NEWS – TUESDAY 13TH OCTOBER 2020

NEWS ROUNDUP

TAX NEWS – TUESDAY 13TH OCTOBER 2020

OECD: No global digital tax deal this year

The Organisation for Economic Cooperation and Development (OECD) says agreement on global rules around the taxation of multinational tech firms will not be in place this year, saying talks over a deal on how to tax companies like Facebook, Amazon, Apple and Google in future will continue until summer 2021. The 137 nations taking part in negotiations that were hoped to deliver a deal this year have agreed to an extension due to the ongoing coronavirus pandemic. The OECD says a series of technical principles on how companies should be taxed have been drafted. Calculations suggest agreement over a digital tax could increase global corporate tax worldwide by between 1.9% and 3.2% – equivalent to around £38.4bn to £61.4bn a year. Angel Gurria, secretary general of the OECD, commented: “It is clear that new rules are urgently needed to ensure fairness and equity in our tax systems, and to adapt the international tax architecture to new and changing business models.” Charlotte Richardson of PwC said the proposed new framework had the potential to be a “once in a lifetime change” to the corporate tax system. James Moore in the Independent reflects on the mooted global tax, saying that getting countries to agree in principle is one thing, but getting them to sign off on their implementation “is another matter entirely”. Philip Aldrick in the Times also looks at the plans, praising the OECD’s ambition but saying “corralling” 137 countries into a fundamental overhaul of global corporation tax rules “was always going to make herding cats look easy”.

The Daily Telegraph, Business, Page: 8 The Times, Page: 4 The Times, Page: 37 Financial Times, Page: 4 The Guardian, Page: 29 Daily Mail, Page: 71 The Independent, Page: 43

IFS: £40bn a year tax rises needed to stop debt ‘spiralling’

The Institute for Fiscal Studies (IFS) says the Chancellor will need to raise taxes by more than £40bn a year by 2025 to balance the books and “stop debt spiralling out of control”, with government borrowing set to hit £350bn this year. The IFS’ Green Budget suggests ministers should take advantage of cheap borrowing costs to provide further support to the economy for at least 18 months. The report says the Government has increased spending on day-to-day public services by £70bn in response to the pandemic, adding that even if three-quarters of that was to stop this year, it would still add £20bn to public sector borrowing by 2024/25. IFS director Paul Johnson said: “Tax rises, and big ones, look all but inevitable, though likely not until the middle years of this decade.”

The Times, Page: 36 The Guardian, Page: 28 Financial Times, Page: 2 The Daily Telegraph, Business, Page: 1 I, Page: 9 Daily Mirror, Page: 2 Daily Mail, Page: 8 The Sun, Page: 2

HMRC urged to prosecute sellers of tax avoidance schemes

George Turner, executive director of think-tank TaxWatch, has written to HMRC calling for those who sell disguised remuneration tax avoidance schemes to be investigated for tax fraud. He wrote: “There is a myth that appears to have taken hold that the promoters of tax avoidance schemes have done nothing wrong as the promotion of a tax avoidance scheme is ‘not against the law’”. “This is simply not the case where someone is involved in the promotion of a scheme that is dishonest,” he adds. Yorkshire Post, Business, Page: 1

Tax cut call

Andrew Morrison, director of MCC Accountants, believes that the introduction of regional corporation tax cuts could help ministers deliver a “levelling up” of the regions. He says it would encourage large firms to move out of London and set up satellite offices in the rest of the UK. The Scotsman, Page: 21

CORPORATE NEWS – TUESDAY 13TH OCTOBER 2020

Asda buyers see tax haven claims

The Mail’s Matt Oliver says Mohsin and Zuber Issa, the billionaire brothers who bought Asda for £7bn, are facing questions over their decision to transfer ownership of the supermarket chain to Jersey, a tax haven which charges a corporate tax rate of zero. Margaret Hodge, former chairman of Parliament’s Public Accounts Committee, said: “Why on earth would the parent company of Asda choose not to be incorporated in the UK?” “The answer must be that there is a lax regulatory approach in Jersey which, at best, facilitates tax avoidance.” A spokesman for the Issa brothers insists that Asda will “remain tax-resident in the UK and will pay all taxes that are due”.

Daily Mail, Page: 71

Eddie Stobart back in black following accounting scandal

Trucking business Eddie Stobart has returned to profitability following an accounting scandal, seeing a £16.6m profit in the half year to May 31, having made a loss of £6.3m in the same period last year. Despite returning to profit, debts rose from £236.9m to £242.7m due to the cost of a loan taken out to secure a £55m rescue deal agreed last December. The accounting scandal arose last year, with it found that £2m was unaccounted for. The issue led to an investigation into auditors KPMG and PwC and saw shares in Eddie Stobart Logistics suspended.

The Independent, Page: 45 Daily Mail, Page: 70 I, Page: 43 The Sun, Page: 43

PTS buyout saves firm and jobs

Oil and gas services company Pressure Test Solutions has been bought by Safety and Technical Hydraulics, saving all jobs. Stuart Preston and Julie Tait of Grant Thornton were appointed as joint administrators last week.

