NEWS – MONDAY 14TH DECEMBER 2020

NEWS ROUNDUP

TAX NEWS – MONDAY 14TH DECEMBER 2020

Chancellor urged not to raise taxes to cover no-deal support

Rishi Sunak has been urged to avoid tax rises to meet the cost of a no-deal Brexit. While Conservative MPs have expressed support for plans for financial measures targeted at the sectors that would be hardest hit, they have urged the Chancellor not to increase taxes to pay for any rise in state spending. Commenting on how to cover the cost of a bailout package for farmers and fishermen, MP John Redwood said: “Of course not tax rises, that would actually probably reduce revenue. I think tax cuts would increase revenue, which would be a good idea.” MP Marcus Fysh, deputy president of the Board of Trade, commented: “We need to have tax settings and other regulatory settings to make Britain the best place to invest. I don’t think higher taxes are a sensible part of such a setting.” “Things like capital gains tax is just the wrong area to be looking at, because it will directly penalise investment and innovation,” he added.

The Daily Telegraph, Page: 5

Wealth taxes: rich pickings

The FT considers the viability of a wealth tax, noting that a 5% tax on net assets above £500,000 would raise more than £260bn and hit 16% of adults. Elsewhere in the FT, Martin Wolf argues against a Wealth Tax Commission suggestion that a one-off wealth tax would reduce the UK’s public debt, saying today’s fiscal risks are being assessed using out-of-date metrics. Meanwhile, the Independent’s John Rentoul also looks at whether a wealth on tax will help foot the nation’s coronavirus bill, suggesting that if the Chancellor needs to raise taxes, “the logic of manifesto promises and practical economics” will drive him towards higher taxes on more valuable homes.

Financial Times, Page: 30 Financial Times, Page: 29 The Independent, Page: 12

Bootle calls for post-Brexit tax cuts

Roger Bootle, chairman of Capital Economics, says that the UK needs to be “ultra-competitive” outside the EU, offering that rather than “contemplating a raft of tax rises and new taxes”, the Chancellor should embark on a programme of corporate and individual tax cuts. If, he adds, Rishi Sunak feels Britain cannot afford this now, “he should frame his plans for current spending accordingly and at least announce a programme for future tax cuts.”

The Daily Telegraph, Business, Page: 2

INDUSTRY NEWS – MONDAY 14TH DECEMBER 2020

Challengers ‘strategic’ over pitches

BDO ’s audit boss Scott Knight says mid-tier accountancy firms are, in some cases, not pitching to win work from some large companies, with challengers such as BDO, Grant Thornton and Mazars said to be becoming disillusioned with lengthy bidding processes with a low chance of success. Mr Knight said: “Everyone’s become a bit more strategic about what they’re going to go for and not go for.” Detailing the “big involved process” of pitching, he goes on to say: “You want to know that you’ve got a good chance of winning it before you go into it.” The Telegraph says there is concern among mid-tier firms that they are being invited to tenders to make up the numbers, while the Big Four continue to audit the entire FTSE 100.

The Daily Telegraph, Business, Page: 3

CORPORATE NEWS – MONDAY 14TH DECEMBER 2020

Potential bidders line up for retailers

The Times reports that 40 parties have registered an interest in the auction of retailer Arcadia’s brands being handled by administrators at Deloitte. American fashion and investment group Authentic Brands is said to be interested, with Marks & Spencer, Next and Boohoo also named among potential bidders while Associated British Foods, the owner of Primark, is also understood to have received the information memorandum. The Times notes Frasers Group and Authentic Brands are believed to be interested in both Arcadia and Debenhams.

The Times, Page: 42

Firms flag post-Brexit growth fears

Research for the Business Growth Fund shows that the majority of mid-sized private companies expect Brexit to add “significant barriers” to their growth. The study, conducted by Delineate, found that seven in ten businesses with turnover between £2.5m and £100m said the coronavirus crisis had created a barrier to their expansion, while six in ten expect Brexit to do the same. Meanwhile, separate research by PwC shows there are over 21,000 companies in the UK with annual sales of between £2.5m and £100m – and before the crisis the majority were fast-growing and profitable, with total turnover rising 4% a year on average between 2013 and 2018.

