NEWS – FRIDAY 1ST MAY 2020
NEWS – FRIDAY 1ST MAY 2020
TAX NEWS – FRIDAY 1ST MAY 2020
Digital newspaper VAT scrapped
A pledge to remove value added tax from the sale of digital newspapers will be brought forward by the Government amid concerns the sector is struggling to survive the coronavirus pandemic. Chancellor Rishi Sunak said in his Budget that VAT would be cut to zero on sales of digital versions of newspapers and e-books from December 1, but the move will now take effect today. Mr Sunak said: “We want to make it as easy as possible for people across the UK to get hold of the books they want while they are staying at home and saving lives. That is why we have fast-tracked plans to scrap VAT on all e-publications.”
The Daily Telegraph, Page: 2 Daily Mail, Page: 12 Financial Times, Page: 3 The I, Page: 53 The Sun, Page: 7
No VAT on PPE
Chancellor Rishi Sunak says taxes on vital personal protective equipment (PPE) are to be temporarily scrapped, with a tax break worth more than £100m to care homes, businesses and charities applying until July 31. This will apply to sales of PPE such as face masks and gowns.
Daily Mail, Page: 7
Health spending will mean tax rises
Oliver Kamm in the Times says the coronavirus health crisis has caused an economic crisis. He considers the cost of protecting public health, saying that in the long term “spending on healthcare will certainly have to expand and this will mean higher taxes”, insisting: “There is no other feasible way”. He says people “will need to get used to paying more in tax to support an adequate health and care system.”
INSOLVENCY NEWS – FRIDAY 1ST MAY 2020
Corporate insolvencies declined in first-quarter
Corporate insolvencies fell in the first quarter despite the economic impact of coronavirus, new figures show. Office for National Statistics data showed there were 3,883 company insolvencies in the first quarter, a decrease of 8.5% from both the previous quarter and the same quarter in 2019. The ONS said the statistics “largely predate the emergence of, and response to, the coronavirus pandemic”. However, it warned: “Some statistics may have been affected where individuals, insolvency practitioners, intermediaries and courts were unable to process insolvencies in the usual manner during the latter part of March”. Duncan Swift, past president of insolvency and restructuring trade body R3, added that the quarterly and year-on-year decrease in corporate insolvency numbers “is highly unusual given the circumstances and climate, and very unlikely to last.”
Daily Express, Page: 49 City AM
CORPORATE NEWS – FRIDAY 1ST MAY 2020
CBI: Private sector activity slips
The Confederation of British Industry’s (CBI) monthly growth indicator shows private sector activity fell at its sharpest pace in 11 years in the quarter to April. A composite measure of business activity, based on 860 respondents, saw 65% of businesses say the COVID-19 outbreak has had “a significantly negative impact on their domestic operations, with 43% in a state of complete shutdown in the UK”. While 48% have temporarily laid off some staff, 13% have done so permanently. Almost 80% reported cashflow difficulties and a third said the availability of external finance was constrained. Alpesh Paleja, the CBI’s lead economist, said: “Activity is expected to drop at unprecedented rates across the economy, so we are in for a rocky few months ahead.”
The Times, Page: 39
Oasis and Warehouse stores unsold
Administrators at Deloitte have been unable to find a buyer for the stores of Oasis and Warehouse, resulting in 1,803 redundancies. Intellectual property assets and certain stock belonging to the retailer, which ceased trading online on April 22 due to the “rising costs of fulfilling online orders and associated logistical challenges”, have been sold to Hilco Capital. Joint Administrator Rob Harding commented: “COVID-19 has presented extraordinary challenges which have devastated the retail industry.”
The Times, Page: 35 Daily Mail, Page: 71 The Daily Telegraph, Business, Page: 7 The I, Page: 53 The Guardian Financial Times, Page: 12 Daily Express, Page: 11 The Sun, Page: 47 Daily Mirror, Page: 5 City AM
Tech activity declines in Q1
KPMG ’s UK Tech Monitor Index shows the UK tech sector saw its worst performance since the global financial crisis in Q1. The index came in at 47.1, down from 50.1 in Q4 2019. This marked the fastest decline in business activity since Q2 2009. While firms said the COVID-19 outbreak had driven a decline in non-essential corporate spending and prompted projects to be cancelled, demand for services related to home working and business continuity rose.
