Category Archives: News Roundup

NEWS – MONDAY 1ST MARCH 2021


NEWS – MONDAY 1ST MARCH 2021

NEWS ROUNDUP

TAX NEWS – MONDAY 1ST MARCH 2021

Chancellor denies tax claim

Rishi Sunak has dismissed claims that he has privately told MPs he wants to raise taxes now so he can cut them before the next election, telling the BBC’s Andrew Marr: “I don’t recognise that”. Speaking ahead of the Budget on Wednesday, Mr Sunak would not confirm newspaper reports he is planning to freeze income tax thresholds or raise corporation tax in a bid to lower debt. The Telegraph reports that the Chancellor is considering freezing the point at which people start paying the basic rate of income tax and the threshold at which they begin paying the higher rate for at least three years, while corporation tax could rise from 19% to at least 22%. Speaking to Sky News’ Sophy Ridge on Sunday, the Chancellor said he “would like to be able to keep taxes low for people in general” but added that he wanted to “be responsible” with people’s money. BBC News notes that the former chancellor Lord Clarke believes Mr Sunak should consider raising VAT, national insurance and income taxes, while Martin Beck, senior economic adviser to the EY ITEM Club, has suggested repairing the public finances could wait and warned that “premature fiscal tightening could undermine recovery”. Writing in City AM, BDO’s Paul Falvey says Mr Sunak faces a “big challenge” to increase the tax take and support the individuals and businesses most severely impacted by COVID-19. Meanwhile, the Mail says the Chancellor could wait until his autumn Budget to deliver tax increases that may include increases to capital gains tax and national insurance for the self-employed, as well as cuts to pension tax relief. Elsewhere, Shadow Chancellor Anneliese Dodds has suggested she would like to see corporation tax raised, saying the UK needs to get “to a better place” on the levy.

The Times, Page: 8 The Independent The Daily Telegraph, Page: 4 Daily Mail, Page: 6 City AM BBC News

MPs: Now is not the time for tax rises

A Treasury Committee report says now is “not the time for tax rises”, warning increases may be needed in the future but in the current climate they could undermine the economic recovery. The cross-party group of MPs says public finances are on an “unsustainable long-term trajectory” and suggests the Government’s “tax lock” manifesto promise not to increase the rate of income tax, VAT or national insurance will come under pressure. The report suggests a “moderate increase” to the corporation tax rate could “raise revenue without damaging growth, especially if balanced with fiscally appropriate measures for business”, while stamp duty is “economically inefficient” and suggests a review of the tax treatment of the self-employed “long overdue”. The MPs have also suggested that businesses should be allowed to offset pandemic losses with a corporation tax refund. Mel Stride, chair of the committee, said: “With our public finances on an unsu stainable long-term trajectory, our clear message is that Budget 2021 is not the time for tax rises or fiscal consolidation.”

The Daily Telegraph, Business, Page: 1 The Times, Page: 33 Financial Times The Independent, Page: 4 BBC News

MPs call for business rates reduction

A group of northern Conservative MPs have called on Chancellor Rishi Sunak to cut taxes for retailers, saying there is the need for “a bold move to reduce business rates”. Members of the Northern Research Group of Conservative backbenchers have written to the Chancellor saying there is a need for “levelling the playing field between bricks and mortar and online retail”, saying reducing business rates from about 50% of market rent to about 35% will help achieve this.

The Guardian, Page: 1

Think-tank: 20 taxes should be axed

The Institute for Economic Affairs’ (IEA) believes the UK should scrap inheritance tax, stamp duty and almost 20 other taxes to simplify the tax regime. In its pre-Budget report, the think-tank has called for Chancellor Rishi Sunak to “simplify the tax system, reduce the overall burden of taxation, and eliminate many harmful distortions”. Among suggestions, it believes property taxes including council tax, the community infrastructure levy and business rates should be rolled into one “single land value tax”, while corporation tax and the diverted profit tax should be replaced “with a single income tax on capital income administered at the corporate level”.

City AM

Poll sees support for wealth and business taxes

A Savanta ComRes poll for the Independent shows 55% of people support a proposed increase in corporation tax, with just 16% of respondents opposed to an increase. The survey also saw 55% of those polled say they would support the introduction of a wealth tax on property or assets in a bid to top up public finances hit by the coronavirus crisis, with 18% against such a move. Around 43% of people said they would accept a 1p increase in income tax rates, with 28% opposed, while respondents were less keen on increases to council tax, VAT or fuel duty, with resistance also seen to the idea of reining in future pension rises.

The Independent

Tax rises needed but not yet

Looking ahead to Wednesday’s Budget, Hamish McRae in the I says the UK “will probably need some tax increases, but now is not the time to bring them in.” Saying that the books will need to be balanced due to the nation’s coronavirus bill, Mr McRae says taxation may be the way to go but believes there are two reasons to delay doing so, saying: “You don’t want to add to the fiscal burden before the economic recovery is secure”, and warning that “we do not know the scale of the tax increases needed to get the deficit under control.” In the Independent, James Moore considers the options open to Mr Sunak, saying tax rises “can clearly wait until such time as the economy can bear them.” Elsewhere, Roger Bootle, chairman of Capital Economics, argues that tax increases may hurt the recovery by dampening optimism, saying: “To clobber people and companies now with a raft of tax increases, before the recovery has even begun, would be tone deaf to the importance of confidence.”

The I, Page: 8 The Independent, Page: 30, 45 The Daily Telegraph, Business, Page: 2

Sunak to delay IR35 announcements?

Matt Fryer, head of legal services at Brookson Legal – the only Solicitors Regulation Authority accredited specialist IR35 law firm, believes it is unlikely that IR35 will be mentioned in Rishi Sunak’s upcoming Budget. Noting that reform has been delayed due to the pandemic, Mr Fryer said ministers are “keen to press on” with changes. He expects the Chancellor to wait until March 23 to confirm the reform, saying that the Budget is set to focus on stimulating short to medium term growth in the economy.

Daily Express

Britain should follow Ireland on corporation taxes

Sir Paul Marshall, chairman of hedge fund Marshall Wace and a member of the Government’s industrial strategy advisory council, suggests that Britain should take a page out of Ireland’s book on corporation tax, calling for the UK to “establish a clear, stable regime for corporation tax that is globally competitive and likely to attract rather than repel inward investment.”

The Times, Page: 37

INSOLVENCY NEWS – MONDAY 1ST MARCH 2021

Insolvency Service pays £453.4m in missing wages and benefits

Figures show that the Insolvency Service paid out £453.4m in missing wages and benefits to workers at firms that went bust last year, the highest total in a decade. The data, compiled by real estate adviser Altus Group, shows that payouts included £297.5m in redundancy pay. The analysis also shows that Government support rolled out amid the pandemic meant the number of firms going insolvent fell 27% compared to 2019. Calling for further support, Altus Group has urged the Chancellor to extend the business rates holiday.

Daily Express

INDUSTRY NEWS – MONDAY 1ST MARCH 2021

Buyout started Big Four break-up

The Telegraph interviews Andrew Coles, saying that in leading KPMG‘s pensions division through a £200m management buyout, he “fired the starting gun on a partial break-up of the Big Four”. It highlights that KPMG was the first of the Big Four firms to ban its consultants carrying out work for audit clients as part of an effort to avoid conflicts of interest, while Mr Coles says constraints around auditor independence were making it difficult for his part of the business to flourish within KPMG. The Telegraph notes KPMG is reported to be in advanced talks with buyout firm HIG Europe over a possible £400m sale of its insolvency and restructuring business, while Deloitte confirmed the sale of its own restructuring unit to consultancy Teneo for an undisclosed sum in February.

The Daily Telegraph, Business, Page: 4

CORPORATE NEWS – MONDAY 1ST MARCH 2021

30 pubs and restaurants close a day while distillery numbers jump

Research from CGA shows that an average of 30 pubs and restaurants a day have closed in the past 15 months. The report shows that 4,170 new sites have been recorded since December 2019 but the loss of 11,894 venues means three closures for every opening, with a net loss of 7,724 licensed premises. Meanwhile, the number of distillery businesses has risen by nearly a third amid the pandemic, with UHY Hacker Young saying the total jumped from 272 in 2019 to 351 last year, with this likely to have been fuelled by people using the lockdown to start craft spirits businesses.

The Times, Page: 8 The I, Page: 45

PROPERTY NEWS – MONDAY 1ST MARCH 2021

Dodds: Mortgage plan will further inflate property bubble

Shadow Chancellor Anneliese Dodds will today warn that a Government scheme to help first time buyers onto the housing ladder by encouraging banks to issue 95% mortgages will inflate the property bubble. Labour believes the initiative will make houses more expensive by increasing demand, with Ms Dodds set to say the plans “will do little to help more than a tiny proportion of Generation Rent – and look set to raise house prices even further beyond the reach of the rest.”

The Daily Telegraph

VAT cut on home repairs could boost economy

The Federation of Master Builders and the Royal Institution of Chartered Surveyors say cutting VAT on home repairs could give the economy a £50bn boost. The bodies, which are calling for a temporary cut from 20% to 5%, cite analysis from CBI Economics showing a five-year reduction would increase economic output by £51bn and create 345,000 jobs in construction and related sectors. They note that such a move would see the Treasury pull in £2.8bn less in tax receipts.

Daily Mail

EMPLOYMENT NEWS – MONDAY 1ST MARCH 2021

Jobless rate around airports above average

Parliamentary data shows that unemployment rates are higher around major airports. While the number of people claiming unemployment benefits went up 112% across the UK between January 2020 and January 2021, in areas around the UK’s top 20 airports it rose 145% on average. In the constituency which contains Heathrow the number of people claiming unemployment benefits has increased 221%, while around Gatwick it has increased 224% and near Stansted the rate has increased by 228%. The All Party-Parliamentary Group for the Future of Aviation said the data shows that airport communities are being hit hard by the pandemic and is calling for more support for the industry.

BBC News

A mutual support network pays dividends

The FT looks at work-based stress, citing a Deloitte report from January 2020 which found that the poor mental health among workers could cost firms £45bn a year.

Financial Times, Page: 12

Businesses draw up plans for hybrid working

With many firms launching reviews of working practices, preliminary findings from a poll of PwC staff show many favour working three or four days in the office.

Financial Times, Page: 2

ECONOMY NEWS – MONDAY 1ST MARCH 2021

Sunak set to extend support

Chancellor Rishi Sunak has indicated that his Budget will see a range of emergency coronavirus support measures extended, with the furlough scheme, bounceback loans, targeted VAT cuts and stamp duty reductions set to remain in place until June. Speaking ahead of his upcoming Budget, Mr Sunak said: “We went big, we went early and there’s more to come next week”. He suggested that support would be extended in line with the roadmap out of coronavirus restrictions set out by the Prime Minister, saying: “I want to support people and businesses along that path.” Mr Sunak told the BBC’s Andrew Marr that while the Budget will seek to provide support, he wants to “level with people” about the “shock to the economy” caused by pandemic, adding that he wants to “be honest” with the public about the pandemic’s impact on the economy and “clear about what our plan to address that is”. The Chancellor said making public finances sustainable “isn’t going to happen overnight”, warning that debt could “rise indefinitely” if borrowing continued after the recovery.

The Daily Telegraph BBC News

Labour fears Budget ‘triple hammer blow’

Labour has urged Chancellor Rishi Sunak not to raise taxes, cut welfare or freeze public sector pay in this week’s Budget, saying this would be a “triple hammer blow” that could undermine the UK’s recovery from the coronavirus crisis. Shadow Chancellor Anneliese Dodds is calling for a plan to protect jobs and businesses, urging Mr Sunak to maintain business rates relief and the reduced rate of VAT for at least six months to September; provide clarity on the future of support for the self-employed; and extend the furlough scheme. She will today insist the Budget should be about “rebuilding the foundations of our economy” with a “responsible plan that puts us on the path to a better, more secure future”.

