News from the first days of 2020
TAX News from the first days of 2020
Voters prefer public service boost to tax cuts
A poll by YouGov for the Times shows that 57% of people believe it is more important to increase spending on public services than it is to cut taxes, while just 16% said tax cuts were more important. Of those that voted Conservative, 54% said increased spending on services such as education and the NHS was more of a priority, while 22% said tax cuts were. A separate survey of members by the Conservative Home website shows that two-thirds of respondents want the Prime Minister to make good on a promise to increase the threshold for the 40p rate of income tax from £50,000 to £80,000, a vow Boris Johnson made during his leadership campaign.
Calls for stamp duty cut to stimulate market
The Government is facing renewed calls to cut stamp duty to breathe life into the housing market, according to the Express. Estate agents and property experts have blamed stamp duty for clogging up sales by making moving home expensive, deterring pensioners from downsizing and stopping buy-to-let investors from buying homes for rent. Nick Sanderson, chief executive of retirement living provider Audley Group, commented that tax breaks would make it easier for older homeowners to downsize, while Residential Landlords Association policy director David Smith fears investors are being taxed out of the market.
Daily Express, Page: 29 (01/01/2020)
Christmas and Boxing Day tax returns climb
HMRC figures show that a record 3,003 tax returns were completed on Christmas Day, marking a 15% increase on Christmas Day 2018’s 2,616. The number of self-assessment forms submitted on Boxing Day was up 9% on a year ago, with 9,254 completed on December 26.
Daily Mail, Page: 44 (1/1/2020)
Civil partners and tax
With opposite-sex partners now legally entitled to enter into a civil partnership, the Mail’s Fiona Parker considers the financial entitlements the change brings, noting that civil partners are entitled to the Marriage Allowance, with up to £1,250 of a person’s personal allowance able to be transferred to a civil partner. Civil partners can also transfer assets between them without paying Capital Gains Tax.
Daily Mail, Page: 44 (1/1/2020)
CORPORATE News from the first days of 2020
Google to end use of tax loophole
Google has overhauled its global tax structure, moving away from a set-up which allowed it to delay paying taxes on its international profits. Parent company Alphabet will no longer use an intellectual property licensing scheme in anticipation of more stringent tax avoidance regulation. The firm will no longer rely on the “double Irish, Dutch sandwich” loophole which allows companies to move profits to a tax haven registered in the Caribbean by moving it through subsidiaries based in Ireland and the Netherlands without being taxed in either country. As of this year, Google will simplify its corporate structure, licensing its intellectual property from the US, rather than Bermuda.
HK firms failing on environmental performance rules
Hong Kong-listed companies are failing to meet the “comply or explain” disclosure rules on environmental performance indicators, with BDO research showing that only 39% of 500 reports fully disclosed their environmental key performance indicators under the current “comply or explain” regime.
The I, Page: 39
Firm in receivership
Construction form Marcus Worthington has gone into receivership with debts in the region of £23m. The contractor announced it was in trouble last year and appointed PwC as administrators.
Daily Express, Page: 16
Redx in takeover talks
Biotechnology company Redx Pharma has received bid interest from a syndicate led by senior industry executive Sam Waksal. An overview of Redx notes that it exited administration in 2017, with FRP Advisory having acted as administrator.
Google used loophole to pay no tax on $40bn profits
Analysis shows that Google has used the double Irish arrangement to pay no tax on profits of almost $40bn over the past three years. Accounts filed by Irish subsidiary Google Ireland Holdings shows that it had profits of $15.5bn in 2018, up from $14.4bn the year before, with profits over the past three years totalling $38.9bn. However, the firm did not pay any Irish corporate tax on these profits as it is tax resident in Bermuda, which has a 0% tax rate. With the double Irish loophole, which allows big companies to move their profits from high-tax countries to nations with a lower rate of tax – often using two Irish entities, set to come to an end this year, it has been reported that Google is changing its international tax structure to remove its use of the arrangement. A spokeswoman for Google said: “In line with changes to US and Irish tax laws, we’re now simplifying our corporate structure and will license our IP from the US, not Bermuda.”
