NEWS – TUESDAY 19TH MAY 2020
NEWS – TUESDAY 19TH MAY 2020
EMPLOYMENT NEWS – TUESDAY 19TH MAY 2020
Home-workers a guide to expenses and benefits
KSK have produced a helpful guide to the tax treatment of expenses and benefits for employees working from home which includes the latest guidance and updates from HMRC. Download here:
Home-workers work fewer hours but feel more productive
PwC analysis shows that a shift to working from home driven by the coronavirus lockdown has left employees working fewer hours but feeling more productive. Almost three-quarters of staff living in London say they are working fewer hours than they did before the COVID-19 crisis, while 71% of Yorkshire-based respondents said they are more productive since working from home. The poll saw 40% of UK workers say they would like to continue working from home more than they did before the coronavirus restrictions. Carol Stubbings at PwC, says: “We’ll undoubtedly see more working from home post crisis, but it’ll be about flexible working rather than the enforced situation we’re in now.”
Yorkshire Post, Business, Page: 1
Lockdown exacerbating gender pay gap
The Daily Telegraph’s Maria Lally explores potential gender inequality amid furloughing rolled out during the COVID-19 pandemic, looking at whether the brunt of home-schooling responsibilities are falling on working mothers. She highlights figures showing that more than 7m UK workers are furloughed and around 2m are newly unemployed – with women representing 60% of those having lost jobs. A report from the London School of Economics suggests the lockdown will exacerbate the gender pay gap as women are more likely to lose their jobs in the upcoming recession, thanks to being over-represented in sectors likely to be hit the hardest, such as hospitality, leisure and the arts. Ms Lally notes that 40% of women in the UK are employed part-time compared to 13% of men, meaning that in some households it makes more economic sense for a woman to ask to be furloughed. Phil Mitchell at KPMG says, anecdotally, that more women have asked to be furloughed, or reduce their hours.
COVID-19 will blight the prospects of a generation
Brooke Masters explores the impact the coronavirus pandemic will have on prospects for new graduates, noting that BDO has furloughed its first-year trainees.
TAX NEWS – TUESDAY 19TH MAY 2020
The taxes most likely to rise
Harry Brennan in the Daily Telegraph says the huge amount of state aid handed out to ease the challenges brought about by the coronavirus crisis will leave Chancellor Rishi Sunak no choice but to raise taxes, saying he may be forced to break manifesto pledges not to increase rates on income tax, National Insurance and VAT. With this in mind, Mr Brennan looks at changes the Chancellor could make, saying Treasury officials calculate that increasing income tax rates from 20% to 21% could raise about £5bn a year as they look to close a £337bn gap in the public purse. Mr Brennan also looks at whether changes for VAT and corporation tax could be on the cards, with the possibility of increasing the amount of National Insurance contributions self-employed people have to pay also mooted. He adds that HMRC may be handed greater power to crack down on tax evasion and avoidance to close the tax gap. George Bull of RSM sugges ts the Government may expect people, aware of the “severity of the situation”, to back its measures, “even for something as unpopular as raising taxes.”
Pandemic points to taxing times?
With a leaked Treasury document suggesting the coronavirus crisis will cost the Exchequer nearly £300bn this year, the Express notes that the document suggests a rise in income tax may be one option for helping balance the books. Mike Hodges at Saffery Champness offers insight on potential Government measures in the aftermath of the pandemic, saying that while the financial crisis saw ire directed toward bankers and the finance sector, the current crisis does not offer a clear target that may bear the brunt of a “seemingly inevitable” tax hike. He adds that while global technology giants who have thrived amid the pandemic could be a target, the Chancellor is likely to face pressure to protect low paid workers who have been at the frontline from tax increases.
Letter: Time for business tax rethink
In a letter to the Mail, chartered accountant Frank Letch asks if there is “ever going to be a better time to restructure tax on all business activity”, suggesting all tax on business should be replaced with a stepped tax based on sales. He says accounting practices “have evolved so profits subject to tax have been reduced at the expense of the economy”, describing this as “grossly unfair to UK-based organisations who loyally pay corporation tax.”
Daily Mail, Page: 62
CORPORATE NEWS – TUESDAY 19TH MAY 2020
Start-up support on the way
The Treasury has released further details of the £500m Future Fund, a bailout package for fast-growing start-ups. As of Wednesday, start-ups which have previously received £250,000 in equity from third-party investors will be able to access convertible loans of up to £5m from the Government. Most of the loans will convert into equity on a company’s next funding round. Applicants must be able to match the Government funding with outside investment. The package will allow Enterprise Capital Funds – partnerships between the British Business Bank and private venture capitalists – to be involved in the scheme, although backers that use the Enterprise Investment Scheme tax relief will not be eligible due to state aid restrictions in Europe.
