NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
TAX NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
Lords criticise ‘flawed’ plan to give HMRC extra tax powers
The Lords Economics Affairs Committee says proposed powers allowing HMRC to force financial institutions to divulge information about people’s assets without court approval are “flawed”, voicing concern over the removal of taxpayer safeguards. The measures, to be included in the 2021 Finance Bill, are “poorly targeted, disproportionate and lacking necessary safeguards”, the committee said. Meanwhile, the committee welcomed plans to give HMRC tougher powers to go after promoters of tax avoidance schemes.
The Times, Page: 10 Financial Times
HMRC urged to delay self- assessment deadline
Industry groups including ICAEW have urged HMRC to push back the self-assessment tax return deadline, saying people may require more time to file their accounts due to the coronavirus pandemic.
Advisers suggest sacrifice salary for tax break on broadband
A government advisory group has suggested that employees should be offered a salary sacrifice scheme that lets them buy ultra-fast broadband in exchange for tax breaks. An interim report from the Gigabit Take-up Advisory Group says voucher schemes or salary sacrifice schemes would boost the uptake of faster broadband.
Opinion: Tax higher earners more as cuts do not trickle down
The Observer’s Business leader column says pressure is building on the Chancellor to tax City financiers and business owners, saying studies suggest nations that follow a tax-cutting agenda “do nothing for the underlying strength of their economies”. It cites London School of Economics analysis of fiscal policies in 18 countries over 50 years which concludes that tax cuts for the rich “have never trickled down” and tend only to benefit those who are directly affected, boosting the finances of higher earners, increasing inequality and doing little to stimulate investment. The piece says higher taxes will help address concern over executive pay, arguing that increases cause no harm, “except to the bank balances of those they target.”
The Observer, Page: 68
Permanent stamp duty cut could deliver £139m tax boost
Research from the Centre for Economics and Business Research (CEBR) suggests a permanent increase in the stamp duty threshold to £500,000 could reap £139m of extra tax receipts a year. The study, for lender Kensington Mortgages, says such a move would stimulate more transactions and increase house prices. The Chancellor earlier this year announced a stamp duty holiday on house purchases of up to £500,000 until the end of March next year in a bid to boost the sector amid the coronavirus outbreak. Property consultancy Savills estimates that the move resulted in £550m of lost receipts to the Treasury in the quarter to the end of September.
Wealth levy goes against principle of fair tax
The Mail’s Ruth Sutherland questions calls for targeting wealth with taxation as a means to rebalancing the nation’s finances after the economic hit of the coronavirus crisis. She says the suggestion that the rich can foot the bill is a “superficially attractive but dangerous idea.” She argues that hiking capital gains tax rates would deter entrepreneurs and investors, while tax benefits on retirement pots “have already been whittled away”. Ms Sutherland says a one-off wealth tax of 5% on net assets above £500,000 is “by far the worst proposal.” A wealth tax, she says, would be retrospective, “which goes against a basic principle of a fair tax regime”.
Daily Mail, Page: 66
UK firms face £34bn VAT bill after Brexit
British companies will face a £34bn tax bill for transporting goods around Europe after the Brexit transition period ends, tax firm VAT IT has said. It warns that thousands of UK businesses are “unprepared” for VAT laws in European countries once the country leaves the EU next month, noting that rates range from 20% to 27%. Selwyn Stein, managing director of the firm, said it is “clear this is something a lot of business just aren’t prepared for”.
The Daily Telegraph, Page: 30 Daily Express, Page: 43 The I
CORPORATE NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
Next in line for Arcadia
Retailer Next is in talks with asset management firm Davidson Kempner Capital Management about joining forces and financing a bid for Arcadia, the collapsed retail group which includes Topshop, Topman, Burton and Miss Selfridge. With Deloitte, which is running the sales process, setting Monday as the deadline for first round bids for Arcadia, Next has just two days to agree the tie-up. CEO Lord Wolfson is also reportedly holding talks with rival financial backers including Carlyle and Alteri. Other potential bidders include Boohoo, Mike Ashley’s Frasers Group, Barney’s owner Authentic Brands and Shein, a Chinese fast-fashion firm. Documents circulated to potential bidders by Deloitte show that Arcadia’s revenues came in at £829m for the year to September 2019, compared with £846m the year before.
