NEWS FROM OVER THE CHRISTMAS PERIOD

NEWS ROUNDUP

TAX NEWS FROM OVER THE CHRISTMAS PERIOD

NO EXTENSION TO 2019/20 TAX RETURN FILING DEADLINE OF 31ST JANUARY 2021

HMRC Chief executive Jim Harra in line for “Meanie of the year” award!

HMRC will not waive late filing penalties or extend the 31 January deadline, but it will accept pandemic related disruptions and agent delays as a reasonable excuse and will also extend the period to appeal a penalty.  HMRC’s chief executive Jim Harra rejected requests to extend the filing deadline or let up on penalties for late returns.

If you need help filing your self-assessment tax return, contact us.

24TH DECEMBER 2020

Individuals sell off assets ahead of expected CGT hike

Experts say that buy to let properties and businesses are being sold off by individuals concerned about future hikes in capital gains tax. The Office for Tax Simplification recently recommended the Chancellor increase CGT rates in line with rates of income tax, as well as making inherited assets subject to both CGT and inheritance tax, City AM notes. CGT receipts have hit £10.1bn, up more than fourfold from £2.5bn ten years ago. Tim Holmes, managing director at Salisbury House Wealth, said: “It’s understandable that people are worried about CGT rates rising but if they rush, it could cost them much more than necessary in tax.” However, he adds that alternatives to selling assets, such as “rolling over” gains into “an EIS investment and making sure you buy an asset inside a pension wrapper are both quite simple steps that may work well for some.”

City AM

Cairn awarded $1.2bn in India tax arbitration

UK oil and gas explorer Cairn Energy has won its tax dispute with India after a tribunal ruled the country had breached its obligations under a UK-India bilateral treaty.

Financial Times, Page: 8

28TH DECEMBER 2020

File soon to apply for tax payment plan, HMRC says

Self-assessment tax returns for income earned in the year to April 5th, 2020 are due on January 31st and taxpayers are being urged to file returns soon if they want to take advantage of an offer from HMRC for those suffering financially due to the pandemic to delay this deadline and apply for a payment plan. The deal involves paying HMRC 2.6% interest on any outstanding tax after February 1st, but any late payment penalties will be avoided. HMRC said it was considering a request from industry bodies such as the Association of Accounting Technicians and the Institute of Chartered Accountants in England and Wales to delay the deadline until March or April.

The Sunday Times (27/12)

Facebook closes Irish holding companies

Facebook is winding up three of its Irish holding companies and returning its intellectual property to the US. The company’s main Irish subsidiary paid $101m (£75m) in tax while recording profits of more than $15bn in 2018. The move comes after the US Internal Revenue Service (IRS) took Facebook to court claiming it owed more than $9bn linked to its 2010 decision to shift profits to Ireland. Facebook said: “In preparation for the unlimited company winding up, Facebook Ireland Holdings’ assets were distributed to its US parent company. Intellectual property licences related to our international operations have been repatriated back to the US.”

The Guardian, Page: 35 (28/12)

29TH DECEMBER 2020

CBI president: Tax cuts can spark growth

CBI president Lord Bilimoria has urged the Government to cut taxes to help drive the post-pandemic recovery. Saying there is a need to “unleash the economy to be able to grow”, he called on policymakers to look at what makes Britain appeal to investors. “The UK has to be attractive from a tax point of view. If you start putting up corporation tax and capital gains tax you will stamp on inward investment and domestic growth”, he commented. Saying he would reduce taxes to enable growth and incentivise exports, Lord Bilimoria said the Government “could be bold and give tax breaks for exports”, insisting tax incentives, not tax rises are needed. He also warned against the creation of a wealth tax, arguing: “Once you go down that route you are really harming inward investment.” Such a levy would, he suggested, “have a very detrimental effect.”

Daily Mail

Hunt suggests care tax for the over-40s

Former Health Secretary Jeremy Hunt believes a tax on the middle-aged could help boost the care system, suggesting a care levy on the over-40s along the lines of schemes in place in Germany and Japan. He said: “Both of them, interestingly, introduced a tax surcharge to people over 40, which is only a small amount extra, but as you get older you start to pay a little bit more.” He added that neither country has seen “public pushback” for rolling out the charges.

Daily Mail, Page: 2

Brexit brings new opportunities, says Redwood

Sir John Redwood believes leaving the EU offers the UK a range of opportunities, saying he is pleased that the Prime Minister is readying plans to “supercharge” growth in 2021 by using new freedoms. Writing for the Express, he says there is scope for more tax reform and reduction of rates as officials look to drive the post-coronavirus recovery, calling on the Government to “revisit” IR35 and other taxes on the self-employed, and offer continued reductions in business rates. He adds that ministers should “remember that there are many transaction and income taxes where they will collect more money if they charge a lower rate.”

