in Ukraine, this measure will support eligible pensioners struggling to keep on top of their bills to claim the £159 annual saving more quickly and with less hassle.

Under the new plans the BBC will be able to verify automatically whether a person applying for a free TV Licence is on Pension Credit with the Department for Work and Pensions (DWP). It will mean in most cases the 7,000 people who apply to TV Licensing for a free licence per month will simply need to apply online or over the phone without any need to supply additional paperwork.

In 2020 the BBC stopped providing free TV licences for all over-75s, but those in receipt of Pension Credit – a benefit which provides extra money for people on the state pension and on a low income – are still eligible.

Digital Secretary Nadine Dorries said:

“The BBC’s disappointing decision to stop providing free TV licences for all over-75s has left low-income pensioners who remain eligible jumping through administrative hoops to avoid paying the charge.

“The changes mean those receiving Pension Credit will get the savings with minimum fuss, ensuring more people get the support they are entitled to as we tackle the cost of living and grow the economy.”

Minister for Pensions Guy Opperman said:

“We want everyone to claim the benefits to which they are entitled, including Pension Credit which acts as a gateway for other benefits such as the free TV licence. This change will help reduce the administrative burden on over-75s and put their minds at ease.”

A statutory instrument has been laid in Parliament today to amend the Television Licences Act 2000. The changes to the application process are expected to come into effect next year.

1 July 2022 – Due date for corporation tax due for the year ended 30 September 2021.

6 July 2022 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2022 – Pay Class 1A NICs (by the 22 July 2022 if paid electronically).

19 July 2022 – PAYE and NIC deductions due for month ended 5 July 2022. (If you pay your tax electronically the due date is 22 July 2022).

19 July 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2022.

19 July 2022 – CIS tax deducted for the month ended 5 July 2022 is payable by today.

1 August 2022 – Due date for corporation tax due for the year ended 31 October 2021.

19 August 2022 – PAYE and NIC deductions due for month ended 5 August 2022. (If you pay your tax electronically the due date is 22 August 2022)

19 August 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2022.

19 August 2022 – CIS tax deducted for the month ended 5 August 2022 is payable by today.

HMRC published a report last month that acknowledges it was only able to recover 95% of the taxes assessed for 2020-21.

In monetary terms, the tax gap for the 2020-21 tax year is £32 billion. At 5.1%, there has been no change in the percentage tax gap compared to the previous year, although the monetary value has fallen by £2 billion from £34 billion in the 2019 to 2020 tax year.

The total tax due to be paid fell from £672 billion in 2019-20 to £635 billion in 2020-21 due to the economic impact of COVID-19.

The estimate for the 2020-21 tax gap is the best assessment based on the evidence available at this time. There is some uncertainty for the tax gap estimates for the first year of the pandemic and estimates could be subject to revisions in future years.

HMRC has published tax gap estimates since the 2005-06 tax year. There has been a long-term reduction in the overall tax gap from 7.5% in 2005-06, to 5.1% in the 2020-21 tax year. The reduction is a result of the government’s action to help taxpayers get their tax right first time, whilst bearing down on the small minority who are deliberately non-compliant.

How does this affect the tax we pay?

Any taxes that are unpaid will create a shortfall in revenue that will add upward pressure to the taxes we pay – to make up the difference.

Current fiscal policy is wedded to the notion that taxes fund public expenditure in which case any tax gap will leave the Treasury short of funds to meet its expenditure commitments.

Unless the expenditure side of the equation can be reduced, by departments agreeing to a drop in funding, this shortfall – the tax gap – will have to be covered by short-term borrowing. Longer term, the shortfall may encourage the Treasury to seek increases in taxation.

Although 5% may not seem to be a significant percentage it amounts to £32bn. This is equivalent to double the amount of tax assessed on capital gains in a full tax year.

Business owners would be reluctant to accept that 5% of their hard-won sales were written off as bad debts each year and we can assume that HMRC will take steps to recover as much of tax assessed as is possible.

It will be interesting to see how effective HMRC will be in the coming year as inflation and a reduction in economic activity start to impact our ability to pay taxes due.

The trivial benefits exemption allows you to provide benefits to employees without your employee suffering a tax charge on the benefit. Likewise, there is no Class 1A National Insurance for you, the employer, to pay.

To count as ‘trivial’ for the purposes of the exemption, the benefit must meet all of the following conditions:

• the cost of providing the benefit is £50 or less.
• the benefit is not cash or a cash voucher.
• your employee is not contractually entitled to the benefit.
• the benefit is not provided in recognition of particular services.

Unless your company is a close company (generally a small company) and trivial benefits are provided to a director or other office holder, there is no limit on the number of trivial benefits that you can give to a particular employee in the tax year.

However, the cumulative provision of trivial benefits to directors or other office holders of close companies is capped at £300 for each tax year.

If you provide the benefit to a number of your employees and it is impracticable to work out the actual cost of each individual benefit provided to each individual employee, you can work out the average cost instead. As long as this does not exceed £50 the cost condition will be met.

