NEWS – FRIDAY 13TH NOVEMBER 2020

NEWS ROUNDUP

COVID- 19 – SUPPORT FOR BUSINESSES

Updated guidance regarding the extended Coronavirus Job Retention Scheme

On the 10th November 2020, the government updated its guidance online which can be found here:

gov.uk/guidance/coronavirus-jobretention-scheme

Below, we summarise the key elements for you:

  • As before, businesses can use the scheme ‘if you cannot maintain your workforce because your operations have been affected by COVID-19’.
  • You can claim for employees that you have made a PAYE RTI submission to HMRC for between 20th March 2020 – 30th October 2020. You do not need to have previously furloughed the employee to claim under the extended scheme.
  • You must submit your claim for periods ending on or before 31st October 2020 by 30th November 2020.
  • You’ll be able to make claims for periods starting on or after 1st November 2020 from the 11th November 2020.
  • The extended scheme will remain open until 31st March 2020. For the period 1st November 2020 – 31st January 2021, the government grant will be 80% of wages, capped at £2,500, with employers required to pay NI contributions and pension contributions. We are therefore expecting to see some shift in contributions from 31st January 2021.
  • If you don’t have an agreement with your staff in place but are planning to claim for the period from 1st November 2020, you must put that retrospective agreement in place by 13th November 2020.
  • You can still fully furlough and flexibly furlough staff. Furlough arrangements can last for any amount of time, but the claim period continues to be for a minimum of 7 calendar days. Also, there is now no maximum for the number of employees you can claim for.
  • You can continue to claim for a furloughed employee who is serving a statutory notice period. However, a word of warning – the government is reviewing its position on this and will likely change the approach for claim periods starting on or after 1st December 2020 with further guidance published in late November 2020.
  • Staff can continue to take holiday during furlough (paid at their normal rate of pay).

Summary kindly provided by HRDept. www.hrdept.co.uk/west-herts-south-beds/

TAX NEWS – FRIDAY 13TH NOVEMBER 2020

Sunak warned off CGT move

Rishi Sunak has been warned that a move to align capital gains tax with income tax will elicit a furious response from entrepreneurs with business leaders warning any recovery would be stifled and innovators would flee the UK. Lord Leigh of Hurley, senior treasurer of the Conservative Party and a senior partner at Cavendish Corporate Finance, said: “Proposals to simplify tax by equating income and capital don’t reflect the differences between the two. Capital gains are rewards for a risk taken by investing in an asset which might become worthless. Income involves no risk at all. If you want people to move from a comfortable salary to invest in a new business, take a risk, employ people, as I did, they have to feel that tax on any success reflects that risk.” Elsewhere, the Centre for Policy Studies and the Centre for Policy Studies both said the plans were ill-advised. The Telegraph’s Jeremy Warner asserts that tax reform that undermines growth “merely leaves the Exchequer with a greater share of a shrinking pie, and is therefore ultimately at best a zero sum game.” Finally, in a letter to the FT, Andrew Joy asserts that what the proposers are really after is a wealth tax, but “CGT is a rotten proxy”. Equalisation is a “seductive but dangerous chimera,” he adds.

The Times, Page: 39 Daily Mail, Page: 2 Financial Times, Page: 24 The Daily Telegraph, Page: 19

Treasury permanent secretary: New Budget to come in March

The Treasury’s permanent secretary says the Chancellor will announce a new government Budget in March as part of plans to raise income tax. Speaking at a Public Accounts Committee meeting on the government’s furlough scheme, Tom Scholar said: “We have to have a Budget before the end of the financial year otherwise the Government can’t continue to raise income tax”. The UK’s Budget deficit is expected to swell to £400bn this year, amid forecasts that the pandemic will push the country into a double-dip recession. The Government’s tax advisory body has urged the Chancellor to roll out a tax raid on buy-to-let properties and other forms of wealth in a bid to shore up more than £14bn to help repair the UK economy. The permanent secretary’s comments are the first clear signal that significant income tax hikes lie on the horizon.

City AM

Rishi Sunak extends investment relief for manufacturing firms

The Chancellor is to extend a temporary £1m cap on tax relief for manufacturing firms on investments in plant and machinery until January 2022. The annual investment allowance break had been due to end on January 1 when the cap would have reverted to £200,000.

Daily Express, Page: 8

CORPORATE NEWS – FRIDAY 13TH NOVEMBER 2020

Second lockdown puts Caffe Nero on brink of ruin

Caffe Nero has entered into a Company Voluntary Arrangement with KPMG hired to advise. The move was triggered by the second lockdown, said founder Gerry Ford. The chain has suffered from curbs on socialising, fewer shoppers in town centres and the government advice for workers to stay away from their offices. Will Wright, head of regional restructuring at KPMG, said: “Caffe Nero is an iconic brand on the UK’s high streets with a terrifically loyal customer base. However, like many others across the sector, the impact of measures introduced in response to the COVID-19 pandemic has been devastating.”

