NEWS TO THURSDAY 5TH MARCH 2020
NEWS TO THURSDAY 5TH MARCH 2020
TAX NEWS TO THURSDAY 5TH MARCH 2020
Government’s coronavirus plan: Case-by-case mitigation over tax
The Government has published a 28-page coronavirus action plan warning that workplaces could have one in five of their staff off sick at any one time. The Prime Minister’s action plan states: “In a stretching scenario, it is possible that up to one fifth of employees may be absent from work during peak weeks. This may vary for individual businesses.” In a bid to support businesses there will be a “case-by-case” mitigation for small firms unable to pay their taxes or other duties due to cash flow issues. This will be run through HMRC’s “Time to Pay” system.
High street calls for reform of business rates
Retail businesses and lobby groups have written to the Chancellor ahead of his first Budget, calling for an urgent review of a business rates system that British Chambers of Commerce director-general Adam Marshall describes as “broken”. Mr Marshall added: “It’s time for the Government to deliver on its manifesto pledge to review and reduce business rates so firms can invest in their people and prospects instead.” Traditional retailers say they shoulder an unfairly high burden from business rates, which are based on a property’s estimated value, with online rivals paying lower rates as they operate from vast out-of-town warehouses. The letter to Chancellor Rishi Sunak was signed by representatives of groups including the British Chambers of Commerce, the Federation of Small Business and the British Retail Consortium.
The Daily Telegraph, Business, Page: 3 Daily Mail, Page: 70 Financial Times, Page: 2
Government confirms 2020/2021 van and car benefit fuel charges
In a Written Ministerial Statement, Financial Secretary to the Treasury Jesse Norman, has confirmed details of van and fuel benefits charges, which will take effect from 6 April 2020.
The van benefit charge and fuel benefit charges for cars and vans will be uprated by the Consumer Price Index from 6 April 2020. The uprate will take effect as follows:
- the van benefit charge will uprate from £3,430 to £3,490;
- the car fuel benefit charge multiplier will uprate from £24,100 to £24,500; and
- the van fuel benefit charge will uprate from £655 to £666.
The Government will lay the statutory instrument to uprate these charges before Parliament.
HMRC investigations into footballer tax affairs reaches record level
A record number of footballers, clubs and agents in England are being investigated over tax payments. HMRC is investigating the tax affairs of 330 footballers, 55 clubs and 80 agents, up from 173 players, 40 clubs and 38 agents in January 2019. The department said it expected “more compliance than previous years” after its “proactive handling of tax risks”.
BCC to call for business rate rethink
Dr Adam Marshall, director-general of the British Chambers of Commerce (BCC), will today call on ministers to deliver a cut in business rates. He will use the BCC’s annual conference in London to say the Government “must stop tinkering around the edges and finally tackle the drag anchor of business rates, which undermine investment and risk-taking and suffocate our high streets.”
The Independent, Page: 51
Chancellor urged to scrap entrepreneurs’ relief
The Guardian calls on the Chancellor to use his Budget to scrap entrepreneurs’ relief, saying that while Treasury officials originally costed it at £200m a year, it “now sucks an annual £2.7bn from the public purse” – and what the public gets for that is “highly debatable”. It notes that the Resolution Foundation calls it “the worst tax break” in the UK and points to Institute for Fiscal Studies analysis showing that three-quarters of the relief benefited just 5,000 individuals.
The Guardian, Journal, Page: 2
FRAUD NEWS TO THURSDAY 5TH MARCH 2020
More fraudsters pose as the taxman
Figures reveal an increase in the number of fraud attempts where criminals pose as the taxman, with more than 1.5m fake emails, calls and texts recorded in the last two years. The number of phone scams reported to HMRC jumped from 58,538 in 2018 to 195,720 last year, and while email-focused fraud attempts dipped from 841,805 to 333,857, the number of fraudsters using text messages in an effort to con victims rose from 36,950 to 57,579.
CORPORATE NEWS TO THURSDAY 5TH MARCH 2020
Chinese group confirms British Steel takeover
Chinese firm Jingye Group has confirmed plans to invest £1.2bn in British Steel, which collapsed in May last year. A spokesperson for the Chinese company, which will pay approximately £70m to buy British Steel, said the deal was due to be completed on March 9. The Mail says EY has reportedly been making £1m a week for running British Steel on behalf of the Official Receiver.
