UK avoids triple-dip recession with better-than-expected 0.3% GDP growth

George Osborne says growth is evidence the coalition's policies are helping to 'build an economy fit for the future'

George Osborne has welcomed news that Britain's economy expanded by a stronger-than-expected 0.3% in the first quarter of 2013, avoiding a triple-dip recession.

As the first estimate from the Office for National Statistics showed that a healthy performance from the services sector helped GDP growth to beat the 0.1% expected by City pundits, the chancellor said it was evidence that the coalition's policies were helping to "build an economy fit for the future".

"Today's figures are an encouraging sign the economy is healing," he said. "Despite a tough economic backdrop, we are making progress. We all know there are no easy answers to problems built up over many years, and I can't promise the road ahead will always be smooth, but by continuing to confront our problems head on, Britain is recovering and we are building an economy fit for the future."

The key services sector expanded by 0.6% on the quarter, according to the ONS, while industrial production also grew, by 0.2% – though much of that was accounted for by North Sea output. The struggling construction sector declined by 2.5%.

The business secretary, Vince Cable, said: "Today's figures are modestly encouraging and taken alongside other indicators, such as employment figures, suggest that things are going in the right direction."

Despite the unusually cold weather in March, the ONS denied that the weather had had any measurable impact on the figures. While retailers suffered in January and March, that was partly offset by increased demand for energy from householders turning up their heating against the freezing temperatures outside.

The spring bounce in the economy will have come as a relief at the Treasury, with officials from the International Monetary Fund due to arrive in the UK on 8 May to scrutinise the coalition's policies. A negative number, after the 0.3% contraction in the final quarter of 2012, would have marked an unprecedented triple-dip recession.

However, Labour will seize on the fact that, as the ONS said in its statement, GDP "has been broadly flat over the last 18 months". Output from the economy remains 2.6% below its pre-crisis peak in 2008.

Tony Dolphin, chief economist at the Institute for Public Policy Research, said the economy was "stuck in a rut".

"Normally, we would expect the economy to grow by around 12% over any five-year period. The fact that it has contracted by 2.6% instead means almost 15% of potential output has been lost, along with the employment opportunities and tax revenues that would have accompanied it," he added.

David Brown, of New View Economics, said: "The government have been very, very lucky. They have avoided a third dip into recession by the skin of their teeth. There is nothing to celebrate over as the UK economy is not out of the woods yet."

Sterling hit its highest level against the dollar in two months after the news, rising by more than a cent, to $1.5414, amid speculation that the Bank of England will be less likely to expand its recession-busting quantitative easing programme against the background of a healthier economy.

"From a policy point of view the signs that the UK economy may be growing, albeit weakly, are probably enough to put to rest any chance that the Bank of England would expand QE in May," said David Tinsley, at BNP Paribas. Three of the Bank's nine members voted for an expansion of QE at their April meeting.

Azure is led by experienced Chartered Accountants and business advisers and specialises in providing online accountancy services to owner managed businesses.Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us On Facebook

Article source : http://www.guardian.co.uk

'Big four' accountants 'use knowledge of Treasury to help rich avoid tax'

Experts offering advice on legislation they helped to create is 'ridiculous conflict of interest', says select committee chair Margaret Hodge

The so-called "big four" accountancy firms are using knowledge gained from staff seconded to the Treasury to help wealthy clients avoid paying UK taxes, a report by the influential Commons public accounts committee says.

Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers have provided the government with expert accountants to draw up tax laws. But the firms went on to advise multinationals and individuals on how to exploit loopholes around legislation they had helped to write, the public accounts committee (PAC) found.

Margaret Hodge MP has called on the Teasury to stop accepting staff from the 'big four' accountancy firms when drawing up new laws.

 Margaret Hodge, the PAC's chair, said the actions of the accountancy firms were tantamount to a scam and represented a "ridiculous conflict of interest" which must be stopped. "The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government," she said, calling for the Treasury to stop accepting their staff to draw up new tax laws.