The Scotsman, Page: 35
Finablr debt may be £1.3bn
Finablr, the owner of Travelex, says its net debt level may be $1.3bn – materially higher than the $334.1m previously disclosed. Finablr, which is embroiled in an alleged fraud scandal, has seen EY resign as its auditor, trading it its shares suspended and its board overhauled.
The Times, Page: 45 Financial Times, Page: 11
Lessons law firms can learn from rivals’ collapses
City AM has asked legal experts for lessons which they can draw from previous law firm failures and what unique challenges the coronavirus crisis poses. RSM restructuring partner Gareth Harris advises that if firms are facing problems they should consider holding conversations with potential rescuers, to allow people to carry out some due diligence.
EMPLOYMENT NEWS – FRIDAY 1ST MAY 2020
Two-thirds of firms use furlough scheme to save jobs
The Office for National Statistics reports that 66% of businesses in the UK have applied for the Government furlough scheme to pay staff wages – but that less than a fifth have received it. More than 500,000 claims covering 4m staff have been made under the jobs scheme, which pays 80% of wages, capped at £2,500 a month. The ONS breakdown showed more than 80% of firms that have temporarily stopped trading are using the furlough, as well as 61% of those that have remained open. Meanwhile, 56% of companies have also applied for the VAT deferral scheme, while 42% have received support from business rates holidays.
The Daily Telegraph Evening Standard
SMEs NEWS – FRIDAY 1ST MAY 2020
Emergency coronavirus loans pass £4bn
Analysis shows that the value of emergency coronavirus loans to small businesses rose 46% to £4.1bn last week, although the number of approvals slowed. UK Finance said 8,638 customers secured an 80% Government-backed loan in the seven days to Tuesday compared with 9,000 the week before. Mike Cherry, chairman of the Federation of Small Businesses, has warned that the initiative “has not worked for the small firms that make up 99% of our business community.” Meanwhile, the Treasury is set to consult with banks on the price of 100% Government-backed bounce back loans today. The loans will be free of interest and fees for the first year, with the price set to be under 3%.
The Times, Page: 43 Daily Express, Page: 5
Small firms welcome support package
The Scottish Government has rolled out a £100m support package for smaller businesses and newly self-employed people, saying the scheme is designed to relieve the hardship of small enterprises ineligible for other forms of support. A £34m hardship fund for the newly self-employed, £20m for small firms in the creative, tourism and hospitality sectors, and up to £45m for viable but venerable small firms “crucial to the Scottish economy” will be administered by local authorities and enterprise agencies. The Federation of Small Businesses welcomed the new help, with Andrew McRae, the group’s Scotland policy chair, calling the measures “another important piece in the jigsaw of support required to minimise the economic impact of this crisis”.
ECONOMY NEWS – FRIDAY 1ST MAY 2020
Government bailout bill at £100bn
The Office for Budget Responsibility says the Government’s bill for subsidies and tax breaks for businesses hit by the COVID-19 outbreak already stands at £103.6bn. Measures included in the figure include £39bn for the furlough scheme which covers a proportion of wages for those unable to work due to the lockdown, but the Coronavirus Interruption Loan Scheme and £750m fund for start-ups are excluded as it remains unclear how many firms will default. The analysis shows that of the £103.6bn, £10bn is for the self-employed income support scheme; £15bn is for small business grants; and £13bn covers a business rates package.
Eurozone economy shrinks at record rate
Figures show that the Eurozone has been dealt a heavy blow by the COVID-19 outbreak as the economy shrank at the sharpest pace on record in Q1, with an estimate of GDP between January and March showing a contraction of 3.8%. Figures show that France saw GDP dip 5.8% – the biggest quarterly slip since it was first recorded in 1949, while Spain saw a 5.1% contraction and Italy’s economy shrank by 4.7%. European Central Bank president Christine Lagarde said that a sharp downturn in eurozone economic activity in April “suggests that the impact is likely to be even more severe in the second quarter,” adding a warning that economic growth could fall between 5% and 12% this year.
OTHER NEWS – FRIDAY 1ST MAY 2020
EY: Don’t screw the environment, opt for a cork
A new study by EY has found that corks are carbon-negative, meaning the production of them captures carbon from the atmosphere instead of adding to the industry’s carbon footprint. The study found that the use of cork stoppers can reduce the carbon footprint by a quarter in a still wine, and nearly half in a sparkling wine.
Contact Paul Southward