The Times, Page: 48 The Daily Telegraph, Business, Page: 3 Daily Mail, Page: 2

FRAUD NEWS – FRIDAY 13TH NOVEMBER 2020

Industry calls for crackdown on ‘dangerous’ clone scams

Finance experts have called for action to tackle clone scams, after analysis from Quilter revealed that an average of 45% of all warnings from the Financial Conduct Authority since 2015 involved the ‘clone’ of a financial services firm. Tom Selby, financial analyst at AJ Bell, warned that trust in financial services and saving would be “eroded” if an increasing number of people fell victim to scams.

FT Adviser

PROPERTY NEWS – FRIDAY 13TH NOVEMBER 2020

CGT plan would spark second-home fire sale

Following recommendations from the Office of Tax Simplification that the Chancellor equalise capital gains tax and income tax as part of efforts to pay for the Government’s response to the pandemic, experts have warned the move could crash the property market by sparking a fire sale of second homes and investment properties. Jonathan Schuman of Luton landlord Magnet Properties said small buy-to-let landlords would be hit hardest after already enduring stamp duty hikes and the loss of mortgage interest relief. Mr Schuman said: “It will massively distort the market. Landlords will be rushing to sell before the capital gains tax (CGT) rise, but after, higher taxes would be a big incentive to hold on to properties.”

The Daily Telegraph, Business, Page: 1

EMPLOYMENT NEWS – FRIDAY 13TH NOVEMBER 2020

Letter: Job retention must be the aim in Brexit countdown

Recruitment & Employment Confederation CEO Neil Carberry urges the Government to reduce employers’ NICs to help struggling businesses retain jobs and encourage hiring.

Financial Times, Page: 24

ECONOMY NEWS – FRIDAY 13TH NOVEMBER 2020

Economy grows by record 15.5%

Official data shows that the UK economy grew at a record pace in the third quarter of the year. The country’s emergence from the first lockdown saw GDP rise by 15.5% between July and September. However, growth was weaker in September than in the preceding months, while the country’s economy is still 8.2% smaller than before the virus struck. Despite the rebound in July to September, analysts warned that the economy was likely to shrink again in the final three months of the year because of the impact of renewed lockdowns in different parts of the country.

Financial Times Sky News The Guardian Daily Mail, Page: 2 Daily Mirror, Page: 8

Chancellor hints at new giveaways

Rishi Sunak has hinted the Government could take steps to boost consumer spending in the run-up to Christmas, telling Sky News that “we’ll look at a range of things to see what the right interventions are at that time”. He added: “We’ll talk about specific measures, but more broadly I think it’s right when we finally exit this [lockdown] and hopefully next year with testing and vaccines, we’ll be able to start to look forward to getting back to normal.”

The Daily Telegraph, Business, Page: 1

INDUSTRY NEWS – FRIDAY 13TH NOVEMBER 2020

Big Four dominance continues to put market at risk – FRC

The Financial Reporting Council has raised renewed concerns about the fallout from the potential failure of a Big Four firm. The accountancy regulator said it had requested detailed information from firms including Deloitte, KPMG, EY and PWC on their responses to the pandemic and financial resilience. “The concentration of the FTSE 350 audit market, the limited choice available for these companies to obtain a high quality audit, and the market’s vulnerability to the failure of one of the Big Four firms remain risks to market resilience,” the regulator said.

The Times, Page: 40

REPORTING NEWS – FRIDAY 13TH NOVEMBER 2020

FRC sets out company reporting expectations

The Financial Reporting Council (FRC) has published its annual end of year letter to CEOs, CFOs and Audit Committee Chairs setting out its reporting expectations for preparers of reports and accounts for the year ahead. The FRC said this year’s letter is of particular significance given the continuing backdrop of economic uncertainty and the impact of COVID-19 on the scope and timing of company reporting, while companies are also dealing with commercial and operational change associated with the UK’s exit from the EU. The letter covers what disclosures should be made to understand the impact of particular events on the company’s position and financial performance, as well as any judgements involving significant estimation uncertainty. The FRC expects increased disclosure of relevant sensitivities or ranges of possible outcomes to help users understand the assumptions underlying those estimates and the extent of the changes that might be reasonably possible in the next twelve months. The regulator also outlines its expectations of companies’ climate disclosures including the impact of climate change on their activities, their own environmental impact as well as explanations of how directors are discharging their section 172 duties.

Financial Reporting Council PQ Magazine Yahoo! Finance Compliance Week ICAEW Reuters This is Money

Green business reporting rules at risk of pale response

The UK aims to become the first country in the world to require climate risk disclosures across the economy. However, critics have questioned whether the rules will make enough difference to investors.

Financial Times

Contact Paul Southward

Paul Southward