The Times, Page: 49

Manufacturers fear no-deal impact

Research by BDO and manufacturing industry body Make shows that a no-deal Brexit will cause “significant damage” to the manufacturing sector. The trade body is predicting that the manufacturing sector will grow by just 2.7% next year, down from an earlier forecast of 5.5%. This means manufacturing – which has seen output fall 12% this year – would underperform the wider economy this year and next, with the Office for Budget Responsibility forecasting a fall in GDP of 11.3% this year before a bounceback of 5.4% in 2021.

The Times, Page: 41 Daily Express, Page: 53 The I, Page: 42

INSOLVENCY NEWS – MONDAY 14TH DECEMBER 2020

Insolvency firms told to report loan fraud

Insolvency practitioners have been instructed to report fraudulent coronavirus loan applications to the Government, with the Insolvency Service writing to firms advising that if claims related to the business interruption loan scheme and bounceback loans appear fraudulent, “it is the duty of the insolvency practitioner to consider their reporting obligations”. Christina Fitzgerald, vice-president of insolvency trade body R3, notes that HMRC has created a task force that “will identify insolvency cases where it has queries about the use of these funds, notify the insolvency practitioners working on these cases about its concerns and ask them to investigate further”.

The Times, Page: 44

PROPERTY NEWS – MONDAY 14TH DECEMBER 2020

Rightmove expects prices to climb 4% in 2021

Rightmove has forecast that house prices will climb 4% next year. The property platform said that while asking prices between November 8 and December 5 were 6.6% higher than a year earlier, it believes the rate of growth is unsustainable. Looking ahead to the end of the stamp duty holiday in March, Rightmove’s director of property data, Tim Bannister, said: “There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers its removal will not be make or break, though may lead them to reduce their offers to a degree.” Rightmove estimates that there is a “logjam” of 650,000 properties still trying to get through the system as buyers look to complete deals before the stamp duty holiday ends on March 31.

The Times, Page: 41 The I, Page: 45 Daily Mail, Page: 71

Landlords take advantage of stamp duty holiday

A report by property services company Hamptons shows that one in six property sales are to landlords, with 51% of the purchases by investors made in cash. The analysis, which is based on data from letting agent the Countrywide Group, suggests landlords are entering the market as they look to take advantage of the stamp duty holiday. The average landlord who fails to complete their purchase by the stamp duty holiday deadline will see their bill rise from £5,400 to £6,500.

The Daily Telegraph, Page: 8 The Guardian, Page: 34 The I, Page: 45

SMEs NEWS – MONDAY 14TH DECEMBER 2020

Loan scheme to help businesses navigate No-Deal

Treasury officials are planning state-backed guarantees to support lending to SMEs, with the FT saying access to the initiative is expected to be much more stringent than to the bounce back loan scheme. The Mail reports that companies hit by disruption in the event of a No Deal Brexit will be invited to take advantage of Government-backed loans and the furlough scheme. It adds that ministers are also looking at the possibility of bailouts for industries hardest hit in the longer term by a No Deal Brexit.

Financial Times, Page: 1 Daily Mail, Page: 8

OTHER NEWS – MONDAY 14TH DECEMBER 2020

Nuclear and net zero

The Telegraph considers the future of nuclear power, looking at plans for the Sizewell C facility in Suffolk and saying the Government is “deciding what sort of public support it wants to give new large nuclear plants”. Steve Jennings, a partner at PwC, comments: “To maintain a pathway to net zero, the Government will want to retain options and encourage investment in a portfolio of different technologies including nuclear.”

The Daily Telegraph, Business, Page: 5

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Paul Southward