NEWS – FRIDAY 10TH JULY 2020
NEWS – FRIDAY 10TH JULY 2020
Rishi Sunak promises £30bn to supercharge economy and save jobs
Read the KSK summary of highlights here: –
SDLT: TEMPORARY REDUCED RATES
As announced in the Government’s Economic Statement on 8th July 2020, reduced rates of Stamp Duty Land Tax (SDLT) will apply for residential properties purchased from 8th July 2020 until 31st March 2021 inclusive. See details here: –
TAX NEWS – FRIDAY 10TH JULY 2020
Economists warn of day of reckoning
Paul Johnson, director of the Institute for Fiscal Studies (IFS), has warned of likely tax rises as a result of a coming recession. He said getting the UK’s £2trn debt mountain under control will take decades and is likely to require the Treasury to raise an extra £35bn to £40bn a year once the immediate crisis subsides. He added: “The time to pay for this will come, but not this year and not next.” Deputy director Carl Emmerson said it was too early to predict the scale of the hikes as it depended on how quickly the economy recovered but said “it could be quite a chunky tax rise.” The Chancellor Rishi Sunak yesterday refused to rule out future tax rises to pay for the record public spending during the pandemic. He said it was “too early to speculate”. Meanwhile, research by Redfield & Wilton Strategies for the Mail found that 71% of the public expect taxes to rise to pay for the coronavirus bailout package.
Tax gap falls to lowest recorded rate
HMRC confirmed yesterday that the tax gap for 2018-19 is 4.7%, its lowest recorded rate. The tax gap is the difference between tax that should be paid and what is actually paid. HMRC collected £628bn in tax revenue in 2018-19. Jesse Norman, Financial Secretary to the Treasury said: “At 4.7%, the 2018-19 tax gap is the lowest on record. The coronavirus pandemic has highlighted the importance of everyone playing their part and paying the tax that is due.” This is the first year that a stand-alone tax gap for wealthy taxpayers has been included in the report. The total wealthy tax gap stands at £1.7bn and represents a very high collection rate of all tax due within this group. The wealthy tax gap is the smallest proportion of the total gap by customer group, making up 6% of the total tax gap.
Apple files accounts showing £6.2m paid in UK tax in 2018
Accounts filed today for Apple Retail reveal that the firm’s UK retail arm paid £6.2m in tax last year on sales of nearly £1.4bn. Profit before tax was £35.8m in 2019, down from £105.6m in 2018, while costs were up 94% to £173.7m from £94.8m in the year earlier period. This comes as Apple awaits the result of an appeal against the European Commission over €13bn in back taxes due to the Irish government. George Turner, director of Tax Watch UK, said: “Apple’s US accounts disclose that the company moves tens of billions of dollars a year out of Europe and into tax havens.” A spokesman for Apple said: “We always pay all that we owe.”
City AM Daily Express, Page: 2 Daily Mail, Page: 14
EMPLOYMENT NEWS – FRIDAY 10TH JULY 2020
Sunak’s £1,000 job retention bonus red-flagged
The head of HMRC wrote to Chancellor Rishi Sunak requesting a “ministerial direction” to proceed with the roll-out of £1,000 bonuses for firms who bring staff back from furlough, according to reports. Jim Harra stressed that there was a “sound policy rationale” for going ahead with the radical plans but it had “proved difficult to establish a counterfactual” for the schemes, adding that “the advice that we have both received highlights uncertainty around the value for money of this proposal”. He also requested written direction to proceed with the £10-per head meal voucher scheme. Paul Johnson, the director of the Institute for Fiscal Studies, also raise doubts about the effectiveness of the scheme saying in a majority of cases the money will go to employers who would have brought people back from furlough anyway. The Chancellor told BBC Radio 4’s Today programme that he accepted that payments would go to support jobs which were not under threat but said that this was an inevitable consequence of the need to act swiftly to an unprecedented challenge.
