NEWS – FRIDAY 17TH APRIL 2020
NEWS – FRIDAY 17TH APRIL 2020
CORONAVIRUS (COVID-19) SUPPORT FOR BUSINESS
Furloughed Employees: practicalities of compliance
It is a requirement that employers confirm in writing that an employee has been designated as being furloughed, and that the employer receives agreement to this from each furloughed employee. Ideally, the employee’s consent should be recorded by them signing the appropriate documentation and returning it to be kept on record. Without such an agreement, employers may not be able to access the government funds. Some employees may not have access to printers and scanners to allow this process to completed. Employers should not assume that consent has been formally accepted and we suggest that an appropriate email should be sent for employees to return providing a record of their agreement. We can provide guidance on the wording for these emails; contact Paul Southward or your usual KSK contact.
Coronavirus Job Retention Scheme (CJRS) – Fourth Version (updated 15.04.2020)
See details here:
TAX NEWS – FRIDAY 17TH APRIL 2020
CIOT president urges clarity on digital tax
Glyn Fullelove, President of the Chartered Institute of Taxation, has said questions remain about who will pay the digital services tax and how much it will cost them. Mr Fullelove stated: “More clarity and greater understanding about DST is needed.” Offering that there is welcome detail aimed at assisting how to calculate revenues attributed to UK users in the Finance Bill, he says businesses “will still face significant practical difficulties in identifying the relevant components of what is within the charge to tax.” He argues that the Government must “manage expectations and the public perception of the taxation of the largest digital businesses”. Mr Fullelove adds that the Government’s commitment to a multilateral solution to taxing digital multinational companies is welcome, as is the commitment to repeal the levy “once an appropriate global solution is in place.”
CORPORATE NEWS – FRIDAY 17TH APRIL 2020
Lockdown sees one in four firms close
The Office for National Statistics (ONS) says Government measures designed to slow the spread of coronavirus has seen a quarter of businesses close down temporarily. A poll of 5,316 businesses, saw 25% say they had closed between March 23 and April 5, while 38% of those that continued to trade said that their turnover was substantially lower than normal and 17% said it was slightly lower. Over 40% said they were reducing staff levels in the short term, while almost 30% have decreased working hours. Just over a third of those surveyed said they had been unaffected by the lockdown. In the fortnight before the March 23 lockdown, almost half of firms saw a dip in income, with this rising to 90% for hotels, cafés and restaurants.
The Times, Page: 32 City AM
COVID-19 may be the final straw for struggling hospitality firms
Begbies Traynor has warned that COVID-19 may be the “final straw” for many firms in Scotland’s hospitality sector. The industry saw a sharp year-on-year increase in severe financial distress in Q1, with a 500% jump in instances of “critical” financial distress – with an 800% increase quarter-on-quarter. Across the UK as whole, “critical” distress in the sector rose by a fifth year-on-year and 37% on the quarter. Ken Pattullo of Begbies Traynor said that while government efforts to offer some support to businesses are welcome, “the reality is that this ‘sticking plaster’ approach may well simply delay the inevitable.”
The Scotsman, Page: 37
Carluccio’s administrators see interest
FRP Advisory says that while no buyer has attempted to snap up collapsed chain Carluccio’s, a number of firms have expressed an interest in its sites and other assets. Boparan Restaurant Group, which owns the Giraffe and Ed’s Easy Diner brands, is believed to have lodged a bid with the administrators for the brand and a significant number of its restaurants. Boparan is expected to face competition from Three Hills Capital, backer of the Byron burger chain, while Tesco is reportedly looking to acquire several of the Italian restaurant chain’s sites.
Jewish Chronicle rival bid sparks anger
The FT reports that a charitable trust and a consortium of political insiders, broadcasters and bankers have submitted rival bids with Begbies Traynor for the liquidated assets of the Jewish Chronicle.
Oil trader Hin Leong races to restructure billions in debt
Oil trader Hin Leong, which owes banks including HSBC, ABN Amro and Société Générale almost $4bn, is looking to restructure its finances and is being advised by PwC.
