NEWS – THURSDAY 3RD DECEMBER 2020
NEWS – THURSDAY 3RD DECEMBER 2020
TAX NEWS – THURSDAY 3RD DECEMBER 2020
Chancellor hints at tax rise
With the UK deficit on course to hit £394bn this year due to the increasing cost of the coronavirus crisis, Rishi Sunak has suggested tax rises could be needed sooner rather than later as he looks to balance the books. The Chancellor told Times Radio that with interest rates low, “servicing that debt, the interest we pay on that debt is exceptionally low, which means it is affordable.” Noting that the country is “much more sensitive” to changes in interest rates and inflation, he added: “And if they moved against us, that’s problematic.” The Telegraph’s Harry Yorke cites Government sources who last night insisted it is too early to discuss potential tax rises, adding that any decisions were unlikely to come until the economic outlook was more certain.
Sunak warned over tax hikes and austerity
Experts warn that inheritance tax bills could increase as the Treasury moves to stabilise the economy in the wake of the coronavirus pandemic, with a review carried out by the Office of Tax Simplification laying out potential changes to capital gains tax that could also have consequences for IHT bills. Graham Boar of UHY Hacker Young says recent proposals are “designed to increase tax revenue and add complexity rather than simplify CGT.” Meanwhile, Richard Murphy of Tax Research UK reflects on options open to Chancellor Rishi Sunak, saying: “If he opts for austerity and tax hikes, then frankly we are heading for depression rather than a recession.”
HMRC clarifies stamp duty rules on mixed use buildings
HMRC has clarified rules regarding stamp duty payments, stating that investors buying buildings which consist of residential and commercial premises should not be forced to pay a 3% surcharge usually applied to buy-to-let properties and second home purchases. Blick Rothenberg says that many landlords who own mixed use buildings will have paid over the odds and could now be entitled to claim the tax back. The firm’s Sean Randall said a “significant tax saving may be due” for some owners.
Taxman criticised over scam stance
A Work and Pensions Committee inquiry has been told that HMRC has benefited from criminal activity by pursuing victims of pension scams. Victims have told MPs, money had vanished despite being in funds registered with HMRC, with some then facing fines because the schemes broke tax laws. Labour MP Debbie Abrahams said the registration of pension schemes by HMRC and the Pensions Regulator appeared “absolutely worthless”, while Rick Muir of the Police Foundation told the hearing that the Revenue’s approach to victims was “unrelenting and uncompromising”.
Daily Mail, Page: 23
CORPORATE NEWS – THURSDAY 3RD DECEMBER 2020
IS urged to ‘rigorously’ examine Arcadia report
Business Secretary Alok Sharma has asked the Insolvency Service (IS) to take a “rigorous” look at the actions of directors at Arcadia and their conduct in regard to the collapsed retail empire’s pension scheme, which has a £350m deficit. As is normal practice in such circumstances, administrators Deloitte are required to provide the IS a report into the conduct of directors within three months. Meanwhile, Lady Tina Green, the retailer’s ultimate owner, is to add the second half of a promised £100m injection into the fund within the next 10 days. The payout had been due in September 2021 as part of a previously struck agreement with The Pensions Regulator and trustees.
The Guardian, Page: 35 The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 28 Daily Mirror, Page: 20 Financial Times, Page: 9 The Times The Independent, Page: 51 Daily Mirror, Page: 20 Daily Express, Page: 7
Bonmarché back in administration
Retailer Bonmarché has fallen into administration for the second time in little more than a year, putting almost 1,600 jobs at risk. Administrators at RSM have been appointed to find a buyer for the chain, with the retailer expected to continue trading while RSM assesses its options. Bonmarché was snapped up by retail entrepreneur Philip Day in February. His other brands – including Peacocks, Jaeger and Edinburgh Woollen Mill – went into administration last month. Damian Webb of RSM says interest to date suggests that there will be a number of potential buyers.