REGULATION NEWS – FRIDAY 10TH JULY 2020
FCA demands safeguards at payments businesses
The Financial Conduct Authority has told payment service providers and electronic money businesses that they must strengthen the way in which they safeguard customers’ money after Wirecard’s catastrophic failure brought greater scrutiny to the industry. New guidance issued by the regulator said it had found “material issues” in a number of areas including the failure to properly manage financial crime risks and misleading claims about service and pricing. The regulator indicated that its intervention had been hastened by fears that the COVID-19 pandemic may pose a risk to the viability of payments firms. A spokesman for the FCA said that its work “makes very clear our expectations of what payments firms must do to protect customers’ money robustly”. “The sector has reached the scale where more regulation is required,” said Matt Hopkins, of the global bank team at BDO. “This is the end of light-touch regulation of e-money and payment institutions.”
SMEs NEWS – FRIDAY 10TH JULY 2020
Pools, gyms, team sport and outdoor events to return
Culture Secretary Oliver Dowden has announced that pools, gyms, nail bars and tattooists will be able to open their doors to customers again. Outdoor performances will also be able to resume with limited audiences. Outdoor pools and open-air theatre and concert venues will open on Saturday when amateur team sports including cricket will also be able to resume. Nail bars, beauty salons, tattoo parlours and other “close contact” personal services will be open from Monday, with indoor sports venues including gyms, pools and courts following on July 25. However, beauty businesses were left distraught when they were told no treatments to the face would be allowed, such as make-up application and eyebrow treatments. Mike Cherry, chair of the Federation of Small Businesses, called the news a “welcome shot in the arm for the health, wellbeing and happiness of the wider public”, but warned that independent operators would need further support to be compliant with safety guidelines.
PROPERTY NEWS – FRIDAY 10TH JULY 2020
Stamp duty aid should be more targeted, critics say
The Institute for Fiscal Studies (IFS) has warned that first-time buyers could be priced out of the market after the Chancellor scrapped stamp duty on properties worth up to £500,000. The think tank suggested landlords could drive up prices as could homeowners seeking to move up the ladder. Stamp duty used to kick in at £125,000, but first-time buyers only started paying at £300,000 so that advantage has now been lost. However, the IFS still praised the move and said it would boost the economy by powering up activity in the property market. Labour said the move also provided a subsidy for second homeowners and said the tax break was not an appropriate use of money at a time when millions are going through financial hardship.
The Daily Telegraph, Business, Page: 1 The Independent, Page: 7
CORPORATE NEWS – FRIDAY 10TH JULY 2020
Laura Ashley collapse to be probed by second administrator
A second administrator has been appointed to examine the finances of collapsed retailer Laura Ashley, with FRP Advisory set to investigate the role of firm’s former directors. The Pension Protection Fund (PPF) requested the additional administrator’s appointment, stating that: “Members of the Laura Ashley retirement benefits scheme, which remains in PPF assessment, can be assured of our ongoing protection.”
The Guardian, Page: 30
ECONOMY NEWS – FRIDAY 10TH JULY 2020
British high street loses a further 5,300 jobs
The British high street took a double hit yesterday after Boots announced 4,000 job cuts while John Lewis said it would close eight of its 50 department stores putting 1,300 jobs at risk. Separately, Burger King said it could close up to 10% of its 530 UK restaurants, putting 1,600 jobs at risk. The UK economy shrank by 25% in March and April and could be heading for its biggest fall in 300 years in 2020, with an unemployment rate on course to more than double to about 10%, according to official projections. Julie Palmer, partner and restructuring expert at Begbies Traynor, predicted further significant job losses on the high street. “Many of the biggest companies have been fighting against the tide of destruction before this crisis and there is a huge dam of distressed businesses building and waiting to break.”
IFS advises against tax rises and spending cuts
The Institute for Fiscal Studies (IFS) has said the country’s budget deficit could reach £350bn this year and £150bn in 2021. This comes as the latest figures from the Treasury show that public spending during the pandemic rose to almost £190bn.
Financial Times The Daily Telegraph, Business, Page: 2, 3 City AM Evening Standard
OTHER NEWS – FRIDAY 10TH JULY 2020
West Midlands man arrested on suspicion of £495,000 furlough fraud
A West Midlands man has been arrested as part of an HMRC investigation into a suspected £495,000 Coronavirus Job Retention Scheme fraud. HMRC officers executed a search warrant on Wednesday in the Solihull area and arrested a 57-year-old. This is the first arrest in connection to alleged fraud relating to the furlough scheme.
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