NEWS – MONDAY 22ND JUNE 2020
NEWS – MONDAY 22ND JUNE 2020
TAX NEWS – MONDAY 22ND JUNE 2020
Sunak set to follow VAT stimulus with autumn tax rises
With reports that Rishi Sunak is considering a cut to VAT to boost the economy as it lumbers out of its slump, retailers are warning that the move could result in extra cash-handling that could increase the spread of coronavirus. Bosses at Primark have reportedly said a VAT cut in Germany saw staff at its stores there handle more cash because prices were no longer in round numbers. The effectiveness of a VAT cut in shifting consumer behaviour has also been questioned with some analysts dubious that a reduction would lift consumer confidence, which has moved little despite retailers already discounting heavily. Meanwhile, former chancellor Alistair Darling has backed the idea of a VAT cut, adding that the coronavirus crisis will result in an “even more profound shock” to the UK than the 2008 financial crisis. Finally, the FT reports that a cut in the VAT rate will come with deferred tax rises and cuts to public spending in the Autumn Budget.
Closing tax gap would help fill Covid hole
The Daily Express talks to tax experts who say the government should crack down on multinationals avoiding tax in the UK through profit-shifting, which Paul Monaghan, of tax transparency group Fair Tax Mark, says costs the Treasury £7bn a year. Atul Shah, an adviser to the Global Tax Justice Network and professor of finance and accounting at City University in London, argues that HMRC needs to access better talent to take on the corporates which “hire the best lawyers and accountants to get around every rule.” Professor Shah forecasts a tax gap of £100bn, which would have a huge impact on filling the black hole left by COVID-19. He said: “The problem is, it’s so difficult to calculate these things. So usually they’re very big underestimates.”
Daily Express, Page: 10
FINANCE NEWS – MONDAY 22ND JUNE 2020
BAME lobby want end to inequality in access to finance
The Ubele Initiative, a social enterprise that promotes the interests of BAME communities in Britain, has written to Rishi Sunak, other government ministers and the chief executives of Britain’s largest lenders to demand action to improve credit provision and other support for black, Asian and minority ethnic entrepreneurs. The group called for banks to capture data on the ethnicity of their business customers and to compare it with those that are accessing lending. It also warned that BAME businesses may need additional support “due to historic and systemic disadvantage”. Stephen Pegge, managing director of commercial finance at UK Finance, the industry body, said: “It is clear that there is still more work to do to improve diversity and inclusion. UK Finance is committed to continuing to work with our members to address inequality in the industry.” Meanwhile, a survey by Business in the Community has found that 1.5% of senior managers, director s and officials are black – barely higher than the 1.4% of five years ago.
The Times, Page: 38 Daily Mail, Page: 65 The Daily Telegraph, Business, Page: 1
Funding applications from female entrepreneurs halve
Figures obtained by the Telegraph show the number of applications from women to Virgin StartUp, which provides funding for entrepreneurs, has halved since the start of the coronavirus lockdown, while for men applications were down just 17.5%. Dame Jayne-Anne Gadhia, the former boss of Virgin Money, told the paper that there should be a tax incentive for “relevant City firms” to set up funds especially for female innovation as the “old boys network is alive and kicking”. “Most of the money available for investment is managed by men and they tend to invest with ‘people like them’,” she said. “I suspect lockdown has simply exacerbated these behaviours.”
UK leads Europe on financial services investment
A study by EY has found that the UK was Europe’s most attractive location for financial services investment last year, attracting 99 projects compared with Germany, which came second with 43. The US contributed a third of the investment in the UK. London receiving the bulk of UK-focusses investment with 67 projects in all – Paris recorded 29. Omar Ali, UK Financial Services Managing Partner at EY, said: “The UK has again performed strongly on financial services FDI and, crucially, should remain in a good position to continue attracting investment this year, despite the challenges posed by COVID-19 and a weaker economy. Financial Services remains one of the most important sectors supporting and driving economic growth in the UK.”
SMEs NEWS – MONDAY 22ND JUNE 2020
Small firms need help with reopening, says FSB
The Federation of Small Businesses has written to Chancellor Rishi Sunak calling for financial help for small firms with reopening as the coronavirus lockdown gradually lifts. Chairman Mike Cherry says: “The majority will face additional costs as they adjust. The government should step in with back to work vouchers so firms doing the right thing can recover this expenditure.” The group also warns that current social distancing rules make it impossible for 400,000 of Britain’s small businesses to reopen. Writing in the Telegraph, Mr Cherry explains how, with the right support, “small businesses can lead us out of this crisis.”
The Daily Telegraph, Business, Page: 1, 4
At least 50 MPs oppose changes to Sunday Trading laws
The Daily Telegraph reports that at least 50 Conservative MPs have written to Boris Johnson stating that they will vote against the Prime Minister’s plans to relax Sunday Trading laws. The proposals aim to provide a boost to retailers as the COVID-19 lockdown continues to ease. However, the MPs argue that relaxing the laws would “harm local shops and high streets by displacing trade to large out of town retail parks and supermarkets”.
Insurers vs small businesses: a high-stakes battle over lockdowns
The FT reports on how insurers around the world are facing claims they have reneged on business interruption policies following the coronavirus pandemic, with small business in the UK minded to stop buying such cover.
CORPORATE NEWS – MONDAY 22ND JUNE 2020
Hume-Kendall puts LCF-linked firms into administration
London Capital & Finance (LCF) founder Simon Hume-Kendall has appointed Sanderlings to handle the administrations of London Power & Technology and LPE Enterprises, two companies connected to the minibond firm. The move comes ahead of legal action being brought by Smith & Williamson, the administrator of one of LCF’s borrowers, London Oil & Gas.
INTERNATIONAL NEWS – MONDAY 22ND JUNE 2020
Tokyo seeks to lure financial groups from crisis-hit Hong Kong
Japan is considering a range of measures to persuade asset managers, traders and bankers to move from Hong Kong to Tokyo, including visa waivers, tax advice and free office space.
ECONOMY NEWS – MONDAY 22ND JUNE 2020
Lord Darling says infrastructure investment will boost recovery
Former Labour chancellor Alistair Darling has said Britain should invest in small “shovel-ready” infrastructure projects to help the economy to recover from the coronavirus pandemic. In a foreword to a report by the Policy Exchange think-tank, Lord Darling said that projects worth less than £500m should be devolved to local authorities. “Wherever possible, central government should hand funds and control to regional and local powers,” he said. “If the government is in favour of levelling up the economy, ministers must recognise that this cannot be done from the top down.” He added: “Increasing taxes will not be the answer, even as the budget deficit and government debt rises.”
OTHER NEWS – MONDAY 22ND JUNE 2020
UK launches export support for agri, food and drink industry
The Department for International Trade and Department for Environment, Food and Rural Affairs has announced a series of support measures to help businesses in the agriculture, food and drink industry to recover from the coronavirus-induced economic downturn. Immediate support will be available to those wishing to expand overseas with measures including specialist webinars and virtual buyer trials.
Contact Paul Southward