NEWS – MONDAY 31ST AUGUST 2020
NEWS – MONDAY 31ST AUGUST 2020
TAX NEWS – MONDAY 31ST AUGUST 2020
Business groups question tax increase plan
Following reports that the Chancellor could be looking to raise taxes to help cover the cost of the coronavirus crisis, Stephen Barclay, the Chief Secretary to the Treasury, has refused to rule out tax increases, saying such issues were a matter for the Budget. His comments came after the Sunday Telegraph reported that the Treasury is considering a £20bn tax increase and a Sunday Times article said capital gains tax and corporation tax may be increased in the autumn, with the latter possibly jumping from 19% to 24%. The FT cites Treasury officials who describe the reports as “nonsense speculation”, but also notes that a Government insider admitted “difficult options” are being considered to boost public finances. Meanwhile, business groups have spoken out over the possible tax increases, with Adam Marshall, director general of the British Chambers of Commerce, saying: “Raising the tax burden on business and entrepreneurs before they have a chance to recover could create serious issues for the trajectory of the UK’ s overall recovery.” He added that while the business sector understands the need to repair the economy, doing so too early risks “choking off growth at the crucial moment.” Mike Cherry, national chairman of the Federation of Small Businesses, said: “Given we’re in a recession the last thing policymakers should be doing is hiking taxes on those we need to invest, create jobs and generate growth over the crucial months ahead.” Matthew Lesh, head of research at Adam Smith Institute, urged the Government to “get its own house in order” by cutting spending before increasing taxes, while Institute for Fiscal Studies economist Stuart Adam believes that “in the short run the Government should probably be looking to cut taxes and increase spending.” EY’s Chris Sanger notes that the UK has “prided itself on having the lowest corporate tax rate of any G20 country”, with any increase set to be seen as a sea change in tax policy.”
The Daily Telegraph The Daily Telegraph, Page: 1 The Times, Page: 4 Financial Times, Page: 1 Daily Mail, Page: 6 Daily Mirror, Page: 6 The Guardian, Page 2 The Independent, Page: 25 The I, Page: 6 The Sun, Page: 4 Daily Star, Page: 8 Daily Express, Page: 12 The Scotsman, Page: 7
Tax pledge to spare Treasury’s big earners from increases?
The Telegraph’s Russell Lynch considers the Chancellor’s options for balancing the books in the wake of the COVID-19 pandemic, saying a manifesto commitment not to raise the rate of income tax, national insurance and VAT is “problematic” as they are the Treasury’s biggest earners, accounting for £460bn of £735bn in revenue pulled in during the 2018/19 tax year. With it suggested corporation tax, which bought in £56bn in 2018/19, could be targeted, Chris Sanger of EY comments: “If you’re looking to make sizable increases in taxation, it is not obvious that corporate taxes would be your tax of choice. We get two-thirds of our total taxes from national insurance, VAT and income tax.” “By the time you add in duties that rises to about three-quarters, so anything other than those is only going to be providing a little bit of additional revenue,” he adds .
Labour urges Chancellor to push ahead with tech tax
Labour has told Chancellor Rishi Sunak to push ahead with a levy on technology giants, with shadow chancellor Anneliese Dodds voicing concern over reports that the digital services tax may be axed because it could jeopardise a post-Brexit trade deal with the US. Ms Dodds said: “This government promised to make tech giants pay a fair share of tax to support our public services. Scrapping the digital services tax will do the opposite, costing millions in revenue that could pay for thousands of nurses, teachers or police officers.”
The Guardian, Page: 27
Tax rethink Q&A
The Telegraph offers a Q&A with queries related to possible tax changes designed to boost the nation’s coffers in the wake of the coronavirus crisis. On inheritance tax, Nimesh Shah of Blick Rothenberg suggests a seven-year rule under which gifts are IHT-free if the person survives for that period could be scrapped, saying one solution would be to make the gift now so it takes place under current rules.
The Daily Telegraph, Page: 4
EMPLOYMENT NEWS – MONDAY 31ST AUGUST 2020
Four-day working week could create 500k new jobs
Research by think-tank Autonomy suggests a move to a four-day week in the public sector would create up to half a million new jobs and help limit an expected increase in unemployment as the Government’s furlough scheme is wound down. The report says it would be possible for public sector workers to go on to a 32-hour week with no loss of pay, calculating that such a move would cost between £5.4bn and £9bn a year. Will Stronge, Autonomy’s research director, said: “To help tackle the unemployment crisis we are facing this winter, a four-day week is the best option for sharing work more equally across the economy and creating much needed new jobs.” He added that the move would “boost productivity, create new jobs and make us all much happier and healthier.” Bank of England forecasts suggest that the jobless rate will rise from just under 4% to 7.5% by the end of the year.
Office attendance on the up
Daily Mail analysis of 30 FTSE 100 and leading firms suggests that many have seen an uptick in employees returning to offices, with PwC saying around a third of its 24,700 office workers were now spending at least some time at their desks and that this was increasing. Alistair Cox, head of recruitment firm Hays, has told the Mail that full-time remote working was unlikely to become “a permanent thing” but predicted offices will be closed as companies assess whether to switch permanently to a hybrid model, where remote and office-based working are balanced..