Administrators warn of ‘vexatious’ LCF claims
Smith & Williamson administrators trying to recover money invested into collapsed mini-bond firm London Capital & Finance (LCF) say they have been dealing “with over a dozen spurious, we would say vexatious, legal challenges” involving parties linked to LCF and London Oil & Gas, a closely tied company that is also in administration. The administrators, who last year warned investors that they had identified “a number of highly suspicious transactions” involving their money, are also suing 13 people and two companies linked to LCF in an attempt to recover £178m.
Mayday in focus
The Mail’s Neil Tweedie looks at Mayday Rescue, a project which trained and equipped civilian rescue teams in Syria’s civil war. He details allegations over financial issues that have been suggested drove founder James Le Mesurier to suicide, noting that a forensic audit by Grant Thornton was commissioned following his death. An anonymous official who has seen the report says it shows claims made by CIO Johan Eleveld are unsubstantiated.
Daily Mail, Page: 52
MPs tell HMRC to name companies using furlough scheme
Ministers have been told to reveal the names of companies that took furlough money, with the Commons Public Accounts Committee (PAC) saying HMRC should publish a list of all businesses that have used the Coronavirus Job Retention Scheme. Ministers have also been urged to outline plans to recover furlough funds from companies that have performed well despite the pandemic. PAC chairwoman Meg Hillier said: “Sunlight is the best disinfectant – if a company has got nothing to hide, it should not be worried about its name being made public”, adding: “Profiteering from the taxpayer is not acceptable.” The Sunday Times notes that BDO U-turned on a decision to keep the £4.1m it had received under the furlough scheme, with this coming on the back of criticism of £500,000-per-partner payments.
EOT appeal rises on CGT speculation
A Freedom of Information request by Price Bailey shows that record numbers of employees are being handed ownership of the businesses they work for as owners seek ways to mitigate tax liabilities, with HMRC seeing a five-fold increase in employee ownership trusts ( EOT) it approved in the last three years. Under EOTs, employees pay nothing to own the business, with owners paid from existing assets and future profits of the company, via the trust, with no capital gains tax to pay on the sale. With speculation that CG T could be increased to help foot the Treasury’s coronavirus bill, Price Bailey says E OTs have become more attractive for business owners planning their succession.
The Sunday Times, Business, Page: 12
Ashley eyes empty Debenhams stores
The Mail on Sunday says Frasers Group owner Mike Ashley is considering moving his brands into empty Debenhams stores as part of a deal to acquire the company, prompting concern that a full rescue of Debenhams is becoming increasingly unlikely. Debenhams, which is being run by administrators at FRP, is running a sale to clear stock as it prepares to close stores if a deal is not struck.
The Mail on Sunday, Page: 123
Critical RICS report not shared
The Sunday Times gives details of a 2018 report by BDO which criticised management of the Royal Institution of Chartered Surveyors (RICS), with the analysis making headlines last week after it was reported that four non-executive directors had been dismissed for trying to raise the alarm over its findings. The BDO report, which went to four people including then finance director Andrew McManus, gave the lowest possible “no assurance” rating for the effectiveness of the RICS’s controls. Of the six areas it assessed, it flagged four as “high priority”.
Struggling restaurant chains on the menu for investors
Sabah Meddings in the Sunday Times says Boparan Restaurant Group’s £6m purchase of Gourmet Burger Kitchen – which was worth £120m in 2016 – is one of several cut-price deals struck recently by opportunistic investors looking for bargains amid a crisis for casual dining chains. Ms Meddings says there is concern in some quarters that allowing weak brands to “limp on” under new owners could ultimately harm the high street. Will Wright of KPMG comments: “There are great opportunities out there, and plenty of buyers for good businesses. The challenge is sorting the wheat from the chaff.”