INDUSTRY NEWS – FRIDAY 17TH APRIL 2020
Accountant accused of ‘extremism’ by law firm chief
Martin Darroch, an accountant and chief executive of law firm Harper Macleod, has accused Bill Drysdale, who is seeking to become deputy president of the Institute of Chartered Accountants of Scotland, of circulating extremist political views. Mr Drysdale had posted a picture on his Twitter account showing a picture of the Westminster cabinet with adviser Dominic Cummings’ face superimposed on every person pictured except the Prime Minister, prompting Mr Darroch to ask: “Do you really think extremist posts have a place in our society, let alone our institute?”.
Insolvency: light touch, heavy cost
An FT column on a new insolvency process in Britain argues that a UK version of Chapter 11 could help reduce “extravagant fees paid to an oligopoly of services firms.”
SMEs NEWS – FRIDAY 17TH APRIL 2020
IoD calls for clarity over furloughed directors
The Institute of Directors (IoD) has called for urgent clarification on what activities directors can carry out while furloughed, saying that Government advice is “conflicting” with information from HMRC more restrictive than guidance available online. Roger Barker, head of corporate governance at the IoD, said new guidance, which appears to prevent a furloughed director, where no other director is available, from undertaking basic tasks “appears to raise a whole host of unintended consequences.” He adds that is “hard to believe the Government has thought through the implications for small companies with only one or two directors.” Mr Barker warned that directors of small companies “have largely been caught between two stools”, saying that as they “don’t fit easily into the support schemes that have established for employees and the self-employed” they need support and it i s “past time government woke up to the problem.”
The Scotsman, Page: 38
FINANCIAL SERVICES NEWS – FRIDAY 17TH APRIL 2020
PPI deadline drives climb in complaints
Figures from the Financial Conduct Authority show complaints to financial services firm jumped from 4.29m in the first six months of 2019 to 6.02m in the second half of the year. This was driven by a surge in claims for mis-sold PPI ahead of an industry-wide deadline last August. The data show that complaints related to PPI hit 3.71m in H2, marking a 75% increase on the 2.12m recorded in H1. Complaints about PPI accounted for 62% of all complaints made to financial companies during the second half of 2019, with half of these upheld. With those related to PPI stripped out, complaints hit 2.31m in the second half of 2019, compared to 2.18m in the previous six months. Issues around current accounts accounted for 10% of all complaints, while credit cards made up 6% and insurance products were the focus of 5%.
ECONOMY NEWS – FRIDAY 17TH APRIL 2020
Economy losing £2bn a day
Analysis suggests that the coronavirus lockdown has already wiped £50bn off the economy, with the Office for Budget Responsibility (OBR) estimating that the closure of schools, shops, offices and factories is costing Britain £2bn a day. This means that some £50bn has been knocked off GDP in the 25 days since the restrictions were rolled out on March 23. The sum is equivalent to 2.5% of GDP. While the OBR has suggested that economic output could slide 35% in Q2 if the lockdown stretches to three months, the Resolution Foundation think-tank has suggested that the economy could then return to near-normal levels relatively quickly – with GDP down just 3% in the medium-term – while a six-month lockdown could see a slower recovery and add an extra £1.5bn a day to the national debt.
Daily Mail, Page: 69
Credit card and home loan demand set to slide
The Bank of England (BoE) has forecast that demand for mortgages and credit card lending will decline in Q2. The BoE’s quarterly credit conditions survey, conducted shortly before the Government imposed the lockdown designed to slow the spread of COVID-19, shows that lenders were planning to scale back the availability of such loans. A net balance of -71% said that they expected demand for mortgages to rise in the coming months, while -23% anticipated that they would be issuing more loans. On unsecured lending, a net balance of -26% of lenders expect to issue more credit, while -4.9% reported greater demand. The balance of lenders expecting to increase credit to the corporate sector climbed to 28%, marking an increase of 0.8% and the highest figure since Q3 2009. Howard Archer, chief economic adviser to the EY Item Club, said the survey offered “encouragement for small and medium-sized businesses”.
OTHER NEWS – FRIDAY 17TH APRIL 2020
Scam warning over COVID-19
With warnings that criminals may be using anxiety and uncertainty over COVID-19 to attempt to defraud people, Action Fraud has revealed that it has received 105 reports concerning crim inality involving coronavirus, while City of London police recently reported a 400% increase in coronavirus-related fraud. James Jones, head of consumer affairs at Experian, notes that some crooks are pretending to be from HMRC, advising caution over emails and other correspondence claiming to be from the taxman.
Contact Paul Southward