The Independent

Economic growth to miss predictions

Britain’s GDP is expected to fall 4% in the first quarter of the year according to the EY Item Club, a downgrade on the 1.9% Q1 growth predicted by the Office for Budget Responsibility (OBR) in November. EY expects the OBR to revise down its forecasts after non-essential high street retail and hospitality were closed amid the latest nationwide restrictions in January. While the coronavirus vaccine rollout is expected to boost growth in the second half of 2021, EY expects overall growth for the year to be down on earlier predictions, forecasting 5% growth against official predictions of 5.5%.

The Daily Telegraph

Contact Paul Southward

Paul Southward


NEWS – WEEKEND TO 28TH FEBRUARY 2021


NEWS – WEEKEND TO 28TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

Sunak warns of bill to be paid to tackle UK’s ‘exposed’ finances

In an interview with the FT, the Chancellor has said Britain’s finances are “exposed” to rising interest rates and the public need to be told the truth about the challenges facing the country. Meanwhile, a Treasury decision to hold a “tax day” three weeks after the Budget will be a bellwether for long-term changes in government policy, experts have said. Separately, Conservative party doners have warned Rishi Sunak that raising taxes in his Budget would be “utterly wrong” and risk sending Britain into another recession. Property developer Steve Morgan said: “One of the advantages of leaving the EU is that we can become a low-tax, dynamic society which can become Europe’s go-to country for investment. Increasing corporation tax and CGT flies in the face of this.” Banker Sir Henry Angest was particularly blunt, adding: “I suspect there is a mindset at the Treasury that just doesn’t believe in the capitalist economic model.”

Financial Times, Page: 1 Financial Times, Page: 3 The Times, Page: 2

Allowance freeze could prove costly for some

The Times talks to accountants about the effect freezing tax thresholds would have on workers following speculation the Chancellor could use the tool in his Budget. PwC said that a 2% increase in wages would push the income of 1% of the working population over the £50,000 threshold. With 32m people in work, this would mean an extra 320,000 paying 40% tax on some income. If income tax thresholds were frozen until the next election, the average family would be £250 a year worse off by 2024-25. Pay rises for those who earn close to the £12,500 personal allowance could tip some of their earnings into the 20% tax zone – another blow for those who have suffered the most from the pandemic. Zena Hanks, an analyst from Saffery Champness, said: “The less that you earn, the more a frozen allowance will influence your take-home pay, so some may consider this a highly inequitable way of increasing tax revenue.”

The Times, Page: 60

Higher business taxes cost us all

The Telegraph’s Matthew Lynn reminds readers that a hike in corporation tax will ultimately mean higher prices and pay cuts for workers. He states: “Sure, the crisis needs to be paid for, but we need to do that with long-term restructuring of the national debt, by rethinking the role of the state and with faster growth – not with panicky tax rises on the one part of the economy that might lead us out of this mess.” Meanwhile, a poll for the paper reveals that nearly 60% of Tory voters polled said they supported an increase in corporation tax to help pay for the Government’s pandemic and recovery spending. Half said CGT should remain the same, 34% stated it should increase and just 16% think it should decrease. Elsewhere, the i suggests the Chancellor will leave tax rises for the autumn and focus on job support instead in his Budget on Wednesday.

The Daily Telegraph, Page: 34 The Daily Telegraph The I, Page: 8

Pandemic losers could cut future tax bills while Covid boomers pay more

Treasury officials have reportedly considered increasing corporation taxes on businesses that profited during the pandemic while expanding the so-called loss carry-back rules, which allow firms which previously made a loss to cut their tax bills when they return to profit. Chris Sanger, head of tax at EY, said: “If you’re incurring losses and you’ve got the history of taxable profits, then the banks can be pretty assured that you’re going to be able to get relief for those losses as you incur them. This would be quite an attractive move in order to help those kind of businesses move forward.” Ministers are also considering a shake-up of research and development (R&D) tax credits to help spur investment by firms after the pandemic.

The Daily Telegraph, Page: 33

Corbyn loyalists warn of Budget tax trap for Labour

Allies of Jeremy Corbyn have warned his successor that failure to back an increase in corporation tax in next week’s Budget would cost the Labour party dearly. Sir Keir Starmer has faced anger on the Labour left after he told MPs it was not the right time for tax rises on families and businesses.

The I, Page: 8

SUNDAY

Chancellor considers tax raid on parcels and freelance workers

The Sunday Telegraph reports that the Chancellor will launch a series of consultations later in the month on tax increases to pay for the cost of the pandemic, including new levies on online retail including for internet deliveries and an increase in National Insurance Contributions paid by the self-employed. Treasury sources said Mr Sunak’s concerns about the different tax treatment of the employed and self-employed have not changed since his first Budget last March. The consultations will be launched on March 23rd – dubbed “tax day” in Whitehall. The Sunday Times runs over some of Rishi Sunak’s fundraising plans, including freezing income tax thresholds and hiking corporation tax rises, both of which are approved of by Mike Brewer, chief economist at the Resolution Foundation, who says the measures “would have the triple benefit of raising about £16bn a year by 2025, while also protecting families that have been hit hardest by the crisis, and not holding back the recovery.” The CBI is less than impressed with proposals to increase taxes on businesses, however, with its chief economist Rain Newton-Smith stating that any rise should wait until after the economy has recovered.

The Sunday Telegraph, Page: 1, 2 The Sunday Times, Page: 1, 2 The Sunday Times, Business, Page: 1 The Sun on Sunday

Tories to blame for 1,000 tax rises in the last ten years

Research by the TaxPayers’ Alliance shows Conservative prime ministers have pushed through more than 1,034 tax rises over the past decade. A total of 1,651 tax changes were made since 2010 with VAT, vehicle excise duty and Income Tax seeing the most adjustment. Income Tax was changed 180 times, going up 61 times while cuts were made 119 times. The Alliance is calling for a recovery budget on Wednesday, giving taxpayers a respite from rises. John O’Connell, chief executive of the Alliance, said: “The tax burden is at a 70-year high, and it’s not hard to see why after a decade of tax increases. All too often we’ve seen Conservative chancellors give with one hand but take back a good deal more with the other, meaning every aspect of every-day life comes with a sizeable tax bill.” Meanwhile, former Tory Chancellor Lord Ken Clark has said Rishi Sunak should not be afraid to raise income tax, VAT or national insurance because people would understand that when the Tory manifesto was written the pandemic could not have been predicted.

The Sunday Telegraph, Page: 2 The Sunday Express The Independent

Return deadline tonight

Self-assessment taxpayers have until midnight tonight, February 28th, to file their return and avoid a £100 fine. The deadline to submit tax returns for 2019/20 was January 31 but HMRC waived the late filing fine as long as they are submitted by February 28.

The Sun on Sunday

CORPORATE NEWS – WEEKEND TO 28TH FEBRUARY 2021

SUNDAY

New ‘shareholder spring’ looms for companies tapping furlough scheme

Fidelity International has joined the Investment Association in calling for companies that used schemes such as furlough without repaying the money to show restraint when it comes to executive pay this year. “We are communicating that this is a red-line policy,” said Jenn-Hui Tan, Fidelity’s global head of stewardship. The Sunday Times notes that rows over taxpayer funds have already led to Tesco paying back £585m in business rates relief and BDO giving back £4.1m of furlough cash. In a letter to FTSE 350 companies the pension fund manager says it expects “companies that have participated in taxpayer-supported staff furlough schemes not to pay bonuses (cash or otherwise) to executive directors and senior management”. Stock-based long-term incentive plans should be scaled back, Fidelity says, and salaries for senior management should be frozen or increased only modestly.

The Sunday Times

UK carmakers may need state aid to survive

The Sunday Telegraph reports on the challenges ahead for Britain’s automotive sector, with Covid and Brexit stunting production to 1984 levels the industry faces tough decisions regarding the investments required for the transition to electric vehicles. Andrew Burn, head of automotive at KPMG says CEOs of carmakers are likely to put off investments in the near term, adding: “Manufacturing in the UK is down to government’s appetite for it. Does it support it or not?”

The Sunday Telegraph, Business, Page: 7

SMEs NEWS – WEEKEND TO 28TH FEBRUARY 2021

SUNDAY

Business leaders alert to task force transition

The Sunday Times speaks to businesses about the Brexit transition, with some expressing concern about Lord Frost replacing Michael Gove as chair of the Brexit business task force, suggesting his “sovereignty-first” ethos may put business second. Mike Cherry, the national chairman of the Federation of Small Businesses, comments: “Against a backdrop of continued trading restrictions, we need to see policy-makers pulling out all the stops to both introduce additional easements for small firms where the EU-UK deal is concerned and strike fresh deals with nations outside the bloc.”

The Sunday Times

UK Government to take stakes in tech start-ups

The Chancellor is preparing to launch a £375m fund to invest in fast growing UK tech companies as part of a series of policies focusing on the sector.

Financial Times

PENSIONS NEWS – WEEKEND TO 28TH FEBRUARY 2021

SUNDAY

Covid widening pension gender gap

Laura Miller in the Sunday Times looks at how the pandemic has widened the pension gap, with women more likely to have lost their jobs in the first lockdown. Kate Smith, the head of pensions at Aegon, comments: “There’s no escaping that Covid is widening an already extensive gender pension and savings gap.” Miller also touches on how maternity leave has affected pensions, with analysis from Aegon showing that women who had paused their pension saving for two years while on maternity leave and then reduced their hours had up to £50,000 less in their pot when it came to retirement.

The Sunday Times

INDUSTRY NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

Accountants have a 99% chance of being automated

Tom Knowles considers the threat to jobs from automation in the Times and reviews the book Futureproof: 9 Rules for Humans in the Age of Automation by Kevin Roose. The New York Times journalist argues that all types of AI are advancing so fast and appearing in so many fields that the only way humans will thrive and hold on to their jobs is to become more human rather than trying to compete directly with machines. “Most of the promising applications of AI and machine learning are in fields like accounting, law, finance and medicine, which involve lots of tasks like planning, prediction and process optimisation.” the book states. Knowles notes a study showing that accountants have a 99% chance of being automated, while solicitors and financial analysts are also in trouble. The less exciting AI is largely overlooked, Roose says, but we “underestimate boring bots at our peril”.

The Times, Page: 17

SUNDAY

Downing Street hesitates over audit reform after bosses’ backlash

Proposals to hold directors responsible for inaccurate accounts have led to a backlash from business leaders who argue the move would stifle innovation and harm inward investment. The proposals form part of a series of reforms designed to improve audit standards that were recommended following three independent reviews. Legislation is needed to implement many of the proposals, including replacing the Financial Reporting Council with a tougher watchdog called the Audit, Reporting and Governance Authority and having the Big Four ensure their audit and consulting arms are independent. Delays in passing the law are frustrating the accounting sector with ICAEW chief Michael Izza saying: “We seem to be mired in treacle.” Now, the business community is hitting back at the crackdown on directors, rattling Downing Street and as a result, the audit reforms are said to be still awaiting the prime minister’s sign-off.

The Sunday Times, Business, Page: 5

TECHNOLOGY NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

UK urged to create a fintech taskforce

The Times carries news that Ron Kalifa is urging the Government to establish a high-profile taskforce to lead innovation in financial technology as part of the UK’s growth plans after Brexit. Mr Kalifa, the former boss of the payments processor Worldpay, was asked by the Treasury to review the sector in July. The Chancellor said yesterday that the review “will make an important contribution to our plan to retain the UK’s fintech crown, create more skilled jobs and deliver better financial services for people and businesses.” Rachel Kent, a partner at Hogan Lovells Financial, who led some of the work for the report, said: “While the UK’s position is well established its future is not assured. Being outside the EU has created an opportunity to re-examine and reshape our regulatory framework to ensure it remains attractive and enabling to fintechs.”

