NEWS FROM THE LAST DAYS OF 2020
NEWS FROM THE LAST DAYS OF 2020
TAX NEWS FROM THE LAST DAYS OF 2020
Ministers warned over CGT ‘own goal’
City veterans have warned policymakers that increasing capital gains tax would hurt Britain’s economy and deliver “the greatest own goal scored in history”. This warning comes as Chancellor Rishi Sunak is said to be considering an increase in CGT in a bid to help balance the books following the economic hit from the coronavirus crisis. Such an increase could raise an extra £90bn over five years, according to analysis from the Public Policy Research think-tank. However, Michael Spencer, founder of broker ICAP and a former Conservative Party treasurer, said the Government “will be doing great damage” to the economy if they increase CGT, arguing that with Britain recovering from Brexit and the pandemic “we need investment into the country.” Andy Bell, head of investment platform AJ Bell, believes harmonising CGT with income tax “would be politically toxic”. Alasdair Haynes, head of trading venue Aquis, said that while the UK has a “tremendous opportunity” to set itself as a low tax, “massively supportive entrepreneurial country” with better regulation to enhance and create greater tax growth, “doing the opposite will be the greatest own goal scored in history.” A Mail editorial reflects on the subject, saying the last thing Mr Sunak should do is “hammer enterprise, savers and aspirational families with a punishing tax raid.”
Daily Mail, Page: 2, 16
Tax hits hospitality
Dermot King, chief executive of Oakman Inns, says industries that once supported seaside and market towns – tourism, hospitality, fishing and farming – have been hit by “the constant drip feed of tax increases over many years”, leaving them vulnerable to competition from businesses models that can move their tax jurisdiction around the world. He notes the impact of the coronavirus crisis on the hospitality sector, as well as the Chancellor’s support measures including the 12 month business rates holiday and temporary reduction in VAT on food – calling for the former to be extended by a year and the latter to be reduced permanently. He also suggests hospitality businesses should be able to offset their corporation tax losses for this year against other tax liabilities. A competitive consumer tax, he argues, “is the root to confidence, investment and regeneration”.
Deadline day nears for tax returns
The Express reminds people that the January 31 deadline for self-assessment tax returns for the 2019/20 tax year is fast approaching. It notes that while 11.7m people submitted a return last year, 700,000 missed the deadline and some left it late, with 26,562 submitting their return in the final hour. Ed Molyneux, chief executive of online accountant software specialist FreeAgent, advises people that the first step should be to register with HMRC if they have yet to do so, “then sort out your paperwork”. Meanwhile, HMRC has revealed that more than 2,700 people filed their self-assessment tax return on Christmas Day.
Daily Express, Page: 32 Press Release
If you need help with your self-assessment tax return contact KSK.
On the first day of Christmas I filed my tax return
HMRC has revealed that more than 2,700 taxpayers filed their self-assessment tax returns online on Christmas Day, with 20,200 doing so on Christmas Eve and 8,500 submitting their returns on Boxing Day.
INDUSTRY NEWS FROM THE LAST DAYS OF 2020
ESG passes pandemic stress test
Simon Freeman in the Standard says firms which focused on environment, society and governance (ESG) issues were “the big winners” when it came to emerging from the year’s pandemic-hit economy, with exchange traded funds which focus their investments on these ethical stocks recovering at a pace and scale “which left other sectors standing”. He cites a senior investment manager who said: “Covid was the stress test for ESG. Before then, people were cynical, saying ESG was a fair-weather phenomenon.” Mr Freeman notes that the Big Four in September unveiled a joint initiative to encourage large global companies to adopt standard benchmarks in their 2021 accounts, with Deloitte boss Punit Renjen saying: “It is important for us to have a common set of standards and if there is widespread adoption it will lead to change in behaviour.”
Deal done but negotiations ‘are far from over’
The Times reflects on the UK’s post-Brexit trade deal with the EU, saying that while it runs to 1,246 pages, there are large areas that it leaves unaddressed – including the ability of UK-qualified accountants to operate on the continent. Such matters, it argues, “mean that in reality negotiations are far from over.”
