NEWS STORIES WEDNESDAY 15TH APRIL 2020
NEWS STORIES WEDNESDAY 15TH APRIL 2020
TAX NEWS STORIES WEDNESDAY 15TH APRIL 2020
HMRC taxpayer inquiries suspended as pandemic continues
HMRC’s inquiries into taxpayers and firms under investigation have been suspended as the coronavirus crisis continues, with a Government spokesperson commenting: “It is right that HMRC does everything possible to protect individuals, businesses and the economy during this extremely difficult time.” Meanwhile , taxpayers have been requested not to press HMRC for information or documents. Fiona Fernie of Blick Rothenberg cautioned: “For individual taxpayers and businesses whose activities are currently curtailed, it would be sensible for them to use the time they have now to deal with HMRC rather than store up problems for the future.” Separately, the FT notes that HMRC has stepped up efforts to tackle tax evasion, with it now operating 209 task forces to target undeclared earnings.
Donations dwarfed by tax haven cash
Think-tank TaxWatch UK has looked at the corporation tax paid by large tech firms, considering the sum some of the businesses hold in tax havens compared to the value of donations made in the fight against COVID-19. The analysis shows that Microsoft, Apple, Alphabet, Facebook, Cisco Systems, Adobe, Intel and Nvidia made donations of $1.2bn in direct cash grants or through the offer of free services over the two weeks to 8 April, while a study by the Institute on Taxation and Economic Policy found that together they held $571bn in offshore tax havens in 2017. TaxWatch UK calculates that money and services donated accounted for 0.22% of the total amount of profits accumulated in tax havens by the end of 2017. With this in mind, James Moore in the Independent says “there should be no question of delaying the implementation of a digital services tax, as the industry’s lobbyists have reportedly been suggesting, in response to the coronavirus”.
The Independent, Page: 49
INDUSTRY NEWS STORIES WEDNESDAY 15TH APRIL 2020
FRC: No change to going concern
The Financial Reporting Council (FRC) has said that UK companies still need to assess whether they can stay in business for the coming year under existing rules, despite uncertainties caused by the coronavirus. Companies are required to state in their annual reports if they are a “going concern” for the coming 12 months. The FRC said talks with investors showed they still want “high-quality information” during the pandemic. “The FRC clarifies that the accounting and auditing standards on going concern have not changed, nor has the FRC increased pressure on auditors to be tough,” it said. “Auditors should challenge management appropriately on their judgements, and given the current uncertainty ensure they have sufficient appropriate evidence to support the judgements they make.”
CORPORATE NEWS STORIES WEDNESDAY 15TH APRIL 2020
Oasis and Warehouse to collapse into administration
Oasis and Warehouse are set to collapse into administration, putting about 2,300 jobs at risk. Deloitte is expected to handle the insolvency process for the companies, which, until the COVID-19 lockdown, operated 90 standalone stores and more than 400 concessions in department stores. Icelandic bank Kaupthing, which controls the business, had been seeking a new investor to take on the fashion chains, and at least two prospective buyers are thought to have come forward, but a deal is unlikely to be finalised before the imminent administration.
The Times, Page: 38 The Guardian The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 63 The I, Page: 39 The Sun, Page: 43 The Independent Financial Times Daily Star Daily Express, Page: 5 The Scotsman, Page: 15 BBC News
Hix Restaurants appoints administrator
Deloitte has been appointed as administrator to chef Mark Hix’s restaurant and hotel business, with WSH and Mark Hix Restaurants being hit financially by the coronavirus crisis. The pandemic and Government shutdown of sites has put pressure on the hospitality industry, with restaurant chain Carluccio’s appointing FRP Advisory as administrator last month. The sector was facing pressure even before the pandemic struck, with figures showing that the number of restaurant and pub insolvencies were up 10% last year to 1,452 and 526 respectively.
