NEWS – THURSDAY 8TH OCTOBER 2020
NEWS – THURSDAY 8TH OCTOBER 2020
TAX NEWS – THURSDAY 8TH OCTOBER 2020
New VAT rules for overseas visitors risks harming tourism
The boss of the owner of Bicester Village, Value Retail, has criticised a new rule which will stop overseas visitors from reclaiming VAT on luxury purchases in the UK. New laws would mean visitors from overseas would have to recoup the VAT by posting the products home directly from shops, something James Lambert says has been done by precisely zero customers visitors to Bicester Village. Mr Lambert added: “We operate 11 villages around the globe and our experience is that typically none of our guests make use of the ship-to-home option.” Separately, Alan McLintock at the Chartered Institute of Taxation said a Whitehall consultation on the tax relief was misleading. Speaking to MPs on the Treasury Select Committee, he said: “It indicated that it was minded to extend [the relief] to EU passengers [after we leave the EU]. The whole steer and flavour of the consultation was about continuing on.” The Telegraph asserts that the move is part of the Treasury’s plan to bring the tax relief in line with other systems post-Brexit.
EMPLOYMENT NEWS – THURSDAY 8TH OCTOBER 2020
Over £250m grants for the self-employed fraudulent or paid in error
HMRC has said up to £258m in grants for the self-employed could have been fraudulent or paid in error, amounting to 1-2% of all Self-Employment Income Support Scheme (SEISS) payouts. A total of £12.9bn has been paid out in 4.7m grants and so HMRC is confident its system has prevented wide-scale fraud. Andrew Chamberlain from the Association of Independent Professionals and the Self-Employed, comments: “When compared to the Bounce Back Loan Scheme, where £26bn has been lost from fraud or default, or the Job Retention Scheme, which has lost £3.5bn through default or error, these numbers are comparatively low.”
Frasers denies breaking furlough rules
Frasers has insisted it did not break the rules following claims that staff were encouraged to work while on the Coronavirus Job Retention Scheme. The group’s Sports Direct unit was accused of asking some furloughed shop managers to move stock from stores to depots at the peak of the pandemic, after a surge in online orders. But finance chief Chris Wootton told investors he was very confident the company had followed the rules.
PENSIONS NEWS – THURSDAY 8TH OCTOBER 2020
New Bill will put pension pot pinchers in prison
Therese Coffey, the Work and Pensions Secretary, told the Commons yesterday that the Government will “strengthen protections for savers” as part of the Pension Schemes Bill. Introducing the second reading of the Bill, Ms Coffey told MPs: “This Bill […] creates a new style of pension scheme that has the potential to increase future returns for millions of working people while being more sustainable for employees and employers alike. The Bill has consumer interests at its heart. It strengthens protections for savers by extending the pension regulator’s sanctions regime. Prison for pension pot pinchers will, I hope, deter reckless bosses from running schemes into the ground.”
The Daily Telegraph Daily Express, Page: 2
State pension money missed out on by some divorcees
Women who divorce later in life may be unknowingly missing out on thousands in extra state pension money, according to new analysis by Lane, Clark and Peacock. Former pensions minister Sir Steve Webb, who conducted analysis of the subject, found that a number of divorcees, widows and married women were unaware they could claim a state pension based on their husband’s records. Sir Steve urged all women who could be affected to contact the DWP to see if they can raise the amount they receive under the state pension.
CORPORATE NEWS – THURSDAY 8TH OCTOBER 2020
Solid listings help London keep float status
A revival in IPOs in the third quarter helped London maintain its status as one of the top markets for company flotations, according to a report from EY. “Despite the transaction numbers remaining low, London has maintained its position behind the US and China for funds raised both in the quarter and in the year to date, according to preliminary global data,” EY said. Scott McCubbin, EY’s leader on IPOs, said that the revival in activity “not only signals an increase in appetite for companies to list, but a successful adoption of virtual IPO marketing in place of the traditional face-to-face meetings”.
Sanjeev Gupta-linked companies with just 11 staff took millions in UK loans
UK government-guaranteed loans worth tens of millions of pounds were provided by London-based lender Greensill to two firms, employing only 11 people, associated steel magnate Sanjeev Gupta.
Smaller shareholders lose their say during the pandemic
A review of AGMs by the Financial Reporting Council has revealed that 163 of 202 announced by FTSE 350 firms this year were held virtually as a result of coronavirus.
SMEs NEWS – THURSDAY 8TH OCTOBER 2020
A fifth of SME owners working extra three hours daily
New research from Aldermore Bank reveals that one in five (21%) SME owners are working an additional three hours daily on average to manage the impact of the COVID-19 pandemic on their business. Many SME owners reported that longer working hours meant they had to make personal sacrifices, such as reducing time spent relaxing (37%), quality time with family (32%), and exercising (20%). 43% of SME owners described themselves as being “stressed or anxious” due to the pandemic. The main causes of the increased time SME directors spent working included: spending more time serving existing customers (27%), working to reduce anxiety about the business’s future (21%) and pursuing more new business opportunities (19%).
BAME business owners struggle to access state help
An inquiry by a committee of cross-party MPs and the Federation of Small Businesses has found that nearly two thirds of black, Asian and minority ethnic (BAME) business owners felt unable to access state-backed loans and grants in the early days of the pandemic due to a lack of clear guidance and the fact many do not use large mainstream banks.
