NEWS – TUESDAY 14TH JULY 2020

NEWS ROUNDUP

TAX NEWS – TUESDAY 14TH JULY 2020

SUPPORT FOR BUSINESS UPDATES

HMRC have updated their online guidance relating to various aspects of the Coronavirus Job Retention Scheme (CJRS).

The updated guidance is:

https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme

https://www.gov.uk/guidance/reporting-payments-in-paye-real-time-information-from-the-coronavirus-job-retention-scheme

https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme

https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme

HMRC launch “Eat out to help out” registration:

https://www.gov.uk/government/news/hmrc-invites-hospitality-industry-to-register-for-eat-out-to-help-out

Don’t get caught by the fraudsters:

https://www.gov.uk/government/publications/genuine-hmrc-contact-and-recognising-phishing-emails

CORPORATE NEWS – TUESDAY 14TH JULY 2020

UK sees rise in zombie firms

Britain is now Europe’s capital for zombie businesses, accounting for a third of the region’s indebted companies kept alive by low interest rates and bailouts. Bank of America analysis shows that the proportion of UK non-financial businesses which were zombies has jumped six percentage points to 15% in the last year, the highest level in Europe. The study shows that the coronavirus crisis prompted a surge in zombie firms across Europe in Q1. Barnaby Martin, credit strategist at Bank of America, said: “Too much debt risks leaving corporates as zombies, which makes it even more challenging for economies to rebound from recessions vigorously.” He added that the increase in zombie firms “puts extra urgency on proactive fiscal policy by governments to help reduce corporate leverage in this crisis”.

The Daily Telegraph

Fund manager knew Wirecard was ‘dodgy’

Fund manager Thomas Brown, of the Miton European Opportunities fund, has admitted that he held shares in Wirecard in his portfolio despite knowing the company was “dodgy”. He said he had been “stupid” to trust the firm’s accounts as he “knew that Wirecard was dodgy” and “a little bit murky in what they were doing.” He blamed the firm’s auditors, EY, for not verifying that Wirecard’s cash existed and himself for trusting the auditor. EY said there are “clear indications that there has been a large-scale international fraud … expertly designed to circumvent all the checks and balances.”

The Daily Telegraph

Output increases

Business output across UK services and manufacturing increased significantly in June, with BDO analysis showing both sectors benefited from the continued lifting of lockdown restrictions. BDO’s Services Output Index rose by 11.20 points to 64.73 in June, its largest increase on record. This mirrors the jump seen in May’s Manufacturing Index, which rose from 69.55 to 80.47. Overall, BDO’s Output Index rose by 11.16 points to 66.50 in June, with this still below the 95 level that represents positive growth.

Yorkshire Post, Business, Page: 3

Quiz suspends supplier

Fashion firm Quiz has pledged to launch a “full review” of its auditing processes after it was revealed that workers were being offered as little as £3 an hour to make its clothes. Quiz says it has suspended one of its suppliers which had used a sub-contractor “in direct contravention of a previous instruction from Quiz”.

The Times, Page: 35

FINANCIAL SERVICES NEWS – TUESDAY 14TH JULY 2020

Market abuse amid the pandemic

Writing in City AM, Duff & Phelps’ Nick Bayley looks at abuse in capital markets, with a Duff & Phelps survey having recently found that 32% of industry professionals thought that the risk had increased “significantly” during the coronavirus pandemic, while 55% thought the risk had increased at least “marginally”. He says that despite the difficulties and an unorthodox working situation brought about by the lockdown, the industry’s ability to tackle these challenges has been “robust”, with 78% of the poll’s respondents saying their firm’s market surveillance arrangements were coping well.

City AM

London leads Europe in follow-on fundraising

Data from EY shows that London markets have seen their busiest six months for follow-on fundraising in a decade, with more than £21bn of funds raised in H1. Of all the funds amassed in Europe in Q2, 40% was raised in London. In a combined measure of IPO and follow-on activity since the start of the year, London came behind only NYSE and the Nasdaq, and Hong Kong. EY’s Scott McCubbin commented: “Whilst IPO activity has been almost extinguished by COVID-19, in what is historically the busiest quarter of the year, the markets were focussed on supporting fundraising by existing issuers to shore-up finances to mitigate the impact of the pandemic.”

