NEWS – THURSDAY 15TH OCTOBER 2020

NEWS ROUNDUP

TAX NEWS – THURSDAY 15TH OCTOBER 2020

Questions raised over digital services tax

MPs have voiced concern over the digital services tax following reports that tech giant Amazon will not be affected by the levy as it will pass on the cost to small traders who use its online marketplace. Dame Margaret Hodge, chair of the All-Party Parliamentary Group on Anti-Corruption and Responsible Tax, said: “The Treasury must go back to the drawing board on the digital services tax so that we can properly tax tech companies like Amazon and create a fairer system for high street businesses.” She added that the tax appears to be “full of loopholes”. Damian Collins, former chair of the Digital, Culture, Media and Sport Select Committee, said the levy, which was brought in to “try to make up some of the tax that should be paid” by large tech firms, “will have failed if this is how it is applied.” Leo McKinstry in the Express calls for a reform of taxation that would target large tech firms, proposing new taxes on sales or turnover.

The Daily Telegraph The Independent, Page: 49 Daily Mail, Page: 23 Daily Mirror, Page: 8 Daily Express, Page: 12

Higher taxes needed to balance the books

The Organisation for Economic Co-operation and Development (OECD) has suggested that higher taxes could be the path to easing national debt that could hit 120% of GDP in the wake of the coronavirus pandemic. OECD economists say higher taxes, tight controls on spending and new measures to boost jobs and growth may be required, mooting measures including the removal of some tax exemptions and reliefs, making pensions wealth liable for inheritance tax and a tougher crackdown on tax evasion. Meanwhile, the International Monetary Fund says the wealthy should pay higher taxes to ease economic pressure brought about by the pandemic. Its head of fiscal policy, Vitor Gaspar, said officials across global economies should “adopt measures to improve tax compliance and consider higher taxes for the more affluent groups and highly profitable firms”.

The Daily Telegraph, Business, Page: 3 Daily Mail, Page: 77

Barratt boss calls for stamp-duty reform

David Thomas, the boss of housebuilder Barratt, has called for a reform of stamp duty that goes beyond the holiday that was rolled out during the coronavirus crisis and is set to end in March next year. He said: “We’ve got to be thankful that the holiday has brought so many customers to market,” but added that “permanent change is a different conversation.”

The Daily Telegraph, Business, Page: 4

EMPLOYMENT NEWS – THURSDAY 15TH OCTOBER 2020

Firms call for mandatory reporting of ethnicity pay gaps

A letter to the Telegraph calls on the Prime Minister to make it mandatory for organisations to report on their ethnicity pay gap. Noting that 11% of companies have already done so, signatories say voluntary publication “will never be enough”, adding that until all organisations with more than 250 employees have to report on their pay gap, “none of us will have the depth of insight that we need to bring about change at the right scale.” They add that UK businesses “stand ready to make this country one of the fairest places to work in the world”, arguing that mandatory ethnicity pay-gap reporting “would be a monumental step towards that ambition”. Signatories include KPMG vice chair Richard Iferenta; Grant Thornton CEO David Dunckley; Deloitte deputy CEO Dimple Agarwal; Hywel Ball, UK&I regional managing partner at EY; and PwC’s chief people officer, Laura Hinton.

The Daily Telegraph, Page: 19

One in five bosses expect job cuts by year-end

A fifth of UK business bosses believe they will need to axe up to one in 10 of their workforce by the end of the year, YouGov research reveals. The poll of 1,108 key decision makers shows that 21% expect to reduce headcount by around 10% before 2021, with this climbing to 26% among bosses at businesses employing more than 250 people. More than 10% of hospitality and leisure businesses plan to make cuts of more than 50% of their workforce by year-end, with 8% in the real estate sector and 6% in retail saying the same.

Daily Mail

CORPORATE NEWS – THURSDAY 15TH OCTOBER 2020

GBK bought in rescue deal

Gourmet Burger Kitchen has been saved, with Boparan Restaurant Group, which took Carluccio’s out of insolvency earlier this year, snapping up the chain in a pre-pack administration overseen by Deloitte. The deal will see 26 branches close, with the loss of 362 jobs. Gavin Maher, joint administrator at Deloitte, said: “As with a number of dining businesses, the broader challenges facing bricks and mortar operators, combined with the effect of the lockdown, resulted in a deterioration in financial performance.”

The Times, Page: 39 The Guardian, Page: 35 The Daily Telegraph, Business, Page: 3 Financial Times, Page: 12 I, Page: 42 The Sun, Page: 46 Daily Star, Page: 2

Nestlé hungry for Mindful Chef deal

Online recipe box business Mindful Chef could soon have a new owner, having entered into exclusive negotiations with Nestlé. The sale process, run by KPMG and expected to see the firm change hands for around £50m, is expected to conclude shortly.

The Times, Page: 40

PROPERTY NEWS – THURSDAY 15TH OCTOBER 2020

Pandemic to hit retail property values

A Duff & Phelps poll of investors suggests retail property values are expected to fall up to 40% over the next year due to the coronavirus crisis. The survey saw 37% of investors say they expect retail to suffer the worst long-term damage, while 36% flagged hotels as the sector likely to be hardest-hit. Most respondents expect these sectors to see a drop in value of between 10% and 40%. Almost four in 10 expect the pandemic to take between 5% and 10% off the value of commercial real estate assets in 2020, while almost a third predict a drop of 10% or more. More than a third believe the online shopping boom will see the industrial and logistics sector emerge the strongest, with 29% pointing to residential assets. Many investors foresee a bounce back in 2021, with 90% expecting asset prices to go back to pre-pandemic levels next year.

City AM

Mortgage applications soar after lockdown

Mortgage applications soared to an estimated value of £216bn after the coronavirus lockdown was lifted, however the closure of the housing market means lending is expected to be down compared to last year. Research from Experian shows that mortgage applications were up 13% year on year in July, followed by rises of 25% in both August and September. According to data from the credit reference agency, 1.2m mortgages will be agreed this year at a value of £216bn, compared to 2019’s £250bn across 1.5m loans. Lisa Fretwell, managing director of data services at Experian, said: “ Tax incentives and an extended period indoors have encouraged people to make a move this summer.”

City AM

ECONOMY NEWS – THURSDAY 15TH OCTOBER 2020

OECD: Disorderly Brexit could damage UK’s economic recovery

The OECD has warned that the UK’s economy faces a double risk to recovery from a disorderly Brexit as the coronavirus pandemic drags down growth. The think-tank said the COVID-19 pandemic would further complicate a disorderly Brexit as companies were less prepared for the end of the transition period, having diverted attention away from leaving the EU. It warned that failure to secure a free trade agreement before the UK leaves the Brexit transition period at the end of December would leave the economy 6.5% lower in the next few years than would have been the case if existing arrangements with the EU had been maintained.

The Guardian

OTHER NEWS – THURSDAY 15TH OCTOBER 2020

Supply warning sparks electricity concern

The National Grid has warned of tight electricity supply margins as power plant shutdowns coincide with low output from wind farms in the coming days. The Times says the rise of intermittent renewable generation has posed challenges in balancing supply and demand. Tom Haddon, a utilities analyst at PwC, said: “We need to ask questions of policymakers on incentivisation of batteries and low-carbon firm generation”, saying the issue is “a dashboard warning light on the journey” to emissions hitting net zero.

The Times, Page: 36

Contact Paul Southward