The report comes after David Cameron on Thursday set out plans to use Britain's chairmanship of the G8 to tackle what he described as staggering worldwide levels of tax evasion and avoidance.

The PAC claims HM Revenue and Customs had to seek outside help because it was engaged in a "battle it cannot win" in seeking to stem the losses to the exchequer from tax avoidance.

The accountancy giants employed almost 9,000 staff and earned £2bn a year from their tax work in the UK, and £25bn globally, the report claims. MPs found that Revenue and Customs had far fewer resources, particularly in the area of transfer pricing: complex transactions deployed by multinational companies in order to shift taxable profits to low tax jurisdictions. "In the area of transfer pricing alone, there are four times as many staff working for the four firms than for HMRC," the report says.

The committee highlights the way the firms seconded staff to the Treasury to advise on issues in the drafting of legislation. "Through their work in advising government on changes to legislation they have a detailed knowledge of UK tax law, and the insight to identify loopholes in new legislation quickly," it said.

One example in the report is that of KPMG, whose staff advised on the development of "controlled foreign company" and "patent box" rules, and then issued marketing brochures highlighting the role they had played. The brochure "Patent box: what's in it for you" had, it said, suggested the legislation represented a business opportunity to reduce tax and that KPMG could help clients in the "preparation of defendable expense allocation".

The committee is "very concerned by the way that the four firms appear to use their insider knowledge of legislation to sell clients advice on how to use those rules to pay less tax", the report adds.

The report was welcomed by Prem Sikka, professor of accounting at University of Essex. "They [the big four] are the epicentre of a global tax avoidance industry and the loss of tax revenues is directly responsible for the current economic crisis. The Treasury should follow the US authorities and prosecute and fine the firms. The habitual offenders should be shut down," he said.

Officials from HMRC rejected criticisms that tax officers were not making progress in tackling avoidance. "The facts show that we are not only aggressively fighting battles against tax avoidance, but we are winning them," a spokesman said.

KPMG said in a statement: "When requested to by government departments we do provide individuals on secondment. Their role is to provide tax technical input and commercial experience so that the authorities can make informed choices on tax policy. Our secondees do not write legislation or make policy decisions."

Bill Dodwell, head of tax policy at Deloitte, said: "We do not believe that there has ever been any conflict of interest but would want to help ensure that there is no perception of conflict." Kevin Nicholson, head of tax at PwC, said: "We provide technical insight to government but only when asked and are never involved in deciding tax policy which is a matter for the government."

In evidence to the committee, John Dixon, Ernst and Young's head of tax, said: "I think there are benefits in the work we do with government ... benefits to the country at large. If you look at the quality of the legislation that we now have ... it is a lot better than it was 10 years ago.

"Why is that? Because we are actively working with government, at our cost, to make sure that the legislative footprint we are working with is as clear and concise as it can possibly be."

An HMRC spokesman said: "HMRC gives careful consideration to the potential risks, as well as how to mitigate any potential conflicts of interest, before any such secondments are agreed. On balance, the carefully targeted use of secondees is beneficial for the development of tax policy and improving the effectiveness of the tax system."

Cameron, who hopes to use an EU summit in May as a stepping stone to a wider agreement at the G8, wrote to all EU leaders proposing:

• Rapid movement to a global system of information exchange to help tackle tax evasion including through the use of offshore trusts.

• Action plans by G8 countries to produce full transparency, breaking through walls of corporate secrecy and establishing central public company registries.

• Voluntary deals for multinational firms to make clear the tax they pay in every country they operate in.

• Implementation of the EU accounting directive so developing countries can access information on payments to governments made from the oil, gas and mining industries.

