NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
TAX NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
No tax shift
In a summary of Government plans outlined in the Queen’s Speech, the Guardian notes that rates of VAT, income tax or national insurance are not set to be increased.
The Guardian, Page: 6
CORPORATE NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
Shell paid no UK corporate income tax last year
Oil and gas firm Royal Dutch Shell, which saw pre-tax profits of nearly $731m on UK revenues of $108bn, paid no corporate income tax in the UK in 2018 thanks to refunds linked to the decommissioning of North Sea oil platforms. Shell also revealed that it did not pay any corporate income tax in the Netherlands last year, apart from at a joint venture with ExxonMobil, as profit was offset with losses from previous years. Globally, Shell last year paid a total of $10.1bn in corporate income tax.
Bookseller falls into administration
The Book People has instructed PwC, which was already handling an auction for the bookseller, to manage its insolvency process. Its private equity owner Endless had been attempting to secure a sale of the company and a number of credible parties had expressed an interest. No redundancies will be made while administrators continue to search for a buyer. Toby Underwood, restructuring partner for PwC, stressed: “The intention is to fulfil and deliver all customer orders received and accepted.
The Guardian, Page: 39 The Daily Telegraph, Business, Page: 7 The I, Page: 39 The Times, Page: 52 Daily Mail, Page: 69 The Sun, Page: 47 City AM, Page: 9
Beales for sale?
Department store chain Beales has appointed KPMG to conduct a strategic review of the firm, including a potential sale, which could lead to its exit from a number of stores and see it attempt to renegotiate rents with landlords.
Daily Mail, Page: 69 The Independent, Page: 51 Daily Express, Page: 47 The I, Page: 40 The Scotsman, Page: 35 Yorkshire Post, Page: 20 City AM
Vapour Lounge snapped up
E-cigarette device and accessories firm Red Box Vape is to buy Scottish group Vapour Lounge. Coates & Partners acted as lead adviser in the deal.
The Scotsman, Page: 35
Hospital firm hit by debt claim
Private hospital firm NMC Health saw more than £1.8bn wiped from its value after hedge fund Muddy Waters accused the company of understating its debt by about £242m. Muddy Waters claims NMC failed to properly report leases in its 2018 accounts associated with hospital operator Aspen Healthcare. Muddy Waters also said NMC’s relationship with auditor EY “raised flags”.
European IPO proceeds dip
Research by PwC shows that proceeds from European IPOs fell 36% this year, with Brexit uncertainty and issues regarding US-China trade relations among factors driving the decline. Analysis shows that European IPOs raised €22.1bn in 2019, down on the €34.5bn generated last year. There were just 105 new market listings this year, compared to 195 in the previous twelve months. PwC’s Peter Whelan said: “We are now seeing progress in both US-China trade relations and the UK election result, which has given a clear steer to the markets concerning Brexit. This provides a positive backdrop to the IPO markets as we go into 2020.”
The Scotsman, Page: 37
NMC Health hits back at Muddy Waters
NMC Health has hit back at Muddy Waters after the short seller published a report raising “serious doubts” about the healthcare operator’s finances. Muddy Waters’ research note suggested NMC’s reported cash balances “could be materially overstated,” while its margins appear “too good to be true” compared to peers. It also questioned the three different senior individual EY auditors NMC has had in four years, saying “we understand that engagement partners generally serve for five to seven years”. NMC Health issued a statement saying Muddy Waters’ claims “appear principally unfounded,” saying that it will investigate “assertions, insinuations and accusations” in the report, adding that they appear to be “baseless and misleading.”
The Times, Page: 46 City AM
Staffline accounts issue claims CFO scalp
Recruiter Staffline has restated last year’s earnings and confirmed the resignation of chief financial officer Mike Watts, who has been replaced by temporary CFO Daniel Quint. The board said profit may have been overstated by £4m in 2018 following a further review of accounts and also cut full-year adjusted operating profit for 2019 to £10m-£12m, down from £17m.
City AM Evening Standard
Bury avoid winding-up petition
A winding-up petition against football club Bury was dismissed by judge Sally Barber yesterday, with the Insolvency and Companies Court told that Bury and owner Steve Dale had settled an outstanding debt with HMRC. Bury have entered into a CVA to address other debts, with the agreement being investigated by the Insolvency Practitioners Association.
The Times, Page: 70 The Guardian, Page: 47 BBC News
Jaguar Land Rover saves Bowler from administration
Jaguar Land Rover has bought niche off-road car manufacturer Bowler out of administration, saving the jobs of Bowler’s 26 permanent staff. Founded in 1985, Bowler builds small numbers of hand-built vehicles for rallies and off-road racing.
