Budget Shuts Controversial Irish Tax Loophole

By David Blevins, Ireland Correspondent

The Irish government has confirmed that it is phasing out a controversial tax regime that has allowed multinational companies to save billions of euros.

Finance minister Michael Noonan signalled the closing of the loophole known as "double Irish" when he delivered his first non-austerity budget in seven years.

He said: "I am abolishing the ability of companies to use the 'double Irish' by changing our residency rules to require all companies registered in Ireland to also be tax resident in Ireland."

Until now, an Irish subsidiary has been able to shift taxable profit to another Irish subsidiary in a tax haven such as Bermuda or the Cayman Islands.

Apple is a multinational corporation that may have benefited from the rules

Apple, Google, Microsoft and Facebook - all of which are thought to have benefited - will be given until 2020 to adapt to the change.

The tax advantages have been a major incentive for multinationals, so the government has introduced new measures to ensure the country remains attractive to investors.

Video: EU Gets Tough On Apple And Ireland

A "patent box" scheme, similar to that in the UK, will reduce the level of corporation tax on patents and similar types of intellectual property.

The European Commission has been investigating tax deals between Ireland and Apple, and provisionally found that they were generous enough to amount to state aid.

Brussels had urged the Irish government to end the controversial tax policies or face a full-blown investigation which carried the risk of multimillion euro penalties.

Video: Ireland Exiting Financial Rehab

Other aspects of the budget delivered in Dublin included funding to increase the number of teachers and police officers, along with measures to encourage house building.

Tax rises and spending cuts of €30bn (£23.8bn) have been imposed since 2007, but a stronger economic performance has signalled the end of austerity measures.

Unemployment remains high at more than 11%, and the introduction of water charges saw one of the largest protests for years in Dublin last Saturday.

Video: Tax Expert On EU Apple Accusations

The government has also unveiled a scheme for claiming tax back on water charges, three days after a candidate opposed to them won a by-election.

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FCA Executives Mull Insurance Probe Criticism

By Mark Kleinman, City Editor

Executives at the City watchdog have begun examining criticism of their conduct as part of an inquiry into a media briefing which wiped hundreds of millions of pounds from the value of listed insurance companies.

Sky News has learnt that a number of senior personnel at the Financial Conduct Authority (FCA) have been invited in recent days to scrutinise findings against them in a draft report ordered by a furious George Osborne earlier this year.

The process, known as Maxwellisation, enables individuals named in inquiries to respond to findings against them prior to the publication of a final report.

Simon Davis, a partner at law firm Clifford Chance, was appointed in April to lead the review, which followed a briefing by FCA executives to The Daily Telegraph about proposed supervisory work on the fair treatment of long-standing customers of life insurance companies.

The reporting of the story sparked panicked selling by investors in a string of London-listed insurers such as Aviva, Friends Life and Legal & General amid fears of a draconian regulatory clampdown.

However, the FCA failed to issue a clarifying statement about the terms of its review for more than six hours after trading in their shares had begun.

Among the FCA executives who could face criticism in Mr Davis' final report are Clive Adamson, the director of supervision; Zitah Macmillan, the director of communications; and Martin Wheatley, the chief executive, who is understood to have been abroad at the time of the story's publication.

Although Mr Adamson was quoted in the Daily Telegraph story, sources said that he had not himself been present at the briefing, which is said to have been provided by a more junior FCA executive.

Executives and other board members from insurers have been interviewed as part of Mr Davis' probe, many of whom are said to have been critical of the practice of pre-briefing by the regulator.

Mr Davis, who is reporting to the regulator's non-executive directors, has signalled to lawyers acting for the FCA executives that he intends to publish his final report by the end of the year.

The inquiry's terms of reference require him to examine, among other issues, whether a false market was allowed to develop in the shares of the affected insurance companies.

Sky News revealed in June that the FCA had appointed Kingsley Napley, the firm which represented the rogue trader Nick Leeson, to act for its executives.

Their legal bills, which are being paid by the FCA, are likely to run to tens of thousands of pounds, industry sources say.

The FCA has set aside £1.7m for the cost of the inquiry into its mishandled media briefing, although it has spent only a fraction of that sum so far.

Both the Chancellor and Andrew Tyrie, chair of the Treasury Select Committee, demanded a rigorous independent probe.

The FCA and Clifford Chance declined to comment.

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Tesco Suspends More Execs Over Profits Error

Tesco has suspended another three executives as it continues its investigation into a £250m profit black hole.

Sky Sources suggest they are Dan Jago, head of beer, wine and spirits and director of convenience Sean McCurley.

The other man is understood to be another category director, William Linnane.

Philip Clarke stepped down as Tesco CEO in July

It brings to eight the total number of executives suspended by Britain's biggest retailer over the crisis.

