NEWS – TUESDAY 14TH APRIL 2020

NEWS ROUNDUP

TAX NEWS – TUESDAY 14TH APRIL 2020

Tech firms call for digital tax delay

Technology firms have urged the Government to pause the new digital services tax, urging ministers to “look again” at the 2% levy on revenues and delay liabilities for a year to “give companies a bit more breathing space” amid the ongoing coronavirus pandemic. TechUK, which represents technology companies including Facebook, Google, Apple and Amazon, has voiced concern that more companies would be caught by the tax than originally intended, with deputy chief executive Antony Walker saying: “The scope of the tax was dramatically extended last month with little warning, meaning that HMRC now expects many more companies across the sector to begin allocating resources to determine liability. This is all at a time when, due to COVID-19, resources are stretched and future revenue is uncertain”. The Government, he argues, “is creating a large degree of uncertainty”. Matthew Herrington of KPMG says the scope has not significantly altered, offering that there had simply been “welcome clarifications and confirmations around scoping” by the Government. Criticising the TechUK call for a delay, George Turner, director of think-tank Tax Watch UK, said: “It is pretty distasteful to see lobbyists attempt to use this unfolding tragedy to extract millions from the taxpayer on behalf of their very wealthy clients,” while Alex Cobham, chief executive of the Tax Justice Network, said: “This is completely shameless of the tech companies – even by their low standards.”

The Times, Page: 1

INDUSTRY NEWS – TUESDAY 14TH APRIL 2020

Auditors clash with directors over the question of ‘going concern’

The FT says the Financial Reporting Council’s call for auditors to be tougher when judging whether a company can continue trading is causing tensions between audit firms and company directors.

Financial Times

SMEs NEWS – TUESDAY 14TH APRIL 2020

Treasury prepares start-up support

The Treasury is said to be considering a rescue package for start-ups that could see joint investment with private backers in a bid to ease pressures brought about by the COVID-19 outbreak. The mooted plans could also involve increased support from the British Business Bank, with the Chancellor likely to use the Government-owned development lender to deploy public money. Philip Salter, founder of the Entrepreneurs Network, has warned that many start-ups’ business models of investing for growth mean they don’t qualify for state-backed loans from banks, adding a warning that “investment deals are falling apart, extreme write-downs are taking place, and early-stage funding is drying up.”

The Daily Telegraph

CORPORATE NEWS – TUESDAY 14TH APRIL 2020

Carluccio’s employees to be furloughed after legal ruling

Carluccio’s employees will be furloughed after a landmark legal ruling at the High Court. The restaurant chain went into administration last month, casting doubt over the eligibility of its 2,000 employees. Doubts about whether companies in administration can access the scheme prompted trade union Unite to seek legal clarification. Mr Justice Snowden said Carluccio’s does qualify – a ruling that means employees at other companies in administration could also access the job retention scheme.

Daily Mail

Housebuilders spark row over taxpayer cash

Britain’s biggest housing companies are facing criticism for furloughing staff despite posting large profits. Barratt, Countryside, Redrow, Bellway and Crest Nicholson are among the firms using the Government’s jobs retention scheme, with Taylor Wimpey also intending to use the emergency support. However, the firms are now facing scrutiny from the Taxpayers’ Alliance. “House-builders should keep in mind that this money comes from taxpayers and they should only seek support if they need it to keep the ship afloat,” said chief executive John O’Connell.

Daily Mail, Page: 68

FINANCIAL SERVICES NEWS – TUESDAY 14TH APRIL 2020

Financial services profits hit before crisis

The latest CBI/PwC financial services survey shows that Britain’s financial services sector suffered a drop in profits and increase in bad debts before the coronavirus crisis-prompted lockdown. The report, based on a poll of 103 firms, shows banks, insurers and fund managers saw a drop in optimism over the three months to March, while the value of non-performing loans rose at the fastest pace since September 2009. The study saw 27% of firms report a drop in profits versus 24% which reported a rise. The poll saw 12% of firms say they were more optimistic about overall business conditions compared to three months earlier, while 53% were negative about future prospects. Employment growth is expected to fall by 37% in the three months to June, the value of non-performing loans is expected to rise by 28% and profitability is forecast to decline by 15%. Rain Newton-Smith, the CBI’s chief economist, said: “The bulk of the survey took place before social distancing measures were ramped up, but there were already signs of the COVID-19 pandemic leaving its mark.” She added: “With the peak of the economic impact to come, equipping the sector to deliver for business is crucial in supporting the growth recovery beyond the pandemic.”

The Times, Page: 36 The Guardian The Scotsman, Page: 33 Yorkshire Post, Business, Page: 5

EMPLOYMENT NEWS – TUESDAY 14TH APRIL 2020

Mayor of London: Self-employed need more help

London mayor Sadiq Khan has demanded more financial assistance for self-employed workers in the capital in a letter to Chancellor Rishi Sunak. The existing £9bn Self-employment Income Support Scheme, under which the Government pays 80% of profits up to £2,500-a-month to self-employed workers affected by the coronavirus pandemic, would be too difficult for the Treasury to pay to anyone who did not have a tax return for the 2018/19 financial year, according to the Chancellor. At the time the package was launched it was claimed that some 95% of self-employed workers should be eligible for assistance.

City AM

Ethnic minorities and young hardest hit economically by pandemic

A BMG poll for the Independent suggests that ethnic minorities and young people are taking a disproportionate financial and employment hit from COVID-19. The survey showed that overall, almost a third of households have seen their finances cut and more than one in 20 have lost over half their income. But it also found that people from black and minority ethnic (BAME) households are almost twice as likely as white Britons to report having lost income and jobs. Additionally, workers aged under 35 are significantly more likely to have been made unemployed or “furloughed” than older colleagues.

The Independent

ECONOMY NEWS – TUESDAY 14TH APRIL 2020

GDP could fall 30% in Q2

Chancellor Rishi Sunak has reportedly suggested GDP could fall by as much as 30% between April and June, while some banks have forecast a decline of around 25% in Q2 – an estimate in line with one put forward by the National Institute of Economic and Social Research think-tank last week. It has been suggested that Mr Sunak is among those in the Cabinet calling for the lockdown to be eased sooner rather than later in an effort to boost the economy.

Daily Mail City AM

Think-tank urges pensions rethink

The Social Market Foundation think-tank has suggested that the triple lock on pensions should be scrapped to help pay for rebuilding the economy in the wake of the coronavirus outbreak, arguing that the Treasury could save £20bn over the next five years by slowing pension increases. It says such a move would ensure that the economic costs of emergency measures rolled out to ease pressures brought about by the pandemic are “shared fairly between old and young”.

The Times, Page: 36 The Daily Telegraph, Business, Page: 3 The I, Page: 40

OTHER NEWS – TUESDAY 14TH APRIL 2020

Coronavirus and the climate change challenge

Rachel Millard in the Telegraph considers the impact the COVID-19 outbreak may have on efforts to tackle climate change, saying the relative ease with which many businesses have held meetings online “rather than by jetting around the world” has led to optimism that travel might fall and reduce aviation emissions. Simon Virley, head of energy at KPMG, says the pandemic “has forced business to adopt new ways of working”.

The Daily Telegraph, Business, Page: 4

Contact Paul Southward

Paul Southward's News Roundup