Issa brothers target Nero
EG Group, led by Mohsin and Zuber Issa, has offered to fund a legal challenge for landlords against Caffè Nero, with the brothers looking to derail the coffee chain’s CVA and take control of the firm. As part of the CVA, which is being run by KPMG, landlords face losing most of their outstanding rent and EG is promising to pay them in full.
Sir Stelios set to ground easyJet plans?
A look ahead to easyJet’s AGM points to speculation that the airline may have to go to shareholders to raise more capital, a move the Mail on Sunday’s Alex Lawson says could stoke the ire of founder and biggest investor Sir Stelios Haji-Ioannou. Sources tell Mr Lawson that Sir Stelios is set to vote against a string of proposals including reappointing its directors and its auditors PwC.
The Mail on Sunday, Page: 124
Business confidence climbs
UK business confidence has risen by the biggest month-on-month total in more than four years, climbing 17 percentage points to -4% in December, according to the Lloyds Bank Business Barometer. The reading is the highest since March, when the economy had yet to see the impact of the coronavirus pandemic. Corporate optimism increased, driven by a more upbeat outlook for the wider economy, confidence in which rose 23 points to -5%. Confidence in trading prospects climbed 11 points to -3%. The Lloyds report also shows that 32% of the 1,200 firms surveyed expect to cut staff next year, while 22% plan to increase numbers. Lloyds economist Hann-Ju Ho said: “The news of the vaccine progress has bolstered this month’s confidence figures, more than offsetting uncertainties around the UK’s new trading relationship with the EU.”
The Times Reuters
Bidders show interest in Arcadia
Administrators at Deloitte are believed to have received around 30 expressions of interest ahead of today’s deadline for bids for collapsed retail group Arcadia. Mike Ashley’s Frasers Group and fashion chains Next and Boohoo are said to be among potential bidders for Sir Philip Green’s retail empire, which owns brands including Topshop, Burton and Miss Selfridge.
Daily Mail, Page: 66
BUSINESS RATES NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
Retailers call for more rates relief
Retail bosses have urged Chancellor Rishi Sunak to extend the business rates holiday, warning that the latest round of coronavirus restrictions which have forced the closure of non-essential retailers in London, the South East and the east of England could hit the sector and put jobs at risk. A holiday on business rates was announced earlier in the year, with the measure designed to support firms hit by the coronavirus crisis set to come to an end in April. Property adviser Altus Group estimates that ending the business rates holiday will cost companies £12.8bn next year. Calling for fresh support, Helen Dickinson, chief executive of the British Retail Consortium, said: “The Government needs to be a little bit more sophisticated in how business rates relief is targeted going forward to those that have been impacted the most.”
INDUSTRY NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
Concern over CCP links
The Telegraph considers reports revealing that many Western firms are employing hundreds of members of the Chinese Communist Party (CCP), with the paper suggesting KPMG, PwC, EY and Deloitte are “jam-packed with CCP members”. The piece suggests there may be concerns over the firms, which are leading suppliers to the UK Government, having ties with the CCP, an organisation it says holds “a monopoly on power, information and wealth.”
The Daily Telegraph, Page: 21
EMPLOYMENT NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
Location hits hiring, say SME leaders
Research from freelance service provider AnyTask suggests that businesses are having to employ workers who are unsuitable for roles simply due to their location. A poll of 500 SME leaders saw 84% say they have given someone a job despite them not being the ideal candidate, with 58% saying their location had restricted the applicants available. The SME leaders said hiring the right staff was their biggest challenge, followed by keeping up with changing rules and regulations. A fifth said they struggled to find time to deal with HR issues, while the same proportion have had issues with inconsistent quality of work from staff. Just under 70% said an inconsistent order book means permanent, full-time staff sometimes don’t have much work to do, with 57% saying outsourcing work to freelancers makes financial sense. Cash flow was a concern when hiring staff for 64% of bosses.