Azure is led by experienced Chartered Accountants and business advisers and specialises in providing online accountancy services to owner managed businesses.Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us On Facebook

Article source : http://www.guardian.co.uk

France could join list of eurozone casualties in a fresh crisis

New figures lay bare growing disparity with Germany as jobless rate hits 15-year high and consumer spending stagnant

France reported flat consumer spending in the final three months of 2012

Ever since reports with the black pit in Greece's public funds initial surfaced at the end of 2009, the cost-effective story in the eurozone continues to be covered with the particular growing gulf involving the crisis-ridden outside as well as the better-performing central. No longer.
Understands upon Thursday night highlighted one more pattern which has created while the emphasis continues to be around the solitary currency's fringes: the actual growing disparity among Indonesia and also France.

Manual work marketplace data through Germany had been once more amazing. Joblessness offers fallen with a 20-year lower regarding Six.8%, not bad to get a region which is heavily just a few exports and therefore subjected to the particular decline in the international economic climate inside the better half regarding 2012. Meanwhile, France noted toned buyer investing inside the ultimate 3 months associated with This year, with the signs directing to a different weak performance in the first quarter regarding The year 2013. The jobless rate in Italy are at any 15-year higher and on program going to 11% later this coming year.
Help make no error, nor country may have a The year 2013 to write residence concerning. However should the eurozone turmoil break out again on the arriving several weeks, there's a actual threat that it is next largest economic system will be included with this list of countries where the general public finances are regarded not sustainable.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us On Facebook

Ernst & Young blames outdated global rules for UK tax avoidance scandals

Head of tax at one of UK's 'big four' accountancy firms denies accusation from Margaret Hodge of 'exploiting loophole'

The UK brain associated with tax at Ernst & Young, the actual accountants which audits Yahoo, Amazon online marketplace and Myspace, provides publicly stated that worldwide guidelines that allow on the web firms to cover much lower business tax as compared to their rivals are usually out-of-date and in demand for immediate reform.
Steve Dixon advised a board associated with MPs how the Business regarding Financial Co-operation and Improvement (OECD), which usually breezes the actual politically contentious guidelines, had been dealing with the "difficulty …  needs to address" since the codes established years in the past by no means envisaged an outburst within on the internet commerce.
Confronting The uk's top several tax professionals at Thursday'shearing, Maggie Hodge, chair of parliament's community company accounts board, mentioned: "What really depresses me is basically that you could add so much to be able to society and also the public good and you also all decide to concentrate on doing work in a place which usually decreases the accessible helpful information on all of us to create universities, hospitals, infrastructure.

Margaret Hodge said it was 'questionable' whether the UK's biggest accountancy firms should be given public contracts

Your woman ties a lot of top political figures around the globe prepared to freely strike the actual duty market. Last week Donald Cameron joined up with in, employing a talk with Davos to railroad in opposition to "an army associated with clever an accountant … [helping] businesses navigate their approach around genuine duty systems". Nevertheless the prime minister in addition has portrayed passion to take British company tax to "the least expensive fee of any significant western economy".
When he declined to opinion particularly upon Amazon online marketplace or other client, Dixon informed the actual board: "In modern day parlance, the way in which deals are usually created is online … If the agreement is manufactured on the internet, and the hosting server relies outside of the United kingdom, that's not developing a taxed liability in the united kingdom.Inch
In a thinly veiled reference to Amazon online marketplace, Rich Sausage Megapixel asked if this type of might be accurate even when a British consumer purchases products from a ".co.uk" website as well as the method is delivered from the storage place in Britain. "Absolutely,Inches mentioned Dixon. "In the actual context of business duty, oahu is the place from the hosting server [that matters] … The effect from the OECD rules … is always that so far as the particular inbound section of the supply chain can be involved -- to the British -- a modest amount of the gain is currently allocated to which exercise. And that is what the particular OECD must tackle."
Meanwhile, recommended Hodge, "you possess exploited the particular loophole". Dixon answered: "Sorry, I don't acknowledge."