Banks to prioritise cost-cutting
EY ‘s banking outlook for 2020 suggests costs need to fall by a third for banks to achieve the industry standard return on equity of 12%, with the analysis suggesting cost-cutting will remain the number one priority for banks in 2020. The report predicts that, with resiliency at the centre of their thinking, banks will continue to focus on upgrading or replacing legacy systems.
The Daily Telegraph, Business, Page: 5
Government offers lifeline for steel deal
The Telegraph reports that the Government has discussed offering taxpayer-backed support to Chinese firm Jingye to help secure its purchase of British Steel. Business Secretary Andrea Leadsom and business minister Nadhim Zahawi have met Jingye representatives to discuss a funding package worth more than £100m. A Department for Business spokesman said it is continuing to work with Jingye and the Official Receiver over the deal.
The Daily Telegraph, Business, Page: 8
Bakery assets acquired
An unspecified number of redundancies have been made at Poundbakery, with several stores earmarked for closure after its owner went into administration. Grant Thornton’s Sarah O’Toole and Jason Bell were appointed joint administrators to Sayers The Bakers and the business assets have been acquired by Karen Wood, who has formed a new company which will be run by the former management team.
Yorkshire Post, Page: 14
SMEs NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
SME leaders unsure on tax relief
Research commissioned by digital bookkeeper app Receipt Bank shows that while 92% of SME owners claim to understand the UK’s tax relief system, many are not claiming as much as they could. The study, which polled around 500 small business leaders, found that around six in ten did not know they could claim for relief on medical insurance or pension payments for employees, while just under half (47%) were unaware they could claim for staff training and 68% did not know claims could be made for staff events. The study also found that over than half of limited company bosses were unaware they could claim back money if their office was based in their home, with a similar proportion unaware charity donations, mileage and legal fees are also tax deductible. The poll saw 15% of respondents say they have not claimed for tax relief in the past due to a lack of understanding of financial jargon.
Business rates set to be cut
The Government is set to announce a cut in business rates in today’s Queen’s Speech, a move that that will benefit hundreds of thousands of small businesses. Standard retailer discounts will rise from 33% to 50% in April, at a cost of around £320m. The tax break will apply to all independent shops, pubs restaurants and cafes in England with a rateable value below £51,000, with these accounting for around 90% of the total. The tax break will be worth up to £12,500 a year. A review of the business rates regime is expected to take place following the Budget. On the business rates relief, Chancellor Sajid Javid said: “We want to reinvigorate communities up and down our great country, helping people put the heart back into the places they call home.”
The Times, Page: 8 Daily Mail, Page: 1 The Independent The Sun
Small businesses see rates cut
The Government has confirmed that small businesses will see their business rates reduced next year. A bill announced in the Queen’s Speech will deliver a 50% discount that is aimed at retailers and will also benefit restaurants and pubs, while independent cinemas and music venues will qualify for the rate relief for the first time. Ministers say nine in ten independent firms will qualify for the relief, which is available to those with a rateable value below £51,000 and will deliver a saving of up to £12,500. The rate relief will cost the Treasury £770m next year, with the current 33% discount accounting for £450m, with a further £320m needed to top it up to 50%. The Government says the measures detailed yesterday will help firms ahead of a “fundamental review” of business rates that is due to begin in the spring. The Mail notes that the rate relief does not help large r retailers, who claim the tax gives an unfair advantage to online retailers.
The Independent, Page: 55 Daily Mail Daily Mirror
EMPLOYMENT NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
Bradford leads on salary growth
Figures from job search engine Adzuna show that Bradford, which PwC recently named as the UK’s most improved city, has seen the biggest growth in advertised salaries of any major city, with a 3.6% increase this year.
Yorkshire Post, Business, Page: 1
Hiring confidence at 3-year low
Data from the Recruitment and Employment Confederation’s (REC) Jobs Outlook report shows that hiring confidence has dropped to a net minus eight – its lowest point since the survey started in 2016, with uncertainty surrounding Brexit and the election seeing firms pause hiring plans. Neil Carberry, chief executive of the REC, said: “Many employers have been sitting on their hands for the past few months, putting off hiring until the outlook was clearer. Now that some of the fog has lifted, both business and the new government can put their plans into action.”
City AM, Page: 5
The Sun’s Jane Hamilton looks ahead to what to expect from the jobs market in the coming decade, noting that Sky, Amazon, PwC, Goldman Sachs and Microsoft are all investing heavily in recruitment, with a combined 1,556 vacancies in December.
The Sun, Page: 67
LEGAL NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
Data dump prompts scam warning
Cyber security firm Mimecast has warned over scams that see fraudsters posing as HMRC to steal personal information. The firm has uncovered an open database of victims’ personal data, with the dump – which included names, addresses, bank details, usernames, passwords and credit card details – found to be linked to an HMRC-related scam.