A Tesco spokesperson said today: "We have asked three employees to step aside to facilitate the investigation into the potential overstatement of profits in UK food for the first half of the year.

Video: The Cost Of Tesco's £250m Error

"We will provide an update on the investigation with our interim results on 23 October".

The company said it had commissioned its own independent inquiry into the causes behind the accounting error when it made the details public on 22 September.

The City watchdog, the Financial Conduct Authority, later said it would also launch its own "full investigation" into the issue.

The £250m figure relates to how it logs suppliers' rebates and if they were reported in the correct accounting period.

The four senior executives previously suspended include UK managing director Chris Bush.

It also emerged the company had not had a finance chief in place for five months.

Tesco said a day later that its new incoming finance chief Alan Stewart, who was not due to start until 1 December, would commence work two months early.

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Twitter: Bank To Use Social Media To Send Cash

By Tom Cheshire, Technology Correspondent

One of the largest banks in France will today unveil plans to let its customers - and those of other banks - send money through Twitter.

Groupe BPCE will be the "first banking group to offer individuals a payment solution where they can transfer money with a simple Tweet", according to CEO Jean-Yves Forel.

It is understood that Twitter has not been involved in creating the service, which was built by Group BPCE's S-Money subsidiary, which has also built mobile and SMS payment systems.

But Olivier Gonzalez, CEO of Twitter France, said: "We warmly welcome this innovation developed by Groupe BPCE and the service it provides to Twitter users in France by integrating its S-Money service into a live, public, conversational dimension characteristic of Twitter."

Twitter is experimenting with its own payment system, known as Twitter Buy, which allows customers to buy products straight from the social media platform. Burberry has signed up.

Video: Twitter's Struggle To Fly High

Technology giants are becoming increasingly interested in online and mobile payments.

Facebook is said to be working on its own payments system, operated through its Messenger app.

And this week Apple Pay is expected to launch, letting users pay for goods and services online and in the physical world using their phone.

In the UK, mobile operator EE has been operating its Cash On Tap app - which works in a similar way to Apple Pay, using Near Field Communication (NFC) for payments including the London Underground - for some months.

Video: Twitter: Tool For Good Or Evil?

Near Field Communication is a form of short-range wireless communication that allows electronic devices, like debit cards or mobile phones, to talk to other computers or networks.

In April, nine banks and building societies adopted Paym, which lets users send money using just a phone number.

Group BPCE has yet to reveal the details, but the service will likely require an extra layer of identification for security - similar to sending money by SMS or on a smartphone app.

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Burberry First Half Revenues Rise By 14%

Burberry has announced a 14% rise in first-half revenues to £1.1bn but the fashion house expects currency exchange rates to hit profits.

The London-listed firm, which has more than 500 stores including franchises worldwide, said the underlying growth in the six months to 30 September reflected a "strong performance across all regions and continued digital growth".

It said key drivers included rainwear, its women's Prorsum collection, leather bags and men's tailoring.

But it said that it expected more cautious demand from travel retail and European customers in the second half of its financial year and said currency fluctuations would have a material impact on reported profits.

It estimated - at current levels - that profits would be hit to the tune of about £25m though this figure was down from an earlier estimate in July of £55m because sterling has since weakened against the dollar.

Chief creative officer and chief executive Christopher Bailey, who faced a shareholder revolt in the summer over his pay deal, gave an upbeat assessment of Burberry's performance.

He said: "This has been a strong first half for Burberry, with sales growth of 14% reflecting our ongoing brand and business momentum.

"Looking ahead, while mindful of the more difficult external environment, we have never been better prepared internally for the all-important festive periods, with our teams intensely focused on delivering outstanding products and experiences, alongside continued investment to drive productivity and profitable growth over the long term".

Burberry's shares fell more than 4% in early trading on the FTSE 100 - partly a result of a profits warning from rival Mulberry that also contained growing concerns about sales amid the weak global economic recovery.

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Mulberry Shares Dip 25% On Profits Warning

A 17% fall in first half revenues prompted Mulberry to issue a profits warning, sending its share price tumbling 25% in early trading.

The British luxury bag maker said in a trading update that full-year pre-tax profit would be "significantly below expectations" after sales slumped in the six months to 30 September - a time the firm had dedicated to an overhaul of its offering.

Mulberry had warned in June of a tough year ahead as it shifts to a lower price strategy following an ill-fated attempt to move upmarket that hit sales and led to chief executive Bruno Guillon's exit in March.

Mulberry admitted tougher than expected trading conditions had added to its woes, with falling levels of tourist shoppers hurting its core UK business.

Revenues for the six months fell 17% to £64.7m - with retail sales down 9% and wholesale sales 31% lower.

The results were in stark contrast to another rival luxury brand, Burberry, which confirmed strong sales growth over the same period but its shares also fell on fears over the weak global economic recovery.

