Today’s news in brief – 21/6/2024

The UK's tax gap, the difference between expected tax revenue and actual revenue collected, hit £39.8bn for the 2022-23 financial year, representing 4.8% of the total tax due. This is a decrease from 5.2% in the previous year. Corporation tax now makes up 34% of the gap, up from 17% in 2018-19, while VAT's share dropped from 28% to 20%. The income tax, NICs, and capital gains tax gap fell from 39% to 34% over five years. Small businesses’ contribution to the tax gap increased from 44% to 60%, whereas large businesses’ share decreased from 15% to 11%. Interpath Advisory facilitated a pre-pack administration sale of Swift Electrical Wholesalers to The Recycling Group Limited, securing the jobs of 34 staff members. Swift Electrical, a distributor of kitchen appliances, faced significant financial challenges, including losing a major customer and supplier, which affected profitability and cash flow. Despite implementing a turnaround plan, the business couldn't return to profitability, leading to the decision to appoint administrators. Interpath's Howard Smith and Tim Bateson managed the sale, ensuring the company's continuity and saving jobs amid the ongoing economic difficulties. KPMG will cut 200 jobs in the UK due to a prolonged slowdown in demand and fewer voluntary departures among staff. The Big Four firm announced the redundancies on June 20, affecting both back-office and client-facing roles. This move follows previous cuts of over 200 roles late last year and a pay freeze for around 12,000 of its 17,000 UK employees. The firm is also merging some back-office functions to reduce duplication. The consultation on these redundancies is expected to conclude by October 1, 2024. KPMG has not specified which client-facing sectors will be impacted. HMRC's latest figures show inheritance tax receipts hit £1.4bn in the first two months of the 2024/25 tax year, £200m higher than the same period last year. The 2023/24 tax year saw inheritance tax revenues of £7.5bn. A Labour Party pledge to restrict non-domiciled individuals from moving money offshore could raise an additional £430m annually, a 6% increase in overall inheritance tax. This issue is prominent in the upcoming election, with both Labour and Conservatives expected to implement policies that would increase inheritance tax due to rising property values and unchanged thresholds.