NEWS – THURSDAY 23RD APRIL 2020
NEWS – THURSDAY 23RD APRIL 2020
TAX NEWS – THURSDAY 23RD APRIL 2020
Tax cuts crucial to getting economy moving after lockdown
The Telegraph’s Tim Wallace comments on suggestions from the IMF that countries should introduce tax breaks to help their economies come out of the coronavirus crisis. The IMF recommends cutting taxes that have an effect quickly, such as those paid monthly rather than annually, Wallace notes, pointing to business rates. VAT is also an obvious target as is National Insurance and stamp duty. Regarding VAT, PwC UK’s chief economist John Hawksworth says cutting the tax was “relatively effective” during the financial crisis “in terms of boosting spending power” and if deployed today “could help bring people back on to the high street”.
Workers advised to use payroll giving to donate to pandemic relief efforts
Employees who donate part of their salary to fund pandemic relief efforts may find themselves facing an unexpected tax bill, the Times reports. Peter Hopkins, technical director at AJ Bell, said that unless charity donations are made through payroll giving, bosses and workers may have to pay tax on the salary they have given away. “The rules were never intended to penalise people in this way but the wording was intended to stop charitable gifts through the employer and it looks like they might bite in the current environment,” he said.
Downing Street adopts IHT plan for NHS victims
The government has adopted an idea put forward by former Deloitte partner Allan Beardsworth, who wrote to the No 10 Policy Unit last week suggesting NHS staff and frontline workers killed by coronavirus should be exempted from inheritance tax.
The I, Page: 6
EMPLOYMENT NEWS – THURSDAY 23RD APRIL 2020
UK companies furlough 2.2m employees
New figures from HMRC show 2.2m employees have now been furloughed by a total of 309,000 companies. Some 185,000 firms made claims by the end of Monday and another 124,000 submitted applications on Tuesday; Wednesday’s figures are expected to show a sharp increase on this. The coronavirus job retention scheme sees the state picking up the cost of 80% of staff wages, up to a limit of £2,500 a month for each worker. The total cost to the taxpayer of the claims made will be £2.6bn, HMRC said. The FT reports on concerns that the slowdown in claims on Tuesday points to a lack of flexibility in the scheme’s design.
CORPORATE NEWS – THURSDAY 23RD APRIL 2020
Laura Ashley strikes Gordon Brothers deal
Laura Ashley’s brand, archives and intellectual property have been bought from administration by restructuring firm Gordon Brothers. PwC, which is handling the administration, is still looking for a buyer for the company’s UK operations.
The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 78 The I, Page: 45
Delta cannot help Virgin Atlantic
Delta has ruled out helping Virgin Atlantic citing the conditions of its bailout by US authorities. The US airline owns 49% of the British firm, which is continuing rescue talks with the UK government.
Travelex for sale in latest blow to parent Finablr
British forex group Travelex has asked PwC to seek offers for the group, with the COVID-19 outbreak adding to woes stemming from a damaging cyber-attack at the start of the year.
Scandal-hit Hin Leong seeks to cede control to PwC
Singapore oil trader Hin Leong is seeking to appoint PwC to run the business as the firm pursues a near-$4bn debt restructuring after admitting to $800m of undisclosed losses.
KPMG special audit into Wirecard runs into second delay
German payments company Wirecard said yesterday that KPMG’s special audit of its financial statements are delayed again but that “no substantial findings” have so far been made.
REGULATION NEWS – THURSDAY 23RD APRIL 2020
Bailout funds should be disclosed
Private Eye’s In the City column says more transparency about which large companies are receiving government support to survive the coronavirus pandemic is needed, particularly as the cash is being spread out across all sectors, making accounting for taxpayers’ cash all the more difficult. The piece urges the Financial Reporting Council to require auditors to press companies that have taken emergency funds to disclose details of the funding. Disclosure of government support should also form part of auditors’ determination of whether a company is a going concern or not. The piece concludes by arguing that “disclosing bailout money could and should be a brake on future corporate excess”.
SMEs NEWS – THURSDAY 23RD APRIL 2020
Hiscox facing legal action over pandemic payouts
Coordinated legal action against Hiscox is being planned by over 100 nightclubs, pubs and bars over the insurer’s non-payment of business interruption insurance claims. Michael Kill, chief executive of the Night Time Industries Association (NTIA) coordinating the action, remarked: “Businesses are being denied legitimate insurance claims, many claims are being disputed by insurers based on contrived arguments to avoid sharing the financial burden during the COVID-19 crisis.” Two separate Hiscox action groups, together involving some 200 further claimants, are also considering taking legal action.
The Guardian Daily Mail, Page: 78
Five in six firms unable to cope if lockdown extended
A new survey by the Business West Chambers of Commerce indicates just one in six firms will able to deal with the financial consequences of a lockdown lasting six months. If the lockdown were to last for 12 months the proportion confident of survival falls to less than 10%.
The Independent, Page: 51
PENSIONS NEWS – THURSDAY 23RD APRIL 2020
Pension switching times speed up
Research by fintech company Origo reveals providers’ overall pension switching times have improved over the past year, now taking on average of 8.8 days to complete, half a day less than last year. Simple transfers now take a week to complete, down from 7.9 days the previous year. Hargreaves Lansdown was named the slowest provider to switch pensions through the Origo transfer service, taking an average of 30.2 calendar days to transfer a pension between 1 April 2019 and 31 March 2020. The fastest performing providers were NFU Mutual at 4.9 days and Canada Life at 5.6 days.
ECONOMY NEWS – THURSDAY 23RD APRIL 2020
Inflation set to continue downward trend
Inflation was down in March as oil prices fell and the coronavirus kept shoppers away from stores. The Consumer Prices Index (CPI) inflation rate was 1.5% for the month – down from 1.7% in February, according to the Office for National Statistics (ONS). Robert Alster, head of investment services at Close Brothers Asset Management, noted: “A collapse in consumer demand combined with plummeting oil prices meant that declining inflation in March was inevitable, and is likely to continue through the duration of the COVID-19 crisis.” Separately, analysis by KPMG suggests the West Midlands will be hit harder than any other region by the coronavirus pandemic with the region expected to see a 10.1% fall in economic activity. KPMG said London was better placed than other regions to maintain its economic activity, despite suffering the highest number of cases and deaths in the pandemic. The capital will contract by 7.3% this year, the report found.
Confidence evaporates among Europe’s crisis-hit consumers
Consumer confidence has dropped to its lowest level since the financial crisis in the eurozone with the European Commission’s measure of household morale plummeting to -22.7 for April, from -11.6 in March. Melanie Debono, Europe economist at Capital Economics, predicts consumer spending to fall by 12% over the whole year – compared with a drop of only 1% in 2009.
OTHER NEWS – THURSDAY 23RD APRIL 2020
A third of UK households believe they will need state support
A third of UK households expect to require financial support from the government over the next months as fears over job security and the state of the economy grow, according to research by Kantar. The public also doubts there will be a swift V-shaped recovery, with half of respondents believing the economy will be in a worse condition next year.
Five more public authorities to gain ‘snooper’s charter’ powers
The Guardian reports that the Insolvency Service is among five more bodies due to be granted permission to access personal phone and computer data under the Investigatory Powers Act. Documents published by the government say the bodies should be given access because they are “increasingly unable to rely on local police forces to investigate crimes on their behalf”.
The Guardian, Page: 19
Contact Paul Southward