Mulberry, like rivals Louis Vuitton and Gucci, is struggling to compete against more accessible, trendy fashion brands such as Michael Kors which give customers the look and feel of luxury at a fraction of the price.

To better compete, the firm is strengthening its product offering at a price range of £500-£800.

Mulberry said sales trends had improved over the first half, indicating it was taking the right steps to restore the business to growth.

But the firm added that its flagship Paris store, due to be opened early next year, would mark the end of its investment in new
stores, which has seen it expand its footprint globally.

Executive chairman Godfrey Davis said: "As I explained in June, my first actions on returning as acting chief executive focused upon reinforcing our product ranges.

"I explained that the impact would be progressive and should produce benefits over the medium term.

"The new products are beginning to reach our shops with the launch of the Cara Delevingne bags at the beginning of September and with further new products being offered in our shops during November.

"As expected, the first half has been difficult, but the Group remains profitable and cash generative, giving us the resources to invest for the future.

"Despite the current challenges, I remain confident that we will build on Mulberry's solid foundations and unique brand positioning in the luxury market to restore growth in the medium term."

The Mulberry share price later recovered some of the early lost ground - down just over 9% by mid-afternoon.

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Over-55s To Use Pension Pots Like Bank Accounts

People reaching the age of 55 are to be given more flexibility over what they can do with their pension pots as they approach retirement.

Chancellor George Osborne will announce today that the over-55s will be able to withdraw several lump sums instead of just one.

The move is part of an ongoing restructuring of pensions, which the government wants to move away from the traditional annuities-only system.

Some of the changes that will be in the Pension Tax Bill were announced in the Budget, but the Chancellor is now unveiling more proposals.

From April individuals approaching retirement and pensioners will be able to take a series of lump sums, rather than being forced to withdraw all their money in one go.

Video: Expert On Pension Scheme Charges

The changes raise the prospect that pensioners could fund their retirement by using their pension pots almost as bank accounts or by investing in other assets like property or shares.

Until now, people who retired were only able to take 25% of their pension as a tax free lump sum in cash in one go. The rest had to be spent on a product like an annuity.

Now, pensioners will be able to take multiple lump sums, with a quarter of each withdrawal tax free.

The remaining 75% of each withdrawal will be taxed at whatever rate they are required to pay based on their annual income.

Video: Pensions: 'We Trust People'

The government is also planning to do away with the taxation of any pension contributions that have been unused and a person wants to pass on to their relatives.

Previously any inheritance of unallocated pension funds was taxed at 55%.

Mr Osborne said: "People who have worked hard and saved all their lives should be free to choose what they do with their money, and that freedom is central to our long term economic plan.

"From next year they'll be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their families tax free.

Video: What The Budget Means For Savers

"For some people an annuity will be the right choice whereas others might want to take their whole tax free lump sum and convert the rest to drawdown.

"We've extended the choices even further by offering people the option of taking a number of smaller lump sums, instead of one single big lump sum."

Pensions campaigner Ros Altmann said: "The Government's changes have the potential to help millions of pension savers make better use of their pension funds.

"Being free to access their money freely as they need to, rather than being forced to buy particular products will be very popular."

Video: 'Pensions Reform - Not Enough'

The Government announced earlier this year that around 320,000 people would get the freedom to access pension pots flexibly without suffering punitive tax rates.

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Three Big Six Firms Face Watchdog Meter Probe

The energy regulator is investigating three 'Big Six' energy firms over a slow roll-out to businesses of advanced electricity meters.

Ofgem said British Gas, E.ON and npower were the poorest performers in terms of completion rates.

Under the Labour Government's advanced meter roll-out scheme, which began in 2009, suppliers had to take all reasonable steps to fit 155,000 business customers with, and supply electricity through, advanced electricity meters by April 2014.

Ofgem said the roll-out was only 75% complete in electricity, compared to 86% complete in gas and the three firms accounted for over half of the 40,000 advanced electricity meters still waiting to be installed. 

It was also watching other suppliers and urged all firms to continue to fit the meters in an effective and timely manner.

Rachel Fletcher, senior partner at the regulator's markets division, said: "We are disappointed in the overall performance of the majority of suppliers concerning the roll-out of advanced meters to business customers.

"These new meters offer real benefits to customers including saving money through reduced energy consumption and ending estimated billing.

"Regulatory and government programmes are not optional and failure to meet these in a timely way causes consumer harm.

"All suppliers can and must learn the lessons from the roll-out of meters for business customers and apply them to the domestic smart meter roll-out."

Ofgem monitored suppliers' progress throughout the roll-out and said it repeatedly reinforced the need to deliver on time.

A similar programme for domestic customers is due to get underway - with firms obliged to ensure that gas and electricity smart meters are installed by the end of 2020.

