FT : Ending UK non-dom regime could raise at least £3.2bn, study finds

Ending UK non-dom regime could raise at least £3.2bn, study finds
Unreported offshore earnings of UK residents domiciled overseas totalled £10.9bn in 2018

The UK Treasury could gain an extra £3.2bn a year if it forced “non-doms” to pay tax on their worldwide income and capital gains, according to a report on Tuesday.

The study by researchers at Warwick university and the London School of Economics, based on an analysis of 20 years’ worth of anonymised tax returns, also estimated that the unreported offshore earnings of UK residents domiciled overseas totalled £10.9bn in 2018, the latest year for which data is available.

The non-dom regime allows foreign domiciled nationals resident in Britain to earn money from capital abroad without paying UK tax on it for up to 15 years, provided they do not remit income or capital gains back into the country.

HM Revenue & Customs, which raises tax on behalf of the Treasury, collected £716bn in 2021-22.

The report follows criticism earlier this year of former health secretary Sajid Javid and Akshata Murty, the wife of former chancellor Rishi Sunak, who had previously claimed non-dom status.

The study estimated about 42 per cent of non-doms’ offshore earnings arise from income, with the rest made up by capital gains. It added that the average non-dom saved about £125,000 in tax in 2018 compared with equivalent UK-domiciled taxpayers.

“By rewarding non-doms for keeping their investments abroad, the current tax rules harm our economy as well as being unfair on ordinary taxpayers who must pay tax on their worldwide income,” said Andy Summers, associate professor of law at LSE and a co-author of the report.

Labour vowed in April to axe the non-dom regime if it won the next general election, although a replacement “temporary resident tax regime” could offer tax advantages for up to five years.

The report found that allowing individuals to retain the benefits of non-dom status during their first year of residence in the UK would reduce the potential £3.2bn by just £210mn, or 7 per cent. However, it estimated a reduction in potential revenue of £860mn after three years and £1.6bn after five.

The study also found that reforms in 2017 that ended permanent non-dom status “resulted in hardly any additional emigration” among those affected by the changes.

Dan Neidle, founder of the think-tank Tax Policy Associates, called the findings “solid” but said they underplayed “the impact of the [excluded property] trust rules”. These rules enable people to shield offshore earnings from HMRC after they no longer qualify for non-dom status.

As well as reforming excluded property trust rules, he suggested replacing the “complex and uncertain ‘domicile’ concept” with a simpler statutory test.

Arun Advani, an associate professor at Warwick university and co-author of the report, said the government’s plan to scrap the 45 per cent income tax rate would shrink the estimated £3.2bn tax boost but that “the crash in the pound caused by the mini-budget probably offsets that”.

The Treasury said that although “we want to attract talent to live and work in the UK . . . it is only right that those who choose to live here for a long time pay their fair share of tax, which is why we reformed the rules in 2017”.

“The tax regime for non-doms is an important feature of our internationally competitive tax system and the government remains committed to encouraging people to live and work here,” it added.

(ZH) JPMorgan: "At This Stage The Question Is Do We Still See A Bounce In Equiti

JPMorgan: "At This Stage The Question Is Do We Still See A Bounce In Equities"

