Updated guidance 21 May 2020

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Scotland bans COVID-19 support to firms in tax havens

The Scottish parliament has passed emergency legislation to prevent companies based in tax havens from using coronavirus relief funding. Firms or individuals who are registered in tax havens, or are a subsidiary of an offshore company, are now prohibited from receiving support grants. Patrick Harvie, the Scottish Green party co-leader, said: “Any company which avoids its responsibility to contribute to society should not be getting handouts when things go wrong. That’s why many European nations and Wales have already made this commitment.”

The Independent, Page: 50 The Guardian

Businesses may be asked to contribute to furlough scheme

The government is considering asking companies to pay more national insurance and employer pension contributions to keep staff on the government’s furlough scheme, the Times reports. Companies will be asked to contribute to the costs of the scheme from August but how much they will be asked to pay has not been announced. Another approach being discussed is requiring employers to contribute 20% of wages, with the government covering 60%.

The Times. Page: 36

A COVID-19 windfall tax would be a mistake

Ryan Bourne says in the Telegraph that a windfall tax on businesses enjoying high profits during the COVID-19 pandemic, such as supermarkets, streaming services and online delivery companies, would be a bad idea. Bourne argues that although advocates claim such an additional tax would be a one-off, companies could justifiably lose trust in the government not to expropriate their gains in the future – gains which were the result of innovative action in the face of a crisis.

The Daily Telegraph, Business, Page: 2


Clarks announces job cuts as funding options explored

Clarks has announced plans to cut a further 900 jobs, as the shoe retailer revealed it is “reviewing funding options with selected advisers” to address short-term liquidity needs resulting from the coronavirus crisis. The shoe chain said that the job losses include 160 immediate redundancies, including 108 positions at its Somerset head office. Around 700 more jobs will also be lost over the next 18 months. However, the retailer said this would be partially offset by the planned creation of 200 new roles. According to the latest Clarks accounts, last year saw losses at the retailer widen to £82.9m from £31m, amid a 6% decline in sales. It had already said that some of its stores would permanently close as a result of the COVID-19 pandemic, and has furloughed over 5,000 UK staff. Last month it emerged that the retailer’s management is being advised by Deloitte, the family shareholders by KPMG and the syndicate of its lenders by PwC.

The Times, Page: 38 Financial Times, Page: 12 The Daily Telegraph, Business, Page: 7 Daily Mail, Page: 74 City AM The Sun, Page: 47 Daily Express, Page: 49 The Scotsman, Page: 35 The I, Page: 47

Questions raised over accounts of Jigsaw owner

The Daily Mail reports that auditors have given a rare “qualified” opinion over the accounts of fashion chain Jigsaw’s owner. The red flag has been raised over whether the books of Jigsaw’s ultimate parent company, Mountain Berg Holdings, give a true and fair view of the state of its finances. Accountants at Duncan & Toplis said they were unable to verify the value of clothing stocks at Jigsaw’s immediate owner Robinson Webster and at two other overseas companies. The news comes after reports that seven directors have left Jigsaw’s board since the beginning of the year.

Daily Mail, Page: 73


Trade body R3 responds to Corporate Insolvency bill

President of insolvency and restructuring at trade body R3, Colin Haig, has responded to publication of the Corporate Insolvency and Governance Bill, stating: “This Bill represents the biggest change to the UK’s insolvency and restructuring framework for almost 20 years. Having called for corporate insolvency reforms since 2016, we welcome the introduction of the Bill to Parliament.” He went on: “We are also pleased our feedback on the draft proposals has been taken on board by the government. Previously, for example, the moratorium would only have been open to solvent businesses, but now the legislation will enable insolvent businesses to obtain a breathing space to review their options, free from the risk that a creditor may push the company into an insolvency procedure prematurely.”

Business Money


Companies raised around £30bn from capital markets amid crisis

A new report shows UK companies raised around £30bn in the corporate bond and equity markets at the height of the coronavirus crisis from the middle of March to early April. More than 90% of large UK companies use the capital markets to raise money, according to the study by BNP Paribas and think-tank New Financial. This translates into around 1,000 large UK companies using the capital markets and a further 14,000 smaller companies. Around £750bn was raised by UK companies in the bond, equity and leveraged loan markets from 2014 to 2018, or around £150bn a year, according to the study.

City AM


Beware rules on salary sacrifice

Accountants are warning those donating part of their salaries to help their businesses or charities during the coronavirus crisis they could face unexpected tax bills due to salary sacrifice rules. Agreements about waiving payments, including dividends, will need to be written up in formal documents ahead of time or income tax and National Insurance will still apply. Tax already paid on any bonuses or wages handed back to the employer cannot be reclaimed. Nimesh Shah, of Blick Rothenberg, said: “The Government and HM Revenue and Customs have introduced temporary exemptions or changed tax rules for certain situations. It’s bizarre that they haven’t moved to change these unfortunate rules and have chosen only to issue guidance on how charges could be avoided.”

