Pandemic could bring about inheritance tax changes

The Treasury’s bid to offset the costs of its furlough scheme, which now stand at £14bn per month, is expected to result in changes to inheritance tax rules, with Caroline Pringle, Associate of private client law firm Murray Beith Murray, stating that major reform of the inheritance tax system has been predicted for some time. Both the Office of Tax Simplification and the All-Party Parliamentary Group for Inheritance and Intergenerational Fairness had recommended published reports setting out their recommendations for Inheritance Tax reform even before the coronavirus pandemic struck. Ms Pringle commented: “While wider reform is probably coming, at the moment the government will be looking at how to easily raise revenue and that could mean reducing or restricting the reliefs currently available.”

The Scotsman

Hospitality sector calls for VAT cut

As hotels, pubs and restaurants gear up to return to work on July 4th, bosses are calling for a VAT cut to help businesses recover. Andy Wood, chief executive of brewer and pub chain Adnams, called for VAT on hospitality purchases to be cut to 5% so companies are better able to cope. He also said firms in the industry should be allowed to put staff on taxpayer-funded furlough until spring 2021.

The Daily Telegraph, Business, Page: 5

Letter: A deal on corporate tax rules is still possible

NRS president Bill Parks says the OECD should proceed in developing an international corporate tax system without the US. Countries observing the benefits of sales-based apportionment will soon join in.

Financial Times, Page: 20


FRC investigating audits of London Capital & Finance

The Financial Reporting Council has confirmed it has started three investigations into audits of London Capital & Finance, which collapsed in 2019 leaving 11,600 investors facing losses of up to £237m. The FRC said the first investigation into the investment firm will look at a one-month period that ended April 30, 2015, which was audited by Oliver Clive & Co. The second covers the year ended 30 April, 2016, which was audited by PwC, and the third looks at the year ended 30 April, 2017, audited by EY. It is the first time the FRC has investigated three separate auditors for the same company. PwC said it would cooperate fully with the FRC and had introduced a major ongoing programme to enhance audit quality in June 2019. EY also said it would fully cooperate with the probe. Oliver Clive & Co could not be immediately reached for comment. The FT’s Lex suggests the regulator’s investigation further risks the sector’s reputation and will make lobbying against a break-up of the Big Four harder.

Financial Reporting Council Reuters The Daily Telegraph, Business, Page: 5 Financial Times, Page: 22 The Times, Page: 44 The I, Page: 25 Daily Express, Page: 45 The Sun, Page: 47 The Scotsman, Page: 35 Yorkshire Post, Page: 11


COVID debt defaults could trigger another financial crisis – Lord King

Mervyn King, a former governor of the Bank of England, has warned that a new financial crisis could be triggered by the weight of state and corporate debt. Lord King told the Telegraph’s Planet Normal podcast: “I think the immediate concern facing us over the next few years is that the very high levels of debt we entered the COVID-19 crisis with are going to be exacerbated by even higher levels of debt. So I think we can expect to see many defaults over the next few years as businesses struggle and many governments in various parts of the world will also struggle to repay their debts. So defaults could be the trigger of another financial crisis down the road.” He went on to say that banks in Europe and China were fragile: “I think banks are going to realise they will experience significant losses, not so much on the loans they’ve made since the COVID-19 crisis became evident, but on pre-existing loans that looked very safe when they were made, but now look a lot more dubious.”

The Daily Telegraph, Business, Page: 1

Business urged to keep price hikes minimal

Nadhim Zahawi has warned retailers and the hospitality industry that ministers will be keeping a close eye on prices as the economy reopens and that action will be taken if businesses are found to be price gouging. “If pubs or salons put their prices up consumers will vote with their feet. We have given over £10bn in grants to small businesses and £28bn in the bounce back loan scheme, and so there has been a lot of support from the taxpayer,” the business minister said. “There is also the VAT deferral, the business rates holiday, so the taxpayer has given them enormous support.” However, trade bodies have pointed out that costs for coronavirus mitigation and extra staff will have to covered – small prices may be inevitable just to remain viable. The Telegraph’s Madeline Grant writes that for a “nation of boozers” it is our “patriotic duty to go to the pub”; which she describes as one of Britain’s “last great institutions at a time of overwhelming systemic failure.”