CORPORATE NEWS FROM THE LAST DAYS OF 2020
Records reveal 12% jump in new firms
Despite the economic blow dealt by the coronavirus crisis, 2020 has seen a surge in entrepreneurs setting up new ventures, with Companies House records showing 84,758 more new firms will have been set up by the end of this year compared with 2019. Consultancy firm SHL says the 12.3% increase is the highest since 2011. Iain Wright, director for business and industrial strategy at the ICAEW, says: “History shows that following any economic downturn, the number of people starting a business rises sharply.” “It may be that, after a period of reflection during lockdown, people have thought hard about a business idea and decided to go for it,” he adds. Fiona Parker in the Mail warns that the figures should be viewed with caution, saying some of the firms registered will be fraudulent entities set up by criminals in an effort to cash in on Government support rolled amid the pandemic.
Daily Mail, Page: 49
CVAs surge in hardest-hit sectors
Figures show that the number of firms in the retail and hospitality sectors launching survival plans has risen by 375% this year, with Jigsaw, New Look, Pizza Express and The Restaurant Group among those opting for a CVA to cut costs. PwC analysis shows there were 25 CVAs by firms with turnover of more than £25m between January and November 2020, compared to 13 last year. David Baxendale, restructuring partner at PwC, said: “COVID-19’s impact on businesses has resulted in a large number of companies using a CVA as an effective means of survival through measures including injecting new money from lenders or shareholders, rent reductions and reducing property portfolios.”
The Independent Daily Mirror, Page: 35
Lookers sees investor revolt
Car dealer Lookers has suffered a rebellion over bosses’ pay, with almost 29% of investors voting against its pay report at the annual meeting and more than 16% voting against the firm’s annual report. The firm has been hit by a number of controversies, including an investigation by the Financial Conduct Authority over issues with its accounts and has identified “potentially fraudulent transactions”. It is noted that long-term auditor Deloitte has been replaced by BDO.
The Daily Telegraph The Independent, Page: 46 Evening Standard
Pockit pockets £15m funding
Alys Key looks at fintech company Pockit, noting that its latest publicly available accounts show that auditor Grant Thornton expressed concern over the company’s ability to continue as a going concern. Pockit’s directors said that they were confident it could survive, and pointed to a fundraising process that has since seen it close a £15m funding round.
The I, Page: 45
British Business Bank cracks down on coronavirus loan fraud
The British Business Bank (BBB) has launched a fraud crackdown amid fears thousands of companies have wrongly claimed emergency coronavirus support loans. The BBB has hired PwC to analyse transactions and will also utilise other compliance and risk experts. It has also set up regular meetings with banking executives, trade body UK Finance and fraud prevention service Cifas as it looks to tackle deceitful claims. The BBB, which is responsible for overseeing the state-backed lending programmes rolled out to help firms navigate the pandemic, has warned that the initiatives have been a target for criminals, telling MPs on the Public Accounts Committee in November that it had already detected over £1bn of fraudulent loan requests.
Businesses call for support to survive shutdowns
With more parts of England being placed under Tier 4 restrictions, businesses have called on the Government for increased financial support. The Federation of Small Businesses (FSB) estimates that more than a million business premises across the UK will now be shut, warning that many have “no cash reserves left”. Craig Beaumont, the FSB’s external affairs chief, said the “intensification of restrictions must lead to an intensification of support for those affected”. Helen Dickinson, chief executive of the British Retail Consortium, has called for further business rates relief and targeted help for retailers, while Kate Nicholls, chief executive of UK Hospitality, has urged ministers to deliver new support grants and extensions of the reduced rate of VAT and business rates holiday.
Pandemic triggers surge in business start-ups across major economies
The UK, US, France, Germany and Japan have seen surges in new company registrations despite the coronavirus crisis, with the UK seeing a 30% year-on-year increase in the four weeks to mid-December.
SMEs NEWS FROM THE LAST DAYS OF 2020
Small firms need more support – FSB
The Federation of Small Businesses (FSB) says small firms need additional support to get them through the latest coronavirus restrictions. While Office for Budget Responsibility figures show that the Government has provided support totalling £34.4bn and small firms have taken bounceback loans totalling £43.5bn, FSB chairman Mike Cherry has written to Chancellor Rishi Sunak to warn that “fresh restrictions have brought renewed disruption and financial pressure for the many small businesses affected”. The business group has called for a new ‘revenue loss scheme’ that would reimburse small businesses for a significant loss in custom, a second round of £10,000 one-off grants, plus targeted grants of up to £25,000 for small firms in retail, hospitality and leisure. Mr Cherry has also called for greater flexibility, including a “student loans approach, which means that loans are only paid when t he company is profitable”.