Casual Dining Group set to bring in administrators
The Casual Dining Group, owner of Bella Italia, Café Rouge and Las Iguanas, is preparing to bring in administrators. The firm has filed a notice of intention to appoint administrators, giving it protection from creditors for 10 working days. Casual Dining Group is working with advisers from AlixPartners over a potential restructuring programme. Russell Nathan of HW Fisher comments: “This shows the very real impact COVID-19 is having on household restaurant names, and unfortunately we are likely to hear more of this going forward.”
Giraffe owner eyes Carluccio’s sites
Boparan Restaurants, which owns the Giraffe, Fishworks and Ed’s Easy Diner chains, is set to confirm a deal to buy Carluccio’s and take on about 30 of its outlets. About 43 further outlets of the chain, which called in administrators from FRP Advisory in March, will reportedly be shut permanently.
Daily Mail, Page: 71 The Independent, Page: 46 The Guardian, Page: 33
Cath Kidston creditors owed £90m
Unsecured creditors of retailer Cath Kidston are owed around £90m and are expected to receive only a small dividend after its pre-pack administration, reports the Times. Records filed at Companies House by Alvarez & Marsal show unsecured claims including trade creditors, landlords and HMRC.
The Times, Page: 35
Jigsaw coming apart?
The Mail considers the climate for retailer Jigsaw following a “mass exit by directors” which has left the boardroom “virtually empty”. It notes that the fashion chain’s auditors from BDO resigned and were replaced by Duncan & Toplis.
Daily Mail, Page: 24
First ‘socially distanced’ concert a test for live music industry
The FT looks at how the coronavirus outbreak has hit the concert business, noting PwC analysis showing the live music business made $28bn in sales globally last year.
FINANCIAL SERVICES NEWS – TUESDAY 19TH MAY 2020
Increase in profit warnings at financial services firms
Analysis from EY reveals that more profit warnings have been issued this year by UK listed financial services firms than in all of 2019. UK-listed financial services firms have issued 31 COVID-19 related profit warnings so far this year, representing 17% of the FTSE financial services sector. Tom Groom at EY remarks: “COVID-19 has resulted in health and economic challenges like none we have witnessed before… No sector has been immune, and we are seeing financial services firms issue profit warnings at a rate well above historic precedent, although many are coming from the smaller players.”
ECONOMY NEWS – TUESDAY 19TH MAY 2020
FTSE 100 surges
The FTSE 100 surged yesterday on the back of hopes that a coronavirus vaccine and more stimulus measures could be set to drive an economic recovery. The index rose 4.3% to hit the highest close this month, with the increase the biggest one-day percentage jump since late March. A report from US biotech company Moderna boosted trade, with the firm saying it has seen positive results from the first human trial of its potential COVID-19 vaccine. Markets were also buoyed by further easing of lockdowns in various countries. Elsewhere, the Dow Jones rose 3.71% and the Nasdaq added 2.6%, Across Europe, Germany’s DAX rose 5.7% to its highest level in over two weeks, while France’s main index rose 5.2%. The pan-European STOXX 600 rose 4.1%, in its biggest one-day percentage gain since March 24. France and Germany jointly proposing a £450bn European Recovery Fund seemingly boosted markets.
Sky News Daily Mail Reuters
OTHER NEWS – TUESDAY 19TH MAY 2020
Fraud warning amid pandemic
BDO analysis shows there were 464 cases of fraud exceeding £50,000 reported in 2019 compared with 525 in 2018, while the average value of fraud reached £3.6m. The firm warns that the coronavirus crisis is providing a “fertile breeding ground” for such crimes. BDO’s Sat Plaha said: “Firms should focus on controls, must not ignore red flags, and need to be confident enough to challenge in the way they did prior to this pandemic in order to remain safe.”
The Scotsman, Page: 36
Fraudster pleads guilty over coronavirus tax scam
Fraudster Mohammed Khan has pleaded guilty to sending fraudulent text messages pretending to be from HMRC, offering tax refunds as a result of the COVID-19 pandemic. His scam involved links to fake Government websites designed to acquire victims’ personal and account details. He pleaded guilty to one count of fraud by false representation and one count of possession of articles for use in fraud.
Contact Paul Southward