NEWS – MONDAY 11TH JANUARY 2021
NEWS – MONDAY 11TH JANUARY 2021
TAX NEWS – MONDAY 11TH JANUARY 2021
HMRC reviews more phone & internet records in light of furlough fraud
The Express looks at how HMRC increased its requests to communications data like phone records and web browsing histories to aid its criminal investigations over 2020. Inquiries picked up as a result of increased concerns over furlough fraud, says RPC, which explained: “HMRC could examine the phone records of an employer to determine whether or not they have been making phone calls to an employee during the period when they were supposedly on furlough. A high number of calls might indicate the employee was actually working and the furlough claims were fraudulent.” Adam Craggs, a Partner and Head of Tax at RPC, commented: “As HMRC shifts its focus to furlough fraud, phone and web browsing data is likely to be a hugely valuable source in identifying those who may be defrauding the public purse.” However, he added: “HMRC must not misuse its investigatory powers and ensure that only lawful, necessary and proportionate applications for communications data are made to the OCDA.”
Upcoming tax hikes considered
Experts tell the Express which tax rules are most likely to change as the Treasury looks for ways to pay for the pandemic. CGT, IHT and pensions relief along with a wealth tax are likely to be easy targets. Debbie Wilson, a director at Hillier Hopkins, said the Treasury could end relief on gifts, suggesting it “would be an easy change to make, face limited opposition and be quickly introduced.” Ending higher-rate relief on pensions contributions could save around £10bn, a move Steven Cameron, Pensions Director at Aegon, said, “would create a big dent in the future pension pots of higher and additional rate taxpayers unless they increased their contributions.” On a possible wealth tax, Rachael Griffin at Quilter said that while unlikely, Rishi Sunak, the Chancellor, might find it more appealing than implementing a range of small tax hikes. Jo Bateson, at KPMG, added: “The Chancellor may decide this is his least worst option, particularly given its apparent popularity with the general public.”
Daily Express, Page: 18
HMRC probes cross-border profit flow
The FT details admissions from HMRC that it has opened criminal investigations into transfer pricing by large corporates, a move John Cullinane at the Chartered Institute of Taxation described as “quite a big deal”
SMEs NEWS – MONDAY 11TH JANUARY 2021
UK firms fearing twin threat of Brexit and Covid
A poll by the Federation of Small Businesses has found that more than 250,000 small firms expect to fold without further government financial support as they look to grapple with the twin threats of COVID-19 and weaker post-Brexit trade with the EU. Just under 5% of the 1,400 companies surveyed by the FSB said they were expecting to close this year. If the same degree of pessimism applies across the UK’s 5.9m small businesses, that would suggest as many as 295,000 fear they will go under. Most firms said they did not expect their prospects to improve over the next three months. Separately, a survey conducted jointly by Make UK and PwC found that a third of companies believed investment prospects would decrease having left the EU. Customs delays, cited by 47% of firms, are seen as the biggest risk to companies.
Late payment issue made more acute by pandemic
The Institute of Directors has warned that almost two in five business had faced an increase in late payment during the pandemic, while nearly one in ten had said that overdue commercial debt problems had become significantly worse. The third national lockdown would likely exacerbate the problem, the IoD added. Many directors are eager for the small business commissioner to be given more powers – to issue binding awards, for example – a move that could make companies think twice before delaying payment.
PENSIONS NEWS – MONDAY 11TH JANUARY 2021
Superfunds face first test with deals expected this year
Pension superfunds are expected to do their first deals later this year as an expected wave of pandemic-induced insolvencies pushes many businesses to the brink. Superfunds combine multiple employers’ schemes under one roof with advocates saying they improve efficiency by sharing administrative and investment costs, as well as ensuring strong governance. Marc Hommel, senior pension adviser at EY, says transfers are likely to happen “where the employer is stressed or distressed and in the trustees’ view there’s a very real chance that the pension scheme is going to end up in the Pension Protection Fund.” Two existing superfunds are currently seeking regulatory approval – the Pension SuperFund and Clara – and if they’re given the go-ahead, schemes on the verge of insolvency are likely to be targeted first. A warning, however, comes from Tracy Blackwell, chief executive of Pension Insurance Corp oration, who says superfunds could encourage companies to avoid their liabilities and favour paying out dividends rather than protecting pensioners.
Nest plans bold expansion into private markets
Nest, the UK workplace pension scheme with 10m members, is planning to lift its private market holdings from 9% to 15% over the next 12 months by expanding its equity stakes in infrastructure.
INDUSTRY NEWS – MONDAY 11TH JANUARY 2021
Accountants prepare for difficult audits of struggling firms
The Telegraph picks up on news that regulators are in talks with listed companies and their auditors about delays to filing accounts due to the difficulties posed by lockdowns. The accounting watchdog will meet the audit heads of the Big Four firms and their main challengers this week to find out how severely their operations have been affected by the latest restrictions, said one source. City regulators could agree to extend deadlines for companies with a December year end while companies with a June year end could also be given more time to report interim numbers. Deadlines for filing accounts at Companies House could be pushed back, as they were last year. The Telegraph suggests audits of retailers’ accounts are expected to involve particularly tough judgments. “It’s going to be a bloodbath,” a senior auditor to several retailers said, adding that accountants will be extremely careful before giving an opinion that clients are able to continue as a going concern: “If [a retail client] goes bust, everyone’s going to look at us and say, ‘how could you not know that it was going to fail?’”
Insolvency industry probed by MPs
The insolvency profession is being investigated by MPs following criticism from businesses about their objectivity standards. The relationship between insolvency practitioners and lenders is of particular concern. Kevin Hollinrake, the Conservative co-chairman of the group, said: “In recent years there have been a number of high-profile failures in the insolvency industry. The APPG has also received its fair share of complaints about the system.” The Times notes that partners at both KPMG and Deloitte have been accused recently of losing objectivity during administration. The MPs are working with the City law firm Humphries Kerstetter to identify any failures and suggest how to address them. James Russell, partner at the firm, said: “What we are interested in exploring is whether such behaviour is indicative of a wider systemic problem. If these problems are endemic, we look forward to working with the APPG to find ways to address them for the benefit of the insolvency industry and the wider economy.”
REPORTING NEWS – MONDAY 11TH JANUARY 2021
Opinion: Best not to judge a retailer’s performance with like-for-like
The Times’ Graham Ruddick discusses the use of the like-for-like sales measure in retailers’ trading reports, describing it as “an unstandardised measure of performance that companies are free to interpret in the way that they see fit.” Ruddick notes a report published five years ago by the ICAEW warning that like-for-like sales are “not the best guide to retail success”. He goes on to give examples of where the like-for-like sales figure is inadequate, concluding with the following advice for readers: “This January look for the old-fashioned metric of total sales and pre-tax profits to judge the performance of Britain’s leading retailers, not like-for-likes.”
ECONOMY NEWS – MONDAY 11TH JANUARY 2021
Business output hit record lows in 2020
UK business output fell to its lowest ever levels in 2020 according to BDO with the firm’s output index averaging 73.62 last year, the lowest figure since the measure was introduced in 2005. Previously, the lowest annual average had been 83.28, which was recorded during 2009’s financial crisis. Commenting on the results, Kaley Crossthwaite, partner at BDO, said: “These figures reinforce just how stark the economic impact of the pandemic has been. As we enter a third national lockdown, crippling challenges will continue to plague businesses in the weeks and months ahead. Successful and rapid roll-out of COVID-19 vaccines will be the single biggest driver of business recovery.”
The Daily Telegraph, Business, Page: 1 City A.M.
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