The Times, Page: 41
EMPLOYMENT NEWS FROM THE LAST DAYS OF 2020
Think-tank: Most firms could afford a four-day week
A report by think-tank Autonomy says most firms with more than 50 workers could afford to move to a four-day week, saying the majority of 50,000 businesses studied as part of its report would be able to deliver such a change through higher productivity or by raising prices. The think-tank, which is campaigning for a shorter working week without loss of pay, said that even in a worst-case scenario, a shorter working week would be affordable for most firms once the initial phase of the coronavirus pandemic had passed, although it noted that firms in sectors where labour costs were high and profit margins are narrow could experience cashflow problems if changes were implemented too quickly. Will Stronge, director of research at Autonomy, said: “For the large majority of firms, reducing working hours is an entirely realistic goal for the near future”, adding: “Any policy push will have to be carefully designed, and different strategies would need to be deployed for different industries.”
Tech jobs bounce back
Job vacancies in the UK tech sector have bounced back after a sharp decline amid the coronavirus crisis. Figures from Tech Nation show that after a steep fall in July, vacancies have since risen 50% and are now accumulating at a rate of 2.6% per month, with the digital economy now accounting for one in ten of all UK job openings. Data compiled by Adzuna show that job openings in the sector reached just over 75,353 by November, with this below the 106,000 IT-related vacancies recorded in March but up from a low of just over 50,000 in July. Office for National Statistics figures show that the digital tech economy employs 2.98m people, having grown 11% over the last two years.
Firms named in underpayment report
Tesco has topped a list of firms who failed to pay workers the minimum wage, with it found that the supermarket chain underpaid 78,199 workers by a combined £5.1m. The list, published by Department for Business, Energy and Industrial Strategy, also includes Pizza Hut, which failed to pay £845,936 to 10,980 workers, and Superdrug, which failed to pay £15,229 to 2,222 employees. In total, the report – which covers HMRC investigations between 2016 and 2018 – found that 139 companies failed to pay £6.7m to over 95,000 workers. Business Minister Paul Scully said: “It is never acceptable for any employer to short-change workers, but it is especially disappointing to see huge household names who absolutely should know better on this list.” Len McCluskey, Unite general secretary, said: “Too many bad bosses get away with it. The rogues don’t fear the inspector’s knock at the doo r.” Jeni Morris, head of the national minimum wage team at EY, commented: “In my experience, most employers do not deliberately flout the national minimum wage rules, but are inadvertently caught out by a number of technicalities in the complex legislation.”
The Guardian, Page: 31 Financial Times, Page: 3 Daily Mail
PROPERTY NEWS FROM THE LAST DAYS OF 2020
House prices up 7.3% in 2020
Figures from Nationwide show that UK house prices climbed 7.3% in 2020, with this a six-year high for price growth. The data also shows that prices were 0.8% higher in December than November, with the average property valued at £230,920. Analysis shows that prices in December were 5.3% up on the average seen at the start of the coronavirus crisis in March. Robert Gardner, Nationwide’s chief economist, said: “The resilience seen in recent quarters seemed unlikely at the start of the pandemic.” Saying that housing demand “has been buoyed by a raft of policy measures”, he noted the impact of the stamp duty holiday. Howard Archer, chief economist at the EY Item Club, believes property prices could fall by around 5% by the end of 2021, saying the housing market is “likely to come under mounting near-term pressure as the economy is hampered by pandemic-related restrictions.” The Guardian notes that Halifax is expecting a fall in house prices of between 2% and 5% next year, while the Office for Budget Responsibility predicts an 8% decline. While Rightmove expects prices to rise by 4% in 2021, Zoopla says a 1% increase is likely.
