In a week that’s been generally dominated by the Budget, the Financial Times has had more than its share of good chunky stories to tell about the Finance Bill’s implications for savers and taxpayers. And personal finance editor Claer Barrett launches a seasonal reminder that December is an excellent time to top up on company pension contributions. But it’s not all been about individuals’ engagements with HMRC.
Although, in a way, it has. The FT reports that the Revenue is getting personally tough with senior corporate executives who allow breaches of the accounting codes to take place on their watch. Last year, the paper reports, no fewer than 115 senior finance directors have been fined up to £5,000 for failing to ensure “appropriate tax accounting arrangements” – which might mean not having their paperwork in order. That’s two and a half times as many directors as in 2009, when HMRC’s powers to fine senior individuals were first introduced.
It’s been a bumpy road to enforcement, by the look of it. The FT says that the Revenue initially used its powers in a softly-softly manner, but that the fines were ramped up during 2015 to reach a record 181 executives. Last year’s slightly reduced figure involved only companies with annual revenues of more than £200 million, or with assets of more than £2 billion – a response, perhaps, to protests from the industry that HMRC was inappropriately holding small companies to the same exacting standards as their larger brethren.
The target list was topped last year by financial services and retail sectors, each of which saw 16 personal penalties being imposed. But the energy sector was coming up fast on the outside rail with 14 penalties, up from nine in 2015. That would seem to imply that a lot of transgressors are in smaller or less high-turnover businesses. And the FT’s various respondents from the legal and accountancy professions seem unanimous in their view that HMRC’s heavy-handed approach is beginning to spread alarm and despondency among the smaller fry as well as the big fish.
Just in case the low-profile Budget has lulled you into an unaccustomed sense of security, The Telegraph seems determined to wake you up. A Doomsday report from data from Bank of America Merrill Lynch on institutional investment patterns reveals the shock truth that money managers are currently holding no more than 4.4% of their portfolios in cash at the moment – the lowest percentage since October 2013.
What’s so wrong about that? Mainly, according to the Telegraph, that it reflects a wall-of-worry situation. Managers know full well that equities are fully-priced at the moment, but the absence of alternatives has left them feeling queasy – but with a sense that there’s no alternative but to join the jostling throng. The worry that new investments may lose money is often overpowered by the fact that nobody wants to end the Christmas season widely askew of the market trend.
Which is not to say that everybody is following the herd up the wall of worry. The Telegraph quotes managers from Rathbones Total Return Portfolio and from Henderson’s Core 3 Income multi-asset, all of whom say they are feeling fine about holding as much as 29% cash at the moment. A bond or equity reversal, they say, would present them with ideal opportunities to hoover up the bargains.
Does that make you feel any less queasy? No, we thought not.
As was the case for Saturday, the budget news has dominated the Sunday money pages too, with the changes to stamp duty for first time buyers being the most popular angle as journalists try to highlight the winners and losers from this change announced last week. We’ll spare you the details – if you need to know more about this – or indeed any budget-related detail – there’s plenty of info out there.
The Financial Mail on Sunday ( by the way it’s congratulations to Jeff Prestridge and his team for picking up the PFS consumer finance award at last Wednesday’s awards ceremony -Ed) takes a look at the Martin Currie Asia Unconstrained Trust in its fund focus column this weekend. Prestridge reports that the fund (previously called Martin Currie Pacific) has overseen a more dividend- friendly policy in response to a wish among investors for a growing income.
A new investment approach has also been introduced which involves backing a small portfolio of companies – no more than 30 – that the manager Andrew Graham, his team and outside ‘forensic’ accountants are convinced will come up trumps. To complete the overhaul, the trust no longer holds any Japanese equities.
Although it is still early days – the new focus on dividends was only implemented in the summer – the trust seems in good shape performance wise says Prestridge. The only blip is the fact that despite the changes the share price remains at a significant discount – 13 per cent plus – to the value of the trust’s assets. It remains to be seen whether this will reduce as more evidence of its new focus on dividends is revealed.
The Mail on Sunday’s Jeff Prestridge reminds us that last week’s rather tame Budget should still be considered an impetus to re-examine our assumptions. Just because Philip Hammond didn’t grasp any of the most painful nettles – such as pension reform, or widening the VAT net to smaller businesses – we should still be aware that probably the only thing holding him back from such bold steps was the fear of electoral retribution. And that the UK economy is still in a perilous position.
But taking a proactive position toward your finances isn’t necessarily the right thing for everybody. Prestridge is talking particularly about the 2015 Pension freedoms, which he says has “turned into a free-for-all” where “people are making key decisions without access to professional advice”, where fraudsters are scooping out funds from gullible investors, and where workers are being poorly advised to move out of company pension schemes where they’d be better off staying in.
Who are we to disagree?
Meanwhile, John Chatfeild-Roberts has been talking to The Sunday Telegraph about his approach to the management of the Jupiter Merlin range of five multi-manager funds where he has around £7bn under management. He explains why he sold out of Woodford funds and reinvested the proceeds into Evenlode Income, with its approach of looking for “growth at a reasonable price”. Across the five Jupiter Merlin funds he holds around 35 underlying funds. He expresses concerns about how what he calls an “expensive” market will react when QE is withdrawn properly and has not made many changes to asset allocation of late because of this. Investment trusts are not on his radar as liquidity means it can be hard to sell out quickly in the kinds of volumes that he works with. He also confirms that he invests in his own funds into the Jupiter Merlin stable as any self-respecting manager will do of course!
Finally, The Sunday Times reports that many workers are facing delays to getting their pension payouts from DB schemes as administrators are being swamped with transfer requests from other scheme members. Many of those approaching retirement are facing a long wait to get their hard-earned cash, Ruth Emery reports. Clients who might be approaching this particular situation might appreciate being forewarned!