Flybe faces collapse
Airline Flybe is on the brink of collapse after a bid for fresh financial support failed. The airline, which had been hoping for a £100m state lifeline and changes to Air Passenger Duty taxes, narrowly avoided going bust in January. As part of a rescue deal at that point, it agreed an arrangement to defer tax payments of “less than £10m” with HMRC. Sky News reports that EY staff have been sent to airports across the UK where Flybe has bases in anticipation of it going bust, with insolvency laws saying airlines in administration must immediately ground all aircraft.
The Daily Telegraph, Business, Page: 1 The Times, Page: 7 The Guardian, Page: 10 The I, Page: 40 Daily Mirror, Page: 6 Daily Express, Page: 45 The Sun, Page: 47 BBC News
Metal forging specialist George Dyke has been rescued out of administration, having been snapped up by RB Forgings (UK). Raj Mittal and Tony Barrell, from FRP Advisory, were appointed joint administrators at the end of January after the firm faced severe cash flow issues.
The Birmingham Post, Page: 61
SMEs NEWS TO THURSDAY 5TH MARCH 2020
2020 set to see record start-ups
Research from financial management firm Intuit QuickBooks suggests 2020 could see a record number of new start-ups, with 1.8m people planning on launching a business. If they all do so, it would mark a 30% increase on the 1.4m new limited company and self-employed registrations recorded in 2019. Chris Evans, vice president and UK country manager at Intuit QuickBooks, said: “Our research shows there’s optimism across the country … particularly for those keen to either start or grow their own business.”
Daily Mirror, Page: 33
Bailey: BoE will need to support firms
Addressing MPs on the Treasury Select Committee, incoming Bank of England (BoE) governor Andrew Bailey has said the Bank would need to play a role in providing finance for firms who are impacted by the coronavirus outbreak, saying: “It’s reasonable to expect we are going to collectively have to supply some supply chain finance in the not too distant future to ensure the shocks from the virus are not damaging to many firms … in particular to small firms.” Philip Aldrick in the Times looks at measures that may help protect small firms from the threats posed by the outbreak, with EY head of tax Chris Sanger saying Britain could use “time to pay” guidance to allow businesses to roll up tax bills and pay them late, with it suggested business rates could be deferred for six months.
The Daily Telegraph, Business, Page: 4 The Guardian The Independent The Times, Page: 38
MPs and SMEs concerned over fuel hike
With Chancellor Rishi Sunak potentially set to deliver the first fuel duty rise in ten years in the Budget, the Federation of Small Business has warned of the impact on SMEs. Chairman Mike Cherry said: “Nine in ten small business owners say cars or vans are crucial to their firm’s success. They already pay more than 50p in tax for every litre of fuel … Raising that further would hurt millions.” He added: “Not every small business has the luxury of being based in a big city with lots of transport options. Many simply have to use local roads to get around.” His comments came after 53 Conservative MPs wrote to Mr Sunak to voice concern at the prospect of overturning an election pledge not to hike fuel duty.
The Sun, Page: 2
INDUSTRY NEWS TO THURSDAY 5TH MARCH 2020
Coronavirus may delay audits
The Financial Reporting Council says it will deal with requests to delay company audits due to the coronavirus outbreak pragmatically and sympathetically, adding it is “plausible” it will face such requests.
The I, Page: 41
PROPERTY NEWS TO THURSDAY 5TH MARCH 2020
Buying activity slows property fund outflows
Property funds are enjoying their best performance since September last year, according to Calastone’s Fund Flows Index, as net outflows slowed to just £18m in February – down from £80m in January. The reduction was caused by an increase in buying activity, as selling activity remained close to the 16-month low experienced in January, marking the seventeenth consecutive month of outflows.
PENSIONS NEWS TO THURSDAY 5TH MARCH 2020
TPR launches consultation on new DB rules
The Pensions Regulator (TPR) yesterday launched a consultation on tougher new rules on the funding of defined benefit pension schemes, with the regulator proposing a twin-track approach that would see trustees able to choose either a fast track or a bespoke approach to completing and submitting a valuation of their scheme. Those that can demonstrate their valuation meets TPR’s guidelines can follow the fast track approach, while the bespoke path requires greater supporting evidence on how they will manage risk and may attract greater regulatory scrutiny, but will be more flexible.