JPMorgan's notoriously, and increasingly comic, permabullish outlook has been the topic of many articles both on this website - and elsewhere- and as of this morning, even JPM's own in house market analyst, Andrew Tyler, appeared gently mock the bank which come rain, shine of nuclear holocaust will still be telling cockroaches to buy the dip. In his morning market intelligence note (available to pro subs), the JPM trader writes that "at this stage, the question being if we will still see a bounce in equities?" His answer? Well, this is JPMorgan after all, so take a wild guess...
For those who enjoy JPM's unshakable ability to keep selling stocks to naive clients no matter how big the mushroom cloud outside the window, below we excerpt from Tyler's full note:
SPX lost 10.15% in the past two weeks, while 10yr yields added 36.9bp to now at 3.689%. Last week, the stock markets were mainly driven by the move in bonds market; MOVE Index added 2.81% and with rates vol spiked and bond selloff globally, equities were under pressure.
The selloff in global bonds was triggered by a flurry of central bank activity plus the UK moving to add fiscal stimulus.
At this stage, the question being if we will still see a bounce in equities? Positioning Intelligence tells us that after the selling pressure over the past few weeks, there are more signs that we might be closer to “at least a short term bounce”. In addition, in our note on August 27th, we discussed the seasonality factors: this century, September has been the worst month for performance, averaging a negative 1.16% return, while Q4 has been the best performing quarter, averaging +3.73% this century.
If we do see a bounce, the rally may be led by short-covering in Tech and Cyclicals, with more Equity Supply coming as we approach 4000 in SPX. On the other hand, if the bonds market continues its selloff and rates vol spike again, we may see Defensives outperform while Cyclicals get punished (see the JPPQCYDE vs. 2s10s chart below).
In our opinion, we still see energy the best long: with Brent at $86 now, Natasha reiterated her 4Q22 estimation of $100 Brent oil price amid volatility returns to the market. She sees demand bouncing 1.5mbd yoy amid gas to oil switching and higher demand from China (her note is here). Besides that, Russian exports and the hurricane season remains wildcards for supply constraints.
GLOBAL RECESSION RISKS: Last week, we saw a hawkish tilt across the Fed, BoE and ECB. Our Economics team now raised their forecasts of YE22 policy rate for the Fed (4.25%), BoE (3.5%) and ECB (2%). In US, Feroli still sees a soft landing to be the baseline case through the end of 2023 and views the Fed pause early next year. He forecasts the unemployment rate moving up to 4.3% by 4Q23 and lowered 2023 GDP forecast from 1.2% to now 0.9%. However, globally, the Economics team is seeing higher risk of recessions. Given more front-loaded actions and higher likelihood of central banks to engineer a recession, the team now sees global recession risks to be ~30% of supply-shock next six months and ~42% of CB induced 23/24 recession.
Q3 EARNINGS & VALUATION: Q3 Earnings will kick off on Oct. 12 with PEP reporting pre-mkt. 21% of the co’s in SPX will report by Oct. 22, 67% by Oct. 29 and 84% by Nov. 5 (see the earnings calendar below). For we week of Oct. 10, we will receive 3Q earnings from 28% of the Financials sector (by mkt cap). Thematically, cost-induced margin shrinking, and FX impacts will be the key focuses, as well as company-specific outlooks for Banks and Consumers. In terms of valuation, Dubravko has FY22 EPS estimate of $225 (vs. $223.46 consensus) and FY23 EPS estimate of $240 (vs. $243.21 consensus). We also updated the chart for the scenario of 10-15% drop in EPS estimates (see the black box below).

(ZH) DeSantis Declares "State Of Emergency," Activates National Guard Ahead Of H

DeSantis Declares "State Of Emergency," Activates National Guard Ahead Of Hurricane Ian
BY TYLER DURDEN
MONDAY, SEP 26, 2022 - 09:00 PM
Update (1531ET):

Oil and gas producers in the Gulf of Mexico are evacuating workers and shutting down offshore platforms as Hurricane Ian barrels towards Florida.
Bloomberg reported Chevron and BP shuttered production at several offshore rigs ahead of the storm:
  • Chevron is shutting in the Petronius and Blind Faith oil-production platforms southeast of New Orleans and is evacuating all personnel from the platforms.
  • BP has shut in production and is evacuating all workers from its Na Kika platform southeast of New Orleans. The company is also shutting production and evacuating personnel from its Thunder Horse platform.
* * *
Hurricane Ian, the fifth hurricane of the Atlantic season, underwent "rapid intensification" in the Caribbean Sea on Monday, with sustained winds of 85 mph, according to the National Hurricane Center.
Ian is a Category 1 storm about 240 miles southeast of Cuba's western tip. The storm's track and the threat of further intensification are so concerning that Florida Gov. Ron DeSantis declared a "state of emergency" for the entire state.
DeSantis activated 5,000 Florida National Guard members and requested 2,000 from surrounding states.
DeSantis said Ian is a menacing hurricane that is 500 miles wide. He said, "Floridians up and down the Gulf Coast should feel the impacts" of the powerful storm.
"This is a really, really big hurricane at this point," the governor said.
AccuWeather warned Ian could strengthen to a Category 4 storm, sustaining winds between 130-156 mph, as it nears Florida's west coast.
Weather models show Ian could make landfall between Florida Panhandle and west-central Florida mid/late week.
Tampa Mayor Jane Castor ordered mandatory evacuations for parts of her region:
"We are asking everyone to go ahead and make those plans to leave from the Zone A, which basically is all the waterfront. We have about 126 miles of waterfront just in our city alone ... You don't have to evacuate far. You just need to get away from the water," Castor told CNN.
Castor's primary concern is a 10-15 feet storm surge that could result in inland flooding.
Meanwhile, St. Petersburg Mayor Ken Welch warned: "This could be the storm that we've hoped would never come to our shores."

