NEWS – MONDAY 26TH OCTOBER 2020
NEWS – MONDAY 26TH OCTOBER 2020
TAX NEWS – MONDAY 26TH OCTOBER 2020
Loan charge victim made to feel like criminal
BBC reporters speak with a man who owes HMRC £180,000 due to the loan charge, but hasn’t told his wife for two years. The unnamed man used a company to manage his admin and also his tax affairs. It promised him he could take home 85% of his earnings and still be compliant with UK tax law. Through these schemes, workers are paid a small amount of salary as a standard, taxable income. They then receive a larger payment as a loan via an offshore trust. The Government closed this loophole but used the loan charge to demand taxes dating back to 2010, resulting in substantial bills for many workers who had not done anything illegal at the time. Tory MP Sir Iain Duncan Smith, who has a number of constituents who have been affected by the charge, says: “I think the government and HMRC go after the wrong target, because it’s the easy target to go after […] they’re not really going after the promoters.”
Developing countries miss out on $2.8bn in tax from Big Tech
Research by the anti-poverty charity ActionAid International claims that US tech giants are exploiting loopholes in global tax rules to avoid paying as much as $2.8bn (£2.1bn) tax a year in developing countries. David Archer, global taxation spokesman for ActionAid International, said: “The $2.8bn tax gap is just the tip of the iceberg – this research covers only three tech giants. But alone, the money that Facebook, Alphabet and Microsoft would be paying under fairer tax rules could transform public services for millions of people.” There is no suggestion that the tech firms are breaking the rules or actively evading tax. ActionAid said it was the failure of world leaders to implement global standards that was the cause for the shortfall.
The Guardian, Page: 26
SMEs NEWS – MONDAY 26TH OCTOBER 2020
Small business confidence hits two-year low
A survey of 1,500 small businesses reveals two out of three expect trading to worsen as confidence hits a two-year low. The poll by the Federation of Small Businesses found firms expected an “incredibly difficult” period in the run-up to Christmas and the end of the Brexit transition with the group’s index falling to minus 32.6 in the third quarter of the year, down 28 points on the second quarter. More than half said revenues had dropped due to the pandemic. One in four had cut jobs in the past three months, with 29% expecting to do so before the new year. Just over 10% expect at least a quarter of staff to go. Mike Cherry, FSB chairman, called for a package to support company directors, the newly self-employed, those without premises, and those in the retail, leisure and hospitality sectors.
The Times, Page: 38 The Daily Telegraph, Business, Page: 1 Daily Express, Page: 9 The Scotsman, Page: 9 Yorkshire Post, Page: 12
Some 6m small businesses at risk
A new study from King’s Business School has found that nearly two-thirds of entrepreneurs believe their business might not survive COVID-19, while more than half predicted they would run out of money within a year. The King’s Business School academics said entrepreneurs were agile and adaptable by nature “but there are only so many things they can do to keep their businesses afloat”.
The Guardian, Page: 27 Daily Mirror, Page: 2
Fraudulent coronavirus loan applications going unreported
Less than 0.5% of fraudulent claims for coronavirus support loans have been reported to the police, according to figures from the national Action Fraud service.
EMPLOYMENT NEWS – MONDAY 26TH OCTOBER 2020
CEBR warns of middle-class job losses
The Centre for Economic and Business Research (CEBR) has produced a study showing that the pandemic has created a middle-class unemployment “crisis”, affecting commuter towns, resorts and manufacturing hubs. The analysis reveals the hardest hit areas include Slough, Luton and Peterborough as well as affluent seaside resorts such as Brighton. CEBR deputy chair Doug McWilliams said: “The middle class is likely to get hit much worse as we go on. A lot of management jobs have gone, a lot of professional jobs have gone, and some specialist ones. The middle classes have a jobs crisis – their pensions are squeezed and house prices will be lower.”
Daily Mail, Page: 6
Millennials breaking into higher income barriers
Research by UHY Hacker Young reveals that the collective income of millennials has jumped more than 10% to hit a record high of £254bn. Those born between 1981 and 1997 saw the biggest increase in pay of any generation last year, the accountancy firm said, with the average millennial now earning £28,995. Elliott Buss, a partner at UHY Hacker Young, said: “Millennials are now breaking through the higher income barriers. An increasing number of them are reaching executive and director level and have more cash coming in than ever before.”
The i, Page: 50
GOVERNMENT NEWS – MONDAY 26TH OCTOBER 2020
Amazon advising UK on public procurement post-Brexit
The Mirror reports that Amazon has been advising the UK Government on post-Brexit procurement processes, sitting on a secret panel arranged by the Cabinet Office. The paper notes that Amazon has been awarded 82 central Government contracts, worth £225m, in the past five years and has a deal enabling local councils to buy supplies in one marketplace. Paul Monaghan, of the Fair Tax Mark, comments: “The manner in which Amazon is embedding itself into national and regional public procurement in the UK has long been cause for concern. We are close to the point where it will be impossible for anyone else to compete.”
Daily Mirror, Page: 2
Sunak pressed to reveal contents of blind trust
The Chancellor is being called upon to reveal what assets he put in a blind trust last year after he had been appointed chief secretary to the Treasury. “Rishi Sunak needs to be completely transparent with the public about whether any of the funds he invested in a blind trust are held in offshore tax havens,” said Abena Oppong-Asare, the shadow exchequer secretary to the Treasury. “Taxpayers paying their fair share expect nothing less.”
ECONOMY NEWS – MONDAY 26TH OCTOBER 2020
Manufacturers urge government to provide support
The manufacturing industry body Make UK says many of its member fear trading will not return to normal for more than a year with half of the industry’s business already having cut jobs and one in five planning to make redundancies. Make UK is calling on the Government to waive business rates and boost investment with tax reliefs, “especially in the light of the absence of any revamped industrial or economic strategy to boost growth”.
INDUSTRY NEWS – MONDAY 26TH OCTOBER 2020
The legacy of BHS rumbles on
The BBC talks to former BHS fashion buyer Santosh Kumari about the demise of the retailer and the shock of “flying around the world in charge of millions of pounds” one minute and being fearful about whether she could pay her mortgage the next. The piece moves on to the role accountancy firms have played in the collapse of companies such as BHS, Carillion and Thomas Cook noting that BHS’s auditors, PwC, were fined a record £6.5m after signing off accounts the Financial Reporting Council described as “incomplete, inaccurate and misleading”. The BBC then points to three government-commissioned reports into audit reform, noting that to date no laws have been passed to tighten the rules. But accounting professor Prem Sikka believes rather than reforming the sector, the best solution would be to have a state body audit the largest companies, just as HMRC oversees the auditing of tax collection, with public given access to information about the audits. Returning to Ms Kumari, she concedes that blame for the collapse of BHS should lie with its bosses, but wonders what auditors knew – or could have asked – about the company’s books before the end.
OTHER NEWS – MONDAY 26TH OCTOBER 2020
Royal Society laments lack of black economists
Prof Carol Propper, president of the Royal Society of Economics, has raised concerns that a lack of black economists is leading to an absence of “passion” in solving housing, education and employment inequalities. It follows Institute of Fiscal Studies research which shows that black economists are 64% less likely to work in Russell Group institutions than their white peers. Ethnic minority economists who work in Russell Group universities are also 45% less likely to hold a senior academic or managerial position than their white peers. Prof Propper said: “Diversity in economics is important because the key policy issues that the Government needs to address are so-called ‘wicked problems’ which are difficult to solve and require trade-offs.”
Contact Paul Southward