NEWS – FRIDAY 2ND OCTOBER 2020

NEWS ROUNDUP

TAX NEWS – FRIDAY 2ND OCTOBER 2020

Chancellor hints at business rates rethink

Rishi Sunak has suggested a rethink on business rates may be on the cards, with the Chancellor also pointing to the potential roll out of an online sales tax. Taking part in the Blue-Collar Conservatism virtual conference, he told MP Esther McVey: “When I talk to high street businesses, the thing they most complain about are business rates.” Noting that one of the Government’s manifesto commitments was to review the business rates system, he insisted that “it’s not easy to do” as the treasury raises “quite a lot” from the rates to pay for the public services. Mr Sunak said that while “it’s not easy to figure out what you can do to tweak that … there’s lots of options in the consultation.” He went on to identify an online sales tax as one mooted option.

Daily Express, Page: 1

Davis in tax cut call

Writing in the Daily Express, former Brexit Secretary David Davis considers the Chancellor’s options for boosting the economy in the wake of the coronavirus crisis. Pointing to rumours that Rishi Sunak is considering rises in national insurance, CGT and “a host of other damaging taxes on business”, Mr Davis says this “would be the worst possible approach.” Arguing that cutting taxes “not only promotes growth, investment and productivity – it also brings in more revenue”, he says: “Far from raising our taxes, the Chancellor should be cutting them to promote growth”.

Daily Express, Page: 8

HMRC increases instalment threshold

In an effort to help ease pressure brought about by the COVID-19 crisis, HMRC has increased the threshold for self-assessing taxpayers to spread the cost of their bill. Where anyone with liabilities up to £10,000 could contact the Revenue to set up instalment payments, this has now been increased to £30,000. Jesse Norman, Financial Secretary to the Treasury, said: “We are supporting jobs by giving more breathing space to up to 11m self-assessment taxpayers.” He added that the move “should ease the financial burdens and protect the livelihoods of these taxpayers in the months ahead.”

The I, Page: 53

CORPORATE NEWS – FRIDAY 2ND OCTOBER 2020

BCC survey points to ‘exceptionally weak’ economic conditions

The British Chambers of Commerce (BCC) says more British companies saw a fall in sales in the last quarter than experienced an increase. The BCC’s quarterly economic survey found that 46% of firms saw sales fall in Q3, an improvement on the 73% who reported a decline in Q2, while just 27% of the businesses surveyed reported higher sales than three months earlier. The poll saw 41% of the 6,410 businesses surveyed say they expect sales to improve over the next 12 months, compared with 35% who foresee a decline. It was also found that while 45% of businesses have seen a dip in cashflow, among the smallest firms, the rate hit 51%. Commenting on the findings, BCC economist Suren Thiru said: “Economic conditions remained exceptionally weak in the third quarter”.

The Times, Page: 36 The Daily Telegraph, Business, Page: 4 Daily Mail

Diversity action called for by CBI

The CBI has stated that the largest UK firms should have at least one black, Asian, or minority ethnic (BAME) member on their boards by next year. The industry group said FTSE 100 firms should have at least one racially and ethnically diverse board member by the end of 2021, with FTSE 250 firms to have the same representation by 2024. The call comes with analysis showing that more than a third of FTSE 100 firms do not have ethnic minority representation at board level. Deloitte is among the first signatories to the CBI campaign. The firm’s Richard Houston commented: “The energy of the Black Lives Matter movement has given a fresh sense of urgency around racial diversity in business”.

The Times, Page: 40 BBC News

UK firms may need to set up an EU office

Thousands of UK businesses may need to set up an EU presence if they want to export goods to European markets, according to Blick Rothenberg. It said both EU and UK law will require companies to “have a door to knock on” if there are any disputes over payment and compliance with customs changes after January 1. Failing that, firms would have to pay a customs and freight forwarding agent to bear the risk that new paperwork and payment obligations are satisfied, with industry sources telling the BBC that few agents will be prepared to take that risk.

BBC News

Rolls-Royce taps shareholders for £2bn

With Rolls-Royce planning a share sale which seeks to raise £2bn, the Mail notes that bankers, lawyers and accountants working on the rights issue are set to share £80m in fees, with PwC among advisers to the engineering firm.

The Times, Page: 33

Clarks steps up investor hunt

Pension trustees at Clarks have drafted in advisers from Penfida and FRP Advisory as the retailer seeks new investors, with LionRock Capital and Alteri Investors believed to have made offers that could see them take a majority stake in firm.

The Daily Telegraph, Business, Page: 7

Connolly eyes G4S windfall

The Mail reports that G4S chairman John Connolly stands to make more than £1m if GardaWorld’s proposed takeover goes ahead. It notes that as CEO of Deloitte, Mr Connolly became Britain’s highest paid accountant in 2008 when he earned £5.7m.