The Scotsman, Page: 40 The Press and Journal, Page: 34

EMPLOYMENT NEWS – TUESDAY 13TH OCTOBER 2020

Ethnicity pay gap lowest in 7 years

The pay gap between white and ethnic minority employees in England and Wales is at its smallest level for seven years, according to the Office for National Statistics (ONS). The analysis shows that there was a 2.3% gap in 2019, with white employees earning an average of £12.40 per hour, compared with £12.11 for those in 17 ethnic minority groups. The gap is the smallest since the 5.1% recorded in 2012. The report shows that white Irish workers are typically the highest paid, at £17.55 an hour, followed by Chinese workers (£15.38) and Indian employees (£14.43). Pakistani workers saw the lowest average hourly wage of £10.55, with this 16% lower than the £12.49 earned by the average white British worker. The ONS report also shows that ethnic minority men earned 6.1% less than white men in 2019, while ethnic minority women earned 2.1% more than white women. Ethnic minority employees aged 30 and over tend to earn less than their white counterparts, while those aged 16-29 tend to earn more, the ONS analysis of Annual Population Survey data found.

Daily Mail Evening Standard

Europe’s highest paid graduate finance roles

Currency firm Money Transfers and jobs website Glassdoor have collated a list of Europe’s best paid graduate jobs in the financial sector, with the report showing that graduates who land roles in finance could be paid as much as £43,797. The top paying role for a new starter is the £93,379 for finance associates in Switzerland, followed by the £71,760 for trainee auditors in Liechtenstein and the £71,473 for investment analysts in Luxembourg.

City AM

INDUSTRY NEWS – TUESDAY 13TH OCTOBER 2020

UK lawyers and accountants risk losing in EU deal, warns report

The House of Lords’ EU services subcommittee has warned that the UK’s professional services industry could lose EU business after Brexit, having been overlooked in trade negotiations with Brussels.

Financial Times

SMEs NEWS – TUESDAY 13TH OCTOBER 2020

FSB chair: Tier system will deliver disruption

Writing in the Express, Mike Cherry, national chair of the Federation of Small Businesses, says the new three-tier system for deeming a region’s coronavirus risk “will mean huge disruption for firms.” He says the system will only work if funding for business support and guidance to accompany it is “sufficient, crystal clear and timely”. He adds that “far too many” people are excluded from the Government’s efforts to help business owners, including company directors and the newly self-employed, adding that a rescue package for such groups is “urgently needed”. Mr Cherry says a world beating test-and-trace system is central to getting the small business community “firing on all cylinders again”, insisting that the sooner one is in place, “the sooner our economy can bounce back”.

Daily Express, Page: 9

PROPERTY NEWS – TUESDAY 13TH OCTOBER 2020

House prices see rapid recovery

House prices staged a strong recovery in the third quarter, as lockdown restrictions eased. Prices rose 3.3% in the three months to September, according to the Halifax Property Index, the strongest increase recorded since the end of 2006. On an annual basis prices were 5.5% higher, the sharpest rate of inflation since the final quarter of 2016. The housing market has been buoyed by Government interventions such as the stamp duty holiday introduced amid the coronavirus crisis.

City AM

ECONOMY NEWS – TUESDAY 13TH OCTOBER 2020

BoE asks banks if they are ready for negative rates

The Bank of England (BoE) has asked banks how ready they would be for the rollout of negative interest rates, with deputy governor Sam Woods writing to commercial lenders asking what steps they would need to take if borrowing costs were pushed to 0.00001% or below zero. He said: “For a negative bank rate to be effective as a policy tool, the financial sector – as the key transmission mechanism of monetary policy – would need to be operationally ready to implement it in a way that does not adversely affect the safety and soundness of firms.” Mr Woods, head of the Bank’s Prudential Regulation Authority, called on banks to offer “specific information” on their “current readiness to deal with a zero bank rate, a negative bank rate, or a tiered system of reserves remuneration”. Meanwhile, BoE governor Andrew Bailey has said the coronavirus crisis means negative rates should be considered as part of its “tool kit” but that did not mean they would be used by the Bank. Lucy Burton in the Telegraph looks at the possibility of negative rates, noting that PwC warned banking clients in July that they had “no choice” but to “batten down the hatches” and prepare for negative rates.

The Times The Daily Telegraph, Business, Page: 1 The Daily Telegraph, Business, Page: 5 Daily Mail, Page: 71 The Guardian

Retail sales up in September

The British Retail Consortium-KPMG sales monitor shows that retail sales rose last month as shoppers started their Christmas shopping, with the biggest monthly sales rise in a decade. Overall retail sales rose 5.6% in September, compared to the same month last year, with online sales seeing 36.7% growth. The 5.6% increase is the best growth in total retail sales since December 2009. The report notes that sales between April and September were 1.1% lower in 2020 than in 2019. Paul Martin, UK head of retail at KPMG, said: “The resilience of British retailers has been nothing shy of remarkable in recent months.”

The Times, Page: 33 Financial Times, Page: 2 Daily Mail, Page: 70 The Scotsman, Page: 5 The Sun, Page: 43

Contact Paul Southward