Daily Mirror, Page: 36
FINANCIAL SERVICES NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
Financial services exports up £3.8bn
A report from The City UK shows that British net exports of financial and related professional services grew almost 5% in 2018, climbing £3.8bn to hit £82.8bn. The research shows that financial services accounted for £1.1bn of the increase, while £2.7bn came from related sectors such as legal services, accounting and management consultancy. Trade Secretary Liz Truss commented: “The financial services sector is a bedrock of the UK’s trade and economic growth.” She pledged that the Government will “ensure our fantastic professional services will continue to lead around the world.”
City AM, Page: 1
PROPERTY NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
First-time buyer mortgage approvals up
There were 32,260 new first-time buyer mortgages completed in October, according to research from UK Finance, 2.8% more than the same month last year. The number of home-mover mortgages completed in the month increased 4.2% on the same month last year, reaching 33,370, though the number of buy-to-let home purchase mortgages slipped 1.5% to 6,600. There were 18,910 new remortgages with additional borrowing, down 20.8%, while the number of new remortgages without additional borrowing also fell by 20%.
House price growth slows
House price growth has slowed to a seven-year low. Values were up 0.7% in the year to October, down from the 1.3% growth recorded in September and marking the slowest rate since September 2012. On a monthly basis, values decreased 0.7% between September and October. The figures from the Office for National Statistics show that the average UK house price was £233,000 in October, a £2,000 increase on the typical price a year ago.
Halifax predicts low price growth in 2020
Halifax expects house price growth to remain subdued at between 1% and 3% in 2020, saying that increases will remain low in a market where young buyers are held back by large deposit requirements. Halifax’s forecast for 2019 had suggested prices would rise by 2% and 4%, with prices subsequently climbing 2.1% over the year to November 2019. Russell Galley, Halifax’s managing director, said 2019 saw modest price growth supported by falling mortgage rates and a low volume of houses for sale, which “helped to underpin a degree of resilience in the market.” Prospects for 2020 appear “a bit brighter”, he added, “with uncertainty in the economy falling back somewhat, transactions volumes anticipated to pick up and further price increases made possible by growth in households’ real incomes.” Halifax’s estimates follow reports from the Royal Institution of Chartered Surveyors, which expects transaction levels to be flat and prices to climb by 2%, and Rightmove, which also foresees a 2% increase.
Stamp duty cut for downsizers urged
Ministers are being urged to reform stamp duty amid concerns it is stopping older homeowners moving to a smaller property, which in turn makes it harder for buyers to get a foot on the property ladder. Office for National Statistics data highlighted by estate agent Savills shows 4m elderly people live alone and 3.6m over-65s have at least two spare bedrooms. A YouGov study in 2018 found 22% of over 65s would be more likely to move if stamp duty was lower. Spencer McCarthy of Churchill Retirement Living has suggested a one-off stamp duty exemption for older people looking to downsize, while Jeff Bromage of Saga says it has “repeatedly called” for one stamp-duty-free move if people “right-size.”
ECONOMY NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
Unemployment hits 44-year low
UK unemployment dropped to its lowest level in 44 years in the three months to October. The number of people claiming unemployment benefits decreased by 13,000 to 1.28m for the quarter, Office for National Statistics (ONS) figures show. The overall rate of unemployment held flat at 3.8%, while the unemployment rate for women fell to a record low of 3.5%. The number of people in work increased by 24,000 to 32.8m, while the proportion of people in employment was flat at 76.2%, with 27.7m people in paid employment. The ONS data also revealed that average total pay increased by 3.2% in the quarter, slowing from 3.6%. Job vacancies fell by 20,000 to 794,000 in October, marking the tenth consecutive month of declines and the first time in more than two years that the figure slipped below 800,000. Jing Teow, an economist at PwC, said the data shows that the labour market “remains fairly resilient despite the uncertain economic and political environment,” adding: “However, there are signs that the labour market is cooling, partly as a result of the rise in real wages and unemployment falling to near record lows.”
The Daily Telegraph The Guardian, Page: 39 Daily Express, Page: 10 City AM Evening Standard
Pound plunges on no-deal fear
The pound saw its losses double yesterday, plunging 1.4% against the dollar and euro alike to hit $1.3166 and €1.1803 respectively, impacted by a weaker than forecast wage growth reading and the returning threat of a no-deal Brexit. Sterling is now below the level it was at going into the general election after rallying above $1.35 on Friday.
Factory output falls
Factory output fell at the fastest pace since the financial crisis in the past three months, a CBI report shows. The survey found 41% of manufacturers reported order books to be below normal levels compared to only 13% who reported above normal. CBI deputy chief economist Anna Leach said businesses will want the Prime Minister “to break the cycle of uncertainty” and are looking for commitment to getting the UK economy “fighting fit as it prepares to leave the EU.” EY Item Club‘s Howard Archer said the CBI survey had “little to inspire hopes”.