EMPLOYMENT NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
Employers back ethnicity pay gap disclosure rule
A leaked report seen by BBC News shows that three quarters of employers believe large firms should be forced to release data on the pay gap between staff of different ethnicities. The findings stem from a consultation exercise on ethnicity pay gap reporting launched in 2018. Of the 321 responses to the consultation, 73% supported compulsory ethnicity pay gap reporting for organisations with more than 250 staff – an obligation similar to one already in place which covers gender pay gaps. BBC News notes that a group of 30 business leaders wrote to Prime Minister Boris Johnson in October, calling for the mandatory duty to be introduced. CBI president Lord Karan Bilimoria told BBC News that members want to disclose their ethnicity pay gap “because they know this is such an important issue” “If they address this issue, they will have companies that are more diverse, more inclusive, more profitable, more innovative,” he added.
FINANCIAL SERVICES NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
The Sunday Times’ Jill Treanor offers a bluffer’s guide to equivalence, saying that it has become the City’s new buzzword having become a sticking point in trade talks. Peter Bevan of law firm Linklaters says equivalence is “mitigating the effect of hard Brexit on the ability of firms to access the EU single market”, with Ms Treanor offering that this makes it a “way of smoothing financial firms’ trading with the bloc” post-Brexit. She says financiers have been exploring ways to maintain access to the EU, including relocating, with EY analysis suggesting 7,500 UK staff have been switched to EU offices. Andrew Gray of PwC says the longer a lack of engagement on equivalence continues, “the more firms will adjust – and the less valuable it will be.”
PROPERTY NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
Average house price climbs £13k in 2021
Analysis from Halifax shows that the average UK house price climbed by £13,316 in 2020. The report shows that the average UK home was valued at £239,927 at the start of 2020, fell towards £237,00 after the first national lockdown and then jumped to £253,243 by the end of last month, with the stamp duty holiday driving activity. The increase in prices record between the end of June and the end of November marks the fastest five-month jump since 2004.
Third of buyers would pull out if they missed stamp duty deadline
A survey has revealed that 31% of home buyers would abandon their purchase if they missed the March 31 deadline for taking advantage of the Government’s stamp duty holiday. The survey, from the Guild of Property Professionals, asked 1,000 people who were currently in the process of buying a home whether they would continue with their purchase if the sale did not complete before the deadline.
The Mail on Sunday
Extra £62bn of housing sales agreed this year
A post-lockdown surge in activity has contributed to an increase in property sales in 2020, with analysis from Zoopla showing an extra £62bn has been spent on homes this year. The property platform estimates that overall sales have increased from about £238bn in value in 2019 to £300bn this year, with increased demand driven by the stamp duty holiday for homes under £500,000.
ECONOMY NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
Retail sales down in November
Retail sales fell in November, with the first decline in six months coming on the back of the closure of non-essential shops amid England’s second national lockdown. Office for National Statistics (ONS) data show that sales were down 3.8% last month when compared to October. Food and household goods were the only sectors that saw sales growth in November, with respective increases of 3.1% and 1.6%, while clothing sales were hit hardest, falling 19%. Despite the month-on-month decline, sales were up 2.4% on November 2019. Year-on-year, online sales were up 74.6% on November 2019, while sales made online accounted for 31.4% of retail sales last month – up from a 28.6% market share in October. Silvia Rindone of EY says the impact of the November lockdown is clear, with consumers continuing to shop more online. “Physical shops are hoping to catch up on trading in the remaining festive period&rd quo;, she adds. She suggests that with many retailers “under acute pressure”, they need to evolve to meet “seemingly permanent changes in consumer habits.”