Daily Express

Self-assessment advice

Mike Warburton in the Telegraph says the gap between Christmas and New Year can be the perfect time to do a tax return and offers advice for those completing their self-assessment. Among issues to consider, he notes that coronavirus support payments are treated as trading receipts and are taxable in the normal way, so in most cases this will be something for the return next year. Mr Warburton highlights that a record 10.4m people filed electronically last year, with 700,000 doing so on deadline day itself – while more than a million self-assessments were filed late and incurred a £100 fine.

The Daily Telegraph

FINANCIAL SERVICES NEWS FROM OVER THE CHRISTMAS PERIOD

24TH DECEMBER 2020

City needs to put business creators at the centre of its model

Daniel Pinto, the founder and chief executive of Stanhope Capital Group, writes in the Telegraph that the City is taken for granted by both the Government and those within it who have failed over the last four years to “come up with a single new idea to preserve their own future.” Pinto goes on to recommend a three-pronged strategy to maintaining the City’s leadership: aggressively pursue global business and encourage dual listings; make the UK regulatory framework more flexible and thirdly, turn London into the capital of venture funding for fast-growing businesses. Additionally, tax breaks and simplified administrative procedures could be offered to lure entrepreneurs. Pinto concludes: “The City can be a vector for substantial economic growth and positive change but for this, it needs to undergo a kind of cultural revolution.”

The Daily Telegraph, Business, Page: 30

28TH DECEMBER 2020

City gearing up for wave of flotations in 2021

Dealmakers in the City of London are preparing for a wave of flotations in 2021 as companies which have delayed their IPOs due to the pandemic and uncertainty over Brexit decide to press ahead with their plans. Alex Ham, co-chief executive of Numis, said: “We’re seeing a real pick up in both founders and owners starting to explore what IPO options are available.” With the rush to market already happening in the US, the Telegraph states that UK officials are reviewing the existing listing regime with the hope of attracting more big ticket companies to London.

The Sunday Telegraph (27/12)

Financial advice needs a rebrand

Writing in the Times, James Coney argues that financial advice needs rebranding. He says that the value of financial advice only comes years after people start paying for it. Therefore, he suggests, what it needs is a shake-up, and that means advisers need to find a way to show their worth right from the start. Coney adds: “Advisers need to grab people at the moments that they are making key decisions in their life — tying their advice up with the changes that come around births, deaths and marriages. That is the way to make an immediate difference to people’s finances and futures.”

The Times (26/12)

28TH DECEMBER 2020

Asset managers boost staffing in EU by 38%

The world’s biggest asset managers have expanded their EU workforces by 38% since 2015, while PwC analysis shows assets under management rose from $84tn to $110tn between 2016 and 2019.

Financial Times

CORPORATE NEWS FROM OVER THE CHRISTMAS PERIOD

24TH DECEMBER 2020

Creditors approve Anne Summers rent plan

A plan that would cut rents at 25 Ann Summers stores has been approved by creditors of the lingerie and adult toy retailer. Ann Summers said that 90% of votes had been cast in favour of its CVA, which switches the stores onto turnover-base rents. The firm had already agreed new rents with the landlords at 91 of its other branches, it confirmed earlier this week when announcing the plan. Following the CVA, Ann Summers has also secured up to £10m of new funding to help with a turnaround plan, and finance the return to growth that the board thinks it can achieve. No jobs will be lost, or stores closed as part of the CVA.

Daily Mail

Covid corporate debt pile threatens economic recovery

Experts say the level of debt built up by companies during the pandemic has reached worrying levels and threatens to undermine the economic recovery. Corporate debts to banks rose from £486bn before the pandemic to a peak of almost £545bn in May. Although the total is down slightly now, it still remains well above pre-Covid levels. George Dibb at the Institute for Public Policy Research says with cashflow down by £180bn this year and companies’ reserves standing at £90bn, it leaves a £90bn black hole which “urgently needs addressing”. “The only way you can do that is through cash injections – it could be through debt which potentially exacerbates the problems. Another potential policy would be cash injections through public equity stakes – the Government taking shares in firms,” added Mr Dibb.

The Daily Telegraph (28/12)

Business leaders urge extension of Covid loan scheme

Some of Britain’s biggest employers are urging the Government to extend the Covid Corporate Financing Facility (CCFF) beyond the end of 2020, when it is set to be closed to new applicants. The scheme has lent more than £84bn to almost 230 companies since it was launched and Flora Hamilton, CBI financial services director, said ministers would need to look afresh in January at how it can support UK businesses through to the spring and beyond. Suren Thiru, head of economics at the British Chambers of Commerce, added that extending the programme would “protect both our largest firms and the extended supply chains of smaller businesses who support them.”