Daily Express, Page: 47 City AM, Page: 9
Inflation steady at 1.5%
UK inflation held at 1.5% in November, with the Consumer Prices Index at the same level as that recorded in October. Despite falling short of a Bank of England’s target of 2%, the figure came in higher than the forecasted 1.4%. Mike Hardie, head of inflation at the Office for National Statistics, said: “The headline rate of inflation remained steady with prices rising across a variety of goods and services.” Yael Selfin, chief economist at KPMG, said: “Inflation is expected to remain well below the Bank of England’s target in 2020, thanks to price caps set on regulated utilities and a stronger pound, giving the Bank of England some room to act if the economy wobbles a little next year. The Bank may wish to secure a pre-emptive cut in rates, either in February or May, if recent economic weakness proves more persistent.”
The Daily Telegraph, Business, Page: 4 The Times, Page: 44 Daily Mail, Page: 75 The Sun, Page: 53 The Guardian City AM
BoE holds interest rates
The Bank of England (BoE) has held interest rates at 0.75% as it warned there was little chance of significant economic growth this quarter. The BoE’s Monetary Policy Committee (MPC) voted 7-2 in favour of maintaining the rate, as it did at its previous meeting in November. The monetary policymakers did point out that both sterling and the FTSE had rallied in the last month, with the pound’s exchange rate appreciating by around 2%. Jonathan Haskel and Michael Saunders voted to cut rates by 0.25%, citing the weakness of the economy as reason to reduce the rate 0.5%. The BoE says it expects GDP to grow by 0.1% in Q4, while the 0.3% growth in Q3 was “a little weaker” than the MPC expected at its November meeting. It added that while some company spending plans put on hold since the EU referendum could be reinstated by the end of next year, uncertainty over the future trade deal with the EU could continue to weigh on the economy. The MPC expects inflation to remain below its 2% target next year.
Retail sales slip in November
Figures from the Office for National Statistics show that retail sales fell in November, with the amount spent in the three months to November down 0.3% compared to the previous three months. The analysis, which was adjusted to account for Black Friday falling later than last year, shows 0.5% less was spent in November than in October. This marks the fourth consecutive month without growth – the longest such run since the data started being collected 23 years ago. Shoppers also purchased less, with sales volumes down 0.4% on a quarter-by-quarter basis and 0.6% month-on-month. Lisa Hooker, consumer markets leader at PwC, said “all eyes will be on next month’s numbers, which will include both Black Friday and the critical run up to Christmas”.
Daily Mail, Page: 75 Financial Times The Scotsman, Page: 5 City AM
UK economic divide mounts as London pulls further ahead
ONS data shows a widening of the economic divide between London and the rest of the UK, although the West Midlands and the East of England were the best performing regions in terms of per capita output growth.
Yorkshire ranks high for economic growth
Grant Thornton ‘s Sustainable Growth Index suggests that Yorkshire performed well for economic growth and job creation, but was weaker on more socially-focused criteria.
Yorkshire Post, Page: 14
OTHER NEWS FOR THE MIDWEEK TO FRIDAY 20th DECEMBER 2019
Millennials expect firms to contribute to causes
City AM looks at company values and culture, citing a KPMG poll which suggests more than 60% of millennials expect their employers to contribute to a social cause.
City AM, Page: 18
PM can ‘turbocharge’ tech industry
Robin Pagnamenta in the Telegraph considers ways the Government could “turbocharge Britain’s technology industry,” citing KPMG research which places Britain third in a global ranking of the most promising countries for technology breakthroughs with global impact.
The Daily Telegraph, Business, Page: 2
Talking tech as investment hits record
Robin Pagnamenta in the Telegraph looks at investment in new technology, noting that UK investment into tech companies hit a record £9bn this year – more than any other European country. He cites analysis by KPMG which ranks London third in the world as a technology innovation hub, while the UK as a whole ranks fourth behind the US, China and India.
The Daily Telegraph, Business, Page: 5
A taxing time for Santa
Katie Grant looks at tax changes that come into force in April 2020, exploring what a shift in taxation rules for self-employed contractors will mean for Santa and his workforce. From April, if a worker is deemed to be an employee for tax purposes, the obligation to withhold PAYE and national insurance moves to the employer. Blick Rothenberg says an assessment of every worker’s status will need to be carried out. Ms Grant quips that the rule-changes are “a further unwelcome development for Father Christmas”, who has faced continued uncertainty over the impact of Brexit on the movement of goods and on his Lapland-born workforce.
The I, Page: 13
Contact Paul Southward.