Daily Mail The Guardian The Independent City AM BBC News
Former LSE chief in debt warning
Xavier Rolet, former boss of the London Stock Exchange, has warned that companies are now “so awash with debt that central banks simply can’t control it”, saying that this poses a major risk to the long-term economic recovery. He believes the issue could see ministers come under pressure to consider debt cancellation programmes. Arguing that governments would have to cancel their own debts and that of individuals before turning attention to company loans, Mr Rolet said: “It’s going to be very difficult for any government to tell their taxpayers they should essentially support the cancellation of debt of companies that have borrowed in order to increase their profits”. TheCityUK estimates the total amount of unsustainable debt taken on by British businesses at around £70bn. Richard Peberdy of KPMG said the level of unsustainable debt is a “massive issue for the economy”, adding: “This is not the sort of base that we hoped to spring into post-Brexit”.
The Mail on Sunday, Page: 121
Philip Inman in the Observer looks at what path inflation may take in 2021, noting that it has fallen toward zero as 2020 nears its end, hitting 0.3% in November. He says some commentators have warned that prices may jump as the economy “overheats” post-pandemic and post-Brexit. He questions the concern, noting that the economy is set to be around 10% smaller at the end of the year than it was at the beginning, with the Office for Budget Responsibility (OBR) not expecting it to recover its previous peak until the end of 2022. The OB R foresees economic growth of 5.5% in 2021 and 6.6% in 2022. This, Mr Inman, argues, seems “electrifying” compared with the annual expansion of 1% to 2% seen over the past 10 years, but it is “playing catch-up and no more”. He also says that without wage increases “there can be no boom”, at least not a sustainable one.
Analysts expect November borrowing to hit £31bn
With the Office for National Statistics (ONS) this week set to disclose the scale of Government borrowing in November, economists expect economic support rolled out to deal with tightened coronavirus restrictions will have driven up borrowing. Analysts at Investec forecast that public sector net borrowing will hit £31.4bn for November, about £26bn higher than the same month last year and up on October’s £22.3bn. In the current financial year, borrowing has increased by an average of £24.2bn compared with the corresponding month in the previous year. If this pace continues, the UK’s deficit would reach £346bn over 2020/21. Investec analysts expect Chancellor Rishi Sunak to address concerns over fiscal sustainability with “a selected rise in taxes at some stage”.
The I, Page: 46
Report warns of economic hit from Brexit
Analysis suggests that no part of the UK economy will be immune from a financial hit from the UK’s exit from the EU, with a sector-by-sector analysis of the impact of Brexit from Blick Rothenberg revealing significant problems for many sectors, with or without a trade deal. The analysis suggests the automotive, construction, food and drink and hospitality industries will be hardest hit, with products, raw materials and skilled workers in short supply in early 2021 at least, with higher costs likely to be passed on to consumers. The financial services industry will lose some access to EU markets for certain products, the report warns. Alex Altmann, head of Blick Rothenberg’s Brexit advisory group, says that while many industries face an “extremely difficult” time in 2021 as they recover from the impact of the coronavirus pandemic, “Brexit will compound the problems for many sectors”.
OTHER NEWS – 3 DAYS TO MONDAY 21ST DECEMBER 2020
How can I get money back from a friend facing bankruptcy?
BDO ’s Jon Claypole offers advice to an FT reader concerned about losing money owed to them by someone who may be declared bankrupt in a tax dispute.
Gamblers turn to black market sites
Analysis by PwC shows that 200,000 Britons have tried black market online gambling, staking a combined £1.4bn on unregulated sites in the last 12 months. The report shows that nearly one in ten gambling search results were for black market sites.
Mum’s game to boost well-being
With a report suggesting that video games can improve well-being, the Sunday Telegraph’s Anna Maxted reflects on efforts to play computer games with her sons. She notes PwC research showing that, bar a few exceptions, children’s most wanted gifts this Christmas are technology-based, with games consoles, phones or tablets among the most-desired items.
The Sunday Telegraph, Page: 19
Teaching learns to attract talent
The Independent profiles Brett Wigdortz, founder of Teach First, who details how he used the same principles businesses use to attract and retain talent to attract talented graduates to teaching. Describing it as the “war for talent”, he muses: “Deloitte does it, Microsoft does it, why not teaching?”
The Independent, Page: 44
Contact Paul Southward