NEWS – FRIDAY 24TH JULY 2020

NEWS ROUNDUP

TAX NEWS – FRIDAY 24TH JULY 2020

Think tank calls for new capital gains tax on homes

The Guardian’s Nils Pratley says the idea put forward by the Social Market Foundation thinktank to introduce a capital gains tax on primary residences deserves a hearing. The paper’s author, Michael Johnson, calculated that when levied at a rate of 10%, and assuming houses rise in value by only 1% a year, the tax on “unearned” gains would raise £629bn for the Treasury over 25 years. He suggested that some of this should be used to abolish stamp duty and inheritance tax on property, leaving the Treasury with £421bn to repair the public finances. “Unearned gains on property are a better target for new taxes than workers’ earned income,” argues the thinktank, a sentiment that Pratley suggests “stands a good chance of commanding broad electoral appeal.” The only other place for a hard-up chancellor to go is pensions, he asserts, which “presents even more political pitfalls.”

The Times, Page: 42 The Daily Telegraph, Business, Page: 3 The Guardian, Page: 32

Letter: Not all tax schemes are created equal

Referencing the Apple tax case, Frank Barry says multinationals exploit asymmetries in the tax laws of different jurisdictions, and these asymmetries are “not necessarily evidence of conspiratorial intent.”

Financial Times, Page: 22

Should we end the tax deductibility of business interest payments?

The FT features an article outlining the arguments for and against ending tax deductibility of business interest payments, with some claiming it increases bankruptcy risk in times of stress.

Financial Times

INDUSTRY NEWS – FRIDAY 24TH JULY 2020

Wylie and Bisset reports rise in digital accounting

Lockdown restrictions resulting from the coronavirus pandemic prompted many clients to switch to digital accounting, according to chartered accountants Wylie & Bisset. Partner Andrew Cowling remarked: “Those clients who decided to make the switch to digital accounting have quickly realised just how simple it is to manage and how much time it frees up for them to concentrate on other, aspects of their business operations.” He went on: “Focusing on the digital workspace has probably been long overdue for many companies. But as working from home became a necessity for many, forward-thinking companies have invested in digital transformation and have quickly realised the efficiency gains from having done so.”

Business Money

CORPORATE NEWS – FRIDAY 24TH JULY 2020

Half a million businesses in serious financial difficulties last month

Begbies Traynor has found over half a million businesses were in significant financial distress at the end of June with the period April to June the seventh quarter in which corporate pain increased, the longest run in six years. The firm’s Red Flag alert found 527,000 businesses in serious financial difficulties last month, an increase of 33,000 over last year. Begbies said all sectors showed rising distress, but the true impact of the pandemic “will only become apparent during the third and fourth quarters of 2020 as government support initiatives are unwound and courts fully reopen so that enforcement action can be taken”.

The Times, Page: 42

FINANCE NEWS – FRIDAY 24TH JULY 2020

Bank of England promises to spur long-term investing

The Bank of England’s executive director for financial stability Alex Brazier has suggested that the central bank could change its rules to encourage long-term investing in companies left with huge debt piles after COVID-19. In a speech on Thursday, Mr Brazier argued that firms should be encouraged to put their finances back on track by selling shares to new investors rather than take on debt. Some £275bn of debt will mature next year and if measures are not taken to create new opportunities for issuers and investors then the economy will be put at risk, said Mr Brazier.

The Daily Telegraph, Business, Page: 3 The Times, Page: 42

SMEs NEWS – FRIDAY 24TH JULY 2020

Brand: Small businesses must be included in emergency response

Writing in City AM, Helen Brand, the chief executive of ACCA, says a tracker poll run by the ACCA and the Corporate Finance Network found 83% of business owners are stressed and anxious about their future compared to 69% a month ago. The proportion not sleeping rose from 17% to 33% and 18% now feel unable to cope compared to 8% last month. Brand says the ACCA is supporting the efforts of various campaigns calling for the smallest businesses to be given government support to ride out the pandemic. The ACCA has also contributed to TheCityUK’s Recapitalisation paper, which proposed converting state-backed business loans into a tax obligation which is repaid alongside other business taxes in a similar model to student loans. Brand concludes that: “There is a clear need for greater government support for the left behind. Accountants are joining the cause, and it’s time for policy makers to join them.”

City AM

PERSONAL FINANCE NEWS – FRIDAY 24TH JULY 2020

AJ Bell and Brewin Dolphin see assets surge

Brewin Dolphin and AJ Bell have reported double digit growth in their total assets after a surge in trading activity following the COVID-19 sell-off in March. AJ Bell reported that assets under administration rose 12% to £54.3bn in the three months to 30 June, with the firm adding 20,370 platform customers in period. It is now pushing into the savings market with a new hub enabling customers to apply for multiple accounts with no paperwork.

The Daily Telegraph The Times, Page: 47 The Guardian, Page: 33

REPORTING NEWS – FRIDAY 24TH JULY 2020

EY prepared unqualified audit for Wirecard in early June

The FT reports on a draft audit opinion submitted by EY to Wirecard in June which the paper says, “rejected allegations made by whistleblowers as well as serious concerns raised by a KPMG”.

Financial Times, Page: 1

ECONOMY NEWS – FRIDAY 24TH JULY 2020

UK manufacturers suffer worst slump in 40 years

Britain’s manufacturers saw orders plunge at their fastest pace for almost four decades over the last quarter, according to the latest CBI quarterly Industrial Trends Survey. The report, in which 356 manufacturers participated, found that volumes declined by 56%, while orders plummeted by 60%. Business sentiment stabilised in the three months to July, following a survey-record plunge in April, while export sentiment fell at a slower pace following a record decline in the last quarter. “Manufacturers continue to face extreme hardship due to the COVID-19 crisis”, said CBI chief economist Rain Newton Smith. “There are tentative signs of gradual recovery on the horizon, with firms expecting output and orders to begin to pick up in the next three months. But demand still remains deeply depressed.”

Evening Standard

Latest spending data shows pause in UK economic recovery

Spending data indicate the economic recovery which began in April may be going into reverse as consumers remained cautious. The figures suggest hopes for a V-shaped recovery maybe optimistic.

Financial Times, Page: 2

OTHER NEWS – FRIDAY 24TH JULY 2020

Tax credits deadline: customers at risk of losing out

Tax credits customers have just one week left to tell HMRC about changes to their circumstances or income before the deadline on 31 July 2020. Customers whose circumstances have changed in the last year or who have received a letter to reconfirm their income details must contact HMRC. Failure to respond by the deadline may mean tax credits customers receive incorrect tax credits payments and may end up having to repay any overpayments. HMRC’s Director General for Customer Services, Angela MacDonald, said: “Tax credits provide much needed financial support to our customers. But we know that many customers leave it to the last minute to renew their tax credits award. The time to renew your tax credits is now, you don’t need to wait until deadline day on 31 July.”

Press Release

Contact Paul Southward

Paul Southward