42% of CFOs expect uncertainty to continue beyond 2020
A Bank of England poll of 2,887 CFOs shows that more than four in 10 believe that Brexit-related uncertainty for business will not be resolved until at least 2021, while a fifth fear that Britain will leave the EU with no deal in place. December’s edition of the monthly poll saw 42% of respondents say they do not expect the uncertainty surrounding Brexit to be resolved until 2021, up from 33% in November. It was also found that 19% believe the UK will leave the EU this year without a deal, up from 16% a year earlier – although the number who expect Brexit with a deal to occur this year rose from 46.2% to 46.6%. The poll saw 53% of CFOs say Brexit was among their top three sources of uncertainty in December.
The Independent The Guardian
Carclo trading halted
Trading in shares of plastics manufacturer Carclo were suspended after it failed to issue its half-year results by the end of the year. The firm, which last month appointed administrators at PwC to its Wipac arm, missed the deadline because of the delayed publication of its annual results in November and work on its disposal of the business.
The Times, Page: 39
TECHNOLOGY News from the first days of 2020
Book-keeping app scores £55m investment
Receipt Bank, a book-keeping app for small businesses which automatically processes uploaded images of receipts and invoices, has secured a £55m investment from venture capital funds. The fundraising was led by New York-based Insight Partners, with Augmentum Fintech and Kennet Partners also understood to have taken part. Receipt Bank is run by Adrian Blair, who served as COO at Just Eat between 2011 and 2018. He commented: “This investment is an endorsement of our mission … to help accountants do more, empowering millions of small businesses grow by getting control of their finances.” “Our machine learning technology enables accountants to do far more for their small business clients, and expands the market for professional advice by making accountants far more productive.”
The Daily Telegraph, Business, Page: 3
PENSIONS News from the first days of 2020
Pension scammers shift operations abroad
A Daily Mail investigation has revealed that rogue firms are shifting their operations abroad, dodging UK regulations while taking advantage of official listings with the Inland Revenue. Campaigners are calling on ministers to clamp down on the abuse of HMRC’S system for registering non-UK pension schemes. The paper’s report found that firms based-overseas can levy huge commissions, a practice outlawed in the UK, and are also cold-calling potential customers – a sales tactic which is banned here. An HMRC spokesman said it has “done much to combat pension scams”, adding: “We will continue to come down hard on scammers.”
Daily Mail, Page: 20 (1/1/2020)
HMRC to act over state pension ‘missing years’
HMRC is to overhaul how it deals with people investigating gaps in their state pension records following a case where it took a taxpayer almost a year to rectify an issue.
PROPERTY News from the first days of 2020
First-timers at highest level since 2007
Analysis of UK Finance figures by Yorkshire Building Society suggests the number of people taking their first step on the property ladder reached its highest level since 2007 last year. There were 353,436 first-time buyers in 2019, up from 2018’s 353,130 and the highest annual total since the 357,590 recorded 12 years ago.
The Independent, Page: 53 Daily Express, Page: 44
Green light for property deals after election
London is likely to see a surge in commercial property deals in 2020 after a flurry of activity following the general election. Investors have acquired or agreed deals on a dozen properties in the capital worth about £1.2bn since the Conservative’s election victory, according to analysis by Green Street Advisors. Meanwhile, in its latest UK Real Estate Market Outlook, CBRE said central London transaction volumes should increase in 2020 helped by “strong occupier fundamentals and about £32bn of overseas equity targeting the region”.
Choc boss: CVAs penalise successful retailers
Hotel Chocolat co-founder Angus Thirlwell has complained that his company is effectively being penalised for its success, as struggling rivals are granted lower rents as part of CVAs while his rents remain sky-high. He says it is unfair that profitable firms like his are subsidising rents for less successful retailers, arguing that lower rents should be extended across the high street. Hotel Chocolat is calling for clauses in rent contracts that say it should receive the same benefits given to neighbours in CVA processes.