The Daily Telegraph, Business, Page: 1
REGULATION NEWS – THURSDAY 8TH OCTOBER 2020
Pre-pack sales to connected parties to face mandatory scrutiny
The Government is to introduce legislation that will require mandatory independent scrutiny of pre-pack sales to connected parties. Lord Callanan, minister for corporate responsibility, said that the economic downturn made it “more important now than ever that people have confidence in the insolvency process. This new law will ensure all sales to connected parties are properly scrutinised, protecting the interests of creditors and the general public, as well as the distressed company.” However, the future of the Pre-Pack Pool remains uncertain as it is unclear who will provide oversight. Colin Haig, president of R3, the trade association for insolvency professionals, which has supported mandatory referrals, said: “There is a careful balance to strike between transparency, protecting creditor value and business rescue, which these proposals support.”
FCA advises businesses to prepare for Libor end
The Financial Conduct Authority’s director of markets, Edwin Schooling Latter, has warned that financial markets must make ready for regulatory updates about the Libor benchmark interest rate ending by 2022. He stated: “Market participants need to be ready for announcements later this year setting out what will happen at the end of 2021.” This comes as NatWest writes to 3,500 firms to explain that the volatility of borrowing costs could increase as a result of delays in switching rates, as well as issuing advice on how to choose the most suitable new benchmark post-Libor.
REPORTING NEWS – THURSDAY 8TH OCTOBER 2020
Climate reporting requirements must be ‘flexible and evolutionary’
The Association of Consulting Actuaries has said that requirements for schemes to implement Task Force on Climate-related Financial Disclosures (TFCD) reporting requirements must be “flexible and evolutionary”. Responding to a DWP consultation on taking action against climate risk, the association called for more detailed proposals to be put forward quickly, and suggested that the costs and benefits of the implementation should be considered more fully. Aegon head of pensions, Kate Smith, said that the largest schemes had “a responsibility to lead the way in environmental, social and governance matters” and also called on the DWP to publish guidance “as soon as possible”.
ECONOMY NEWS – THURSDAY 8TH OCTOBER 2020
IoD survey shows UK businesses plan to cut jobs and investment
A survey by the Institute of Directors shows the employment expectations of firms for the year ahead fell in September while investment expectations were also down. “The overall business outlook appears to be stuck in the doldrums,” said Tej Parikh, chief economist at the IoD. “The Treasury should step in to support job creation.” The survey showed that the top concern after the pandemic and the impact on the economy is uncertainty over trade talks with the European Union. A separate survey from KPMG and recruitment group the REC showed people were losing their jobs “rapidly” in September, causing a sharp increase in workers looking for new posts. However, demand for employees in the capital continues to fall as the rest of the country recovers. Finally, the Resolution Foundation says youth unemployment will not return to its pre-pandemic level for at least another four years and could hit a high o f 17% before gradually falling back to 7% by 2024.
OBR warns over ballooning government debt
The Office for Budget Responsibility has warned that the prevailing low interest rate environment may not last forever and the Government should not base its policies on low borrowing costs in the long term. The OBR’s new chairman, Richard Hughes, told MPs: “The level of debt is higher and the maturity of debt is getting shorter, so our debt stock is getting more sensitive to interest rate shocks, so there are reasons for us to be more concerned.” Sir Charlie Bean, a former deputy governor of the Bank of England who is now at the OBR, adds: “It is entirely appropriate, given the large and unusual shock the economy has been subject to, for the Government to run a large deficit so long as the virus emergency persists. But as one goes beyond the emergency, then it will be appropriate to stabilise the public finances and potentially start building in fiscal space to recognise that there will be future bad shocks further down the road.”
OTHER NEWS – THURSDAY 8TH OCTOBER 2020
Business leaders say unemployment is world’s biggest risk
A survey by the World Economic Forum (WEF) has found that unemployment is seen as the biggest worry over the next 10 years for business executives. “The employment disruptions caused by the pandemic, rising automation and the transition to greener economies are fundamentally changing labour markets,” said Saadia Zahidi, Managing Director at the WEF. “As we emerge from the crisis, leaders have a remarkable opportunity to create new jobs, support living wages, and reimagine social safety nets to adequately meet the challenges in the labour markets of tomorrow.” The Regional Risks for Doing Business survey saw concern over pandemics rise to second place, followed by fiscal crises, cyber-attacks and profound social instability.
BDO’s Spanish division ordered to pay €100m over Pescanova fraud
BDO partners in the UK are at risk of being exposed to a €100m fine issued in Spain over fraud at a fishing company. The firm’s Spanish division was the auditor of Pescanova which collapsed in 2013 and a court has accused BDO of issuing fraudulent favourable reports on the company’s annual and consolidated accounts for the financial years 2010, 2011 and 2012. Santiago Sañé, a BDO auditor, was sentenced to three and half years in jail. Reports suggest more than €160m is owed in compensation with BDO’s share put at about €100m. BDO said that it would lodge an appeal against the ruling, saying that it had been a victim of Pescanova’s fraud.
Wilbur Ross: UK trade deal with US in no doubt if Trump wins
US commerce secretary Wilbur Ross has said that if President Trump wins re-election a UK-US trade deal could be completed in the new year. In an interview with the Telegraph, he said that trade talks are progressing well and no “unsurmountable” issues have emerged. However, if Joe Biden were to win, negotiations would be re-set and the delay to progress would be considerable, added Mr Ross.
Contact Paul Southward