NEWS – MONDAY 27TH JULY 2020

NEWS ROUNDUP

TAX NEWS – MONDAY 27TH JULY 2020

Rishi Sunak mulls online sales tax

A new online sales tax is being considered by the Chancellor as a means to provide a “sustainable and meaningful revenue source for the Government” and avert a collapse of the high street. In a call for evidence published last week, the Treasury said that the coronavirus crisis “has had a significant impact on how business is done” and that the Government must act to make sure that “the tax system raises sufficient revenue”. Two proposals are being looked at: a 2% tax on goods sold online and a mandatory charge on consumer deliveries. A plan to abolish business rates and replace them with a “capital values tax” – based on the value of land and the buildings on it – is also being considered, according to the Times. This levy would be paid by the owner of the property rather than the business leasing it.

The Times, Page: 1, 2

Over-40’s may be taxed to pay for social care

The Guardian reveals that ministers are seriously considering imposing a new tax on the over-40’s to pay for old age care. Such schemes operate in Japan and Germany which are widely praised for their social care provision. Matt Hancock, the health and social care secretary, is said to be a keen advocate of the plan. Sources tell the paper there is a “renewed urgency” in Downing Street to come up with a solution. Meanwhile, the Local Government Association and more than 30 organisations have called for a “complete reset” of social care in the wake of the coronavirus pandemic. James Jamieson, the LGA chairman, said: “The COVID-19 crisis has proved we need a complete reset, not a restart, when it comes to the future of social care. It is more important than ever that we find a long-term and sustainable solution.”

The Guardian, Page: 1, 2 The Daily Telegraph, Page: 6

Majority of pubs not passing on VAT savings to customers

Research by HIM/MCA Insight found that the majority of pubs are refusing to pass on the VAT cut on food and soft drinks to customers. The Chancellor has cut VAT on food and non-alcoholic drinks from 20% to 5% until January 2021 but polling of 163 pubs by trade magazine the Morning Advertise showed that 84% said they would not be cutting prices for visitors.

The Daily Telegraph, Page: 5

SMEs NEWS – MONDAY 27TH JULY 2020

CGT reforms prompt business owners to change plans

Fears over possible changes to the tax regime have led small business owners to consider selling up or even leaving the country to avoid a hike to capital gains tax. Lord Leigh of Hurley, co-founder of Cavendish Corporate Finance, which advises on mergers and acquisitions, said a number of entrepreneurs had been calling him to say that news of a Treasury review into CGT has prompted them to “capitalise a bit earlier than they had otherwise planned if they possibly can.” Lord Leigh added that the Chancellor “needs to encourage entrepreneurs to get us out of this mess […[ If you want someone to start a business, you’ve got to give them an incentive to do so.” Chris Etherington, a private client tax partner at RSM, said: “I’ve already had people saying to me that if capital gains tax went up in line with income tax, then they would want to leave the country [for tax purposes].”

The Times, Page: 37

Small businesses cut jobs as furlough scheme winds down

A report by the Federation of Small Businesses (FSB) shows that, despite the Government’s furlough scheme, 23% of small UK businesses have cut jobs in the last quarter. The FSB also found that more than one in five respondents said they expected their performance to be “much worse” over the coming quarter, while about one in eight predicted improvements. FSB chairman Mike Cherry said: “The majority of small business owners have benefited from the Government’s emergency support measures but many have not. We need to see the Treasury outline how it intends to support those who have been left out.” Separately, the Telegraph reports that MakeUK, the manufacturers trade body, has found 46% of British manufacturers are planning to rely more on UK suppliers in future, which may help to offset the loss of jobs currently underway.

Financial Times, Page: 2 The Daily Telegraph, Business, Page: 3 Daily Express, Page: 45 The Sun, Page: 2 Yorkshire Post, Page: 11 The Scotsman, Page: 34

UK Treasury and banks in talks on coming wave of bad Covid debt

The FT reports that the Treasury is in talks with banks about an industry-wide plan to help tackle the £16bn in bad debts expected from the “bounce back” loans scheme. The Times says the Chancellor is understood to be reluctant to write off the debt as it would be unfair on those businesses that struggled on without loans. The Federation of Small Businesses has suggested that repayment conditions should be relaxed. Mike Cherry, national chairman of the federation, said: “A guarantee that they won’t have to start making repayments until they’re turning a profit would give them the confidence to invest and hire today, rather than further down the line, when [it] may prove too little too late.”

Financial Times, Page: 2 The Times, Page: 38

NatWest accounts closed after applications for loans

Several small business customers who applied for government-backed loans to help them get through the pandemic have had their accounts suspended or closed by NatWest, the Guardian reports. The paper says it is not clear how many accounts have been closed following bounceback loan applications but a NatWest spokesman stated: “Investigations confirm that the reason for closing these specific customers’ accounts is valid.”

The Guardian, Page: 29

FINANCIAL SERVICES NEWS – MONDAY 27TH JULY 2020

Women still peering at glass ceiling

New research by Pinsent Masons has found that there has been little progress in hiring and promoting more women at senior levels within financial services firms. A review of more than 4,000 individuals taking up senior roles at financial services firms in the year to March 31 found that around 830 were women and 3,200 were men. Elizabeth Budd of Pinsent Masons said: “More financial services firms are taking steps to improve gender diversity at top levels but the pace of change is still very slow.”

Daily Express Personnel Today

REGULATION NEWS – MONDAY 27TH JULY 2020

Rules to stop slavery need tightening, argues commissioner

Dame Sara Thornton, the independent anti-slavery commissioner, has called for tougher sanctions for businesses that fail to tackle the exploitation of workers in their supply chain. Her comments come after revelations of mistreatment of workers in the textile industry. Dame Sara said no businesses had so far been censured under the Modern Slavery Act in the five years since the legislation was introduced.

The Times, Page: 2

CORPORATE NEWS – MONDAY 27TH JULY 2020

Baird Group in last-ditch talks with creditors

Baird Group has filed for a CVA. Howard Smith, associate partner at KPMG and proposed joint supervisor of the CVA, said Baird Group’s heavy reliance on concession partners had contributed to its troubles.

Financial Times, Page: 11

ECONOMY NEWS – MONDAY 27TH JULY 2020

Oil crash halves North Sea tax take

The Office for Budget Responsibility (OBR) has warned that North Sea tax revenues will almost halve due to the crash in oil prices triggered by the pandemic. The OBR predicts the Treasury will receive £400m from oil and gas projects in 2020-21, down from £700m forecast in the March Budget.

Daily Mail, Page: 64

Contact Paul Southward

Paul Southward