(ZH) Meet The Fiercely Loyal "Guru" Behind Masayoshi Son At SoftBank

Meet The Fiercely Loyal "Guru" Behind Masayoshi Son At SoftBank

And so, all of a sudden, SoftBank - which has been suffering from a $23 billion loss at the hands of the global tech selloff - has a scapegoat advisor to Masayoshi Son.
The fall guy "guru", profiled in an FT piece out this weekend, is Yoshimitsu Goto, who is described as being "fiercely loyal" to Masayoshi Son. Masa hired Goto all the way back in 2000 after stating: “I like the look of his eyes. Let’s hire him.”
Perhaps Goto isn't just getting press now because of SoftBank's recent troubles - instead, perhaps it is because three of Masa's top executives have jumped ship over the last 18 months and Goto has been the exception.
As FT notes, SoftBank has lost its chief operating officer Marcelo Claure and strategy chief Katsunori Sago. Rajeev Misra, head of SoftBank’s Vision Fund, all in short order in less than 2 years.
Goto, in the interim, has become "indispensable", the report says. And that's not because he continues to defend Masa as the company's Vision Fund suffers from terrible performance.
Masa's "guru" says that the plan with the Vision Fund is to "stay the course": “I won’t be surprised [if Son changed his mind] but I don’t think that’s likely. Investment firm is this company’s ultimate style. The basis of Mr Son’s thinking is that change is the best growth strategy to avert risks.”
The report describes Goto's job as "to persuade investors to scrap what he describes as the misleading image of the deal-driven, debt-saddled group" as reckless. He has also been in charge of taking Masa's "big picture" ideas and converting them into "comprehensible pitches" for lenders.
That is to say, Masa's ideas must first usually be incomprehensible. Color us not surprised.
And Goto does supposedly stand up to the boss once in a while, the report says. He told FT: “When an executive in charge of the company’s financing and cash flow says no, that’s the end of the story so I know the weight of my words when I say no.”
“I tell my team not to search for reasons why they can’t do it, but to think of ways that can be done if they were to try it. When it’s really impossible, there is no answer and that’s when I say we should not do this. Mr Son is rational so he gets it right away.”
The one cardinal rule Goto has is not to do anything that would compromise the firm's relationship with Mizuho, where he formerly worked as a banker. “It takes a long time to build a relationship of trust but when it crumbles, it happens with the blink of an eye. I have never broken my promise with the banks in the past 20 years," he told FT.
Koji Fujiwara, senior adviser at Mizuho Financial Group, said: “The current relationship between Mizuho and SoftBank Group would have been unthinkable without Mr Goto. That’s how important he is.”
Kiyoshi Miyake, the former deputy president of Mizuho Bank, concluded: “The ideas flow like water for Mr Son, and it was Mr Goto who said which of those can be done and which cannot be done.”
And as such, we're near certain he'll receive his fair share of the blame should the picture worsen for SoftBank..