Daily Mail, Page: 2
Transport data shows slow office return
A poll by the AA shows that 40% of people who normally drive to work are working from home all or part of the time, with the rate jumping to 54% among senior or middle managers and professionals. In regard to public transport, official figures show that trains carried only 28% of their normal passenger loads last Monday, while buses saw 45% of typical passenger numbers. The figures suggest people are opting to work from home, despite a government push to get people back into the office.
Big firms cut 255k jobs
Figures analysed by the Daily Mail show that more than a quarter of a million workers at stalwart British firms have been laid off since the beginning of the coronavirus pandemic, with Gatwick Airport, Pret a Manger and BMW Mini among the latest big firms to announce job losses. Of the 255,000 roles that have been lost since March – or are set to be cut – more than 153,000 are in the UK, with overseas workers laid off by British firms accounting for the rest. Tej Parikh, chief economist at the Institute of Directors, has urged ministers to “boost the wider jobs market by reducing the burden of employment taxes, helping businesses to retain and hire staff.”
Daily Mail, Page: 62
CORPORATE NEWS – MONDAY 31ST AUGUST 2020
BrightHouse accused of sidestepping FCA guidance
Collapsed rent-to-own firm BrightHouse has been accused of sidestepping Financial Conduct Authority (FCA) guidelines by offering struggling customers payment holidays of just 28 days during the coronavirus crisis, rather than the suggested three months. Campaigners have also voiced concern that administrators at Grant Thornton have been focused on “maximising the value of the loan book collections”, with Mick McAteer, co-founder of the Financial Inclusion Centre think-tank, saying: “There is a potential conflict between the interests of the administrator – and those they represent – and the vulnerable customers who owe money to BrightHouse.”
The Guardian, Page: 28
Independent shops boosted by dip in commuting
Analysis suggests that independent shops in towns and suburban areas have seen positive sales throughout the lockdown period, with such businesses benefitting from a decline in commuting. Andrew Goodacre, chief executive of the British Independent Retailers Association (BIRA), said members are unlikely to join calls for workers to return to city centre offices, saying: “I think at the moment if you are situated in a suburb or small town, or a more local high street, then you are doing better than those in the city centre.” The Guardian notes that Dame Carolyn Fairbairn, the director-general of the Confederation of British Industry, has warned that city centres could become “ghost towns” if the Prime Minister does not do more to encourage workers back to the office.
Early advice can save a firm
Richard Bathgate, a restructuring partner at Johnston Carmichael, says that while speaking to an insolvency practitioner about restructuring a business may be “right up there with a trip to the dentist” when it comes to things people want to put off, seeking early professional advice to assess the options available “could be the difference between life and death for a business”.
The Scotsman, Page: 41
Kooth to float
Online counselling service Kooth is to be floated on the stock market, selling £26m of shares at a valuation of £66m. It will use the proceeds of the float to treat more young people, to expand the service to include older people through the NHS and to launch in the US. It also wants to sign up more private companies. CEO Tim Barker notes Deloitte research showing that businesses saw a £45bn hit due to lost productivity owing to mental health problems.
The Times, Page: 35
Spotify making noise in the podcast world
Spotify is making a play for the wider audio market by strengthening its position in the world of podcasts. A report from Deloitte in December suggested that the podcast industry is set to increase by 30% to $1.1bn this year.
The Daily Telegraph, Page: 5
PROPERTY NEWS – MONDAY 31ST AUGUST 2020
Landlords hit out at CVA abuse
Landlords have accused retailers of “weaponising” CVAs as part of a bid to cut costs, with the British Property Federation (BPF) saying that the restructuring method is being abused. BPF CEO Melanie Leech said of CVAs: “Rather than as part of a sustainable rescue plan for those in genuine distress, they’re becoming a boardroom negotiating tactic for solvent businesses to rip up leases freely agreed with property owners.” She added: “The process is discriminating against property owners, allowing non-affected creditors to vote on a CVA, yet forcing property owners to absorb the lion’s share of the burden.” Meanwhile, Vivienne King, CEO of retail property association Revo, has called for reforms, arguing that landlords are being hit by mistakes made by companies’ management.
ECONOMY NEWS – MONDAY 31ST AUGUST 2020
Economist in debt warning
Philip Booth of the Institute of Economic Affairs says Britain’s pubic debt poses as serious a long-term threat to prosperity as climate change. Mr Booth, who will tomorrow appear before the Treasury Select Committee to discuss tax after coronavirus, says the country’s borrowing levels could overtake Japan, currently the most heavily indebted of the G7 advanced nations. With national debt passing 100% of GDP in July, he added that Britain should be more anxious over its debt-to-GDP ratio rising than Japan, where debt is largely financed by domestic savers and thus less reliant on international interest rates and foreign investors’ confidence. Institute for Fiscal Studies director Paul Johnson has warned that Britain may struggle for finance as it competes with other nations looking to increase deficits post-coronavirus, saying: “There’s a risk the UK becomes rather unattractive given the risks we face around our less than fully competent government, Brexit and possible Scottish independence.”
OTHER NEWS – MONDAY 31ST AUGUST 2020
Prince Harry may qualify for tax loophole
Canadian tax adviser David Lesperance says Prince Harry will likely get a special type of visa so as to avoid becoming what is known as a ‘US person for tax purposes’. This visa is called the O non-immigrant visa and is given to individuals with extraordinary ability or achievement in their field, with Mr Lesperance saying the most noteworthy achievement Harry could point to is founding the Invictus Games.
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