The Daily Telegraph, Page: 1 The Daily Telegraph

Reasons to fear the march of the zombie companies

The FT reports on a rise in the number of firms unable to cover their debt-servicing costs from profits in the long term, which may obstruct post-coronavirus economic recovery.

Financial Times


UK small business investment soars to £8.5bn

The British Business Bank’s annual Small Business Equity Tracker report shows investment in UK tech businesses rose by 27% last year to hit £4bn – the highest level for eight years. The study found that 52% of deals took place outside of London, with the south west of England, Scotland and Northern Ireland showing a strong increase in 2019, rising by 34%, 26% and 24%, respectively. Meanwhile, equity investments into UK “growth stage” companies rose by 39% to £5.3bn. Keith Morgan, chief executive of the British Business Bank, said: “The UK’s small business equity finance market saw a record year in 2019 with investment amounts soaring to £8.5bn. This was a clear sign of investor confidence in UK smaller businesses located across the country and their potential for growth as well as the strong fundamentals of the UK economy as a place to start and grow a business.” Matt Adey, director of economics at the British Business Bank told City AM that there had been “a fair bit of activity in April and there were still deals being done even in May,” despite the coronavirus lockdown.

The Scotsman, Page: 35 The Press and Journal, Page: 27 P2P Finance News City AM


Landlords fear quarter rent day will yield little

High street chains such as William Hill, JD Sports, Primark and Boots were among the companies that failed withheld their quarterly rental payments yesterday, the Times reports, as Colliers International predicts that as few as 10% of property owners’ shop tenants will pay their rent in full this quarter. The news comes as shopping centres operator Intu warned that it may have to close malls if it cannot come to an agreement with lenders, telling investors yesterday that it has appointed accountancy firm KPMG as administrator as part of a “contingency plan”.

The Times, Page: 37 Evening Standard The Guardian City AM


Unite warns of income hit from rising unemployment

Unite the Union members are being affected by large-scale redundancies across the UK economy, with the union facing “significant financial strain” as a result.

Financial Times


IMF warns of $12trn hit from coronavirus

The International Monetary Fund has said the global economy will suffer from a $12trn slump as a result of the lockdowns put in place to stem the spread of the coronavirus. The IMF said it would take two years for world output to return to pre-2019 levels. In the meantime, we can expect the global economy to contract by 4.9% this year, worse that the 3% fall forecast in the Spring. The UK economy was on course to shrink by 10.2% in 2020, the fund said. The United States is expected to contract by 8% this year. The IMF had estimated a contraction of 5.9% in April. Similarly, the fund also downgraded its forecasts for the euro zone, with the economy now seen shrinking by 10.2% in 2020.

The Daily Telegraph The Guardian, Page: 6 Daily Mail

Duncan Smith: Unlocking the economy must be top priority

Sir Iain Duncan Smith voices his concern in the Telegraph that messaging around the danger of coronavirus has been too threatening, citing Cambridge Professor David Spiegelhalter who says Britons under the age of 50 are more likely to die from an accident or injury, under-40s are more likely to die in a car accident and under-25s are more likely to die from flu or pneumonia, than from coronavirus. Duncan Smith asserts that the government must now “sell the reality that unlocking is vital and that the balance of risk and reward clearly favours the resumption of economic and social activity.”

The Daily Telegraph


Former Wirecard boss released from custody as firm negotiates with lenders

Markus Braun, former boss of German payments firm Wirecard, has been released from custody after paying his bail of €5m. He was arrested yesterday on suspicion of falsifying the accounts at the firm, which is now holding emergency talks with lenders. Auditor EY had earlier refused to sign off on Wirecard’s 2019 accounts due to a missing sum of €1.9bn. Meanwhile, authorities in the Philippines are looking for former COO Jan Marsalek as part of a broader probe into the payments group.

Financial Times, Page: 1 The Daily Telegraph, Business, Page: 8 City AM Evening Standard

Contact Paul Southward

Paul Southward