The Times

REPORTING NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

Carney’s green boasts highlight need for ESG audits

The former Bank of England governor has been accused of using an unrecognised and widely discredited definition of “net zero” to promote the green credentials of Brookfield Asset Management, the Canadian investment company he joined last year. The Times’ Patrick Hosking suggests Mark Carney has inadvertently drawn attention to the problem of ESG auditing: “Auditors pore over claims made for companies’ finances and there is still fraud and rule-bending. Why would unaudited environmental boasts be more reliable or honest?”

The Times The Times, Page: 49

EMPLOYMENT NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

Sunak to announce £126m boost for traineeships

The Chancellor is set to funnel a further £126m into training and apprenticeship schemes in his Budget on Wednesday. Rishi Sunak said it was “vital” support continued to get people back into work. Currently, firms in England are given £2,000 for every new apprentice they take on under the age of 25, and £1,500 for those over 25, in addition to a £1,000 grant they are already getting under another project. The Government’s planned investment could therefore enable a further 40,000 traineeships.

BBC News

Boris Johnson: Remote working won’t be the new normal

The Prime Minister has said in only a few months people will be commuting back into the cities and returning to their offices to work. Boris Johnson dismissed fears that Britain is facing a new age of remote working claiming in a video message that, as the economy reopens, “the British people will be consumed once again with their desire for the genuine face-to-face meeting.” The PM’s comments come after Goldman Sachs boss David Soloman rejected remote working as the new normal and labelled it an “aberration”.

The Times

PERSONAL FINANCE NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

264,800 Help to Save accounts opened

More than 264,000 individuals have opened a Help to Save account and could be earning money on their savings, statistics from HMRC have revealed. Help to Save is the Government backed savings scheme that allows individuals to earn a 50 pence bonus for every £1 saved over four years. The 50% bonus is payable at the end of the second and fourth year and is based on how much account holders have saved.

Press Release

PROPERTY NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

Treasury to introduce mortgage guarantee scheme

The Chancellor will outline a new scheme on Wednesday that will see the Government guarantee part of a 95% mortgage for first-time buyers, up to a property value of £600,000. Banks are expected to have capacity to lend to about 3,000 individuals a month under the scheme. First-time buyers accounted for just 31% of all sales last year – the lowest proportion since 2016.

The Times, Page: 1 The Daily Telegraph

FRAUD NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

Rishi Sunak to launch new Covid fraud team

The Chancellor is to launch a £100m taskforce to crack down on Covid fraud. Based in HMRC, the new Taxpayer Protection Taskforce will focus on tracking down the criminal gangs thought to have stolen billions of pounds by posing as legitimate businesses.

Daily Mail, Page: 2

ECONOMY NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

Government borrowing costs rise as inflation fears grow

Yields on US and UK government bonds rose yesterday hitting one year highs and driving further the worldwide equities sell-off. The FTSE 100 dropped 2.5% while the Cac 40 and the Dax were also off by 1.5% and 0.8% respectively as concerns about inflation grow. “In the short term, volatility is likely to persist, and yields may rise further still,” said Salman Ahmed, global chief investment officer at Fidelity International. “However, while further rises in real rates and tightening of financial conditions may be needed before any real action is taken by central banks, we are closer to a turning point than a week ago.”

The Times The Daily Telegraph

Hospitality sector calls for further support

Hospitality firms have warned that one in five businesses in the sector could run out of cash in the next week unless more emergency support is confirmed. In a letter to the Government, signed by companies including Carlsberg, Intercontinental Hotels, pub chain Wetherspoons and Legoland owner Merlin Entertainment, they warned they faced a “truly perilous” situation with months of continued restrictions ahead. The letter said: “There is a significant gap between the current support provided by the government and the fixed outgoings associated with a closed hospitality business.”

City AM

Sunak to pledge £5bn in grants for the high street

In his Budget on Wednesday, the Chancellor will announce a £5bn fund to help high street pubs, restaurants and non-essential shops that have remained closed as a result of the Covid lockdown. Nearly 700,000 companies will be eligible for new direct cash grants of up to £18,000. Rishi Sunak said on Saturday night: “Our local businesses have been hit hard by the pandemic, which is why we went big and went early with a multi-billion pound package of support. There’s now light at the end of the tunnel, and this £5bn of extra cash grants will ensure our high streets can open their doors with optimism.” Craig Beaumont, chief of external affairs at the Federation of Small Businesses, heralded the “significant cash injection”, which he said would “help thousands of businesses survive through these final restrictions, and then help drive the vaccine-enabled recovery”.

The Sunday Telegraph, Page: 1, 2 The Sunday Times, Business, Page: 1 The Observer The Mail on Sunday

INTERNATIONAL NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

US removes stumbling block to global deal on digital tax

Janet Yellen, the US Treasury secretary, has told G20 finance ministers the US will remove the “safe harbour” requirement from proposals for global digital taxation reforms, potentially unlocking long-stalled multilateral negotiations at the OECD. The measure, which Donald Trump’s administration insisted on in 2019, would permit US tech companies to opt out of having to pay such taxes abroad. The German finance minister Olaf Scholz said Ms Yellen’s statement was a major breakthrough.

Financial Times The Times, Page: 51 The I, Page: 10

OTHER NEWS – WEEKEND TO 28TH FEBRUARY 2021

SATURDAY

Former Spanish king pays £3.8m in taxes

The former King of Spain, Juan Carlos, has made a payment of close to €4.4m (£3.8m) in unpaid taxes to Spain’s authorities in a move designed to avoid an embarrassing lawsuit. It is the second settlement Juan Carlos has paid in less than three months. Under Spanish law, someone cannot be prosecuted for tax offences if they settle an outstanding debt before formal charges are brought.

Financial Times The Daily Telegraph, Page: 15 The I, Page: 37

Contact Paul Southward

Paul Southward


NEWS – FRIDAY 25TH FEBRUARY 2021


NEWS – FRIDAY 25TH FEBRUARY 2021

NEWS ROUNDUP

ADVISORY FUEL RATES FOR COMPANY CARS FROM 1 MARCH 2021

See the latest updates here: –

Advisory-Fuel-Rates-from-1-March.pdf

TAX NEWS – FRIDAY 25TH FEBRUARY 2021

Cameron joins calls to resist tax increases in Budget

Rishi Sunak will call for “honesty” about the need to reduce spending when he delivers his Budget speech on Wednesday, Treasury sources have said. “You will hear the word honesty used a lot. He will be very clear to people that we’ve spent at wartime levels to get people through this, which was the right thing to do, but this can’t go on forever,” they said. Meanwhile, senior Conservatives including former prime minister David Cameron are warning the Chancellor not to use major tax hikes to balance the books. In an interview with CNN, Mr Cameron said that tax increases “wouldn’t make any sense at all” before the economy was up and running again. His comments come as Tory and Labour MPs plot to thwart an increase in corporation tax, leading Downing Street to threaten to remove the party whip from Tory MPs who rebel against the Budget. Meanwhile, the left-leaning think tank the Institute for Public Policy Research should use increases in CGT, corporation tax, wealth tax and a land value tax to raise £55bn while injecting a further £190bn into the economy to lay the ground for a “balanced recovery.”

Daily Telegraph, Page: 1, 2 Daily Telegraph Times Times Times, Page: 38 City A.M. Sun The I, Page: 7 Daily Express, Page: 7

Sunak likely to freeze lifetime allowance, higher tax rate

The Times reports that Rishi Sunak is expected to announce that the lifetime allowance will be frozen for the rest of this parliament at just over £1m. If the lifetime allowance rose in line with inflation it would increase by £88,900 by the end of this parliament. However, freezing the allowance means the additional pension savings will face the 25% levy – equivalent to £22,225. It is also understood that the Chancellor will freeze the £50,000 threshold for the higher rate of income tax, but resist freezing the £12,500 threshold amid concerns it will hit low earners. Freezing the higher rate would create 800,000 more higher-rate taxpayers, according to the Resolution Foundation.

The Times, Page: 1, 2 The Sun

Chancellor faces revolt over planned CGT raid

Mel Stride, the chairman of the Treasury Select Committee, has warned of a backbench rebellion if the Rishi Sunak raises capital gains tax. “If you were going to align income tax rates to capital gains tax, I think it would be extremely problematic,” he said. Landlords would be hit particularly hard by a hike in CGT, the Telegraph notes, with those in London potentially facing an average bill of £27,000, according to Hamptons. Separately, Bridget Phillipson, shadow chief secretary to the Treasury, said now was not the time to be putting up taxes on families and businesses that are struggling. She added: “Not only can they not bear that, but it would hamper the recovery that we want to see.”

The Daily Telegraph

CORPORATE NEWS – FRIDAY 25TH FEBRUARY 2021

Asda restructures, EG accounts will be late

Asda has launched a restructuring that could put 5,000 jobs at risk, the group has said. A spokesman said that the shake-up was not linked to Asda’s new ownership after the £6.8bn takeover by EG Group and TDR Capital, but was part of a new focus on the online grocery market. EG released financial results for its petrol forecourt empire and also told investors that its accounts would be late as KPMG, its new auditor, required more time “to complete their period of transition and to establish an audit team that is capable of preparing for and carrying out an audit of the size and scale of EG Group”. Deloitte resigned as auditor of the group in October over corporate governance concerns.

The Times, Page: 40 The Daily Telegraph, Business, Page: 3

SMEs NEWS – FRIDAY 25TH FEBRUARY 2021

Councils fail to hand out £1.6bn of Covid grants

New figures from the Department for Business show that councils across Britain failed to hand out more than £1.6bn of emergency Covid grants to struggling businesses, causing fury in Whitehall. Craig Beaumont, of the Federation of Small Businesses, said: “We should be seeing local authorities in a big race to stop supply chain businesses going bust, yet most are still at the start line and have not got discretionary grants out the door. Full discretion has made councils afraid of making mistakes and wanting more guidance from government, while government insists all instruction has been given.”

The Daily Telegraph

PROPERTY NEWS – FRIDAY 25TH FEBRUARY 2021

Nearly 800,000 homes at risk of being repossessed

The Social Market Foundation estimates that some 770,000 families are at risk of losing their homes if they suffer a loss in income when a ban on repossessions ends in April. A quarter of the homeowners at risk of having their property repossessed work in the retail and manufacturing sectors, the SMF said. Scott Corfe, research director at the SMF, warned the Government needs to prepare for “a possible spike in evictions and repossessions” given many households will not be able to pay their mortgage if they lose their jobs.

The Daily Telegraph

EMPLOYMENT NEWS – FRIDAY 25TH FEBRUARY 2021

Latest lockdown saw businesses furlough 900,000 in January

New figures show that the latest lockdown saw businesses furlough another 900,000 jobs last month. A total of 4.9m wage bills were paid by the Treasury under the furlough scheme at January’s peak, surging from below 4m for most of December when more businesses had been allowed to open. It took the number paid to stay at home to its highest level since the end of July. Data from HMRC show that number fell to 4.7m by the end of last month.

The Daily Telegraph

REGULATION NEWS – FRIDAY 25TH FEBRUARY 2021

Global financial system skewed in favour of wealthy, UN panel says

The UN panel on financial integrity for sustainable development has urged governments to overhaul tax rules and the banking system to help end poverty and tackle the climate emergency. Systemic tax abuses, corruption and money laundering are leaving billions of people trapped in poverty. The panel of world leaders, central bank governors and business and civil society representatives said up to 10% of the world’s wealth could be hidden offshore at a time when governments were under growing financial strain because of the Covid pandemic, and as inequality soars.

The Guardian

ECONOMY NEWS – FRIDAY 25TH FEBRUARY 2021

Return to growth expected in second half

PwC is predicting growth of up to 4.6% for Scotland this year as the country’s economy recovers from the pandemic. After an estimated drop of 10.6% in GDP last year, the economy north of the Border is expected to grow by between 3.6% and 4.6% in gross value added (GVA) terms in 2021, depending on the speed of the recovery. For the UK as a whole, PwC believes the economy will see negative growth in the first quarter of up to -2.8%, followed by a gradual return to growth from the second quarter.

