NEWS – MONDAY 2ND NOVEMBER 2020

NEWS ROUNDUP

TAX NEWS- MONDAY 2ND NOVEMBER 2020

Capital Allowances changes coming

Paul Southward reminds businesses of the changes to the Annual Investment Allowance at the end of December 2020.  From 1st January 2021 reduces from £1million to £200,000.  Businesses planning to invest in capital equipment should consider making purchases before the end of December and take advice to ensure that the purchase will qualify for tax relief.

EMPLOYMENT NEWS- MONDAY 2ND NOVEMBER 2020

Business groups question furlough plan

British Chambers of Commerce director general Adam Marshall has voiced concern that extending the furlough scheme by a month may not be enough to support firms as England enters a new four-week lockdown, warning: “Business communities enter a second lockdown in a much weaker position than they did the first”. Mike Cherry, national chairman of the Federation of Small Businesses, said smaller firms face “severe challenges” deciding whether to retain or lay-off staff. With Cabinet Office Minister Michael Gove yesterday saying the lockdown could be extended beyond December 2, Mr Cherry called on ministers to “remain responsive to circumstances” and be “open-minded” on the end date of the furlough scheme. Meanwhile, Blick Rothenberg’s Heather Self has warned that extending the Job Retention Scheme may have come too late to save some jobs. With the extension confirmed on Saturday as the Prime Minister announced the England-wide lockdown, Ms Self said: “Employers are supposed to agree any changes to employees’ contracts in advance – how are they supposed to do that at six hours’ notice at a weekend?” She added that while the additional support for firms was welcome, “the change may well come too late to save jobs.”

The Daily Telegraph, Business, Page: 1 The Times, Page: 40

INSOLVENCY NEWS – MONDAY 2ND NOVEMBER 2020

Tax experts warn on HMRC move up creditors ladder

The Chartered Institute of Taxation has warned that a policy which moves HMRC higher up the list of creditors in insolvencies could see more firms go bust and other creditors lose out.

Financial Times, Page: 2

Letter: The UK should extend insolvency protection

Roger Barker of the Institute of Directors believes the wrongful trading suspension should be reinstated amid tightened coronavirus restrictions, saying insolvency protections have been a “crucial aspect” of Government support.

Financial Times, Page: 24

FINANCE NEWS – MONDAY 2ND NOVEMBER 2020

Pandemic sees business loans jump

A report from EY Item Club suggests net borrowing by UK companies is expected to be more than five times higher this year than in 2019. With the coronavirus crisis driving firms to take loans as revenues and cashflow took a hit, banks had issued £43.2bn up until August, far exceeding the £8.8bn borrowed in the whole of last year. The report predicts that most businesses will only start repaying this debt and cut borrowing from 2022. EY’s Omar Ali comments: “Banks are facing squeezed interest margins, slow growth in consumer credit and increased write-offs on loans. ” EY predicts that banks will have to write off 2.5% of loans to consumers next year – up from 1.3% this year.

The Times, Page: 41 Daily Mail, Page: 8

INDUSTRY NEWS – MONDAY 2ND NOVEMBER 2020

Pandemic makes audits harder, warns PwC

PwC chairman Kevin Ellis has warned of the challenges auditors face in evaluating firms’ books amid the coronavirus crisis, saying it has delivered “uncertainty no one has seen before”.

Financial Times, Page: 12

CORPORATE NEWS – MONDAY 2ND NOVEMBER 2020

Laura Ashley set for return

Laura Ashley is relaunching, with its products to appear in Next stores and online from spring 2021. The firm brought in PwC to advise on the administration process in March and announced it would permanently close 70 stores, detailing plans to cut 268 office jobs and furlough more than 1,500 workers.

Daily Express, Page: 45

New Look CVA faces four separate challenges by landlords

Sources say that New Look’s CVA has been subject to four separate challenges from landlords, with British Land and Land Securities among them.

Financial Times, Page: 13

PROPERTY NEWS – MONDAY 2ND NOVEMBER 2020

FCA to detail loan support measures

The Financial Conduct Authority (FCA) will today offer greater details of an extension to the mortgage holiday scheme, with the initiative set to have expired on Saturday but extended due to the national lockdown announced for England. The FCA has already said that those who have yet to apply for a mortgage holiday can request a pause on repayments of up to six months, while those who have already agreed to defer payments can extend it until they reach the six-month limit.

BBC News

ECONOMY NEWS – MONDAY 2ND NOVEMBER 2020

Policymakers likely to opt for QE, not a rate rethink

The Bank of England’s monetary policy committee (MPC) is set to consider the impact the four-week lockdown in England could have on the economy before its latest policy announcement on Thursday. The first nationwide lockdown saw the economy shrink by 20% in April, and Gerard Lyons, an economic adviser to Boris Johnson during his time as London mayor, believes that while the economy will not contract as much as it did in the initial lockdown, “it will still be significant, possibly as much as 7.5%-10%”. Paul Dales, chief UK economist at Capital Economics, said he is expecting GDP to fall by 5% in November. “The economy is likely to show zero growth or even have a small decline in the fourth quarter of the year,” he added, while warning the issue “has all the signs of a double-dip recession”. Elsewhere, Howard Archer, chief economic adviser to EY Item Club, said output was likely to contract by 5% to 8% in Q4, commenting: “There seems little doubt a renewed national lockdown will cause the economy to contract in the fourth quarter – and very possibly by an appreciable amount”. The Guardian suggests that the MPC is unlikely to reduce interest rates, which currently sit at 0.1%, and is instead likely to expand its quantitative easing programme. This, argues Oxford Economics’ Martin Beck, could “boost sentiment” in financial markets and among businesses and consumers.

The Guardian, Page: 26 The Times, Page: 39

Lockdown to cost £1.8bn a day, says economist

Economist Douglas McWilliams, founder of the Centre for Economics and Business Research, has warned that the four-week lockdown starting in England on Thursday will wipe £1.8bn off the value of the economy for every day it lasts. He also said the economic pressure is set to stretch beyond year end, meaning the recession brought on by the pandemic is likely to last until spring 2021.

Daily Mail, Page: 8

OTHER NEWS – MONDAY 2ND NOVEMBER 2020

A third of firms warn economic gap between regions has widened

A BDO poll of 500 medium-sized businesses saw 30% say the coronavirus pandemic has already widened the economic gap between the UK’s regions, while 38% believe disruption caused by the outbreak will slow down the levelling-up progress. Martin Bell, head of tax for BDO in Scotland, said: “The government needs to take a local approach to supporting regional mid-sized businesses to navigate the months ahead.” The survey also found that the biggest concern among firms is cashflow.

The Press and Journal, Page: 33

Contact Paul Southward

Paul Southward