City AM

SMEs NEWS – TUESDAY 14TH JULY 2020

Small businesses could see 1.4m job losses

Small business may be forced to cut 1.4m jobs unless ministers move to rescue the economy, according to a survey by computing company Sage. The study found that more than three-fifths of SMEs have launched redundancies or are planning to do so amid the coronavirus crisis, with 15% saying they expect to collapse if there is a second wave of COVID-19 cases. Around half said they could go bust if revenue drops by a fifth between now and September. The poll of 2,000 firms saw 65% say management jobs were most likely to be targeted, while 79% do not expect to be making the same profits they did before the pandemic by year-end. Sage managing director Sabby Gill, who described the findings of the report as “gut wrenching”, noted that businesses are embracing the digital revolution as a result of the pandemic, adding that small firms could be encouraged to invest in technology with tax breaks and other support.

The Daily Telegraph, Business, Page: 3

PROPERTY NEWS – TUESDAY 14TH JULY 2020

Nationwide to restart 90% mortgages

Nationwide is to restart mortgage lending to first-time buyers with a 10% deposit, saying the stamp duty tax break introduced by Chancellor Rishi Sunak had helped restore confidence in the property sector. The building society restricted its mortgages in June, citing fears that falling house prices could leave high-mortgage borrowers in negative equity, with only customers holding a 15% deposit having been able to apply for loans. It has now said it will resume lending to first-time buyers with a 10% deposit as of July 20. Following Nationwide’s announcement, Coventry Building Society said it would offer 90% mortgages on a trial basis, while Platform, part of the Co-operative Bank, will now also offer 90% loans.

The Daily Telegraph, Business, Page: 5

EMPLOYMENT NEWS – TUESDAY 14TH JULY 2020

BoE governor ‘very worried about jobs’

Bank of England (BoE) governor Andrew Bailey has said that while the economy is showing signs of recovery from the coronavirus crisis, he remains concerned about unemployment. He told an event organised by Speakers for Schools: “We are seeing the economy come back now somewhat, because obviously the restrictions are beginning to be lifted … But there’s a long way to go, we are very worried about jobs, as are a lot of people.” “We think it is likely that more activity will return, but more jobs will not return necessarily immediately,” he added.

City AM The Daily Telegraph

ECONOMY NEWS – TUESDAY 14TH JULY 2020

OBR boss proposes debt write-off

Richard Hughes, the new head of the Office for Budget Responsibility (OBR), says a broad write-off of toxic coronavirus debt may be the only way to save the economy. He has suggested making repayments on £45bn of taxpayer-backed loans earnings-contingent, saying they could be linked to companies’ revenue, with anything owed after a set timeframe cancelled. Speaking to MPs on the Treasury Select Committee, Mr Hughes said: “The longer the crisis goes on for, the more likely it becomes that Government-guaranteed loans become less of a facilitator of the recovery and more of a burden, because firms have built up large stocks of debt which they will struggle to write off.” He added: “The more that debt is a burden on companies, the less they will invest.” Edwin Morgan, of the Institute of Directors, commented: “Our figures suggest corporate debt could cast a shadow over investment plans for some time.” “We’ve called for a student loan-style system, by which firms pay back as they recover,” he added.

The Daily Telegraph, Business, Page: 1

Retailers see sales rise in June

Retailers saw the biggest monthly sales jump since May 2018 in June after a number of high street stores reopened, with the British Retail Consortium-KPMG retail sales monitor revealing a 3.4% increase. This represents the first growth since the lockdown was introduced and marks an improvement on an average decline of 6.4% recorded over the previous three months. Helen Dickinson, chief executive of the British Retail Consortium, said: “June finally saw a return to growth in total sales, primarily driven by online as a result of lockdown measures being eased and pent-up demand being released.” She added that retail “is not out of the woods yet”, warning that the pandemic “continues to pose huge challenges to the industry, with ongoing store closures and job losses.” Paul Martin, head of retail at KPMG, said: “Retailers won’t be picking up where they left off and months of reduced or no sales will threaten the survival of many.”

The Guardian, Page: 33 Financial Times, Page: 2 The Times, Page: 38 The Independent, Page: 52 The I, Page: 43 Daily Express, Page: 44 The Sun, Page: 43

Contact Paul Southward

Paul Southward