The Scotsman

INTERNATIONAL NEWS – FRIDAY 25TH FEBRUARY 2021

Head of EY Germany set to step down amid Wirecard scandal

The FT reports that EY Germany head Hubert Barth, the longstanding auditor of disgraced payments firm Wirecard, is expected to step down from the role.

Financial Times, Page: 9 Wall Street Journal

OTHER NEWS – FRIDAY 25TH FEBRUARY 2021

Covid crisis makes the rich richer

London has overtaken New York as home to the highest concentration of dollar millionaires in the world, according to a report by the property consultants Knight Frank. Some 874,354 people in London have assets, including property, worth more than $1m compared with 820,000 in New York. The Knight Frank wealth report shows that despite the economic destruction wrought by the pandemic on millions of people with modest incomes, those who were already very rich have been able to increase their fortunes.

The Guardian

Art sell off pre-empts CGT rise

Artworks by Vincent van Gogh, Lucian Freud and Henry Moore are being sold off by a British family concerned about an imminent rise in capital gains tax. Thomas Gibson, a London art dealer, and his three sons have decided to sell the work which has a total valuation of almost $23m in New York. La Mousmé, a drawing by van Gogh, is valued at up to $10m by Christie’s.

The Times

Contact Paul Southward

Paul Southward


NEWS – THURSDAY 25TH FEBRUARY 2021


NEWS – THURSDAY 25TH FEBRUARY 2021

NEWS ROUNDUP

REMINDER TO FILE SELF-ASSESSMENT TAX RETURNS

For anyone who missed filing their 2019/2020 self-assessment tax return, a reminder that the extended filing deadline ends on 28th February 2021.  Filing after this date could lead to a £100 penalty.  A reminder also to pay any tax due by 1st April 2021 at the latest, to avoid a 5% late payment surcharge.

If you need help with your tax affairs – contact Paul Southward or your usual KSK contact.

TAX NEWS – THURSDAY 25TH FEBRUARY 2021

Sunak to use US example for corporate tax increase

Rishi Sunak is expected to announce a sharp rise in Britain’s corporation tax rate with officials suggesting the rate could rise to 25% or more over the course of the parliament. The Chancellor will point to US plans to hike the tax and the fact that the UK’s rate will remain competitive within the G7. Meanwhile, Labour leader Sir Kier Starmer indicated that his party would oppose any rise in corporation tax. Sir Kier, who stood on a 2019 manifesto to raise corporation tax to 26%, told MPs it was “not the time for tax rises for families and for businesses.” After a backlash, the position was softened with a Labour source saying last night that the party would back a steady minimal increase later in the parliament. The Mail reports that the Chancellor is expected to shelve plans to raise fuel duty and intends to extend the stamp duty holiday until the end of June. The Express leads with news that senior Tory figures and business groups are urging Mr Sunak not to increase the tax burden and focus instead on freeing businesses to spur a recovery.

Financial Times The Times, Page: 2 Daily Mail, Page: 1 Daily Express, Page: 1, 4-5 The Guardian, Page: 1, 2

New freelancers could miss out on Covid payout

The Government has considered extending the self-employed income support scheme to new freelancers, the Telegraph reports, but civil servants raised concerns over the number of freelancers yet to file their returns. Reportedly, some 1.5m people are yet to sort out their taxes, after HMRC said no one would face fines as long as they filed by the end of February. Andy Chamberlain of IPSE, a freelancer trade body, said: “It would be a major kick in the teeth for people who have taken advantage of lenient tax return rules to be penalised.”

The Daily Telegraph, Business, Page: 5

Barclay sets out free port rules

Stephen Barclay, the Chief Secretary to the Treasury, told MPs on Wednesday that free ports planned for the UK would not be allowed to provide tax breaks to those wanting to import luxury goods. Those bidding to host the ports must demonstrate that they will help regenerate the local area, Barclay added, while other officials warned that ministers had the power to “de-designate a tax site if there is lots of non-compliance”.

Express & Star

Surge in phone scams recorded

Reports of fraudsters calling taxpayers pretending to be from HMRC surged 200% between December and January – from 10,997 to 33,053 – the Revenue said. Scammers usually offer fraudulent rebates but they have also threatened legal action over unpaid tax or sent emails or texts offering fake government support or grants.

BBC News Daily Express, Page: 2

City lobby group calls for tech boost

TheCityUK has called for the launch of a tax simplification programme in Rishi Sunak’s Budget, which it says would “have a positive impact on inward investment and the overall attractiveness of the UK’s business environment”.

City AM

REGULATION NEWS – THURSDAY 25TH FEBRUARY 2021

BoE governor warns EU over derivatives clearing power grab

Attempts by Brussels to force banks to move all clearing of euro-denominated derivatives from London to the eurozone risks a “serious escalation” in tensions in its relations with the UK, Andrew Bailey warned yesterday. Brussels has granted EU banks temporary access to UK-based clearing houses but expects them to move their euro-denominated trades into the bloc by mid-2022 when equivalence lapses. The governor of the Bank of England told MPs the EU have their eye on forcing other overseas banks to shift their euro-denominated trades to the eurozone too in a resurgence of the EU’s location policy. “The issue of location policy is not a new one,” he said. “It would be very controversial in my view because legislating extraterritorially is controversial anyway, and obviously of dubious legality frankly.” Mr Bailey went on to say that an agreement with the EU on financial services was preferable, but “there ’s a point beyond which the deal is not worth having”.

Financial Times The Times The Daily Telegraph Daily Mail

High Court orders FCA to halt Danish tax fraud probe

The High Court has ruled that the FCA should stop disciplinary proceedings against a businessman accused of defrauding Danish authorities while judges decide a lawsuit brought by the country’s Tax Administration.

Financial Times

CORPORATE NEWS – THURSDAY 25TH FEBRUARY 2021

Asda’s new owners appoint another heavyweight director

The Issa brothers have appointed another senior director to their petrol station empire as they move to assuage concerns over corporate governance. Dame Alison Carnwath will join the board of EG Group as the head of the audit committee, Mohsin and Zuber Issa announced. The Mail notes that Deloitte resigned in October as auditor due to concerns over governance and internal controls.

Daily Mail, Page: 79

Ratesetter may need more financial support

Ratesetter faces “material uncertainty” over its status as a going concern, according to its latest accounts. EY said that the company “may not have sufficient capital to continue to meet its regulatory capital requirements” unless Metro Bank, which bought the peer-to-peer lender last year, injects more funds.

The Times, Page: 39

EMPLOYMENT NEWS – THURSDAY 25TH FEBRUARY 2021

The future promises a ‘hybrid’ approach of working

The Scotsman considers the future of work since the pandemic has altered practices so acutely. A report from specialist recruiter Robert Half found that about 90% of UK firms expect hybrid workforces to become a permanent part of working life. The report comes after PwC said in December that it was reviewing the layout and technology of all of its offices to ensure they were “best equipped for a hybrid working world”. KPMG later said it was “preparing for a future of hybrid working,” and this year will spend a further £44m to transform its offices and invest in new home working technology for staff.

The Scotsman

PENSIONS NEWS – THURSDAY 25TH FEBRUARY 2021

Cut to pension tax relief inevitable

The Express reports that Rishi Sunak could slash pension tax relief, citing Tim Stovold of Moore Kingston Smith who said a cut was inevitable as the benefit was too generous. However, the change may not necessarily come in this Budget as it doesn’t immediately collect large amounts of tax.

Daily Express

ECONOMY NEWS – THURSDAY 25TH FEBRUARY 2021

Lifting restrictions should see economic bounceback

The governor of the Bank of England told MPs on Wednesday that the economy was performing better than expected considering the Covid restrictions, citing the adaptability of the British people. Andrew Bailey said the Prime Minister’s reopening roadmap should result in the economy growing rapidly over the next six months, getting GDP back to its pre-Covid levels by early 2022. Ben Broadbent, Deputy Governor for Monetary Policy, added that experience from last summer suggested that when restrictions are lifted there should be a bounceback in spending.

The Daily Telegraph

ACCOUNTANY NEWS – THURSDAY 25TH FEBRUARY 2021

KPMG close to selling UK restructuring business

KPMG has entered into exclusive talks with private equity firm HIG Europe about the sale of its UK restructuring business, according to Sky News. Reports indicate that HIG has lined up John Connolly, the former chairman of Deloitte, to chair the business. If the deal goes ahead, it will represent the most valuable disposal to date by one of Britain’s big four auditors. The news comes a week after Deloitte confirmed that it was selling its restructuring arm to Teneo. Sky News notes that the Big Four have all submitted plans to the Financial Reporting Council demonstrating how they intend to ‘operationally separate’ their audit and consulting arms during the next four years.

Sky News City AM

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Paul Southward


NEWS – WEDNESDAY 24TH FEBRUARY 2021


NEWS – WEDNESDAY 24TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 24TH FEBRUARY 2021

Business urged to prepare for increased tax enforcement

Research carried out by EY shows business leaders expect greater tax enforcement from governments over the next three years as countries look to rebalance their books following the pandemic. Europe was seen as the region representing the highest tax risk to businesses in the coming three years, with the Americas and Asia-Pacific close behind. Workers stranded overseas, the treatment of financial losses linked to the pandemic, the claiming of tax refunds and even the receipt of stimulus measures were seen as the top pandemic-related tax risks. Kate Barton, EY’s global vice chair of tax, said COVID-19 had “greatly amplified the tax risk profile” of organisations. “As governments look to balance budget deficits, tax authorities are resuming suspended tax audits and litigation. Meanwhile, the digital transformation of the global economy – and the increasing volume of data and compliance requirements from tax administrations – means that organisations will inevitably face more risk for tough audits,” she said. “Without a change in approach today, organisations face a real risk of financial penalties and reputational damage tomorrow.”

City AM

Revera case illustrate need for reform of care home sector

Canadian care home operator Revera, which owns 56 care homes in the UK, has been accused of using aggressive tax avoidance to route profits from its homes through the tax havens of Jersey, Guernsey and Luxembourg. A report by the Centre for International Corporate Tax Accountability and Research says that profit-shifting such as that allegedly undertaken by Revera “indicates that investor-owned UK care companies have consciously chosen to extract profits rather than increase spending on higher staffing levels and better-quality care”. Christina McAnea, general secretary of the trade union Unison, said: “The scale of tax avoidance across the UK care home sector is deeply concerning. Urgent reform is needed.”

The Times, Page: 41

VAT Deferral New Payment Scheme – online service opens

Over half a million businesses who deferred VAT payments last year can now join the new online VAT Deferral New Payment Scheme to pay it in smaller monthly instalments, HMRC has announced. In order to take advantage of the new payment scheme businesses will need to have deferred VAT payments between March and June 2020, under the VAT Payment Deferral Scheme. They will now be given the option to pay their deferred VAT in equal consecutive monthly instalments from March 2021. Businesses will need to opt-in to the VAT Deferral New Payment Scheme. They can do this via the online service that opens on 23 February and closes on 21 June 2021.

Press Release

PROPERTY NEWS – WEDNESDAY 24TH FEBRUARY 2021

Stamp duty holiday to be extended to end of June

The Chancellor will use his March Budget to extend the stamp duty holiday until the end of June, according to the Times. In July last year the Chancellor raised the threshold for paying stamp duty from £125,000 to £500,000, providing people with up to £15,000 in savings. Experts warned ending the policy on March 31 would slow sales and send prices down by over 8%. However, Paul Johnson, the head of the Institute for Fiscal Studies, warned that by extending the stamp duty holiday the Government was increasing the likelihood of it becoming permanent. Extending the holiday is expected to cost the Treasury about £1bn. Additionally, the business rates holiday for the retail, hospitality and leisure sectors will also be extended at a cost of just under £1bn a month, along with the VAT cut for hospitality and tourism at an estimated cost of £200m a month.

