NEWS – THURSDAY 14TH MAY 2020
NEWS – THURSDAY 14TH MAY 2020
CORONAVIRUS (COVID-19) SUPPORT FOR BUSINESS
Job retention scheme is extended until October
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TAX NEWS – THURSDAY 14TH MAY 2020
PM warned over tax increase
The Times reports that Boris Johnson has been warned against raising taxes, with senior Conservatives telling the Prime Minister that he risks “entrenching” the impact of the coronavirus crisis if he does so. With a leaked Treasury document suggesting the pandemic would cost the exchequer almost £300bn this year, potentially requiring income-tax rises, a public pay freeze and an end to the triple lock on state pensions, a cabinet minister has said. “We should be looking at policies that open up the economy – we will need fiscal stimulus. Taxes need to be lower rather than higher.” The Times’ Oliver Wright, Eleni Courea and Greg Hurst consider Chancellor Rishi Sunak’s options for cutting the deficit, including scrapping the triple tax lock, a manifesto pledge vowing no increases in income tax, national insurance or VAT for five years. They also weigh options including changes to pension tax relief and corporation ta x increases. The Guardian highlights that think-tanks including the Institute for Fiscal Studies and the National Institute of Economic and Social Research have suggested tax increases may be the solution for tackling the budget deficit.
EMPLOYMENT NEWS – THURSDAY 14TH MAY 2020
Self-employed grant scheme sees 110k first day claims
The first day of the Government grant scheme for self-employed people whose businesses are affected by coronavirus has seen claims worth over £340m. A total of 110,000 people submitted claims worth an average of £3,090 by midday on Wednesday under the new Self-Employment Income Support Scheme, HMRC chief executive Jim Harra said. Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed, said the initiative provided “a much-needed lifeline to those self-employed people who are eligible for it.” “We continue to urge the Government to open out support schemes to these struggling groups,” he added.
Return to offices may hit productivity
The Telegraph looks at how businesses in London will return staff to offices despite two-metre social distancing rules that mean public transport capacity could be cut by up to 90%. It says many employers are having to stagger shifts or have fewer workers on site overall, which is likely to affect productivity. The piece notes a PwC poll showing that 22% of Londoners never want to work from home again, even though two thirds felt they were more productive when doing so.
The Daily Telegraph, Business, Page: 3
7 in 10 firms have furloughed staff
Analysis by the British Chambers of Commerce suggests 71% of businesses have furloughed a portion of their workforce. The poll saw 63% say they would be able to call furloughed staff back to work as the Government started to lift lockdown restrictions. Of the 601 companies which participated in the survey, 36% have either applied for a bounce back loan or intend to. Almost one in five said that they had concerns about repaying the loan.
The Times, Page: 35
Taxman sees 800 furlough scheme fraud claims
HMRC says it has received 795 reports of potential fraud related to the Coronavirus Job Retention Scheme. A Government spokesperson said: “HMRC is committed to ensuring the tax systems we operate are used fairly and efficiently and, where necessary, will take action to ensure compliance with the relevant rules, regulations and legislation that govern the UK taxation systems.”
The Independent, Page: 54 The Guardian, Page: 5 The Sun, Page: 45
REPORTING NEWS – THURSDAY 14TH MAY 2020
Pandemic spawns new reporting term ‘Ebitdac’ to flatter books
The FT reports that a new metric dubbed ebitdac – earnings before interest, tax, depreciation, amortisation and coronavirus – is being utilised by firms seeking to flatter their financial results.
CORPORATE NEWS – THURSDAY 14TH MAY 2020
Tip-offs over improper conduct increase
Whistleblower activity regarding inappropriate behaviour at financial firms has increase by more than a third, data obtained by Kroll reveals, with a 3.5% increase in whistleblowing tip-offs to the FCA overall.
Insolvency inevitable for some Scottish clubs
A Football Distress Report from Begbies Traynor suggests the financial implications of the coronavirus pandemic could prove “fatal” for some Scottish football clubs with insolvencies “probably inevitable”. The firm’s Ken Pattullo said: “There are real concerns that cash-strapped clubs may be pushed to the brink of insolvency … Finances are already stretched and every match that isn’t played means income from matchday ticket sales and hospitality is lost.”
The Scotsman, Page: 64 The Press and Journal, Page: 46
Wirecard hit by shareholder lawsuit over disclosures
An investor lawsuit against payments group Wirecard has been filed in Munich, accusing it of “false, omitted and incomplete” disclosures on the back of findings in a special audit by KPMG.
Virgin not based in a tax haven
In a letter to the Mirror, Nick Fox of Virgin Group clarifies that Virgin Atlantic is not based in a tax haven and is a UK company and business. He adds that “the fact its largest ultimate shareholder lives outside the UK has no impact on the benefits it brings to the UK economy, through tax or otherwise.”
Daily Mirror, Page: 36
Sage announces fall in new customers
Accountancy, payroll and payment software firm Sage Group has announced that new customer numbers were down to around 50% of the level it had been expecting last month, with businesses wary of making spending decisions as the coronavirus pandemic continues. Results for the half year to March 31 showed underlying pre-tax profits remained flat at £275m on revenues up 5.7%.
The Daily Telegraph The Times, Page: 41 The Independent, Page: 58
SMEs NEWS – THURSDAY 14TH MAY 2020
London firms struggling as pandemic effects hit
A YouGov survey commissioned by City Hall’s London Growth Hub has revealed that some 23% of London firms are close to collapse, with 5% saying they will not last more than a month. Mayor of London Sadiq Khan has written to Chancellor Rishi Sunak and Business Secretary Alok Sharma, outlining concerns and urging them to “continue to take whatever action is needed to support our economy and to fight off unemployment, homelessness and poverty.” “That must urgently include more help for small and medium-sized businesses which are struggling to pay rent and making more companies eligible for government support grants,” he added.
PROPERTY NEWS – THURSDAY 14TH MAY 2020
Estate agents in England allowed to reopen
Plans to restart England’s housing market have been announced by the Government, with estate agents permitted to open and viewings allowed to take place, among other updates. Housing Secretary Robert Jenrick said: “Our clear plan will enable people to move home safely, covering each aspect of the sales and letting process, from viewings to removals,” adding: “This critical industry can now safely move forward, and those waiting patiently to move can now do so.” Property markets in Wales, Scotland and Northern Ireland remain closed under lockdown regulations however.
BBC News Daily Mail
ECONOMY NEWS – THURSDAY 14TH MAY 2020
Chancellor in recession warning
Chancellor Rishi Sunak has warned that “a significant recession” in the UK is likely. This came after a fall in GDP of 5.8% was recorded in March, with the economy shrinking 2% in the first quarter of 2020. The Office for National Statistics said there had been “widespread” declines across the services, manufacturing and construction sectors. Mr Sunak said the Government has taken action to “support people’s jobs, their incomes, livelihoods at this time and support businesses so we can get through this period of severe disruption and emerge stronger on the other side.” Ruth Gregory, senior UK economist at Capital Economics, said the figures showed the UK economy was “already in freefall within two weeks of the lockdown going into effect”, while Melanie Baker, senior economist at Royal London Asset Management, commented: “The economic damage from roughly only a week of lockdown is striking,” before predicting that activity growth in April “will be much worse.” Suren Thiru, head of economics at the British Chambers of Commerce, said: “The speed and scale at which coronavirus has hit the UK economy is unprecedented”.
Contact Paul Southward