Business Of Fashion : Handbag Prices Are Skyrocketing. Who’s Buying Them? | BoF

Handbag Prices Are Skyrocketing. Who’s Buying Them? | BoF Insights
As Versace becomes the latest brand planning to hike its handbag prices, BoF Insights looks at the degree to which consumers’ budgets accommodate these higher prices.
BoF Insights’ Chart Watch

Brands have been steadily increasing the prices of their designer bags for years, long before the recent record inflation. The average price for a women’s designer bag in the US has risen around 27 percent since 2019, according to Edited research cited in BoF Insights’ report “The New Era of Designer Handbags.”
Versace is the latest luxury player to announce price hikes for its bags, which currently sell for between $1,000 and $3,000. John Idol, chief executive of Capri Holdings, Versace’s parent company, told an industry conference earlier this month that the increases better aligned Versace’s prices with those of competitors. Capri has also signalled that price increases were forthcoming at two other subsidiaries, Michael Kors and Jimmy Choo.
BoF Insights’ Chart Watch
How do these increasing prices align with consumers’ budgets? A US survey in June 2022 from BoF Insights sheds some light on the matter. The average price of $2,475 for a designer bag is almost 2.5 times higher than the amount US general consumers say their budgets will allow, but is still within budget for approximately 60 percent of the US high-net-worth individuals polled.
BoF Insights’ Chart Watch

WWD : What Could Be Next for Riccardo Tisci After Burberry?

What Could Be Next for Riccardo Tisci After Burberry?
The company, which is 100 percent quoted on the London Stock Exchange, has not addressed any of the brewing speculation.

LONDON — Burberry’s spring 2023 show in London on Monday afternoon opened the rumor mill among industry showgoers about the future of chief creative officer Riccardo Tisci at the British heritage brand.

The company which is 100 percent quoted on the London Stock Exchange, has not addressed any of the brewing speculation.

Tisci’s tenure has been the subject of speculation for the past year with his contract coming to an end in March 2023.

The Italian fashion designer joined Burberry in March 2018, where he amped up the volume on the house monogram; TB logos, and introduced his starlet friends such as Kanye West, Marina Abramović and Nicki Minaj to the brand.

Tisci, a buzzy designer who made a name for himself at Givenchy from 2005 to 2017 as creative director, has not been able to achieve the same level of critical success at Burberry.

However, some defenders of Tisci contend the British brand, an official supplier to the royal household, has been too stiff in its treatment of him and has controlled his creative potential.

It has been widely anticipated that former Bottega Veneta creative director Daniel Lee is to sign imminently with Burberry, but under a different job description to Tisci’s.

A friend and champion of Tisci, then-chief executive officer Marco Gobbetti hired the designer at Givenchy and Burberry. Gobbetti left the company in 2021 and joined Salvatore Ferragamo as CEO, where he appointed Maximilian Davis as the Italian brand’s new creative director in March 2022.

What Tisci needs is a fashion house that understands his sense of wit and penchant for gothicism.

Tisci, who is a close friend of Donatella Versace’s, has been previously linked to the Italian fashion house prior to his position at Burberry.

In 2015, Versace appeared in the brand’s fall 2015 campaigns and rumors have often circulated about Tisci going under her wing at Versace. But some believe rather than solely taking over, a better idea would be to have the two designers in a co-creative directors position like at Prada with Miuccia Prada and Raf Simons.

A fashion house from his native country sounds like a safer bet but not always. Right now, there’s a shakeup of new blood at houses such as Ferragamo, Bally, Etro and Missoni and these designers’ first efforts during Milan Fashion Week had mixed results.

The possibilities for Tisci are numerous — he’s a designer trained in womenswear, men’s, couture and accessories. His contact list includes Hollywood stars, athletes, artists and musicians.

Tisci used to frequently collaborate with Nike while still working at Givenchy and given his close friendship with West, a consultancy gig with Adidas or West’s own brand is not completely off the cards.

WWD : LVMH Métiers d’Art Takes Stakes in Heng Long Italy, Robans

LVMH Métiers d’Art Takes Stakes in Heng Long Italy, Robans
Investment in the tannery and leather clothing manufacturer is intended to strengthen its supply chain.

PARIS — LVMH Métiers d’Art is adding to its roster of suppliers with the acquisition of a majority stake in Heng Long Italy and taking a minority stake in Robans.

Heng Long Italy is the new name for the former Ally Projects, aimed to better reflect that it is the longstanding European outpost of Singapore’s famed Heng Long Tannery. The original Heng Long Tannery was founded in 1977 and became a renowned supplier of alligator and crocodile skin, before being acquired by LVMH in 2011 in a deal then valued at $161 million.