The Times, Page: 1

EMPLOYMENT NEWS – WEDNESDAY 24TH FEBRUARY 2021

New wave of £7,500 grants for self-employed planned

Rishi Sunak is preparing to offer self-employed workers grants of up to £7,500 in next week’s Budget, the Telegraph reports. People who meet the criteria can claim 80% of average monthly profits up to a maximum of £2,500 a month. However, the scheme will probably end at the end of April reflecting the fact that many self-run businesses will have to remain shut until then. Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed, welcomed the proposals but cautioned against pulling support from self-employed workers too soon. “Throughout the coming months, where there are still restrictions on the economy and businesses, Government must ensure there is proportionate support for this country’s freelancers and self-employed,” Mr Chamberlain said.

The Daily Telegraph

Extension to furlough scheme urged as unemployment hits 5.1%

Chancellor Rishi Sunak has been urged by the CBI to extend furlough and other support programmes amid fears that the unemployment rate could grow. CBI figures show that it has already reached 5.1%. Matthew Percival, director of People and Skills at the CBI commented: “With tough decisions on jobs being taken daily, employers need the Budget to provide further business support until the economy is fully reopen,” while Julian Jessop, economist at the Institute of Economic Affairs said of the furlough scheme: “It would make sense for the Chancellor to extend this scheme in next week’s Budget, but only for as long as substantial COVID restrictions remain in place.”

Evening Standard Financial Times, Page: 2

CORPORATE NEWS – WEDNESDAY 24TH FEBRUARY 2021

Women representation on FTSE boards climbs by 50%

The Hampton-Alexander Review has found that women representation on FTSE 350 boards has risen from 21.9% to 34.9% since 2015. “In total, 220 of the FTSE 350 companies now meet the Hampton-Alexander target of having at least 33% of their board positions held by women – with the figure having quadrupled from just 53 in 2015,” a statement from the Department of Business, Energy and Industrial Strategy read. The final report from the review also noted that there are now no longer any all-male FTSE 350 boards. The figures also show that women occupy 29.4% of broader senior roles, up from 24.5% in 2017. Hampton-Alexander Review chief executive Denise Wilson said: “The lack of women in the boardroom is where it all started a decade ago, and it’s the area where we have seen the greatest progress. “But now, we need to achieve the same – if not more – gains for women in leadership. The supply of capable, experienced women is full- to-over-flowing. It is now for business to fully-utilise a talent pool of educated, experienced women, to their own benefit and that of the UK economy.”

BBC News City AM

ECONOMY NEWS – WEDNESDAY 24TH FEBRUARY 2021

Sunak urged to support manufacturing in Budget

Crowe is calling on Chancellor Rishi Sunak to support the manufacturing sector in his March Budget. Johnathan Dudley, partner and head of manufacturing at Oldbury-based firm, said: “The Government has secured billions in COVID-19 corporate debt, most of which is at least a medium-term risk to the Exchequer. To reduce and manage this risk, it is important for manufacturers to be productive and competitive and for the original equipment manufacturer supply chains to be secure for the former to survive and the latter to have the incentive to stay around. This requires investment and simple tax relief alone will not justify it.”

Express & Star

CBI survey shows fall in retail, wholesale and motor trades employment

The CBI’s distributive trades survey has revealed that employment levels in the retail, wholesale and motor trades declined at a record pace in the year to February. CBI principal economist Ben Jones commented: “With lockdown measures still in place, trading conditions remain extremely difficult for retailers. Record growth in internet shopping suggests that retailers’ investments in on-line platforms and click-and-collect services maybe paying off, but the re-opening of the sector can’t come soon enough to protect jobs and breathe life back into the sector.”

City AM

INTERNATIONAL NEWS – WEDNESDAY 24TH FEBRUARY 2021

PwC head to trial over whistleblower firing

PwC US will go to trial on Monday as it defends its audits of two tech companies – Cavium and Harmonic – and that it rightly fired a whistleblower. Mauro Botta, former senior manager at the firm, has accused PwC of firing him because he submitted complaints to the Securities and Exchange Commission and other regulators, saying the firm had too cosy a relationship with its clients. PwC denies this, arguing Botta “fabricated an internal control and falsified audit documentation,” and then lied about doing so during an internal investigation.

City AM

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Paul Southward


NEWS – FRIDAY 19TH FEBRUARY 2021


NEWS – FRIDAY 19TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – FRIDAY 19TH FEBRUARY 2021

Chancellor set to extend rates relief and furlough

The Telegraph’s Ben Riley-Smith reports that the Chancellor is set to keep the furlough scheme going until the summer and extend the business rates holiday for the retail, hospitality and leisure sectors beyond the end of March. He says the moves are set to be outlined in Rishi Sunak’s March 3 budget, adding that the Chancellor is also considering freezing personal income tax allowances in a move that could bring in up to £6bn by 2024/25. Other changes under consideration as Mr Sunak looks to balance the books after heavy coronavirus-related spending reportedly include increases in corporation tax and capital gains tax. However, Mr Riley-Smith says Mr Sunak is expected to leave the more significant tax rises he is considering until his autumn budget, when the economy may be stronger. Meanwhile, Nigel Morris in the I says Mr Sunak has abandoned plans to announce tax rises in next month’ s budget, with the Chancellor instead to focus on protecting jobs and providing extra support for businesses struggling to survive after the third lockdown. He notes that Mel Stride, chairman of the Treasury Committee, believes Mr Sunak should “definitely not” increase taxes at the moment, but must use the budget to outline his roadmap to paying back borrowing.

The Daily Telegraph The I, Page: 12

Next boss calls for tax on warehouses

Next boss Lord Wolfson has rejected the idea of a 2% online sales tax, saying he believes “ultimately the consumer will pay the price of that”. He told the BBC: “An online tax isn’t going to get people back… it is going to put a hole in consumers’ pockets.” He added that while some people have suggested an online sales tax could prevent corporation tax dodging, “a better way of doing that is to say if you’re an online business, pay either 2% of your turnover or 19% of your profits, whichever is the higher.” Lord Wolfson has also suggested a hike in business rates on warehouses, saying they should be subject to an increase of up to 50% while high street stores could see a 35% reduction in a bid to level the playing field between online giants like Amazon and chains located in expensive city centre stores. Robert Hayton of real estate adviser Altus Group warned against a rates hike, noting that online retailers represent only a small part of the warehouse occupier base, with Jerry Schurder, head of business rates at property consultancy Gerald Eve, offering a similar sentiment, pointing to “the tens of thousands of warehouse-based firms that have nothing to do with online retail”. Meanwhile, the FT reports that the Chancellor will today announce he is delaying a report on a review of business rates – which will also consider the case for an online sales tax – until later this year.

The Daily Telegraph BBC News Financial Times

HMRC denies misleading MPs over contractors’ tax avoidance

HMRC has been accused of “misleading” a parliamentary committee over its use of contractors who used tax avoidance schemes. The All-Party Parliamentary Loan Charge Group says at least 15 contractors using disguised remuneration schemes had worked for HMRC and its Revenue and Customs Digital Technology Services division between 2016 and 2020. The MPs said HMRC’s attempts to evade questions on the matter are “disgraceful” and “a clear attempt” to cover up an “embarrassing fact.” The group added that the “whole farce of the loan charge fiasco” is demonstrated by the fact that HMRC used contractors engaged in what it now describes as aggressive and defective tax avoidance arrangements. HMRC refutes the claims, arguing that it is possible for contractors to use such schemes without the participation or knowledge of those that hire them.

The Guardian Yorkshire Post

UN report proposes carbon taxes

A UN report has suggested carbon taxes should be introduced amid a number of measures required to solve the “triple planetary emergency” caused by climate change, biodiversity loss and pollution. The Making Peace with Nature report calls for countries to stop tax breaks and other subsidies for fossil fuels. Separately, a group of climate finance experts have suggested taxes on international transport could help developing countries finance measures to reduce greenhouse gas emissions and cope with the climate crisis.

The Times, Page: 16 The Guardian, Page: 17

Think-tank: Tax wealth to support children

The Intergenerational Foundation think-tank has urged the Chancellor to raise £50bn in tax on unearned income and wealth, saying the money raised could go toward addressing the attainment gap in children’s lost education. It says money could be raised by charging landlords national insurance contributions on rental income, taxing dividend income, and removing capital gains tax exemptions or relief.

Daily Mirror, Page: 2

Praise for PAYE

Looking at taxation and financial policy, Ed Conway in the Times lauds the creation of PAYE, saying the system has been exported and copied around the world. He says it is easier for taxpayers to digest as tax is taken before they ever see it, suggesting: “It is no coincidence that council tax is among the least popular of all taxes, because you actually see it leaving your bank account.”

The Times, Page: 26

SMEs NEWS – FRIDAY 19TH FEBRUARY 2021

Roadmap out of lockdown must support SMEs

ACCA chief executive Helen Brand says the Government’s roadmap on how the UK will exit lockdown and recover from the pandemic needs “signposts and barrier-free routes to help SMEs”. She says she hopes to see “a focus on policies that help existing and new entrepreneurs”. Ms Brand also reflects on the findings of the SME Tracker from the ACCA and Corporate Finance Network, noting that February’s update shows 8.5% of small firms said they would be affected by new off-payroll (IR35) rules, with responsibility for determining the tax status of contractors delivering more work and the risk of penalties.

City AM

Survey points to SME optimism

UK SMEs should expect an average 8% growth in revenues for 2021, according to the Barclaycard Payments Barometer, which has found that almost a quarter have surpassed their pre-pandemic levels of output. The survey warned, however, that only three in ten SMEs say they are prepared for the easing of lockdown measures. It was also found that 25% have seen an increase in job applications. Rob Cameron, CEO of Barclaycard Payments, said: “While the world may be returning to some form of normal this year, small businesses have realised the benefits of flexible working and digital skills, with many already looking at what improvements they can take forward into 2021.”

City AM

EMPLOYMENT NEWS – FRIDAY 19TH FEBRUARY 2021

Firms urged to get recruitment right

The Recruitment & Employment Confederation (REC) says recruitment could play a key factor in the UK’s economic recovery, with recruiters boosting productivity by £7.7bn a year. The sector body has warned firms against “wasteful approaches” to the hiring process, with REC chief executive Neil Carberry saying that while many CEOs have described people as their biggest asset, they have often “left the process of bringing staff into the business as something to be done at low cost and high speed.”

City AM

BCC calls for furlough scheme extension

A new survey from the British Chambers of Commerce has found that a quarter of UK businesses expect to lay-off employees if the furlough scheme is not extended beyond April. The BCC has called on ministers to extend financial support measures for businesses throughout 2021, urging the Chancellor to target further support at sectors hardest hit by the pandemic.

City AM

CORPORATE NEWS – FRIDAY 19TH FEBRUARY 2021

Share schemes in the spotlight

Marianna Hunt in the Telegraph looks at the benefits of share schemes but warns that if companies do not follow the right procedures, they can end up landing themselves and their employees with significant tax bills. Mike Hodges of Saffery Champness notes that there may be long-term benefits for shareholders if a firm offers incentives to employees that make them more invested in its growth while conserving cash for other expenses.

The Daily Telegraph

Silence isn’t golden, whistleblowers are

The FT reflects on last year’s 35% increase in whistleblower cases involving financial services firms, noting that Deloitte has warned of a new “whistleblower environment” amid the pandemic.

Financial Times, Page: 23

ECONOMY NEWS – FRIDAY 19TH FEBRUARY 2021

Starmer outlines economic policy

Labour leader Sir Keir Starmer has outlined the party’s economic policy direction, saying that under his leadership “Labour’s priority will always be financial responsibility” and arguing that “a fair society will lead to a more prosperous economy”. Saying that Labour must build “a strong partnership with businesses” if it is to deliver a more just and equal society, he added that “for too long the party saw business as “something just to be tolerated or taxed”. Mr Starmer also proposed a “British recovery bond”, a saving scheme with a competitive interest rate that would help people invest in the UK’s post-pandemic future. The Labour leader also said he would end the public sector pay freeze, extend business rate and VAT relief, and boost the furlough scheme. Labour, he added, would create 100,000 start-ups in the next five years.