The Sunday Telegraph (27/12)

Sir Philip Green’s family will net £50m from Topshop sale

The Sunday Times reports that Sir Philip Green’s family will receive £50m from the sale of Topshop via a British Virgin Islands entity which lent the cash to the retailer last year. Administrators from Deloitte are auctioning brands under the Arcadia umbrella, which collapsed with an estimated £350m hole in its pension fund.

The Sunday Times (27/12)

FRP due to send first EWM report

Edinburgh Woollen Mill creditors are set to find out just how much they should expect to get back from the collapsed high street retailer with administrator FRP Advisory due to send its first report imminently, according to the Sunday Express.

Sunday Express, Page: 50

29TH DECEMBER 2020

Business groups call for transition vouchers

The Institute of Directors (IoD) and Federation of Small Businesses (FSB) have called for financial support for firms as they adjust to new EU rules as the Brexit transition period comes to an end on December 31, proposing a voucher scheme to cover the extra costs that businesses may face. Allie Renison, head of EU and trade policy at the IoD, said ministers need to “step up to the plate to help the effort”, adding that a lack of implementation period means firms face “an enormous task”. She said vouchers and special tax reliefs would help businesses adjust. Craig Beaumont, chief of external affairs at the FSB, said “simple to use Transition Vouchers” would provide up to £3,000 for small businesses to buy-in necessary tech, training or expertise, adding: “We understand that the Cabinet Office has been discussing this intensely with the Treasury.”

The Daily Telegraph, Page: 27

CBI boss in EU trade warning

CBI Director General Tony Danker says firms are unsure on how to implement the post-Brexit trade deal once the transition period ends, calling on ministers to turn the Trade and Co-Operation Agreement document into “practical guidance” for firms. He said that Christmas Day saw “1,200 pages of legal text come down the chimney”, adding that it “really changes the nature of our trading relationship with the EU.”

ITV News

Mayor wants increased business support

West Midlands Mayor Andy Street has urged Chancellor Rishi Sunak to increase the £3,000 monthly grant for businesses forced to shut by the coronavirus to an average £10,000. He also wants the Government to create a devolved approach to retraining for workers left unemployed by the pandemic, giving councils and metro mayors support for locally driven initiatives.

The Independent

SMEs NEWS FROM OVER THE CHRISTMAS PERIOD

28TH DECEMBER 2020

Employee ownership or nationalising debt ‘could help save businesses’

The Federation of Small Businesses (FSB) has called on the Treasury to consider launching an employee-ownership revolution to prevent Britain’s multibillion-pound debt burden undermining its economic recovery. A new policy paper from the FSB warns that a surge in borrowing means many companies are taking “unmanageable debt levels” into 2021and that support measures should be immediately introduced, such as an extension of the ability to defer VAT payments and allowing companies to defer paying back debt accrued under the bounce back loan scheme until March 2022. The FSB also suggested that emergency Covid debt could be used to help more companies into employee ownership while another proposal is the conversion of debt to a tax liability, to be paid off over a longer period from profits – a move that would require the Government to “step in and nationalise a portion of small business debt, perhaps through the creation of a bad bank”. Martin McTague, the FSB’s national vice-chairman, said: “We need the Government to intervene swiftly to avoid a small business credit crunch in the spring. Debt levels are spiralling among viable firms, hampering their ability to provide the investment, hiring and innovation needed to bounce back from this year’s severe recession.”

The Times (26/12)

29TH DECEMBER 2020

SMEs adapt to survive

Samuel Osborne in the Independent looks at the ways SMEs have adapted in order to survive the coronavirus crisis. He notes analysis by Yell Business showing that 76% of small businesses have introduced new services, with 52% of those who rolled out new services saying doing so was crucial for them to survive and 88% planning to continue the new service post-pandemic.

The Independent, Page: 38

EMPLOYMENT NEWS FROM OVER THE CHRISTMAS PERIOD

24TH DECEMBER 2020

Union leaders warned of a ‘stampede’ away from self-employment

Just a third of self-employed and freelance workers want to continue working as they are as the pandemic wipes out their pay. An inquiry by independent experts, politicians, union and industry leaders warned of a “stampede” away from self-employment with half saying they had lost between 60% and 100% of their household income this year and two out of three were less likely or unsure if they wanted to continue to be self-employed. Prospect general secretary Mike Clancy, who commissioned the inquiry, said: “The news […] should be a massive wake-up call to the Government.” He added: “These workers have powered our economy in recent years and this flexible workforce were lauded by ministers as key to our prosperity, but the way they have been treated in this pandemic is disgraceful and will have consequences for our ability to recover in 2021 in beyond.”

