NEWS – MONDAY 8TH FEBRUARY 2021
NEWS – MONDAY 8TH FEBRUARY 2021
TAX NEWS – MONDAY 8TH FEBRUARY 2021
High street chiefs for level playing field
The bosses of supermarkets and high street chains have asked the Chancellor to overhaul the current tax system to put them on a “level playing field” with digital rivals. A letter signed by Asda chief Roger Burnley and Morrisons CEO David Potts, along with 18 other prominent retail figures and high street landlords, warns the sector has already lost nearly 15,000 jobs with “many more to come”. They continue: “Reducing business rates for retailers and rebalancing the tax system to ensure online retailers pay a fair share of tax would be revenue-neutral, provide a vital boost to bricks-and-mortar retailers and support communities in need of levelling up.” The letter follows news first published in the Sunday Times that the Chancellor is considering new taxes for businesses which profited from Covid lockdowns. An “excessive profits tax” could be used to keep bricks-and-mortar retailers afloat, reports have suggested, but a Government spokesman said this was “not something the Treasury is looking into”.
Now is the time to reform the UK’s dysfunctional tax system
The FT’s Martin Wolf says the Chancellor needs to take a strategic look at the UK’s tax system, be honest about the country’s fiscal priorities, and make a start on radical reforms.
REGULATION NEWS – MONDAY 8TH FEBRUARY 2021
Cost of liability insurance for company directors soars
The cost of insuring British directors has doubled in the past year, the FT reports, and could rise further with proposed new regulations making directors personally responsible for the accuracy of financial statements. Meanwhile, the Telegraph details industry fears that making directors personally liable for any errors in their accounts could deter entrepreneurs from starting their businesses in the UK, potentially causing them to incorporate in rival European tech hubs.
CORPORATE NEWS – MONDAY 8TH FEBRUARY 2021
Restaurants were in trouble before pandemic struck
Britain’s leading restaurants had lost over £500m in the 12 months ahead of the first lockdown in March last year, according to a study by UHY Hacker Young. Peter Kubik, a partner at the firm said: “These figures reveal how seriously the restaurant industry was already struggling pre-pandemic. Restaurants will be still having to absorb the impacts of lockdowns for weeks or months to come. The Government has stepped in to help, but it’s likely that even more will need to be done. At the very least, the hospitality VAT cut will almost certainly have to be extended.”
The Times, Page: 33 The I, Page: 11
Britain’s economy faces lengthy recovery as business debt soars
Figures from EY show British businesses took on debt at more than twice the normal average growth rate since the coronavirus crisis began and are on course to have borrowed £61bn by the end of 2021. EY forecasts a £26bn rise in borrowing from banks this year – as much as £17bn more than in 2019 – with the scale of debt raising fears of weaker investment and a hamstrung economic recovery. Separately, business surveys from NatWest and BDO show that tougher lockdown measures at the start of the year triggered a broad-based contraction in business activity.
The Guardian, Page: 29 The Times, Page: 37
UK M&A begins 2021 at pace
The value of deals involving a UK company hit $38.8bn in the first few weeks of 2021 – a high not seen since the 2008 crash, according to Dealogic. “People have fully grasped that deals can be done, and done quickly, under lockdown,” said Nick O’Donnell, who advises on deals for law firm Baker McKenzie. “The strange outcome is that we find ourselves in a very counter-intuitive place where the possibility of a return to more normality later this year is now the largest known unknown.”
PROPERTY NEWS – MONDAY 8TH FEBRUARY 2021
Think tank calls for end to stamp duty
Gerard Lyons, a senior fellow at the Policy Exchange think-tank and an adviser to Boris Johnson when he was London mayor, has urged the Chancellor to extend the stamp duty holiday permanently or even scrap the tax altogether. Mr Lyons said: “The current stamp duty holiday should become permanent with stamp duty being abolished on lower valued properties. Temporary freezes in stamp duty are not a solution as they prompt a spurt in demand as people try to buy before the tax is raised again, pushing prices higher, out of the reach of many first time buyers.” The Telegraph notes that Policy Exchange has a strong track record of having its suggestions adopted by the Government.
New property tax dismissed by ministers
The Mail reports that ministers have now ruled out a new property levy to replace stamp duty and council tax after reviewing proposals for a “proportional” tax based on home values. A Government spokesman yesterday said: “We have no plans to introduce a new form of annual property tax.”
Daily Mail, Page: 14
ECONOMY NEWS – MONDAY 8TH FEBRUARY 2021
UK skirts double dip recession despite £250bn hit to economy
Analysts expect the loosening of Covid restrictions in the run-up to Christmas to have helped the UK avert a double-dip recession. Stockpiling ahead of Brexit in December also boosted the economy, according to Paul Dales, chief UK economist at Capital Economics, which predicts a 10% slide over 2020 overall, marking the worst economic hit for more than 300 years. The Bank of England is braced for a 4% slide in the current quarter. The blow to growth leaves the UK economy nursing almost £250bn in lost output, according to Nomura economist George Buckley.
Manufacturers call for a new Marshall Plan
Ministers have been urged to devise an industrial strategy akin to the Marshall Plan to help British manufacturers recover from the pandemic. Stephen Phipson, the chief executive of Make UK, said that Britain needed an industrial strategy as ambitious as the American aid programme that helped to rebuild western Europe after the Second World War. He added that as well as the pandemic, manufacturers have been wrestling with complications at Britain’s borders after the end of the Brexit transition period on December 31.
The UK companies seeing the upside of Brexit
The FT considers which companies will benefit from Brexit, with EY’s Mark Gregory pointing to likely growth in the food and advanced manufacturing sectors while Simon Hart at RSM assures readers new regulatory systems will bed down.
Contact Paul Southward