Daily Mail, Page: 81

SMEs NEWS – FRIDAY 2ND OCTOBER 2020

HSBC halts new bounce back loan applications

HSBC has stopped accepting applications for new business bank accounts as it looks to focus on clearing a backlog of applications for loans for small firms under the Government’s Bounce Back Loan Scheme. Official figures show that lenders have handed out about £38bn under the initiative, with 1.3m businesses handed financial support designed to soften the blow dealt by the coronavirus crisis. HSBC has approved 194,000 bounce back loans, with a total value of nearly £5.9bn. The bank says it is approving a new loan every 20 seconds. It announced yesterday that new small business customers will not be able to open accounts until December 14. An HSBC UK spokesman said: “As one of the only banks that remained open to applications from all UK businesses since the scheme’s launch, we received a huge level of demand. With the scheme closing on November 30, we need to focus our resources on fulfilling existing applications.”

The Daily Telegraph

REGULATION NEWS – FRIDAY 2ND OCTOBER 2020

Skeoch appointment delayed

Sky News reports that plans to name Keith Skeoch as interim chair of the Financial Reporting Council (FRC) have been delayed despite being signed off by Business Secretary Alok Sharma. It is reported that the appointment of Mr Skeoch, who had served as a non-executive director of the FRC for more than eight years, was supposed to have been announced in August but Whitehall has so far failed to rubber-stamp the appointment. Sky News claims that Mr Skeoch has now been forced to leave the FRC’s board altogether until the impasse is resolved.

Sky News City AM

INDUSTRY NEWS – FRIDAY 2ND OCTOBER 2020

A call for competition between accounting codes

In a letter to the FT, DR Myddelton, emeritus professor of finance and accounting at Cranfield School of Management, welcomes the fact that US and international accounting standards have not merged.

Financial Times, Page: 22

FINANCIAL SERVICES NEWS – FRIDAY 2ND OCTOBER 2020

FCA issues post-Brexit guidance

The Financial Conduct Authority (FCA) has updated its rules ahead of the Brexit transition period coming to an end. While the new rules will apply from January 2021, the City watchdog said it will temporarily waive some of them, meaning businesses can continue to comply with existing requirements for a limited period – although it insisted there are some areas where it would not be appropriate for relief to be granted beyond December this year. Full compliance with updated regulatory obligations is expected by March 31, 2022. Conor Lawlor of banking industry body UK Finance welcomed the FCA’s flexibility, saying the regulator “acknowledges the scale, complexity and magnitude of some of the changes in relation to key requirements”.

Reuters Financial Times

PROPERTY NEWS – FRIDAY 2ND OCTOBER 2020

Warehouse rentals hit record in Q3

A report from property consultancy CBRE shows that a record amount of warehouse space was let in Q3, with take-up hitting 13.3m sq ft in the July through September quarter. This exceeds the 12.8m sq ft record set in Q2. The increase was driven by online retailers looking to expand capacity as demand surged amid the coronavirus pandemic. Jonathan Crompton of CBRE said: “The extraordinary level of take-up seen in Q2 has now been exceeded in Q3. To put the numbers into context, the past six months’ take-up exceeds the annual total for eight of the past ten years.”

The Times, Page: 41

ECONOMY NEWS – FRIDAY 2ND OCTOBER 2020

GDP expected to contract

Research from PwC suggests GDP could contract by between 11% and 12% over 2020. The firm said that a rebound in 2021 is likely but the scale of the recovery will depend on whether there are further waves of the coronavirus and the measures needed to tackle the pandemic, predicting that growth could be between 4% and 10%. The PwC report suggests that if the virus is kept under control, the economy could hit pre-lockdown levels by the end of 2021, while a fresh wave and further lockdowns could push the recovery back to 2023. PwC economist Jing Teow suggests that a recovery in 2021 “could be buoyed if there is a vaccine.” Meanwhile, S&P Global has predicted the UK economy will contract by 9.7% in 2020 before seeing a rebound next year. It said the economy was on course to grow by 15% in Q3 2020 adding that it could rebound by as much as 7.9% in 2021. The firm also suggested that the economy may not return to pre-coronavirus levels until at least 2024. S&P Global Ratings senior economist Boris Glass said that while initial signs of a rebound have been promising, “many hurdles are ahead on the path to recovery”.

City AM

OTHER NEWS – FRIDAY 2ND OCTOBER 2020

Innovative Lawyers

The FT’s Innovative Lawyers supplement looks at PwC Legal’s NewLaw units and Deloitte Legal’s work with Unilever on simplifying contracts.

Financial Times, Innovative Lawyers

Contact Paul Southward

Paul Southward