The Guardian Financial Times City AM BBC News

OTHER NEWS – FRIDAY 19TH FEBRUARY 2021

PwC: Northern Ireland is the best place to live, post-pandemic

PwC ’s latest Future of Government report has found that Northern Ireland is the best place to live compared with the rest of the UK as people continue to trade cities for the countryside after a year spent at home.

City AM

Contact Paul Southward

Paul Southward


NEWS – THURSDAY 18TH FEBRUARY 2021


NEWS – THURSDAY 18TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – THURSDAY 18TH FEBRUARY 2021

IHT reclaims hit six-year high

The number of Inheritance Tax (IHT) reclaims reached a six-year high in 2020. Figures released by HMRC following a Freedom of Information request by financial advisers NFU Mutual show there were 6,262 reclaims in 2020. This marks an increase on 2019’s total of 5,499. Analysis of the data shows that there were a total of 4,419 reclaims on loss of property value, nearly 600 more than 2019. There were also 1,843 reclaims for shares sold at a lower value – a small increase from 2019’s tally. Sean McCann of NFU Mutual said the figures show more people are becoming aware they can reclaim overpaid IHT.

Daily Express

Taxes set to settle pandemic bill?

The Independent’s Ben Chu says policymakers and analysts are considering whether tax rises will be required to cover the cost of the coronavirus crisis, with emergency support measures and a pause on collecting certain taxes hitting state coffers. He says Chancellor Rishi Sunak is examining the case for future tax increases, with corporation and capital gains levies said to be potential targets and a new digital sales tax possible. Mel Stride, chair of the Treasury Select Committee, has this week suggested a one-off wealth tax may be the way to go, with a Wealth Tax Commission report suggesting such a levy would delay permanent tax rises.

The Independent

MPs: Tax rethink can drive a green recovery

The Environmental Audit Committee has suggested tax cuts could help drive a greener Britain, arguing that a reduced VAT rate could incentivise businesses and households to reduce carbon emissions. Committee chair Philip Dunne said a tax system “fit for net-zero Britain is key”, adding that it will “encourage innovation, give confidence to the sector and support companies to make the low-carbon transition.” The MPs also urged ministers to “begin scoping work on a carbon tax” in an effort to propel a green recovery from the coronavirus pandemic.

The Independent Daily Express

CORPORATE NEWS – THURSDAY 18TH FEBRUARY 2021

Small chains and vacant sites targeted by expanders

City AM says the UK’s bigger pub and restaurant chains – as well as private equity firms – are circling smaller chains and vacant properties, looking to snap up expansion opportunities at a discounted price during the pandemic “and reap the rewards when the industry bounces back”. It cites figures from restructuring firm Resolve showing that between September and December 2020 there were 28 M&A transactions in the hospitality sector, a 75% increase on Q3. The paper also notes that a moratorium on landlords evicting commercial tenants ending could see a surge in company collapses, with Begbies Traynor’s Julie Palmer expecting a spike in the number of firms “showing significant distress and the number of businesses that start to fall away”.

City AM

£176m hit for Arcadia creditors

Topshop and Topman creditors are facing losses of £176m as the Arcadia retail empire is wound up, more than double a previous estimate. Analysis shows that creditors are owed £219m in total but there are only £42.4m of assets available to pay them. The figure falls far below a November estimate by administrator Deloitte, which suggested £82.2m was owed to creditors – although the firm warned that the true amount would be much higher.

The Daily Telegraph, Business, Page: 1

SMEs NEWS – THURSDAY 18TH FEBRUARY 2021

FSB: Support overlooks 1m small firms

The Federation of Small Businesses (FSB) has warned that a million small businesses and sole traders “overlooked” for emergency coronavirus support need assistance, with one in five small companies missing out due to the way assistance has been targeted. An FSB poll of more than a thousand small business owners saw one in five said they have received no financial help from the Government amid the pandemic, while separate FSB research suggests one in two firms have not been able to gain access to a cash grant and only one in twenty had received discretionary help from their local authority. The federation has urged the Chancellor to extend cash grants and business rates reliefs and called for the threshold at which businesses start paying rates to be permanently increased. FSB national chairman Mike Cherry said that while too many small firms have been left out of support measures, “it’s not too late to bring those left out into the fold.”

The Times, Page: 36

EMPLOYMENT NEWS – THURSDAY 18TH FEBRUARY 2021

Lockdown leaves 2m without work

A report from the Resolution Foundation think-tank says close to 2m people have been unable to work for at least six months after losing their jobs in the pandemic or being placed on furlough. Its calculations put the total at 1.9m, far steeper than official statistics showing a total of around 1.2m. The report says 700,000 workers had been unemployed for at least six months in January and a further 500,000 had been on full furlough, working no hours at all, for the same period. The Resolution Foundation says one in five of the people not working fear they will remain jobless or their roles will vanish when the furlough scheme stops on April 30. Meanwhile, a survey by the British Chambers of Commerce found one in four companies will have to lay off staff unless furlough support is extended beyond April 30.

Daily Mail Financial Times

Ministers sceptical over unconscious bias training

Michael O’Dwyer in the Telegraph says ministers are sceptical over whether focusing on unspoken prejudices will improve workplace equality, highlighting that unconscious bias training sessions for civil servants in England were scrapped last year. Michael O’Dwyer notes that during a controversial virtual meeting which led to his departure, KPMG chairman Bill Michael said there is “no such thing as unconscious bias” and suggested that “after every single unconscious bias training that’s ever been done, nothing’s ever improved.” This, Mr O’Dwyer says, shows that ministers’ doubts about unconscious bias training “are mirrored in some boardrooms” – even if directors do not voice the opinion publicly for fear of drawing criticism. It is noted that KPMG has offered unconscious bias training to its staff, while PwC made sessions mandatory following 2020’s Black Lives Matter protests.

The Daily Telegraph, Business, Page: 5

PROPERTY NEWS – THURSDAY 18TH FEBRUARY 2021

House prices up in December

House prices saw the strongest growth in six years in the final month of 2020, figures from the Office for National Statistics show. House prices were up 8.5% year-on-year in December, hitting an average of £252,000. This compares to growth of 7.1% in November and is the highest annual growth reading since October 2014. Wales saw the highest growth, with prices rising 10.7% to an average of £184,000, followed by England with an 8.5% increase taking the average to £269,000. The increase in the UK average seen toward the close of 2020 has been driven by pent-up demand amid the initial lockdown and the stamp duty holiday, with analysts saying demand and prices may wane as the tax relief comes to an end at the end of March. Howard Archer, chief economist of EY Item Club, said elevated housing market activity and robust prices “will prove unsustainable sooner rather than later” and predicted that prices will fall by around 5% this year.

Daily Mirror, Page: 46 City AM

London prices dip

London’s mini property boom came to a halt in December, official figures show, with prices seeing their biggest monthly fall since the market reopened in May. The average cost of a home in the capital was down 1.1% in the month to £496,066, according to data from the Land Registry. The dip dragged the annual growth rate down from 7% in November to 3.5% in December. Property experts said the shift was likely to be caused by buyers abandoning transactions, believing they would miss March’s stamp duty holiday cut-off.

Evening Standard

ECONOMY NEWS – THURSDAY 18TH FEBRUARY 2021

Inflation up to 0.7%

Inflation rose in January, with Office for National Statistics data showing the consumer prices index rose to 0.7% last month – up from 0.6% in December. The increase came as food retailers pushed up prices and furniture retailers and household goods stores did not offer the level of discounting seen in previous years. Andy King, the head of consumer price inflation at the ONS, said the end of the Brexit transition period did not appear to have had a noticeable impact on prices, despite border disruption. Some experts have warned that inflation could exceed the Bank of England’s 2% target by the end of 2021. Samuel Tombs of Pantheon Economics said January’s increase “marks the first step this year towards an above-target rate by the autumn”, while Karen Ward of JPMorgan Asset Management said inflation is expected to be at 2% by year end “but it could be higher than that”. Fidelity International’s Ed Monk said the outlook for prices is “pretty confusing”, adding: “It will take a few months and an ending of current restrictions for the full picture to emerge”. PwC’s Hannah Audino says renewed demand in service sectors hit by restrictions and the end of VAT cuts could see an increase in prices, while an expected increase in unemployment as the furlough scheme ends “will increase spare capacity in the labour market and subdue wage growth, putting downward pressure on prices”.

The Guardian Daily Mail BBC News Sky News

Scottish shop sales fall in January

New figures from the Scottish Retail Consortium (SRC) show total shop sales north of the Border fell year-on-year by almost 28% in January. This marks the worst monthly performance since April and the worst January reading on record. KPMG’s head of retail Paul Martin said fresh coronavirus restrictions have left retailers to “contend with another month of empty high streets”, adding that poor weather exacerbated the issues, “creating a perfect storm”.

BBC News

OTHER NEWS – THURSDAY 18TH FEBRUARY 2021

Business travel unlikely to take off again

Jonathan Hinkles, chief executive of airline Loganair, has warned that business travel is unlikely to return to 2019 levels in the aftermath of the coronavirus crisis, saying that in the medium term he expects a recovery of around 60-65%. Speaking to the Independent after a speech to The Aviation Club UK, he said that while some sectors will see a 90%-plus recovery in business travel, across sectors like accountancy and consulting, the rate will be as little as 25-30%.

The Independent

Michael’s stance supported

Leo McKinstry in the Express reflects on the news that Bill Michael, UK boss of KPMG, has been forced to stand down after telling staff to “stop moaning” about the impact of the pandemic. Mr McKinstry sides with Mr Michael, arguing that “the ability to cope with adversity is not built by mollycoddling, but by a sense of perspective.” Stephen Glover in the Mail says Mr Michael “was doomed” after such “straight-talking”, adding that following criticism of his comments, he “quickly stepped down, apologising profusely as is obligatory after any show trial.”

Daily Express, Page: 12 Daily Mail, Page: 19

Contact Paul Southward

Paul Southward


NEWS – WEDNESDAY 17TH FEBRUARY 2021


NEWS – WEDNESDAY 17TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 17TH FEBRUARY 2021

Sunak urged to follow Scotland on rates relief extension

Scotland has extended its business rates holiday, with Finance Secretary Kate Forbes announcing that the tax relief will apply to businesses in retail, leisure, hospitality and aviation – sectors which have been badly hit by the coronavirus outbreak – and will last until April next year. The move has prompted calls for Rishi Sunak to announce a similar policy, with industry leaders urging the Chancellor to confirm an extension before his upcoming budget. Jerry Schurder, head of business rates at real estate advisor Gerald Eve, said that with firms “on their knees” and desperate for further support, “they need to know now, rather than waiting until March’s Budget to find out what their obligations will be.” John Webber, head of business rates at property firm Colliers, has also urged Mr Sunak to act immediately. Analysis by real estate advisor Altus Group shows that the rates relief, which is due to end on March 31, saved 358,264 occupied retail, leisure and hospitality properties in England from paying around £10.13bn.

The Daily Telegraph

IFS: £60bn in tax rises needed

The Institute for Fiscal Studies (IFS) has warned that tax rises will be required to help foot the nation’s coronavirus bill, saying the Chancellor is likely to need to raise an additional £60bn via taxes over the coming years. However, due to ongoing economic uncertainty, the think-tank does not believe increased taxation should be rolled out in the March budget. The IFS has also called on policymakers to scrap stamp duty, arguing that such a move could help stimulate the economy. It has also suggested that support measures rolled out amid the pandemic should be extended before being phased out rather than being “cut completely in one go”, warning that extending the furlough scheme beyond a point where most restrictions have been eased “will actually choke off recovery”.

