NEWS – FRIDAY 18TH DECEMBER 2020

NEWS ROUNDUP

COVID-19 SUPPORT FOR BUSINESS

CORONAVIRUS JOB RETENTION SCHEME EXTENDED TO END OF APRIL 2021

CJRS-extension.pdf

TAX NEWS – FRIDAY 18TH DECEMBER 2020

HMRC defends tax debt enforcement

Mary Aiston, HMRC’s director of counter-avoidance, has defended enforcement tactics utilised by the Revenue, telling a House of Lords committee that it has acted “in the most sensitive way” when handling tax debts. This came after a Times investigation uncovered examples of aggressive tactics, with people struggling due to the economic impact of the coronavirus pandemic threatened with repossessions and accused of “deliberately” choosing not to repay tax debts. Viscount Chandos, a member of the House of Lords economic affairs finance bill sub-committee and chairman of the credit services association, asked Ms Aiston about the reports. She said early in the pandemic the Revenue had “pulled back from a huge amount of our debt collection” before restarting it “in as sensitive and data-led way as we can”. She added that the fact a “very, very high percentage quid pro quo; of payment terms reached with people are successful shows HMRC does “take a lot of care to reflect people’s personal circumstances and the sensitivity of being in tax debt”.

The Times, Page: 24

Hard to sell an online retail tax?

The Telegraph’s Ryan Bourne considers the implications of an online sales tax, with a poll showing that 56% of people believe web retailers should be taxed more to help drive down national debt. He suggests that the public will be less keen on an online sales tax once they are aware it will mean prices rise. He also argues that while some within government have suggested such a levy is needed, to “use taxes to try to prevent new business forms acquiring market share is especially damaging when consumers’ preferences are shifting sharply towards them.” Mr Bourne notes that proponents of an online sales tax say it will level the playing field between online and physical retailers, with the latter burdened more heavily by business rates. However, he argues that business practices designed to avoid the high fixed costs associated with inner-city rents and rates are “afforded to all retailer s”.

The Daily Telegraph, Business, Page: 2

Windfall tax could balance the books

Leo McKinstry in the Express says that large tech firms which have seen a “dramatic surge” in revenues during the coronavirus crisis should be the target of a windfall tax. He argues that such a move would boost public finances which “have been battered by the pandemic”, noting that national debt now exceeds £2trn while annual borrowing could reach £400bn this year. Mr McKinstry notes that some experts say a wealth tax on assets over £500,000 or a rise in corporation tax could help balance the books but warns that such levies could prove counter-productive by undermining enterprise. They are, he says, blunt instruments, whereas a windfall tax is a “precision weapon”.

Daily Express

The pandemic is an opportunity to simplify UK tax rules

BDO ’s Paul Falvey believes the coronavirus pandemic presents HMRC the opportunity to simplify the tax system, warning that it is a “confused and confusing web of rules” which “lacks coherence”.

Financial Times, Page: 2

CORPORATE NEWS – FRIDAY 18TH DECEMBER 2020

Businesses more concerned over COVID restrictions than Brexit

A new survey of more than 600 mid-market businesses by Grant Thornton has found the majority remain positive ahead of the UK’s exit from the EU. Only a fifth believe that Brexit will negatively impact on their business in the next six months, while 31% think it will not have any impact. Business leaders are more concerned about the negative impact of continued coronavirus-related restrictions. The poll saw 41% say further lockdown restrictions would be bad for their business, while 22% think Brexit would have a negative impact.

City AM

Facebook tax bill ‘beggars belief’

Facebook has been told to “pay its fair share” after its accounts revealed a slight increase in its tax bill despite profits surging. While operating profits climbed to £122m in 2019 from £97m the year before and recognised revenue climbed from £797m to £1.07bn, its total income tax outlay was £28.6m compared to £28.5m a year earlier. Margaret Hodge, former chair of the Public Accounts Committee and current chair of a parliamentary group on responsible taxation, said the tax figure “beggars belief”. “Facebook and the rest of the tech giants must do their moral duty and pay their fair share,” she added.

