NEWS – FRIDAY 15TH MAY 2020

NEWS ROUNDUP

TAX NEWS – FRIDAY 15TH MAY 2020

MPs warn against tax rises

The Telegraph reports that Boris Johnson is expected to come under pressure from Conservative MPs who will urge him not to hike taxes to pay for the coronavirus crisis. This comes with the Prime Minister set to take part in a virtual meeting of 250 backbench Conservative MPs in the party’s 1922 committee, with 1922 chairman Sir Graham Brady overseeing a session where questions are put to Mr Johnson. With a Treasury document leaked this week suggesting the COVID-19 pandemic will cost the Exchequer £300bn this year, several senior Tories have suggested MPs will ask Mr Johnson not to green light tax increases and a pay freeze for public sector workers to cover the cost. It is suggested that the PM will be urged to wait to see whether the economy recovers quickly. One Tory MP told the Telegraph Mr Johnson might be better to wait until the UK leaves the EU and has more freedom to cut taxes such as VAT in order to stimulate the economy. Elsewhere, a Sun editorial says Chancellor Rishi Sunak must avoid tax hikes that could push the economy “into a death spiral”, arguing that tax cuts will “turbo-charge post-lockdown growth and give us a better chance of a speedy V-shaped recovery”.

The Daily Telegraph The Sun, Page: 12

Tax changes could jump-start the economy

Hugo Dixon in the Independent argues that while “it would be a mistake to hike taxes now as that would stifle the economy”, in the longer term “most of the effort to cut the deficit should come from taxes.” He argues that a fall in oil prices driven by the coronavirus crisis offers a good opportunity to push up fuel duty and calls for an increase in taxes on carbon emissions by industry and energy producers. Mr Dixon also proposes a higher digital tax, saying the 2% rate of digital services tax on UK revenues of large internet groups could be nudged up.

The Independent, Page: 36

RICS calls for stamp duty holiday

Surveyors have urged the government to give home buyers a stamp duty holiday amid fears that UK house prices could crash by as much as 13% as confidence dries up due to the coronavirus pandemic. The Royal Institution of Chartered Surveyors reiterated its calls to scrap the tax on property purchases for anyone who is downsizing their home.

The Independent, Page: 55

City traders handed illegal tax break, ECJ rules

The British government has been ordered to pay the European commission’s legal costs after being successfully sued over tax breaks for City traders. The European Court of Justice (ECJ) ruled that the UK breached an EU directive by failing to notify Brussels of a zero rate of VAT given to commodities traders, a move it said unfairly boosted the City of London at the expense of other EU financial centres. A Treasury spokesman said the ECJ decision does not require businesses to pay back VAT on historic trades.

The Guardian The Daily Telegraph, Business, Page: 2

FIRMS NEWS – FRIDAY 15TH MAY 2020

City firms begin to move back in

Financial services firms and banks in the City of London are working on ways to return staff to offices as coronavirus lockdown restrictions are eased. Tim Jones, chief operating officer at KPMG UK, commented: “As part of our preparation, we’re applying lessons learned from other firms in our global network. These include looking at how we’ll implement social distancing in our offices, guidance for colleagues working at client sites, phased returns and staggering our travel times.” Meanwhile Kevin Ellis, PwC UK chair and senior partner, noted: “It goes without saying we’re planning for how we might gradually increase numbers of people in our offices for when restrictions are lifted. This includes rethinking what collaborative working looks like in a workplace where social distancing rules apply.” Meanwhile, ICAEW CEO Michael Izza says implementing guidance on returning to offices “will mean costs and changes which businesses will not find easy,” saying: “This is not a return to business as usual.”

City AM Financial Times, Page: 3

Health experts question England’s rapidly assembled tracing army

The FT looks at efforts to test for and trace COVID-19 cases, noting one initiative has seen drive-in test centres run by Deloitte.

Financial Times, Page: 2

EMPLOYMENT NEWS – FRIDAY 15TH MAY 2020

1m self-employed turn to scheme

Data shows that around a million self-employed have asked for Government support in the 48 hours since a wages bailout was rolled out. Some 440,000 people made claims via a new online portal when it opened on Wednesday, with HMRC seeing more than 500,000 fresh applications on Thursday. This means that 8.5m Britons are now getting emergency pay from the state, more than a quarter of the UK’s 33m-person workforce. Commenting on the support scheme for self-employed workers, Chancellor Rishi Sunak said: “Britain’s self-employed workers are a crucial part of our economy and will be key in our recovery – which is why we’re doing everything we can to support them.”