EMPLOYMENT NEWS TO THURSDAY 5TH MARCH 2020
Study shows minimum wage hike did not harm jobs
The Low Pay Commission has concluded that increases in the minimum wage have not resulted in a cut in jobs or higher prices for consumers. The research by the Government’s low-pay watchdog found that employers tended to absorb higher costs from the increase in the pay floor “through a reduction in profits”. The report says: “The labour market for National Living Wage (NLW) workers is generally positive. There has been stronger employment growth for groups of workers who are more likely to be paid the NLW”. The commission has recommended an even faster rise in the minimum wage for 2020, which it said would be “the largest cash rise” in the history of the policy.
National Minimum Wage and National Living Wage – update
Coronavirus sick pay boost
Statutory sick pay is to be made available from the first day of illness under emergency legislation to help tackle the coronavirus outbreak. Prime Minister Boris Johnson said: “We will take every step that we can to ensure that businesses are protected, that the economy remains strong and that no-one, whether employed or self-employed, whatever the status of their employment, is penalised for doing the right thing”. Current laws dictate workers are not entitled to minimum statutory sick pay of £94.25 a week until they have taken four or more days in a row off work.
City AM Evening Standard
London lags for female staff
PwC ’s Women in Work Index says London is the worst UK region for female staff, pointing to poor female labour force participation and a high female unemployment rate. The south-west of England took the top spot, with Northern Ireland and Wales taking second and third places, respectively. The PwC report also suggests female staff in the technology sector are continually side-lined from technical roles into more admin-focused positions. The index shows that, across G7 countries, 30% of the tech workforce are women. The UK ranks 16th for female representation, with Iceland, Sweden and Slovenia taking the top three slots.
The Daily Telegraph, Business, Page: 7 City AM, Page: 9 The Scotsman, Page: 35 Yorkshire Post, Business, Page: 10
INTERNATIONAL NEWS TO THURSDAY 5TH MARCH 2020
Coronavirus prompts US rate cut
The US central bank has cut interest rates in response to concerns over the economic impact of the coronavirus. The Fed lowered the benchmark rate by 50 basis points to a range of 1% to 1.25%. With shares falling as the cut seemingly spooked investors worried about the outbreak, George Lagarias at Mazars commented: “Rate cuts don’t stop viruses or mitigate demand and supply damage.”
ECONOMY NEWS TO THURSDAY 5TH MARCH 2020
Carney: Policymaker response to coronavirus ‘powerful and timely’
Bank of England (BoE) governor Mark Carney says policymakers around the world are working on a “powerful and timely” response to the potential economic hit from the coronavirus. With the outbreak prompting fears of a global recession, Mr Carney said the lines of communication between central banks are “wide open”, adding that it is “reasonable to expect a response that reflects a combination of fiscal measures and central bank initiatives.” Comparing the potential economic damage to that seen in the financial crisis, Mr Carney said: “The 2007-2008 crisis caused some lasting scarring effects on the economy. The prospect with this situation is that we will have disruption, not destruction.” On the shock coronavirus may have on the UK economy, he suggested it could be “large but temporary”. Meanwhile, Mr Carney has suggested the BoE would be prepared to cut interest rates and let banks use “rainy day” funds to soften the impact of the outbreak on the economy.
Reuters Financial Times
Exports dip amid coronavirus worries
Coronavirus is starting to hit the UK economy, with exports to Asia dipping in February. The IHS Markit/CIPS export index was down last month, from 50.4 to 47.7 on an index where a score of above 50 indicates growth on the month and a figure below 50 shows contraction. Growth in the services sector, which accounts for four-fifths of private sector activity, slowed slightly as the PMI slipped from 53.9 to 53.2. The all-sector PMI rose to 53 in February, up from 52.8 in January to its highest level since September 2018. Chris Williamson at IHS Markit said that survey data suggested the British economy will grow by 0.2% in the first three months of this year, after stagnating at the end of 2019, but warned that a downturn could be on the cards, saying: “Whether this expansion can be sustained in coming months is starting to look increasingly at risk.” “The survey data leaves policymakers juggling between current signs of both improved economic growth and rising prices, while risks to the outlook have clearly intensified,” he added.
OTHER NEWS TO THURSDAY 5TH MARCH 2020
Wall-sized TVs on the way?
Analysts predict that living rooms will have to be redesigned to make space for larger TV screens in the next 10 years, with a Deloitte study saying screens have grown each year as streaming technology develops. Suggesting screens will reach 100 inches, Deloitte’s Paul Lee said: “Every year people will say screens can’t get larger. When they are the size of the wall, that’s when they can’t get larger.”
The Daily Telegraph, Page: 22 Daily Mirror, Page: 25 Daily Star, Page: 21
Contact Paul Southward.