NEWS – MONDAY 12TH OCTOBER 2020

NEWS ROUNDUP

TAX NEWS – MONDAY 12TH OCTOBER 2020

Asda parent will be based in Jersey

Mohsin and Zuber Issa, the new owners of Asda, have created an offshore bid vehicle in Jersey that will be the ultimate parent company of the supermarket chain. The island jurisdiction will offer tax advantages, including potentially lower financing costs on the debt that the bidders are using and lower withholding taxes. The Times reports that the new Asda owners also would not face capital gains tax if they were to choose to sell it in the future. Sheena McGuinness, a corporate tax partner at RSM, said: “I wouldn’t underestimate the desire for non-disclosure and anonymity that Jersey offers. It means they won’t have to disclose the income that is flowing back to the ultimate shareholder.” A spokesman for the Issa brothers and TDR said: “Asda will remain tax resident in the UK and will pay all taxes that are due.”

The Times, Page: 38

Self-employed face tax bills higher than their income

Freelancers whose income has been slashed this year due to the pandemic could soon face tax bills higher than their earnings, the Mail reports. Because self-employed workers pay a biannual tax in advance based on their previous income, someone on £50,000 before the pandemic would owe around £16,682 in tax, even if their income was £15,000 this year, according to analysis by Royal London.

Daily Mail, Page: 10

Banks call back stayaway staff abroad amid tax warning

Major lenders are asking staff working remotely from abroad to return to the UK, even if they don’t return to the office, warning of tax and regulatory consequences if they stay too long.

Financial Times, Page: 1

CORPORATE NEWS – MONDAY 12TH OCTOBER 2020

Government grants Amazon cash to build depots

Tax campaigners have criticised Amazon for taking £11m in government grants since 2010 to help fund the cost of building its depots. The grants were revealed in accounts for Amazon UK Services and prompted Labour MP Dame Margaret Hodge to say: “It really sticks in the gullet that a company which deliberately does not pay its fair share of tax should benefit in this way. It’s not on – it’s outrageous. Amazon builds these fulfilment centres on the outskirts of towns yet the high street shops… get stung with higher business rates.” Alex Cobham, chief executive of the Tax Justice Network, added: “It can’t be right to throw public money at them – especially when they themselves pay so little tax.” The Mirror points out that Amazon recently disclosed that it paid £293m in “direct” taxes last year, up from £220m in 2018. However, it would not say how much was corporation tax and business rates.

Daily Mirror, Page: 2

EMPLOYMENT NEWS – MONDAY 12TH OCTOBER 2020

Sunak’s job support scheme won’t plug flood of unemployment

Two UK think tanks have warned that the Chancellor’s job support schemes will do little to prevent a rise in redundancies this winter. The Institute of Public Policy Research is warning of nearly 3m job losses while the Centre for Economics and Business Research estimates that at least 1.25m more people could be laid off by Christmas. This was revised down from 1.5m after Rishi Sunak announced new support measures last week.

The Times

SMEs NEWS – MONDAY 12TH OCTOBER 2020

CVAs made easier for SMEs

Britain’s insolvency trade body has simplified the process of putting together a proposal for a company voluntary arrangement (CVA) for small businesses. R3 has created a standard form to assist struggling businesses to carry out a CVA, which are typically deemed too complex and expensive for SMEs to consider. “SMEs are the backbone of the UK economy, but these businesses have been hit hardest by COVID-19 and the subsequent lockdown,” Stewart Perry, chairman of R3’s general technical committee, said. “As a result, many of them will have been forced to consider an insolvency process or seek insolvency advice when they most likely would never have had to in normal circumstances. These documents aim to make CVAs as accessible as possible to them so they can benefit from the flexibility and business rescue support a CVA provides.”

The Times, Page: 43

Banks consider outsourcing recovery of Covid loans to debt collectors

The Times reports that high street lenders may employ debt collectors to recover state-backed loans, arguing that the scale of the task is too great for the banks to manage directly. The paper claims officials have contacted debt collection companies to assess whether they could take on the loans to seek repayment, for which they would receive a fee. Unpaid debts would return to the banks, which would then claim on the state guarantee attached to the loans. The news follows an estimate from the National Audit Office last week that £26bn of Bounce Back Loans for small businesses may have been lost to fraud.

The Times, Page: 35

A third of small firms don’t expect to survive

Research by law firm Fladgate shows that 35% of small and medium-sized enterprises (SMEs) fear that they will not be operating beyond a year. One in five SMEs said their business is already in “distress” while 64% report they are just about surviving on current support measures. Jeremy Whiteson of Fladgate said: “This should be seen as a loud Mayday call by UK SMEs. As the bedrock of the UK’s economy, any recovery plan must address the needs of these firms.”

The Times Daily Express, Page: 46 The I, Page: 45 Yorkshire Post, Page: 11

FINANCIAL SERVICES NEWS – MONDAY 12TH OCTOBER 2020

Investment firms move €150bn of UK assets to France

The governor of the Banque de France claims that at least €150bn of assets have been decamped from the City to France since September. François Villeroy de Galhau told the Europlace International Financial Forum that the bank had in that time authorised 21 investment firms, four credit institutions and seven third-country branches to “ensure continuity of activities in France”. Mr de Galhau went on to encourage more firms to follow suit, arguing that companies “operating under the European passport must quickly finalise their relocation to the EU if they want to operate here as of next year.” The Telegraph notes a report from EY earlier this month which said more than 7,500 jobs had been transferred to the Continent since the Brexit referendum, with at least 24 financial services firms recording more than £1.2trn of asset transfers.

The Daily Telegraph

ECONOMY NEWS – MONDAY 12TH OCTOBER 2020

Next year’s growth estimates downgraded

EY Item Club has lowered its estimates for economic growth next year to 6%, from 6.5%, according to forecasts released today, with growth of at most 1% during the final quarter of this year expected. This is despite estimating that GDP expanded by between 16% and 17% quarter-on-quarter during the three months to the end of September. Meanwhile, a report by BDO suggests the recovery in UK business was losing momentum, with the firm pointing to a significant slowdown in the services sector last month from 11.2 points in June to 1 point.

The Times The Daily Telegraph, Business, Page: 1 The I, Page: 45 Yorkshire Post, Page: 11

OTHER NEWS – MONDAY 12TH OCTOBER 2020

Just One in eight companies ready for Brexit

Research by EY indicates that only 29% of companies in Britain and around the world feel that they have a “good understanding” of what the conclusion of the Brexit transition period at the end of the year will mean. A further 36% are said to have a “moderate” grasp of the changes, while the understanding of 35% is described as “poor”.

The Times, Page: 36

Contact Paul Southward