The Sun, Page: 2

CORPORATE NEWS – FRIDAY 15TH MAY 2020

Half of businesses reveal cash shortage fears

Figures from the Office for National Statistics reveal that almost half of UK businesses are concerned that they will run out of cash in less than six months, with a survey of over 5,000 firms finding that a quarter said they were unsure about their level of reserves. Some 4% reported having no reserves at all, with VAT deferrals, business rates holidays and state-backed loan schemes from the Treasury proving insufficient to prop up every business.

The Daily Telegraph

Trio of hotels being sold off

Glenmorag Hotel in Dunoon, the Garve Hotel and Strathpeffer’s Mackay’s Hotel are being sold after Donald McNaught and Matt Henderson of Johnston Carmichael were appointed joint nominees for a proposed CVA on behalf of three companies in the David Urquhart Group.

The Scotsman, Page: 34

Spain’s La Liga targets China deals with joint venture

La Liga has entered into a joint venture designed to accelerate commercial deals in China. Deloitte estimates that clubs in Spain’s top division made €3bn in revenues in 2017/18.

Financial Times, Page: 9

5G body names leadership team

Looking at the appointment of a chairman and CEO the Scotland 5G Centre, an organisation set up to accelerate the adoption of 5G in Scotland, the Scotsman notes a study by Deloitte which last year estimated that significant changes to wireless technologies, including 5G networks, could increase GDP by more than £17bn. Julie Snell will chair the organisation, with Paul Coffey taking up the role of chief executive.

The Scotsman, Page: 34

PROPERTY NEWS – FRIDAY 15TH MAY 2020

Mortgage rates at record lows

Finance experts at Moneyfacts have reported that the average two-year fixed mortgage rate is now at a record low of 2.09%, with the Bank of England reducing base rate to a record low of 0.1%. Eleanor Williams of Moneyfacts stated: “Looking at products often favoured by first-time buyers, at 90% loan-to-value, the number of products available has dropped by 270 and 243 for two and five-year fixed rate options respectively. First-time buyers are therefore likely to feel the effect of the current circumstances even more keenly than most.”

Daily Mail

INTERNATIONAL NEWS – FRIDAY 15TH MAY 2020

Luxembourg facing legal action on money laundering

Luxembourg is facing legal action from the European Commission in response to new EU rules intended to increase scrutiny of financial assets controlled by politicians and owners of companies. The EU executive arm has also called on the Grand Duchy to change a law allowing firms to reduce their tax burden beyond what is permitted under rules within the EU.

Daily Mail

Germany faces €82bn tax receipts shortfall because of coronavirus

The impact of the coronavirus crisis is set to see a 10% decline in Germany’s tax take, which is forecast to be down €81.5bn on 2019, while GDP slips 6.3%.

Financial Times

ECONOMY NEWS – FRIDAY 15TH MAY 2020

Government’s coronavirus bill hits £123.2bn

Analysis by the Office for Budget Responsibility (OBR) shows that the cost of the Government’s efforts to combat the coronavirus pandemic has risen to £123.2bn. This is an increase on the previous estimate of £103.7bn, while the OBR’s pre-coronavirus estimate for borrowing stood at £55bn. Borrowing for this year is calculated to be £298bn, with this up £26bn on a forecast made a month ago, with an extension of the furlough scheme the main contributor to the increase. Annual borrowing is expected to equal 15.2% of the UK economy. This would be the highest proportion since the 21% recorded at the end of World War Two.

BBC News The Guardian, Page: 33 The Independent, Page: 11 The Times, Page: 9 The Daily Telegraph, Business, Page: 1

OTHER NEWS – FRIDAY 15TH MAY 2020

Lloyd’s of London: Insurance claims to be biggest since 9/11

Insurance market Lloyd’s of London has said it expects coronavirus-related claims to cost it £2.5bn to £3.5bn, which would be the biggest payout since the September 11 attacks in the US in 2001. Lloyd’s chief executive John Neal said it could be two years “before everyone really gets their arms around the true cost of this pandemic”. He added: “We estimate that government borrowing could be as much as $10trn globally to protect the economy for the losses that we’ve seen”. Lloyds said the estimated 2020 underwriting losses covered by the industry as a result of COVID-19 are approximately $107bn, adding that the industry will also experience falls in investment portfolios of an estimated $96bn.

BBC News

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