NEWS – MONDAY 16TH NOVEMBER 2020

NEWS ROUNDUP

TAX NEWS – MONDAY 16TH NOVEMBER 2020

OECD candidate optimistic over tech tax

Michal Kurtyka, a candidate to become secretary-general of the Organisation for Economic Co-operation and Development (OECD), says agreement over an international tax on large tech companies is possible if countries show “political will”. The OECD has been overhauling tax rules but a lack of agreement has prompted many countries, including the UK, to press ahead with their own measures for taxing tech giants. Commenting on the efforts, EY’s Chris Sanger said the OECD will look to convince states that there is “a workable solution that can be implemented and managed.”

The Daily Telegraph, Business, Page: 3

MPs warn Chancellor over end to tax-free shopping

A group of Conservative MPs have written to Rishi Sunak, warning the Chancellor that axing duty-free shopping will make Britain less attractive to international visitors. The MPs told Mr Sunak that they believe the tax rethink will “set back the Government’s levelling-up agenda, and damage our ambitions for a global Britain.” Retail groups say tax-free shopping is worth £3.5bn a year and directly supports 70,000 jobs.

Daily Mail, Page: 20

Superdry boss calls for VAT ‘goodwill gesture’

Julian Dunkerton, CEO of fashion retailer Superdry, has called on ministers to cut VAT and extend business rates relief to support stores hit by England’s national lockdown. He said a 5% reduction in VAT in December would be a “goodwill gesture” from the Treasury to the public and retailers. Mr Dunkerton also called for “targeted help” in regard to business rates, saying any extension of the holiday from the levy should not apply to supermarkets or food retailers as they have been able to remain open during lockdowns.

The Daily Telegraph, Business, Page: 1

HMRC launches tax crackdown on businesses shifting profits overseas

HMRC is cracking down on profit diversion by multinationals, asking firms to review their transfer-pricing arrangements having found that large businesses with UK operations may owe an additional £34.8bn in tax for 2019/20.

Financial Times, Page: 1

Taxing of private equity needs a rethink

The FT looks at tax and private equity, saying reform of capital gains tax proposed in a government-commissioned review could help address concerns centred on taxation of the industry. The paper’s Jonathan Ford says that with buyout groups’ executives paying a lower rate of CGT, it is “fiscal perk” that has helped create many billionaires in the private equity sphere.

Financial Times, Page: 24 Financial Times, Page: 13

CORPORATE NEWS – MONDAY 16TH NOVEMBER 2020

Firms lack Brexit plans

A study from BDO shows that almost two in five medium-size businesses have no plan for Brexit or have delayed their preparations as a result of the coronavirus outbreak. More than a quarter of 500 business leaders surveyed said adapting their plans for Brexit is their most immediate concern. BDO managing partner Paul Eagland comments: “There are rough seas ahead for businesses. As we draw closer to exiting the EU, it is important that those in the sectors most impacted are offered support and information to help them navigate a myriad of complex challenges.”

The I, Page: 4

Arcadia denies administration reports

Retail group Arcadia Group has rejected reports it is about to enter a type of administration that would allow it keep trading while selling its assets. It came after a Sunday Times report claimed Arcadia was drawing up plans for the administration and a break-up of Sir Philip Green’s retail empire, with Deloitte administrators reportedly set to be appointed. However, Arcadia declined to comment on reports it is in talks to secure £30m in loans and in negotiations with the Pensions Regulator and its lifeboat fund over a £350m pensions black hole.

