NEWS – FRIDAY 5TH JUNE 2020
NEWS – FRIDAY 5TH JUNE 2020
TAX NEWS – FRIDAY 5TH JUNE 2020
Economists advise UK follows Germany’s tax cuts
The UK should follow Germany’s example and introduce cuts to VAT and launch a spending programme to stimulate Britain’s economy in the aftermath of the coronavirus crisis, experts have said. Angela Merkel has announced a €130bn stimulus plan which includes temporary cuts to VAT, from 19% to 16%, along with €50bn for rail and broadband networks and electric car subsidies. Gerard Lyons, Boris Johnson’s former economic adviser, proposed cuts in VAT and stamp duty in a paper published by the Policy Exchange think tank. RSM’s George Bull tells the Telegraph that Chancellor Rishi Sunak would have to make a significant cut to VAT to boost demand – such as bringing it down to 15% for a limited time.
Are Ireland’s days as a tax haven numbered?
The Independent’s Ben Chapman suggests with Ireland reporting bumper tax income from global corporates the country and others with generous tax incentives is likely to come under the spotlight again. Despite taxes on consumption falling as people stayed home during lockdown, Ireland took in an extra £1.1bn from taxes on company profits compared to a year earlier. Alex Cobham, chief executive of the Tax Justice Network, comments: “Ireland is still making out very nicely from procuring profit shifting at the expense of many other EU member states, even as the pandemic imposes grave health, social and economic costs on everyone.”
HMRC to target investors in BPRA schemes
The Times picks out Sir Steve Redgrave as one of the high profile individuals looking at a large tax bill as HMRC readies a legal challenge to claw back £2bn in tax from various investment schemes. The business premises renovation allowance (BPRA) was introduced in 2007 to encourage investment in deprived areas, with investors receiving tax breaks of up to 100% of their qualifying investments spent on converting or renovating premises in certain areas. But the scheme was abolished in 2017 amid concerns that it was being abused.
CORPORATE NEWS – FRIDAY 5TH JUNE 2020
Thousands of jobs lost in car industry
Car dealership Lookers has announced it will cut up to 1,500 jobs with the closure of more showrooms in the UK. The company reopened its showrooms on Monday after the government lifted coronavirus lockdown restrictions. Meanwhile, Aston Martin plans to make 500 workers redundant as it looks to cut costs under new chief executive, Tobias Moers, because of the slump in sales due to the coronavirus pandemic. Additionally, Volkswagen-owned Bentley is to cut 1,000 jobs in the UK, about a quarter of its workforce. A formal announcement is expected today. The cuts come as the Society of Motor Manufacturers and Traders (SMMT) suggest that new car sales fell 89% in May. Several sources note that Lookers is under investigation by the Financial Conduct Authority over sales protocols while accountants from Grant Thornton probe suspected internal fraud within at least one operating entity.
Azzurri Group in sale talks
Azzurri Group, the owner of the ASK Italian and Zizzi restaurant chains, is exploring a sale of the company as Britain’s hospitality industry battles to survive the effects of the coronavirus pandemic. Advisers from KPMG, which is acting for the company, have begun contacting prospective bidders for the business in recent days. KPMG is reportedly inviting offers for part or all of the business, which was created in 2015 when Bridgepoint paid £250m for the ASK and Zizzi chains.
Government announces £10bn trade credit insurance scheme
The government has said it will guarantee up to £10bn of trade credit insurance transactions as it seeks to relieve some pressure on British manufacturers and construction firms amid the coronavirus pandemic.
Financial Times The Daily Telegraph, Business, Page: 3
PROPERTY NEWS – FRIDAY 5TH JUNE 2020
Sellers granted stamp duty coronavirus extension
HMRC has extended the deadline for second home owners to apply for a refund on the extra 3% stamp duty they paid. The refund is available to those who sell their old property within three years and make their new home their primary residence. But the coronavirus lockdown brought the market to a standstill meaning many house sales were delayed. Now, the government has said anyone whose three-year deadline was from January 2020 onwards will be granted an extension if they write to HMRC.
EMPLOYMENT NEWS – FRIDAY 5TH JUNE 2020
Starting salaries and job placements continue to fall
Figures from the Recruitment and Employment Confederation and KPMG show both permanent and temporary job placements fell again last month while the number of people looking for work rose at its fastest pace in more than a decade. Permanent starting salaries fell at their quickest rate since February 2009 while pay for temporary workers declined at the fastest rate for 11 years. Nursing and medical care was the only sector to report more vacancies while the worst hit sector was retail, followed closely by the hotel and catering industries.
SMEs NEWS – FRIDAY 5TH JUNE 2020
Arch Company extends rents relief for SMEs
The owner of an empire of railway arches in London, home to restaurants, gyms and hair salons, will extend a rents relief package to help tenants impacted by the coronavirus crisis. The Arch Company said that for the upcoming quarter, small firms banned from opening by government guidance will continue to receive a rent-free period until they are allowed to open. Those that are able to open, but severely affected, will get a rent holiday for July. For August and September they will have the option of drawing down deposit funds to cover half the rent.
REGULATION NEWS – FRIDAY 5TH JUNE 2020
FCA warns advisers on pursuing claims against own advice
Megan Butler, the FCA’s executive director of supervision, has said advisers who rack up outstanding liabilities should not be “expected back into the regulatory space”. She told the Pimfa virtual summit she had seen examples of advisers racking up complaints only to re-emerge at claims firms and seek compensation against the advice they have given.
ECONOMY NEWS – FRIDAY 5TH JUNE 2020
Rise in online sales offsets massive high street slump
Figures from BDO show like-for-like online sales jumped by 129.5% in May as the pace of shoppers shifting online continued to accelerate during lockdown. However, overall sales were down 18.3% – the second worst result after April’s historic low. Sophie Michael, head of retail and wholesale at BDO, said: “Despite the significant pick-up in ecommerce, the monumental collapse in discretionary spend remains stark as retailers continue to face challenging headwinds. Retailers will be looking to both central government and local authorities for creative solutions to ensure the high street has a viable future as lockdown restrictions continue to lift.”
The Times, Page: 32 The Sun, Page: 49
Central bank’s money printing heading for £1trn
Capital Economics is predicting a further £350bn in QE from the Bank of England over the next twelve months, on top of the £200bn announced in March. This would bring the total value of bonds purchased to £995bn. The consultancy’s chief economist Paul Dales says it will be at least ten years before the Bank even thinks about unwinding QE and five years before the base rate rises above 0.1%.
The Times, Page: 34 Daily Mail, Page: 71
Lockdown bill rises to £132.5bn
The Office for Budget Responsibility has said the government’s emergency measures to shore up the economy are likely to cost £132.5bn, up about 7.5% from a previous estimate. However, the OBR has cut its estimate of the cost of the furlough programme by 30% after it found employers have been concentrating its use on part-time and low-paid workers. The fiscal watchdog now says the gross cost will reach £60bn, down from a previous estimate of £84bn.
Financial Times, Page: 3 The Times, Page: 40 Yorkshire Post, Page: 1
OTHER NEWS – FRIDAY 5TH JUNE 2020
Diego Costa handed six-month prison sentence
Atletico Madrid striker Diego Costa has been handed a six-month prison sentence and fined £485,301 for tax fraud. The former Chelsea striker pleaded guilty to evading almost £1m in taxes on his image rights. However, under Spanish law, he will not have to serve any jail time.
The Independent Daily Express
Contact Paul Southward