Daily Mail

Figures suggest furlough extension keeping redundancy rise low

New figures suggest that the extension of the furlough scheme until the end of April 2021 appears to have slowed the rate of redundancies across the UK. The Insolvency Service said 36,700 redundancies were proposed in November, the lowest monthly figure since lockdown restrictions were introduced in March. The November total is around a fifth of the peak, with 156,000 redundancies in June. December’s total however will likely include up to 25,000 job losses resulting from the collapse of Debenhams and Arcadia – if either of the stricken retailers are unable to find buyers.

City AM

28TH DECEMBER 2020

Median salary among workers over 50 is 23% less for women

Analysis of official data by Rest Less, a company that offers help and advice to people over 50, shows that women over 50 in the UK are paid almost £8,000 a year less than men in the same age group. The study shows that a woman in a full-time job earned on average just under £28,000 this year, compared with nearly £34,000 for men. But the gap was wider for those over 50 – £26,230 for women and £34,325 for men. Women aged over 60 are paid £23,903 on average, while men receive £31,667. Stuart Lewis, the founder of Rest Less, said: “Women in their 50s and 60s face the double discrimination of age bias, combined with the widest gender pay gap of all ages.” Mr Lewis went on to warn that “decades of a gender pay gap and the resulting wide gulf in private pension savings mean that the future retirement incomes of men and women remain far from equal.”

The Guardian (28/12)

WEALTH MANAGEMENT NEWS FROM OVER THE CHRISTMAS PERIOD

24TH DECEMBER 2020

Goldman Sachs to offer digital wealth management to US investors

Goldman Sachs has begun internal testing of a digital wealth management service for the masses, as it continues its push into the mainstream consumer market. Employees who sign on to the digital service, called Marcus Invest, will pay an annual management fee of 0.15%, according to reports.

FInExtra

ECONOMY NEWS FROM OVER THE CHRISTMAS PERIOD

24TH DECEMBER 2020

Haldane: Bank must have ‘laser focus’ on inflation

The BoE’s chief economist Andy Haldane has said that the central bank must have a “laser focus” on keeping inflation expectations in check once the COVID-19 crisis eases. Mr Haldane said: “The last thing the world needs right now is a nasty inflation surprise,” echoing comments he made on November 28. The BoE said on December 17 it is prepared to let inflation overshoot its 2% target temporarily. Mr Haldane told warned any overshoot could not become entrenched otherwise bond yields would rise, pushing up the cost of repayments on Britain’s £2trn debt mountain and jeopardising any recovery. He also said he was much more confident about the economy in the second half of 2021 than in the first quarter of the year because of the prospects for rolling out COVID-19 vaccines.

The Times City AM

Brexit deal will boost UK economy

With a Brexit deal reportedly on the brink of being finalised, economists say an agreement will spur a surge of investment and lead to a bounceback for the economy. Sterling is expected to rise 6% if a deal is confirmed while fund managers are predicting a rally in equities, which have long been devalued by Brexit uncertainty.

The Daily Telegraph Financial Times Daily Mail, Page; 6

28TH DECEMBER 2020

Hopes for household spending boom following Brexit deal

Economists are optimistic that the Brexit deal will unlock pent-up household savings helping to drive an economic recovery in 2021. The latest available Bank of England data indicates that household deposits surged by £113bn between the start of the year and October – almost double the £59bn growth in deposits over the same period of 2019. Consumer debt has fallen in the meantime, by about £20bn to £205.5bn. “Many people should be in a decent position to spend when restrictions are relaxed, non-essential retailers open and the hospitality and leisure sector increasingly opens up,” said Howard Archer, chief economic adviser to the EY Item Club. “There are grounds to hope that consumers can play a leading role in a healthy recovery once Covid restrictions ease, with the high household savings ratio certainly supportive.” The Sunday Times speaks with economists who broadly do not expect the BoE to drop rates below zero, but if QE fails after further lockdowns, it could use the tool to force household spending.

The Sunday Telegraph (27/12) The Sunday Times (27/12)

Britain overtakes India to become the world’s fifth-largest economy again

According to the annual league table produced by the Centre for Economic and Business Research (CEBR), the UK has become the world’s fifth-largest economy once again, leapfrogging India despite a cumulative fall in GDP of 21.2% in the first half of 2020. The CEBR predicts annual growth of 4% for the UK until 2025 after which it will fall to 1.8% annually until 2030. By 2035, UK GDP is forecast to be 23% more than France. However, over the course of 2024, India will again have overtaken the UK, pushing it back to sixth place overall. Meanwhile, the CEBR also predicts that China will overtake the US to world’s largest economy by 2028 – five years earlier than expected.