Debenhams claimed £40m under furlough scheme
HMRC records show that Debenhams, which is being liquidated after FRP Advisory was unable to find a buyer, claimed £40.5m through the furlough scheme after it fell into administration. A spokesman for Debenhams said the money was used “in exactly the way the scheme was intended”, to preserve jobs while stores were closed during the coronavirus lockdown. The Telegraph notes that administrators are allowed to furlough staff and make claims under the job retention scheme, with HMRC saying this should only be used if there is a reasonable likelihood of retaining the employees.
Prezzo on the menu for investment firm
Restaurant chain Prezzo has been bought by private investment firm Cain International for an undisclosed sum. Cain said it bought Prezzo, which underwent a CVA in 2018, as a going concern after it was put up for sale by the private equity firm TPG, with FRP Advisory hired to conduct an auction in July. Elsewhere, natural fast-food chain Leon has appointed Quantuma to launch a CVA that will seek to deliver a reduction in rents.
The Daily Telegraph, Business, Page: 3 The Times, Page: 50 The I, Page: 52
BUSINESS RATES NEWS – THURSDAY 3RD DECEMBER 2020
Tesco and Morrisons repay rates relief
Tesco has announced that it will repay £585m in business rates relief received from the Government during the coronavirus crisis, with chairman John Allan describing it as “the right thing to do” now that some of the risks from the pandemic were behind the business. Morrisons has also vowed to return the Government support, saying it will hand back its £274m of rates relief. Experts from real estate advisers Altus Group estimate that between them, Britain’s four largest grocers – Tesco, Sainsbury’s, Asda and Morrisons – and German discounters Aldi and Lidl would save around £1.87bn via the rates holiday.
EMPLOYMENT NEWS – THURSDAY 3RD DECEMBER 2020
Wages in UK kept down by pandemic
A report from the International Labour Organisation (ILO) shows that the UK has seen the clearest drop in wages during the coronavirus pandemic, with average real wages down by around 2% in the first half of this year compared to 2019. The analysis highlights that countries including Canada, France, Italy and the US have seen average pay levels rise during the crisis, with this attributed to the fact that most of those losing jobs were low earners. The report also shows that among G20 countries, the UK saw the joint-biggest fall in average real wages between 2008 and 2019, with Japan and Italy the only other countries to record a decline. The period saw real wages in the UK slip by 4%.
PROPERTY NEWS – THURSDAY 3RD DECEMBER 2020
Vaccine may protect against house price slump
Analysts believe the approval of a coronavirus vaccine could help prevent a downturn in the housing market. Although the market has been strong since the end of the UK’s initial lockdown – with Office for National Statistics data showing a 4.7% year-on-year price increase in September and Nationwide reporting a 6.5% annual climb in November – there has been concern that the end of the stamp duty holiday in March 2021 might see prices and activity slide. PwC economist Jamie Durham says a vaccine and the potential for a return to something nearing normality by Easter “may help to mitigate the risk of a more severe downturn in house prices in 2021 than would otherwise have been the case.”
ECONOMY NEWS – THURSDAY 3RD DECEMBER 2020
Analysts: Vaccine will inject optimism but economic benefits may take months
Analysts have predicted that the approval – and impending rollout – of the Pfizer/BioNTech coronavirus vaccine is unlikely to deliver an immediate boost to the economy. Michael Hewson, chief market analyst at CMC Markets, said that even if the first round of jabs are given out this month “it’s likely to be several months before we start to see a possible economic benefit in terms of an easing of restrictions”. Caroline Simmons, CIO at UBS Global Wealth Management, said the vaccine will inject a “dose of optimism” into domestic and global markets, saying global output and corporate earnings “are on course to return to pre-pandemic highs by the end of 2021”. PwC chairman Kevin Ellis said the start of the immunisation programme may support consumer spending in the short term and enable employers to plan for a post-coronavirus world. “The economy will recover , but won’t look exactly the same and people will need help with the transition,” he added.
Contact Paul Southward