Daily Mail

Tax squeeze unlikely… for now

The Telegraph’s Jeremy Warner looks ahead to Rishi Sunak’s March 3 budget, saying that despite the £400bn deficit the UK is expected to see this financial year, the Chancellor is unlikely to impose an immediate tax and spend squeeze on the economy. He says most commentators agree doing so “would kill recovery from the effects of a year of repeated lockdowns stone dead”, adding that continued targeted support will “be the name of the game”. He goes on to suggest that the nation’s coronavirus spending will eventually have to be paid for with higher taxes.

The Daily Telegraph

Online sales tax may be on the way

Jess Sheldon in the Express reflects on speculation over the Chancellor’s upcoming budget, with changes to stamp duty, CGT, IHT and corporation tax said to be among possible announcements. Melissa Geiger of KPMG says an online sales tax is an option Rishi Sunak may be mulling, noting: “It is probable that any online tax would be passed onto consumers rather than being borne by the retailer.” Laurence Parry of Kreston Reeves says that while a potential online sales tax has been “vigorously opposed by global online retailers”, a surge in online sales has increased the likelihood of it being rolled out somewhere down the line. He adds: “The question is will that tax fall on shoppers or on business?”

Daily Express

Poll shows support for CGT rethink

A poll for campaign group 38 Degrees saw 61% of respondents say they would support an increase in capital gains tax that brought the levy in line with income tax. This comes after an Office for Tax Simplification report last year suggested that CGT is “counter-intuitive” and “creates odd incentives”, with the review suggesting reform of the tax could add £14bn to Treasury coffers. Tax Justice UK executive director Robert Palmer commented: “When the Chancellor raises taxes it is crucial those with the broadest shoulders take the strain; this poll shows the public agree.”

Daily Mirror, Page: 2

MPs: Tax perks can deliver a greener future

A report from the Commons Environmental Audit Committee will today call for greater tax incentives to drive a greener future. The MPs will propose tax cuts to make greener options more attractive to consumers and urge ministers to consider taxes on imports from countries where manufacturers do not face the same green levies as in the UK. Committee chair Philip Dunne wants the Chancellor to use the March budget to deliver “a tax system fit for net-zero Britain”.

The Times, Page: 8

Tax rise warning

A Mail editorial says the upcoming budget provides the Chancellor a “crucial opportunity … to chart a course for our economic recovery” and warns that tax hikes could “shackle consumer spending, enterprise and job and wealth creation at just the wrong moment.”

Daily Mail, Page: 16

The benefits of taxes borne

Robert Watts, compiler of the Sunday Times Rich List, looks at how companies could benefit from detailing their “taxes borne” – the total taxes paid including VAT and stamp duty. He says: “You might think companies would want to disclose how much they’re contributing to the public finances”, asking whether total taxes borne may seem “more significant than a lot of the glossy corporate social responsibility that often appears in annual reports”.

The Times, Page: 39

CORPORATE NEWS – WEDNESDAY 17TH FEBRUARY 2021

Moody’s: UK leads Europe for distressed firms

Research by Moody’s has found that the UK has the highest number of distressed companies in Europe. Across the continent, there were 113 companies with a B3 negative rating or lower in December, with the UK accounting for the highest proportion with 28 distressed companies. Kristin Yeatman, vice president and senior analyst at Moody’s Investors Service, said: “We expect the number of companies rated B3 and lower to remain broadly stable over the first six months of 2021 as defaults, upgrades, and withdrawals are set to outnumber downgrades at those levels.”

City AM

Red tape hits European SPAC market

Simon Foy in the Telegraph looks at special purpose acquisition vehicles (SPACs), citing Simon Olsen of Deloitte who says Europe’s SPAC market is being held back by its regulatory system, with red tape particularly apparent in London. “There is considerable investor interest and … should a European exchange be able to offer the right regulatory regime, they should be able to compete with the US markets”, he comments.

The Daily Telegraph, Page: 5

Investigation flags council’s failings

A leaked report shows a probe into property investments by Spelthorne Borough Council has uncovered serious failings around transparency, financial reporting and accountability. It is noted that the council’s auditor, KPMG, is investigating whether the local authority acted unlawfully by failing to comply with the prudential code.

The Times, Page: 42

SMEs NEWS – WEDNESDAY 17TH FEBRUARY 2021

Pandemic adds £173k to small firms’ debts

A study by cloud computing firm Sage suggests that the coronavirus crisis is likely to give SMEs an additional £173,000 debt pile each year. The report surveyed more than 1,000 small businesses and found that around half have taken out a pandemic-related loan, leaving firms with an average additional debt burden of around £173,000 once repayments begin. Almost a third of those surveyed said they were unsure how they would clear their debts. The report notes that SMEs have seen revenues slide by more than 20% on average during the latest lockdown, with this coming on the back of a 41% decline in revenue last year. On possible support measures, more than 70% of SMEs surveyed backed an extension of the VAT cut, saying it would provide “breathing space” and prevent wide-scale job losses.

City AM

38% of small firms plan to trade overseas

A survey of 791 small UK businesses has found that 38% are likely to trade overseas this year. The poll for digital challenger law platform Lawbite saw more than half of the manufacturing firms polled say they plan to trade in Europe, with just over a third saying they wanted to focus on Asia instead. Close to a quarter of respondents said they would conduct more overseas trade if the legal barriers were less complicated.

City AM

FSB Chair: Government must increase business support

Mike Cherry, chairman of the Federation of Small Businesses (FSB), has urged minsters to help companies that fell through the gaps in business support amid the coronavirus crisis, saying the Government “urgently needs to come forward with a road map to recovery and interventions”. Mr Cherry, who was speaking in response to the Treasury Committee’s Economic Impact of Coronavirus inquiry update, has proposed a Directors’ Income Support Scheme and suggests that building support initiatives according to what workers have missed out on would be the best remedy for those who have lacked support.

City AM

EMPLOYMENT NEWS – WEDNESDAY 17TH FEBRUARY 2021

London hardest hit by job losses

Analysis by the Institute for Fiscal Studies (IFS) shows that London suffered the largest number of job losses of any UK region amid the pandemic. The number of London employees on payrolls dropped 5.5% between February and December 2020, almost double the figure recorded in Scotland, which saw the second-highest number of job losses. The IFS said the coronavirus crisis has affected the jobs market across the UK, with every region recording an increase in losses over 2020. Northern Ireland was the least-affected region, with losses of almost 1.5%. The think-tank has warned that job losses are set to increase as the furlough scheme comes to an end. It notes that 8% of the UK workforce was still on furlough in December, with the rate in London higher, at 10%.

City AM

PROPERTY NEWS – WEDNESDAY 17TH FEBRUARY 2021

Firms mull office options

With the coronavirus crisis driving an increase in home-working and uncertainty over the future of office-based working, a CBI and PwC survey of financial services firms has found three-quarters are reviewing their office space requirements as expensive city centre sites go under-used.

Daily Mail, Page: 6

ECONOMY NEWS – WEDNESDAY 17TH FEBRUARY 2021

UK well placed to bounce back

Ambrose Evans-Pritchard in the Telegraph says the UK economy did not suffer a bigger contraction than the eurozone last year, despite some analysts suggesting otherwise. He says that it “never made sense that the UK’s output figures should have been exceptionally disastrous”, adding that close analysis of data points to a “story of apples and oranges”, arguing that confusion over figures is due to measurement models that has delivered “an epidemic of bogus quantification”. Mr Evans-Pritchard highlights that like-for-like nominal GDP contraction was 10% in Spain, 6.2% in France, 4.8% in the UK, 3.8% in Germany and 2.3% in the US. Neil Shearing from Capital Economics says the UK is “clustered in the middle of the pack with Germany, France, and Italy”, adding:” We might beat some of the others and get back to pre-pandemic levels by the end of this year, if there are no nasty surprises”;. David Owen of Jefferies comments: “The UK actually outperformed other countries in Europe slightly if you look at nominal GDP, and we’re expecting another outperformance this year.” On the impact exiting the EU may have on the UK’s economic bounce-back, Mr Evans-Pritchard says that while much has been made of the immediate economic shocks of Brexit, little has been said on the “silent offsetting effects”.

The Daily Telegraph

OTHER NEWS – WEDNESDAY 17TH FEBRUARY 2021

Support for Michael

Following the news that Bill Michael has quit as KPMG’s chairman following controversial comments he made in an online meeting, the Sun’s Jane Moore suggests the “blunt truth caused offence to a few hypersensitive types” while Ann Widdecombe in the Express says his only mistake was to apologise and quit.

The Sun, Page: 13 Daily Express, Page: 13

New high for cryptocurrency

Alys Key in the I reflects on bitcoin after the cryptocurrency hit an all-time high of more than £36,000, noting the asset’s volatility and citing Mazars’ chief economist George Lagarias who said: “We feel that, due to its volatility, bitcoin lacks many of the established qualities that make up ‘money’, such as being a stable store of value and unit of account.”

The I, Page: 42

Contact Paul Southward

Paul Southward


NEWS – TUESDAY 16TH FEBRUARY 2021


NEWS – TUESDAY 16TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – TUESDAY 16TH FEBRUARY 2021

IFS: Sunak should avoid tax rises

The Institute for Fiscal Studies (IFS) believes the Chancellor should look to avoid any tax rises in his March 3 budget, although it has warned that “sizeable net tax rises” may be needed at some point to help cover the Government’s coronavirus-related spending. IFS director Paul Johnson said: “A reckoning in the form of big future tax rises is highly likely, but not as yet inevitable.” The think-tank is calling on Rishi Sunak to “secure the UK’s economic recovery” and “set out plans for how to help the economy recover and adjust to a new normal”, suggesting “well targeted” extensions to current emergency coronavirus support measures should be rolled out. Separately, Mark Littlewood, director general at the Institute of Economic Affairs, has said the UK “has reached its taxable limit,” adding that over the medium term “public finances are going to need to be repaired by expenditure reductions not tax rises”. Meanwhile, the FT says that while the Chancellor may be considering tax rises to cover pandemic-related spending, many Tory MPs oppose tax rises in the short to medium term.

The Times, Page: 36 City AM Financial Times, Page: 3 The Sun, Page: 2

Stride calls for one-off wealth tax

Mel Stride, chair of the Treasury Committee, has suggested that a one-off wealth tax could help boost public finances and balance the books following vast coronavirus-related spending. He suggested that a one-off levy may be preferable to raising taxes across the board or an annual wealth tax. Mr Stride noted that several European countries have tried to introduce annual wealth taxes only to withdraw the idea, saying “it is highly complicated and very difficult”. Mr Stride’s remarks follow a report from the Wealth Tax Commission which last year suggested that a one-off wealth tax could raise up to £260bn if levied at 5% of assets worth in excess of £500,000. City AM notes that Chancellor Rishi Sunak, who is set to outline tax and spending plans in his March budget, has reportedly said that a one-off wealth tax would go against Conservative Party values.

The Independent City AM

Reduced checks on sellers raises tax evasion risk

With a Freedom of Information request showing that HMRC sent just 80 individual data requests to online retail platforms about sellers using their service between April and December last year, down from 2,684 in the 2019/20 tax year, UHY Hacker Young’s Sean Glancy has warned that a failure to investigate overseas online sellers “risks allowing them to use tax evasion to undercut UK retailers with relative impunity.”

The Daily Telegraph, Business, Page: 3

EMPLOYMENT NEWS – TUESDAY 16TH FEBRUARY 2021

Men hit harder by pandemic job losses

While analysis from economists at Citi shows that female employment dropped by up to three percentage points more than male employment across major economies amid the initial wave of the pandemic, Office for National Statistics figures suggest the UK bucked the trend, with men accounting for three-quarters of the fall in employment. It has also been shown that the UK has not seen unemployment surge as much as the US or eurozone amid the crisis, with the jobless rate at 5% in November compared to 4% before the pandemic. Insight into the data suggests the UK’s unemployment rate was prevented from spiking by the furlough scheme. In regard to the gender divide, the varying types of work undertaken by men and by women is said to be factor, with men more likely to work for themselves and women far more likely to work for the public sector. Vicky Pryce at the Centre for Economics and Business Research notes that women are more likely to have suffered cuts to their pay or hours, while childcare issues may have had an impact on the hours they can work.