The government has announced their intention to radically overhaul the rights of tenants. The changes announced include:

For tenants

• Helping the most vulnerable by outlawing blanket bans on renting to families with children or those in receipt of benefits.
• For the first time, ending the use of arbitrary rent review clauses, restricting tribunals from hiking up rent and enabling tenants to be repaid rent for non-decent homes. This will make sure tenants can take their landlord to court to seek repayment of rent if their homes are of unacceptable standard.
• Making it easier for tenants to have much-loved pets in their homes by giving all tenants the right to request a pet in their house, which the landlord must consider and cannot unreasonably refuse.
• All tenants to be moved onto a single system of periodic tenancies, meaning they can leave inferior quality housing without remaining liable for the rent or move more easily when their circumstances change. A tenancy will only end if a tenant ends it or a landlord has a valid reason, defined in law.
• Doubling notice periods for rent increases and giving tenants stronger powers to challenge them if they are unjustified.
• Giving councils stronger powers to tackle the worst offenders, backed by enforcement pilots, and increasing fines for serious offences.

For landlords

• A new Private Renters’ Ombudsman will be created to enable disputes between private renters and landlords to be settled quickly, at low cost, and without going to court.
• Ensuring responsible landlords can gain possession of their properties efficiently from anti-social tenants and can sell their properties when they need to.
• Introducing a new property portal that will provide a single front door to help landlords to understand, and comply with, their responsibilities as well as giving councils and tenants the information they need to tackle rogue operators.

According to government sources these reforms will help to ease the cost-of-living pressures renters are facing, saving families from unnecessarily moving from one privately rented home to another and thereby saving hundreds of pounds in moving costs.

If your taxable income exceeds £100,000 you will suffer a reduction in your personal tax allowance.

For every £2 that your income exceeds £100,000, £1 will be knocked off your allowance. The reduction is progressive and means that once your income exceeds £125,140 your personal allowance of £12,570 will be reduced to zero.

As Income Taxpayers with income in the range, £100,000 to £125,140, are paying tax at 40%, the gradual loss of the personal tax allowance means that the effective rate of tax in this range is 60% not 40%.

Accordingly, if you are affected by this process, tax planning to reduce your income below the £100,000 threshold would be cost effective.

This may involve consideration of pension top-ups, deferring income, sacrificing salary for additional holidays, or other planning options that may be available to you.

Please call so we can help you consider your options.

Finance Secretary Kate Forbes, of the Scottish government, made a number of suggestions to help households and businesses who are struggling to cope with inflation.

With inflation reaching a 40-year high of 9 per cent, and forecast to rise higher, Ms Forbes has written to the Chancellor of the Exchequer urging the UK Government to use the £30 billion fiscal headroom it has available to help those struggling in the face of rising bills.

Her suggestions are reproduced below.

"I am proposing four principles that should guide a response from the UK Government:

"Firstly, ensure that the fiscal support package is targeted at the households and businesses that most need support. The package should aim to offset the disproportionate burden of the cost-of-living crisis on the least well-off, and I would urge you to consider as a starting point of any package:

• An emergency cost of living cash payment to all UK households with below median income, tapered to provide more support to those at the lower end of the income distribution. I would suggest this be up to £1,000 to those on the lowest incomes, to be delivered directly as cash support at periods across the fiscal year. Providing money directly, without a link to specific bills, would provide households with the means to manage the cost-of-living crisis however it is affecting them the most, whether it is on food, transport or energy bills, and offset the impact of the cost-of-living crisis for those on the lowest incomes. The Resolution Foundation has also called for a policy intervention of a similar design.
• Permanently uprate all social security benefits as if they had been increased by 10% in April to match the current level of inflation, as proposed by the Centre for Social Justice. In April, we increased our eight Scottish social security benefits by 6%, reflecting the higher inflation expected at that time.
• A further £25 uplift to Universal Credit, and for this to be extended to legacy benefits.
• Increase the National Living Wage rate of £9.50 to the Real Living Wage rate of £9.90 for all over eighteen.
• A temporary suspension of VAT on household energy bills, which we estimate would save the average household around £100 a year at current prices.
• Extend the £350 energy rebate scheme to small and medium enterprises and remove the requirement to repay to the £200 energy bill reduction component.
• Remove standing charges for anyone with a pre-payment meter. The energy price increases will be felt more severely for consumers using prepayment meters who are often subject to higher prices for energy than through other means such as direct debit, and as standing charges must still be paid even if there is no credit on the meter, and top ups can be swallowed up before energy can be bought. Removing standing charges would reduce the risk of self-disconnection if they cannot afford their energy costs.

"Collectively, we estimate this package can be comfortably implemented within the £30 billion fiscal headroom available to you, even before allowing for any additional revenue from a windfall tax.”

It will be interesting to see if the Treasury respond to these ideas or any others aimed at reducing the current cost of living crisis.