The Times, Page: 4 The Daily Telegraph, Page: 27 Financial Times, Page: 3 Daily Mail, Page: 13 The Independent, Page: 45 The Guardian Daily Mirror, Page: 2 Daily Star, Page: 8 The Sun, Page: 45 Daily Express, Page: 47 BBC News
FINANCIAL SERVICES NEWS FROM THE LAST DAYS OF 2020
City of London won’t get quick EU financial services deal
Baker McKenzie has questioned claims by the UK Government that it can negotiate a post-Brexit financial services settlement with the EU within the next three months. The US law firm said the EU’s equivalence assessments will continue “well into 2021”. Mark Simpson, a partner in Baker McKenzie’s financial services unit, said: “Equivalence is not as straightforward as either the EU or UK might otherwise indicate.” Meanwhile, a senior member of the UK’s Brexit negotiating team maintained that progress could be made in this area within the coming few months.
ECONOMY NEWS FROM THE LAST DAYS OF 2020
UK’s trade deals worth £885bn
Britain has secured trade deals worth £885bn, with a £18.6bn tie-up with Turkey signed off by Trade Secretary Liz Truss meaning the UK now has new agreements in place with 62 countries. On top of this, the Express reports that there are free trade deals with America, Canada and Australia in the pipeline for 2021. Analysts suggest these deals could boost the economy by at least £100bn over the coming decade. Former Business Secretary Andrea Leadsom says the UK’s trade deal with the EU can be a “catalyst for the UK to redefine our place in the world”, adding that after the blow dealt to the economy by the coronavirus pandemic, “the Roaring Twenties can now truly begin”.
FTSE 100 hits highest since March
In the first day of trading since markets closed on Christmas Eve, the FTSE 100 closed at its highest since the pandemic hit markets in March, ending up 1.6% at 6,603 points yesterday. The increase was the biggest since November 9, with the climb coming despite a dip in banking shares. A note from analysts at brokerage Jefferies said the Brexit trade deal “should see sentiment towards the FTSE indices recover just as the dividend payout ratio improves, vaccines are rolled out and overseas revenues accelerate. We lift UK equities to Bullish”.
EU exit and the economy
Liam Halligan in the Telegraph considers what the UK’s exit from the EU may mean for the economy, saying “all the ingredients are there” for an economic boost and pointing to the impact of the free trade deal. He says that outside the EU’s single market, the UK is free of a European Court of Justice “which imposes huge restrictions on our economic freedom”, while UK firms will also now be free from “unnecessary and expensive EU rules”. Mr Halligan goes on to stress the importance of non-EU trade, which he says is “rising fast”, makes up the majority of Britain’s international commerce and generates a surplus. He adds a call for Britain to “seek lucrative agreements with the largest players”, such as the US and China, noting that “intra-EU conflicts” have seen certain trade deals elude the bloc.
Retail could be set for boost in H2
The KPMG / Ipsos retail think-tank says the retail sector could see a boost in the second half of 2021, with consumer demand and savings driving activity. Suggesting that 2021 could see growth come in “flat to 3%”, the report said: “Any real growth will take part in the second half of the year, driven by the non-food sector as the vaccine rollout gathers pace, non-essential retail is open again and consumer confidence starts to rise.”
The Sun, Page: 45
OTHER NEWS FROM THE LAST DAYS OF 2020
Parliament in need of repair
Tanya Gold says the Palace of Westminster, home of Parliament, is “in a terrible state” and in need of repair. She notes that in 2014 Deloitte drew up three separate estimates for restoration and renewal: moving out completely for six years for £3.9bn; partially moving out for 11 years for £4.4bn; and not moving out at all for 32 years, for £5.7bn. Six years on, she adds, these estimates are “low to meaningless”.
Hamilton awarded a knighthood
Seven-time Formula 1 champion Lewis Hamilton has been knighted in the New Year Honours list, despite leaving the UK in 2007 to live in the tax havens of Switzerland and Monaco. Mr Hamilton was included on the Foreign Office’s ‘Overseas’ list, with it believed that the sport honours committee was unable to recommend him through the usual channels because his Monaco residency meant HMRC could not vet his tax affairs adequately.
Daily Mail, Page: 24 The Daily Telegraph
Contact Paul Southward
HAPPY NEW YEAR