Dixon's remarks contrast with those of Google boss Eric Schmidt, that lately pushed aside criticisms with the group's intricate company construction, that involves a global company inside Eire and a father or mother business within Delaware and has observed it change revenues of approximately $9.8bn (£6.2bn) right into a covering company in Bermuda, in which they may be sheltered from tax. "It's called capitalism. We have been with pride capitalistic. I'm not really unclear about this kind of,Inch stated Schmidt.

Dixon made an appearance alongside alternatives through PricewaterhouseCoopers (PwC), Deloitte and also KPMG : each of them stoney-faced although having a volley regarding brickbats through angry MPs of most events for just two . 5 hrs.
Every one of the duty professionals in the big four arranged the actual OECD principles overseeing just how worldwide companies were subject to taxes in various states have been obsolete as well as necessary changing -- although each denied accusations that they helped clients taken advantage of the actual weak points at the tariff of great britain tax payer. Proposals for reform are required from your OCED later this particular 30 days.

Hodge -- which when helped PwC, even though not necessarily within duty : mentioned in which together, the important four help make nearly £490m yearly coming from community market work. "I think it is sketchy whether you need to get general public contracts," your woman said. Dixon disagreed, declaring the four companies have been "one of the biggest members in order to tax in the UK.Inches
The MPs grew increasingly discouraged since the an accounting firm attempted to describe some of the arcane as well as linguistically perverse duty principles at the root associated with a few the controversy. "A storage place is not an 'permanent establishment'," explained Dixon from some point. "An internet-based enterprise, where basically the website and also the server are centered outside of the British, is also not a 'UK long lasting establishment'.Inch
Worldwide, Dixon mentioned the book-keeping team used 29,Thousand individuals offering taxes guidance, which is why E&Y gets income associated with $6bn : just over a quarter associated with group revenues. Along with counseling Google, Amazon . com as well as Myspace -- every together with controversial tax constructions that lead to tiny United kingdom duty - E&Y tend to be auditors to pub party Greene Full, which was called simply by MPs as a result of an deterrence plan beaten with tribunal by HMRC.

E&Y can be the particular auditor to H . p ., that has been not too long ago savagedat a US united states senate panel reading for its intense approach to duty deterrence. Parliamentary committees inside Australian and New Zealand are now expected to start their own questions in to multinational tax.

PwC's Kevin Nicholson bombarded the complexness of duty principles and also advised it was up to people in politics to change the actual 70s as well as 1980s suggestions about so-called "transfer pricing" : OECD principles regulating where monetary value has been said to possess occurred in cross-border trading inside a worldwide party.

"One of the difficulties now's we have been visiting a great deal of soreness, unrest as well as unhappiness round the fact that companies are marketing a whole lot in the united kingdom but they're not really viewing the net income [in the particular UK. And area of the basis for that's the method the actual worldwide rules specified sets the worth in various places. One of many discussions we must have now is how do you get tax as well as income within the proper locations."
But Hodge challenged all tax specialists on the firms' relationship along with government, waving a couple of brochures from KPMG that they said offered suggestions about minimising taxes. The lady mentioned the duty specialists reported in literature entitled Managed International Company Change and Patent Box: What is in it To suit your needs called KPMG duty specialists Edwards as well as Jonathan Bridges respectively, both which had previously labored on secondment on the Treasury, advising about the appropriate legislation.

Hodge stated this was "inappropriate and incorrect … It really is poacher, flipped gamekeeper, flipped poacher once more.Inch KPMG's mind associated with taxes, Britta McCormick, denied this particular characterisation, saying assistance had been agreed to government. Bill Dodwell, brain of taxes with Deloitte, noted experts coming from his / her firm have been often seconded to be able to government with out repayment.
Separately, Oxfam released a study on Thursday night indicating tax evasion -- against the law non-payment associated with taxes thanks, rather than tax prevention was famished great britain economy of at least £5.2bn annually, or even practically £200 for each and every household. The particular charity said the particular delinquent tax could go a long way in the direction of helping "rescue thousands and thousands from your poverty trap"

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike for more info visit our site Azure Global and join us On Facebook