The Daily Telegraph, Business, Page: 4


Treasury faces £6.5bn bill from Bounce Back loan scheme

Around 43% of those borrowing from the Treasury’s Bounce Back loan programme do not intend to repay the cash, according to a survey by the Business Banking Resolution Service (BBRS). The scheme gives cheap bank loans of up to £50,000 to the country’s smallest businesses with minimal checks. A spokesman for UKFinance said: “Is important to remember that any financing provided under the government-backed schemes is a debt not a grant and will need to be repaid in full by the borrower over the term of the loan.” However, the survey raises the prospect that thousands of firms could have to be pursued through the courts for what they owe.

The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 74


Furloughed employees say they are being bullied to continue to work

The Telegraph details how some employers are falsely claiming staff are furloughed so they can profit from the taxpayer. One whistleblowing charity, Protect, says 36% of its coronavirus-related calls involved furlough fraud with the number rising each week. WhistleblowersUK said the fraud appeared “rife” with its helpline receiving dozens of calls. Baroness Kramer, co-chair of the all-party parliamentary group for whistleblowing, said: “At a time like this when we as taxpayers are stepping forward to give people a lifeline, this abuse seems even more outrageous than it might under normal circumstances. Taxpayers are feeling the pain.”

The Daily Telegraph, Page: 7


Residential sales down by nearly half

Data from HMRC show house sales in April were down 46% on a year earlier, at 46,440. The figure is below levels seen during the financial crisis. Hansen Lu, property economist at Capital Economics, said that current transaction levels were “probably close to their floor” and that transactions would remain well below where they were before the virus hit even at the end of the year.

The Times, Page: 41 The I, Page: 48


UK council pension funds warn on green issues and governance

The Local Authority Pension Fund Forum, whose members manage £300bn of assets, has warned companies that they must stay focused on sustainability and high governance standards despite global economic turmoil.

Financial Times, Page: 11


UK economy is on course for a slow rebound

The UK economy is set for a slow rebound from the coronavirus outbreak in the wake of an unprecedented slump in April caused by lockdown measures, according to a preliminary reading of the IHS Markit/Cips purchasing managers’ index (PMI). The index came in at 28.9 in May compared to 13.8 in April. A score below 50 indicates contraction. Chris Williamson, the chief business economist at IHS Markit, said: “The UK looks set to see a frustratingly slow recovery, given the likely slower pace of opening up the economy relative to other countries which have seen fewer COVID-19 cases. Virus-related restrictions, widespread job insecurity and weak demand will be exacerbated by growing business uncertainty regarding Brexit.” IHS Markit also forecast GDP to fall by almost 12% in 2020.

The Times, Page: 40 Financial Times The Guardian, Page: 35

Factories record biggest drop in output on record

The CBI’s industrial trends gauge shows that UK manufacturing output fell at the fastest pace since the survey began 45 years ago in the three months to May. The survey, which is based on a poll of more than 800 manufacturers, fell to minus 51 in May from minus 21 in April, as more than 80% of the UK’s factories were hit by the coronavirus lockdown. More than half of manufacturing firms said they had partially shut down in the three months to May, and nearly three-quarters (74%) reported cash flow problems. Anna Leach, CBI deputy chief economist, said: “Production levels have fallen even more sharply as firms experience collapsing demand and supply chain disruption, leading some to temporarily shut down their factories.”

The Times, Page: 41 City AM


Ex-Revenue worker convicted of fraud

Former Inland Revenue employee Martyn Arthur has been arrested for submitting inaccurate tax returns over five years cheating public services out of £120,000. The tax adviser turned author in 2009 with a book called The Taxpayer Strikes Back about how to “stand up to” HMRC. He was told by a judge: “You are a man who has destroyed your own reputation. You are now professionally worthless.”

The Times, Page: 21 The Daily Telegraph, Page: 13 Daily Mail, Page: 26 Daily Mirror, Page: 11

Former MP will head up public affairs and policy at TheCityUK

Emma Reynolds, the former Wolverhampton North East MP, is to join industry body TheCityUK as its new managing director of public affairs, policy and research. TheCityUK is advising the government on how to recapitalise companies amid the coronavirus lockdown. Reynolds said: “We will be looking ahead at the challenge of rebuilding the economy and getting businesses back on their feet.”

City AM

Contact Paul Southward

Paul Southward