SMEs NEWS STORIES WEDNESDAY 15TH APRIL 2020
FSB in support call for self-employed workers
The Federation of Small Businesses (FSB) has warned that large numbers of self-employed workers have “fallen through the gaps” of Government coronavirus support. The FSB says the recently self-employed, those who work for themselves with annual earnings of more than £50,000 a year and directors of limited companies are among those being left “frightened and bewildered” about their financial situation. FSB national chairman Mike Cherry said those struggling to secure help include “hard-working people who have built up successful businesses and paid taxes all their lives”. Mr Cherry added: “We call on the authorities to look urgently at what help can be provided to those who miss out on the income support for self-employed.”
PROPERTY NEWS STORIES WEDNESDAY 15TH APRIL 2020
One in nine homeowners take mortgage holiday
One in nine UK homeowners has taken a so-called “mortgage holiday” as their finances have been hit by the effects of COVID-19. Figures from UK Finance show lenders have agreed that 1.2m homeowners can delay repayments as jobs are cut and wages reduced. Typically, this defers a mortgage bill of £775 a month, with borrowers given the option of delaying up to three months of repayments. Stephen Jones, chief executive of UK Finance, said lenders had “pulled out all the stops” to hand out an “unprecedented” number of payment holidays.
Help to Buy extension planned to boost housebuilding
The Government is in talks with housebuilders about extending the Help to Buy scheme in order to stimulate the industry once lockdown measures are eased. Help to Buy is due to be replaced in April next year with a scaled-back version. Further possible initiatives being considered by ministers to support builders with cashflow concerns include deferring the payment of planning obligations and extending planning permissions that may otherwise lapse.
ECONOMY NEWS STORIES WEDNESDAY 15TH APRIL 2020
OBR predicts record contraction of economy
The Office for Budget Responsibility (OBR) has warned that the economy could contract by a record 35% by June, with chairman Robert Chote saying this would mark the biggest decline “in living memory”. The OBR forecast suggests a three-month lockdown followed by three months of partial restrictions would see an economic decline of 35.1% in Q2, following growth of 0.2% in Q1. If this scenario plays out, the OBR suggests the UK economy would contract by 12.8% this year but get back to its pre-crisis growth trend by the end of 2020, with extra spending by the Treasury in support of the economy set to help limit damage. The budget watchdog has forecast that unemployment will rise to 10%, from the current 3.9%. Considering the OBR report, Chancellor Rishi Sunak said that while the report was “not a forecast or a prediction but one possible scenario”, he is “deeply troubled” by the warning which highli ghts the “serious implications” COVID-19 will have for the UK economy. “These are tough times, and there will be more to come,” Mr Sunak said, while noting that the OBR expects the economic impacts to be “significant” but “temporary, with a bounce back in growth.”
IMF: Global GDP set to fall 3%
The International Monetary Fund (IMF) has warned that the coronavirus pandemic is set to deal the global economy a blow that exceeds the hit seen during the financial crisis, forecasting that $9trn (£7trn) of output will be lost this year and next. IMF economists expect global GDP will fall by 3% in 2020, the biggest drop since the Great Depression of the 1930s. It forecasts that the UK economy will shrink by 6.5% this year, its biggest fall since 1921, while Germany will see a 7% dip and Italy will see its economy slip 9.1%. Japan, the US and Canada are forecast to see recessions of 5.2%, 5.9% and 6.2% of GDP respectively.
OTHER NEWS STORIES WEDNESDAY 15TH APRIL 2020
Business confidence slides
BDO ’s business confidence index fell by 21.69 points in March to 79.95, marking the sharpest monthly fall since the index was launched 15 years ago, with the decline similar in size to the cumulative falls during the 2008 financial crisis. BDO’s employment index fell by 26.89 points to 85.97, the first dip since November 2012. Kaley Crossthwaite, partner at BDO, said: “The speed of the decline across all indices reveals how the economic crash caused by COVID-19 is different to the 2008 financial crisis when the fall was spread across multiple months.”
The Times, Page: 33 The Scotsman, Page: 36
Contact Paul Southward