The Government has estimated the business scheme should save firms a combined £40m annually.

A British Gas spokesman said: "British Gas is a committed advocate of smart and advanced metering.

"Since 2008 we've made significant efforts to ensure that all our business customers can benefit from advanced metering, which will put them even more in control of their energy consumption and help them keep their bills down.

"We remain very aware of our obligations and will continue to work hard to overcome obstacles to the roll-out of this technology.

"We'll co-operate fully with the Ofgem investigation".

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Inflation Falls To Five-Year Low Of 1.2%

Plunging fuel costs and a supermarket price war are being credited for the latest dip in the annual rate of inflation.

The Office for National Statistics (ONS) measured a 1.2% rise in consumer prices in the 12 months to September - its lowest level for a decade if the September 2009 figure is excluded.

The easing from a rate of 1.5% in August was much stronger than economists had predicted and highlighted the extent of the grip on price pressures currently being exerted by major supermarkets.

The sector, which imposed a new round of cuts on petrol pump prices on Tuesday, has been battling an in-store challenge from hard discounters such as Aldi and Lidl.

The major supermarket chains are competing fiercely to counter discounters

Price cuts to help keep customers from making a switch have been made at a time of wider price falls in commodities such as wheat and oil - the latter falling to four-year lows.

While cutting their margins does little for supermarket profits, the war for market share is seen as more important with Tesco and Morrisons currently losing ground.

A separate report on Tuesday by the British Retail Consortium suggested warm weather in September helped push retail sales to their weakest level for almost six years.

It said while people delayed buying goods like coats and footwear there was also a significant hit to sales values from the supermarket price war.

Supermarkets have led the way in slashing fuel costs

While the inflation figure is good news for every family - despite earnings growth still lagging behind inflation - pensioners also learned today how much more they would receive next spring.

The CPI figure means that state pensions will rise by 2.5% or £2.85 a week as the Government's so-called 'triple lock' ensures an increase of whichever is the greater out of average earnings, September's inflation rate or 2.5%.

The ONS said that food and non-alcoholic beverage prices fell by 1.4% year on year, the steepest drop since June 2002 and the fifth month in a row that they have not risen on an annual basis.

It is the longest sustained period of flat or falling food prices since the end of 2004, the body said.

Petrol fell by 0.8p per litre in September compared with the previous month and diesel by 0.7p.

Sea and air fares fell more steeply than at the same time last year while laptops and tablets, computer games, games consoles, books and e-books also contributed to the inflation slowdown.

The ONS said that were it not for the impact of falling food and motor fuel prices - the latter of which were down 6% - the rate of inflation would be around a third higher at 1.6%.

The pound fell sharply after the figures were released as the sharper-than-expected drop meant it was less likely that the Bank of England would need to take action soon to raise the base rate of interest from its five-year low of 0.5%.

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Coke Aims To Fizz As 'Boris Bikes' Sponsor

By Mark Kleinman, City Editor

Coca-Cola is among a number of international brands vying to replace Barclays as the headline sponsor of London's pioneering cycle-sharing scheme.

Sources have told Sky News that the soft drinks giant is one of several companies which have proposed to Transport for London (TfL) taking over the deal at an annual cost of at least £5.5m.

Barclays, which has sponsored the popular initiative since 2010, will end its association next year, paving the way for another major consumer brand to put its logo on more than 10,000 bikes across the capital.

Nicknamed 'Boris Bikes' after the London Mayor, Boris Johnson, the scheme's new partner is expected to be named early next year following a three-month tender process run by TfL which expired at the end of September.

Coca-Cola last month struck a deal to sponsor the London Eye, the Central London attraction owned by Merlin Entertainments Group, and it is unclear whether that agreement will impinge on the company's willingness to spend a further substantial sum on an association with the cycle-sharing venture.

If the soft drinks manufacturer, whose brands include Fanta, Powerade, Sprite and Coke Zero, did proceed with a deal to sponsor the bikes, it could prompt criticism about TfL's willingness to accept money from a major soft drinks producer.

Speaking in July, Mr Johnson said the bikes had been rented more than 31m times since the scheme's launch and that they were now "as recognisable as our iconic black cabs and red buses".

In a statement, Graeme Craig, TfL's director of commercial development, said:

"The tender process to find a new sponsor for London's iconic cycle hire scheme has now closed.

"We have had a very positive response and have received bids from a number of top global brands across a range of sectors. We will now be evaluating their submissions.

"We expect to announce the name of the successful partner for TfL's internationally recognised bike sharing scheme early next year, with the new sponsor in place by summer 2015."

A spokeswoman for Coca-Cola, which was also a major sponsor of the London Olympics in 2012 through its association with the International Olympic Committee, said:

"We are always looking at partnerships which are a good fit for our brands, but we do not comment on speculation."

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