The Daily Telegraph, Business, Page: 5 The I, Page: 12 The Sun, Page: 8

Spotify pays less than £1m in UK tax

Despite global revenues of £6bn last year, Spotify UK paid £994,152 in tax to the Treasury. The firm had turnover of £90.3m in the UK with a pre-tax profit of £6.3m, with this far below the £434m in revenue reported by its parent company. A second Spotify UK business which earns money from intercompany commission fees generated £19.3m in turnover in 2019 and paid no corporation tax.

Daily Mirror, Page: 17 Daily Express, Page: 15

EMPLOYMENT NEWS – FRIDAY 18TH DECEMBER 2020

Chancellor extends furlough scheme

Chancellor Rishi Sunak has extended the furlough scheme for a month, with the job retention scheme to run until the end of April 2021. Confirming that the Government will continue to pay up to 80% of the wages of workers who have been furloughed, Mr Sunak said the move would provide “certainty for millions of jobs and businesses”.

The Daily Telegraph The Times BBC News

FINANCE NEWS – FRIDAY 18TH DECEMBER 2020

Loan schemes extended

The Treasury has announced extensions of its business loan guarantee schemes until the end of March. The new round of funding from the Treasury covers the Coronavirus Business Interruption Loan Scheme, the Bounce-Back Loans Scheme and the Coronavirus Large Business Interruption Loan Scheme. Rain Newton-Smith, chief economist at the Confederation of British Industry, said that “with cashflow difficulties still at the forefront of the minds of many business owners, continued access to Government-backed loans through to Spring will bring great comfort.”

The Times Financial Times The Daily Telegraph City AM

ECONOMY NEWS – FRIDAY 18TH DECEMBER 2020

BoE holds interest rates at 0.1%

The Bank of England (BoE) has kept interest rates at the lowest levels on record, with its monetary policy committee voting unanimously to keep the official interest rate at 0.1%. The committee also opted to keep the Bank’s quantitative easing bond-buying programme unchanged at £895bn, having pumped an additional £150bn into the economy last month. The BoE says it expects GDP to be down by 11% over 2020, with pandemic-driven lockdowns and restrictions delivering a decline in Q4, although a projected increase of 2.1% in Q1 2021 is set to avert a double-dip recession. The committee said the development of coronavirus vaccines was “likely to reduce the downside risks to the economic outlook” but warned that if no post-Brexit trade deal is agreed with the EU, “inflation would be likely to be higher and GDP growth weaker” than projections made in November. Meanwhile, economic output grew by 0.4% in October, the Bank revealed, but it still remained around 8% lower than at the end of 2019.

The Times The Guardian Daily Mail Sky News

Inflation expectations on the up

A YouGov poll for Citi shows that people expect average inflation in the UK over the next 12 months to hit 3.8%. The figure, which is up from 3.3% in November, is the highest since 2011. The poll of 2,020 people shows that expectations for inflation over a five- to 10-year period held steady at 3.4%. Citi economists said: “Despite recent moderation, inflation expectations remain relatively high.”

Reuters

OTHER NEWS – FRIDAY 18TH DECEMBER 2020

UK leads the world on cutting emissions

Analysis by PwC shows that the UK has cut its carbon emissions more than any other country this century, with carbon emissions down by 3.7% every year as it expanded the use of renewable energy while using less coal, natural gas and oil. The firm says countries need to cut CO2 production by 11.7% a year to meet targets set out in the Paris Agreement.

Daily Mail, Page: 15

Jet boost for economy

Lockheed Martin’s F-35 fighter jet will generate economic benefits of more than £40bn by 2038, mostly through its supply chain, according to a report from KPMG which also notes that the programme will support 20,000 British jobs a year.

The Sun, Page: 54

Contact Paul Southward

Paul Southward