Daily Mirror, Page: 51 The Independent, Page: 50 The I, Page: 47 Daily Mail
First-timers pay 44% more in Edinburgh
Analysis suggests first-time buyers in Edinburgh face paying a premium of 44% compared with the Scottish average. While data from Registers of Scotland shows that the average Scottish house price stands at £151,891, research from the Bank of Scotland suggests that a typical starter home in the Scottish capital cost £217,406 last year. This is up 255% on 1999’s average. First-time buyers made up half of Scottish property transactions in 2019 and paid an average of £19,952 for a deposit.
SMEs News from the first days of 2020
Small firms miss out on Government spending
Analysis of public sector contract awards shows a 17% rise in spending to £93bn in 2019, spread over 45,216 contracts awarded to 16,218 suppliers. However, the study by consultant Tussell shows that, by value, just 12% of the contracts went directly to SMEs. This comes despite a target of £1 in every £3 of central government cash being spent with SMEs by 2022, either directly or through the supply chain. In 2017/18, just 23.7% went to smaller firms. The figures show the Government’s 34 “strategic suppliers” – which include accountants Deloitte and KPMG – claimed 16% of contracts by value last year. A Cabinet Office spokesman said the Tussell figures did not “accurately reflect the value of the business the Government does with SMEs”.
Daily Express, Page: 1
Minimum wage rise could hit SMEs
The Telegraph’s Tim Wallace warns that plans to increase the minimum wage are set to put serious pressure on smaller businesses. Nearly 3m people are set to receive increases to their hourly rates in April, and it is predicted that millions more will get a raise to reflect the premium given to more skilled or experienced workers. The Low Pay Commission estimates at least 35% of all workers will get a boost. Retailers and lobby groups are worried it could see wage bills spiral out of control, having a knock-on effect on the economy.
MEP: Small firms to thrive post-Brexit
Brexit Party MEP Rupert Lowe believes Brexit will boost British SMEs, arguing that EU regulations serve to protect the interests of large corporations and multinationals at the expense of small businesses. He said that while more than 90% of private sector firms in the UK are SMEs which do not export to the EU, they have to follow EU regulations, which adversely affects their profitability. Mr Lowe told the Express: “I think small businesses in Britain are thriving in spite of the European Union and our Government. So I don’t think they will suffer any negative effects [of Brexit].”
EMPLOYMENT News from the first days of 2020
Over-60s to drive employment growth
Analysis of Office for National Statistics data suggests people in their 60s will deliver more than half of all employment growth in the next 10 years, with this set to rise to almost two-thirds by 2060. In the past 20 years the number of employed over-65s has increased by 188% from 455,000 to 1.31m, while the proportion has grown from just over 5% to just under 11%.
Daily Express, Page: 1
Robots to rise in the 20s
The Telegraph’s Russell Lynch and Lizzy Burden look at what the next decade may hold, saying automation is set to be “a key trend” – with the Office for National Statistics suggesting 7.4% of the workforce is at high risk of being replaced by robots. They say the UK “has some catching up to do,” with the World Robotics Report showing spending on industrial robots fell 3% in the UK in 2018, with the country 22nd in the league table for density of robots to workers, with 85 per 10,000 staff. BDO estimates that businesses will pump up to 9% of investment budgets into automation this year, with the firm’s Tony Spillett suggesting 2020 may be “the springboard year for automation that could set the stage for a decade of innovation”.
The Daily Telegraph, Business, Page: 4
Fake apprenticeships exploit £3bn levy
A survey by the education and skills think tank EDSK suggests half of the apprenticeships created by a levy launched in 2017 are fake, with hundreds of thousands of apprenticeships either low-skilled jobs labelled as training or rebadged schemes for middle managers. The levy sees large employers with a payroll of more than £3m pay into a fund held by HMRC that firms can access for apprenticeship training. The fund was worth £2.7bn in the first year alone. The Guardian notes that a recent survey by Grant Thornton found that 45% of companies with an apprenticeship levy had not used any of the funds they had set aside since the scheme was launched.