The Daily Telegraph, Business, Page: 1 Financial Times

BUSINESS RATES NEWS – MONDAY 16TH NOVEMBER 2020

Further criticism of rates boost for retailers

With it revealed that Tesco, Sainsbury’s, Asda, Morrisons, Aldi and Lidl will save around £1.87bn thanks to a business rates holiday rolled out amid the coronavirus crisis, the chains have come under fire, with critics noting that supermarkets have seen strong sales during the pandemic. The fact that some of the chains have made dividend payments while accepting state support has also drawn criticism. Retail analyst Richard Hyman says “something doesn’t feel right or smell right” about the shareholder payouts, given the circumstances. Robert Hayton, head of property tax at Altus Group, said that with some parts of the retail sector thriving during the pandemic, “the rates holiday has been the icing on an already very sweet cake.” Shadow Business Minister Lucy Powell believes firms that received government subsidies but performed strongly should waive their entitlement to the rates holiday, urging them to “do the socially and morally responsible thing”. Conservative MP Esther McVey said supermarkets should hand back the money, suggesting it would be better directed toward owners of small companies that have not been eligible for emergency support.

The Guardian, Page: 12 Daily Mail, Page: 10 Financial Times, Page: 3

PROPERTY NEWS – MONDAY 16TH NOVEMBER 2020

Office exodus puts valuers in the spotlight

Louisa Clarence-Smith in the Times looks at concerns over office valuations, noting that vacancies are rising and rents are falling while some of the UK’s biggest corporate office occupiers, including Deloitte, are looking to shift toward home-working following a change in working practices brought about by the COVID-19 pandemic. Ms Clarence-Smith notes that the ICAEW raised the alarm about the lack of evidence for objectivity of property valuations in accounts in September.

The Times, Page: 36

REPORTING NEWS – MONDAY 16TH NOVEMBER 2020

Investors call on European businesses to include climate change risks in accounts

Investors have urged large companies to include climate change risks in financial statements. A recent Financial Reporting Council review found that few listed companies’ statements made reference to the issue.

Financial Times, Page: 12

EMPLOYMENT NEWS – MONDAY 16TH NOVEMBER 2020

Incomes barely boosted by lockdown exit

A report from the Resolution Foundation think-tank shows that the end of Britain’s first coronavirus lockdown did little to boost the incomes of people hit financially by the restrictions, with the proportion of adults reporting a drop in incomes hitting 23% in Q3 compared to 27% in Q2. Those in the top 20% income band were more likely to have seen their finances improve than deteriorate from before the pandemic, with many managing to save more, while those on £13,000 a year were more than twice as likely to have seen their budgets deteriorate.

Reuters

Pandemic widens wealth gap

Research from the Centre for Enterprise, Markets and Ethics (CEME) shows that the coronavirus crisis has widened the wealth gap between rich and poor people in the UK. The think-tank says that a third of people now have less than £1,500 in the bank, with many lower-paid employees’ finances taking a hit as they have been furloughed or made redundant. The CEME report says households have been able to save an average of 29.1% of their disposable income since March, while savings ratios in 2019 stood at around 5%. CEME has suggested an increase in tax relief on savings would encourage more investment by the less well-off, with the think-tank also calling for higher interest rates on savings.

Daily Express, Page: 5 City AM

INTERNATIONAL NEWS – MONDAY 16TH NOVEMBER 2020

German auditors fight tighter regulation after Wirecard scandal

Germany’s auditing industry has questioned government plans for tougher regulation following the Wirecard accounting scandal, with the chief executive of Germany’s association of accountants describing the plans as a “knee-jerk reaction”.

Financial Times

ECONOMY NEWS – MONDAY 16TH NOVEMBER 2020

Analysts: Toxic loans could hit eurozone economy

Analysts at UBS have warned that the eurozone economy risks being stifled by a surge in toxic loans, with corporate debt levels pointing to an increase in defaults next year. While stimulus measures from policymakers amid the coronavirus crisis have delayed possible bankruptcies, UBS analysts say defaults could almost quadruple in Italy, rise 180% in Spain and double in Germany and France.

The Daily Telegraph, Business, Page: 3

OTHER NEWS – MONDAY 16TH NOVEMBER 2020

Sunak to invite freeport bids

Chancellor Rishi Sunak will today detail plans for low-tax business hubs, inviting bids for at least seven “freeports” in England. Cities and towns with freeport status will benefit from tax breaks, simpler customs procedures and Government support to attract investment.

Daily Express, Page: 4

Contact Paul Southward

Paul Southward