The Daily Telegraph (26/12) The Guardian (26/12) The Mail on Sunday (27/12)

29TH DECEMBER 2020

Think-tank: Coronavirus restrictions set to hit growth

The Resolution Foundation has warned that the latest round of coronavirus restrictions could see the economy 6% smaller by Easter than the Office for Budget Responsibility (OBR) forecast a month ago. The think-tank said Tier 4 restrictions imposed in much of England and nationwide lockdowns across Scotland and Wales are set to result in depressed growth until Easter. The report adds that this will result in growth of 4.3% in 2021 – down on the 5.5% forecast by the OBR. Resolution Foundation CEO Torsten Bell said that tougher lockdowns may be required to contain the new strain of COVID-19 in early 2021, adding: “By Easter that could mean the economy being 6% smaller than what was hoped just a month ago.” Mr Bell said that while 2021 “offers light at the end of the tunnel … it’s going to be a bumpy ride getting there.” While he believes vaccines are likely to deliver a “gradual return to normality” and could prompt a “roaring 20s” style spending boom, Mr Bell warned: “Rising unemployment means household incomes may actually fall even as GDP recovers.”

The Independent The Guardian

PROPERTY NEWS FROM OVER THE CHRISTMAS PERIOD

29TH DECEMBER 2020

Islington leads on price growth

Figures from Halifax show that London’s Islington has seen the fastest house price growth over 2020, with the value of the average property climbing 13.4% to £727,922. Across London, average prices rose by 6%, with the capital seeing nine regions in the top twenty for price growth. Outside London, Leeds was in second place overall, recording a 11.3% rise, followed by Wolverhampton, with a 9.5% increase. At the opposite end of the scale, Paisley in Scotland saw the typical house price decline by 1.7% to £138,036. The Halifax figures show that the average rise across the UK was 10.6%.

The Guardian, Page: 25 Daily Mirror, Page: 17 Daily Express, Page: 20

PENSIONS NEWS FROM OVER THE CHRISTMAS PERIOD

24TH DECEMBER 2020

OECD warns against using pension assets for ‘pet projects’

Governments have been warned by the OECD to avoid using private pension assets on frivolous projects as states increasingly encourage providers to invest in projects that can fuel a recovery.

Financial Times

28TH DECEMBER 2020

135,000 women could win extra £100m from state

The Times reports that widows who missed out on state pension payments while their husbands were alive could get thousands of pounds in back payments after the Government confirmed that it was exploring ways to put things right. The pensions minister Guy Opperman said that the DWP was checking state pension records held on a legacy IT system to identify women who might be being underpaid state pension. Opperman said the DWP was exploring how it could “most effectively analyse state pension accounts to identify other instances where those widowed or over age 80 are being underpaid”. Sir Steve Webb, a former pensions minister and a partner at LCP, said that if the DWP did add widows and the over-80s to the ranks of the married women who were being underpaid and refunded them all, repayments could equate to more than £100m.

The Times (26/12)

OTHER NEWS FROM OVER THE CHRISTMAS PERIOD

28TH DECEMBER 2020

No laughing matter

Jimmy Carr has revealed that he feared his involvement in a K2 tax avoidance scheme, which was exposed in 2012, would end his career. The stand-up comedian and television presenter said: “It did feel that I was going to lose it all. It felt like maybe I was going to get cancelled. Maybe that’s it, maybe I won’t be able to work or tour again. It was scary,” he told Sky One’s Peeping Behind The Curtain.

Daily Mirror (26/12) The Sun (26/12)

28TH DECEMBER 2020

Storm helps deliver wind power first

Boxing Day saw more than half of Great Britain’s daily electricity come from wind turbines for the first time. With Storm Bella bringing gusts of up to 100mph, wind provided 50.7% of Great Britain’s electricity. With the UK increasingly utilising green energy in 2020, PwC’s Steve Jennings comments that the “key challenge on our pathway to net zero” is what the electricity system does “when the wind doesn’t blow or the sun doesn’t shine”.

The Guardian, Page: 2

Accountant stole $1m from vodka box

Accountant Natalya Agaltsova has been charged with stealing more than $1m in cash from an empty case of vodka at the Russian foreign ministry in Moscow. The money had come from Russia’s embassy in Iran as part of a $1.5m payment for consular services.

The Times, Page: 37

Contact Paul Southward [Tax Consultant]

Paul Southward