The Guardian, Page: 13 The I, Page: 4 The Times, Page: 12
ECONOMY News from the first days of 2020
BCC: Economy stagnated in Q4
The British Chambers of Commerce has warned that the economy stagnated in the final quarter of 2019, prompting director general of the group Adam Marshall to call on the Government “to take big decisions to stimulate growth”. The service sector, which accounts for almost 80% of economic output, worsened in Q4. “Listless” manufacturers saw falling export business rather than rising order books for two quarters in a row – the first time that has happened for a decade, while domestic orders are in a sustained decline for the first time since 2011 and investment intentions are at an eight-year low. Dr Marshall said: “If ministers take action to reduce up-front costs, move key infrastructure projects forward, and to help businesses on training, they’ll be rewarded with increased investment.”
The Guardian, Page: 27 The Daily Telegraph, Business, Page: 1 The Times, Page: 33 Daily Express, Page: 44 Daily Mail, Page: 2 The Independent, Page: 6
Fewest floats in a decade
Figures show that 2019 saw the lowest number of stock market floats in London since the financial crisis, with just 36 companies completing initial public offerings on the London Stock Exchange. This is the lowest total since the 23 recorded in 2009. The analysis shows that £7.2bn was raised in new issues last year, with five of the listings from companies capitalised at more than £1bn. PwC’s annual review of the market shows that London “retained its position as Europe’s most active market in 2019”, contributing about 30% of total European IPO proceeds. The firm’s Peter Whelan says he sees a “positive backdrop to the IPO markets as we go into 2020”.
Retail administrations set to continue
The Telegraph’s Laura Onita considers the climate for retailers, saying a “steady stream” of administrations is expected to continue in 2020, with mid-market retailers set to be the most exposed. “The ‘at risk’ register will continue to remain a long one,” warns the KPMG/Ipsos Retail Think Tank.
The Daily Telegraph, Business, Page: 1
Deals on the horizon?
The Guardian looks at what 2020 may hold for investments, with Jonathan Boyers, the head of mergers and acquisitions at KPMG, predicting that a stable government may see a number of takeovers in the next six months. He says: “”Many have done their early prep work and are set to launch processes in the new year. Meanwhile, I expect there will be a significant amount of demand.”
The Guardian, Page: 29
Economists predict little change for UK growth in 2020
An FT survey of economists sees KPMG’s Yael Selfin say a “cloud of uncertainty” may keep business investment at bay, while EY’s Mark Gregory considers the UK’s place in European supply chains.
Manufacturing stalls in December
UK manufacturing shrank at its fastest pace in almost seven-and-a-half years in December, with an eighth successive month of decline. The IHS Markit/CIPS Purchasing Managers’ Index was 47.5 last month, down from 48.9 in November on an index where any figure below 50 is seen as a contraction. Duncan Brock, a director at the CIPS, said: “As the downturn deepened, Brexit uncertainty continued to dominate the business landscape and impact on client confidence. Combined with the effects of a slowing global economy, new orders from domestic and export markets dried up at one of the fastest rates seen in seven and a half years.” Howard Archer, chief economic adviser to the EY Item Club, commented: “Manufacturers are clearly hoping that the uncertainties surrounding the economy are diminished by December’s decisive general election result and by the UK leaving the EU with Boris Johnson’s deal on 31 January – and that this encourages businesses to step up their investment and demand for capital goods and consumers to become more willing to splash out on big-ticket durable goods.”
OTHER News from the first days of 2020
Recruiting with confidence
The army’s latest recruitment campaign centres on confidence and is based on research by the Prince’s Trust and Deloitte which shows that 54% of 16-to-24-year-olds believe a lack of self-confidence holds them back.
The Times, Page: 12 The Daily Telegraph, Page: 4 The Independent, Page: 16
Wildfire warning for insurers
The Daily Mail looks at the costs insurers are facing over the wildfires hitting Australia. It notes that two years ago, Deloitte warned that Australia would face growing costs from natural disasters, saying the bill could hit £21bn a year by 2050.
Daily Mail, Page: 69
Contact Paul Southward.