Ally Projects was formed in 2013 to supply Italian fashion houses with exotic animal skin from the leather hub of Santa Croce sull’Arno. It’s known for its small batch orders and short lead times which has made it a key and agile supplier for European brands. The Métiers d’Art support is aimed at helping Heng Long Italy to develop even further its capacity as demand continues to grow unabated.

Robans is also a new name, formerly Roban’s Produzione, for the artisanal ready-to-wear manufacturer that specializes in producing leather and suede collections for luxury labels. The house was started in 1989 by brothers Andrea and Roberto Palmieri in Pisa, Italy. Robans is growing its material research and treatment specialties, and has been key in recruiting and training young people of the region to enter into craftsmanship careers.

LVMH has been investing in cultivating strategic suppliers as well as manufacturers to strengthen its supply chain. The LVMH Métiers d’Art division was set up in 2015 tasked with helping the conglomerate’s houses build and maintain strong sourcing of rare materials, as well as education and training for the industry. The same year it acquired a stake in Spanish tannery Riba-Guixà. A stake in another Santa Croce sull’Arno-based tannery Masoni followed in 2019 as it continues to strengthen its supply chain.

TechCrunch : AI is taking over the iconic voice of Darth Vader, with the blessin

AI is taking over the iconic voice of Darth Vader, with the blessing of James Earl Jones

Image Credits: Disney
From the cringe-inducing Jar Jar Binks to unconvincing virtual Leia and Luke, Disney’s history with CG characters is, shall we say, mixed. But that’s not stopping them from replacing one of the most recognizable voices in cinema history, Darth Vader, with an AI-powered voice replica based on James Earl Jones.
The retirement of Jones, now 91, from the role, is of course well-earned. But if Disney continues to have its way (and there is no force in the world that can stop it), Vader is far from done. It would be unthinkable to recast the character, but if Jones is done, what can they do?
The solution is Respeecher, a Ukrainian company that trains text-to-speech machine learning models with the (licensed and released) recordings of actors who, for whatever reason, will no longer play a part.

Vanity Fair just ran a great story on how the company managed to put together the Vader replacement voice for Disney’s “Obi-Wan Kenobi” — while the country was being invaded by Russia. Interesting enough, but others noted that it serves as confirmation that the iconic voice of Vader would officially from now on be rendered by AI.
This is far from the first case where a well-known actor has had their voice synthesized or altered in this way. Another notable recent example is “Top Gun: Maverick,” in which the voice of Val Kilmer (reprising his role as Iceman) was synthesized due to the actor’s medical condition.
That sounded good, but a handful of whispered lines aren’t quite the same as a 1:1 replacement for a voice even children have known (and feared) for decades. Can a small company working at the cutting edge of machine learning tech pull it off?
You can judge for yourself — here’s one compilation of clips — and to me it seems pretty solid. The main criticism of that show wasn’t Vader’s voice, that’s for sure. If you weren’t expecting anything, you would probably just assume it was Jones speaking the lines, not another actor’s voice being modified to fit the bill.

The giveaway is that it doesn’t actually sound like Jones does now — it sounds like he did in the ’70s and ’80s when the original trilogy came out. That’s what anyone seeing Obi-Wan and Vader fight will expect, probably, but it’s a bit strange to think about.

It opens up a whole new can of worms. Sure, an actor may license their voice work for a character, but what about when that character ages? What about a totally different character they voice, but that there is some similarity to? What recourse do they have if their voice synthesis files leak and people are using it willy-nilly?

It’s an interesting new field to work in, but it’s hardly without pitfalls and ethical conundra. Disney has already broken the seal on many transformative technologies in filmmaking and television, and borne the deserved criticism when what it put out did not meet audiences’ expectations.
But they can take the hits and roll with them — maybe even take a page from George Lucas’s book and try to rewrite history, improving the rendering of Grand Moff Tarkin in a bid to make us forget how waxy he looked originally. As long as the technology is used to advance and complement the creativity of writers, directors and everyone else who makes movies magic, and not to save a buck or escape tricky rights situations, I can get behind it.