The Daily Telegraph, Business, Page: 5

CORPORATE NEWS – TUESDAY 16TH FEBRUARY 2021

Pharmacies at risk

The Mail looks at the climate for the UK’s independent pharmacies, noting EY analysis suggesting that three-quarters of the often family-owned businesses are either closing or under threat of closure.

Daily Mail, Page: 40

Rolls-Royce names new finance chief

Panos Kakoullis, a former global head of Deloitte‘s audit and assurance practice, has been appointed chief financial officer at Rolls-Royce.

The Daily Telegraph, Business, Page: 7 Daily Mail, Page: 75 The I, Page: 44 City AM Evening Standard

PROPERTY NEWS – TUESDAY 16TH FEBRUARY 2021

100k buyers could miss out on stamp duty deadline

One in five home buyers who agreed a deal last July when the stamp duty holiday was announced have not completed their purchase yet – and Rightmove has estimated that around 100,000 buyers will fail to complete by the March 31 cut-off for the relief. The analysis suggests that of those buyers who agreed a purchase last July, one in five remain stuck in the “logjam” more than six months later. Meanwhile, Rightmove says the average asking price has increased by 0.5%, or £1,522, this month. Property inquiries in the first week of February were up 18% on the same period last year, and agreed sales were up 7%. This marks a decline on a post lockdown peak seen last year, where agreed sales jumped 60% year-on-year in August.

The Times Daily Express Daily Mail City AM

Hamptons research reveals new generation of BTL investors

Research by estate agents Hamptons International shows that the stamp duty holiday has led to a “new generation” of first-time investors, with figures showing that 50% of landlords purchased with a mortgage in the last six months of 2020, representing the highest share since the firm’s records began 12 years ago.
The Daily Telegraph, Business, Page: 4

ECONOMY NEWS – TUESDAY 16TH FEBRUARY 2021

Vaccine optimism pushes up the pound

The pound has hit its highest level in almost three years amid increasing optimism about the UK’s coronavirus vaccine rollout. Sterling rose above $1.39 for the first time since April 2018 – reaching a high of $1.3918. Sterling was also up against the euro, reaching €1.1463 – a level not seen since April 2020. With the pound boosted by optimism that the UK economy could be one of the fastest to recover from the coronavirus pandemic, some forecasters say it could hit $1.45 this year. This would mark the highest point since before 2016’s Brexit vote. Despite the gains and optimism, Societe Generale strategist Kit Juckes warned that as the UK’s economy is global, it will only see a full recovery once the rest of the world is vaccinated.

Daily Mail

Tech investment could boost the economy by £232bn

Analysis from Virgin Media Business and the Centre for Economics and Business Research (CEBR) think-tank suggests investment in digital technology could boost the economy by £232bn by 2040. The report sets out three factors that would be needed to deliver the biggest economic growth: a prolonged investment in connectivity; higher spending on collaboration technologies; and better enterprise resource planning systems. These, it says, will enhance productivity and output across the private and public sectors. It adds that in the medium term, making the sufficient investments could add £74bn to the economy by the middle of the decade.

Daily Mail

OTHER NEWS – TUESDAY 16TH FEBRUARY 2021

Green growth

The Guardian looks at the green economy, with Chris Doran of the University of Salford saying the green agenda “will form the bedrock for regeneration from COVID-19” and “drive innovation, growth and employment”. Local Government Association analysis suggests that 700,000 new jobs in low-carbon sectors could be created by 2030 – and over a million by 2050. Siobhan Gardiner, climate change and environment lead at Deloitte Ventures, comments: “Over the past decade, the public’s awareness of climate change has soared.”

The Guardian, Page: 10

Contact Paul Southward

Paul Southward


NEWS – MONDAY 15TH FEBRUARY 2021


NEWS – MONDAY 15TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – MONDAY 15TH FEBRUARY 2021

Chancellor warned over tax hike on ‘fragile’ self-employed

The Chancellor, who has previously suggested he would consider increasing national insurance contributions to even out an “inconsistency” between independent workers and employees, has been urged not to raise taxes on the self-employed. Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), has warned Rishi Sunak that people are “in an extremely fragile state”, with an increased tax burden “the last thing they are going to need”. A tax increase, he warned, could be the “straw that breaks the camel’s back”. He added that “If we care about our employment rate, if we care about people ’s business and if we care about the economy we should not be considering tax rises right now .”

Daily Express

Industry calls for reform of R&D tax credits

Trade bodies representing businesses focused on research and development have called for a reform of tax credits, saying this would boost the economy and attract investment into the UK. A report commissioned by industry bodies including the Confederation of British Industry warns that “outdated” rules do not allow companies to claim R&D tax breaks on capital spending, unlike in other countries including France, Spain and Japan. This, the report argues, means there are “far stronger incentives to physically locate new research facilities in other countries.” The trade bodies say altering the R&D tax credit regime so as to include capital spending could incentivise companies to invest in Britain, adding £4bn a year to the economy within a decade and creating at least 12,000 jobs.

The Daily Telegraph, Business, Page: 5

HMRC reduces checks on online sellers despite VAT fraud risk

Analysis by UHY Hacker Young shows that HMRC sent online retail platforms 80 data requests about sellers between April and December 2020, down from 2,684 requests in the 2019/20 tax year.

Financial Times, Page: 1

EMPLOYMENT NEWS – MONDAY 15TH FEBRUARY 2021

AI can give bosses a boost

Jonty Bloom of BBC News considers the implications of AI taking a greater role in the workplace and whether workers would be willing to take orders from a machine. Jeff Schwartz, a senior partner at Deloitte and a global adviser on the future of work, says he hopes AI bosses may help human counterparts improve their performance, suggesting that with a machine taking on more mundane leadership tasks such as compiling rotas and performance monitoring, human bosses will be freed up to concentrate on being better team leaders.

BBC News

Online classrooms democratise corporate training

The FT looks at executive training programmes, citing Deloitte’s Erin Clark who says a shift toward online learning opens leadership development training up to a wider number of people.

Financial Times, Page: 18

CORPORATE NEWS – MONDAY 15TH FEBRUARY 2021

Payday lenders criticised for not detailing compensation

High-interest lenders and their auditors have been criticised for failing to reveal how much they could owe customers who were mistreated, with many not detailing the cost of payouts over claims they breached City rules by offering customers unaffordable credit. Alan Campbell, founder of Salad Money, has warned that unaffordable borrowing continues partly because auditors do not always force companies to reveal the full liability they may face from potential compensation claims in their accounts. He believes that unaffordable lending practices will change if lenders “are burdened by the liability” of it being disclosed in their accounts. Michael O’Dwyer in the Telegraph notes that the auditors have not been accused of wrongdoing. He also highlights that a number of high-interest and payday lenders have gone bust despite their accounts being signed off by audit firms including Grant Thornton and Mazars.

The Daily Telegraph, Business, Page: 3

Voke creditors to take big hit

Unsecured creditors in Kind Consumer who are owed £46.5m are set to suffer heavy losses after it was sold via a pre-pack administration. The firm, which developed the Voke nicotine inhaler, was sold to OBG Consumer Scientific for £1.6m in a pre-pack sale agreed by administrator Smith & Williamson. The sale came last November, before legislation changes that reintroduced HMRC as a preferential creditor.

The Times, Page: 39

Sport bail-outs on the way

The Telegraph looks at a £300m Government bail-out for sports hit by the coronavirus crisis. The payouts, which will come mainly as loans rather than grants, follow audits by Sport England and Deloitte which have analysed the impact on clubs and competitions. The paper looks at “fault lines” which have appeared in several sports, with a number of debates over the allocation of money and level of support being offered.

The Daily Telegraph, Sport, Page: 25

Cruise ship retailer deploys CVA on the high seas

Harding Retail, which operates boutiques on cruise ships, has appointed KPMG to implement a CVA. Harding is reportedly asking suppliers to accept reduced amounts in settlement of unpaid invoices.

Financial Times, Page: 11

Rolls-Royce set to name CFO

Engineering group Rolls-Royce Holdings is expected to name former Deloitte partner Panos Kakoullis as its new CFO this week.

The Times, Page: 35 Sky News

New fund to support BAME entrepreneurs

The Times looks at Create Equity Fund, a new investment vehicle that will focus on investing in black, Asian and minority ethnic entrepreneurs with fledgling creative businesses, noting that KPMG is helping to hone the business plan.

The Times, Page: 40

‘Authentic’ leaders who lack adaptability, empathy and kindness are sure to fail

Andrew Hill reflects on corporate leadership amid the pandemic, considering the writings of sociologists Gareth Jones and Rob Goffee and commenting on Bill Michael’s departure as chairman of KPMG.

Financial Times, Page: 18

FINANCIAL SERVICES NEWS – MONDAY 15TH FEBRUARY 2021

London will remain Europe’s financial capital, says Raab

The biggest competition to the UK’s financial services sector will come from Asia and the US, says Foreign Secretary Dominic Raab, who believes that while EU financial capitals may “nick a bit of business here and there from the City” post-Brexit, they will not challenge London’s status as Europe’s global financial capital. Mr Raab said that while EU financial capitals may be able to compete with the UK for some business, “the problem is the measures they will take to achieve this will undermine their own competitiveness.” “The challenge to London as a global financial centre around the world will come from Tokyo, New York and other areas rather than those European hubs. Particularly if they start to erect barriers to trade and investment,” he added.

City AM

INTERNATIONAL NEWS – MONDAY 15TH FEBRUARY 2021

EY China faces mismanagement allegations

EY is facing whistleblowing claims in China, with the firm accused of looking the other way when large client Xinwei Group failed to disclose a risky stock purchase. Claims circulating on Chinese social media site Weibo have seen a whistleblower say that when she raised concerns, she was told by senior managers that the investment was not risky and the matter should be dropped. She claims her warnings were ignored by senior employees, with EY failing to raise them in the audit. A spokesman for EY China said the firm is “fully committed to offering the highest standards of audit services by leveraging robust audit methodology, tools and policies”. The claims come in the wake of Chinese regulators telling Deloitte to investigate similar claims made by a whistleblower who alleges there were five serious breaches of good practice between 2016 and 2017.

The Daily Telegraph, Business, Page: 3

ECONOMY NEWS – MONDAY 15TH FEBRUARY 2021

Financial crisis made sandwich generation more resilient

More than three fifths of those aged 40 to 59 feel they are better equipped to deal with the economic impact of the coronavirus crisis due to lessons learnt during the 2008 financial crisis. People in this age bracket – known as the ‘sandwich generation’ as they are likely to have responsibilities toward their children and their parents – say they built resilience amid the banking crisis and ensuing recession. A poll by investment house Killik & Co saw a fifth say they are now more cautious about spending, while one in ten have increased their emergency savings. The research comes as Financial Conduct Authority analysis reveals that more than 14m adults in the UK have low financial resilience, with a third expecting to cut back on essentials, one in ten likely to use a food bank and one in six expecting to take on more debt.

Daily Mail

OTHER NEWS – MONDAY 15TH FEBRUARY 2021

Why Michael had to go

Ruth Sunderland in the Mail looks at the departure of KPMG chairman Bill Michael, saying that while his supporters believe “mollycoddling employers have created a generation of snowflakes on the staff”, to say Mr Michael is the victim of a workplace culture war is “nonsense” She says Mr Michael “had to go” as the controversial views he expressed in an online meeting – “whether right or wrong” – are incompatible with leading a top accountancy firm. Ms Sunderland says the Big Four, as large employers of graduates and apprentices, can “play a part in creating a fairer, more socially-mobile and prosperous country”, adding that if you become a partner at one of the firms, “you sign up to be a champion of diversity.” Meanwhile, Max Pemberton in the same paper expresses his support for Mr Michael’s comments, saying he was right to tell staff they were in “a very lucky sector” and should stop whingeing.

Daily Mail, Page: 71, 49

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Paul Southward