NEWS – TUESDAY 21ST APRIL 2020

NEWS ROUNDUP

TAX NEWS – TUESDAY 21ST APRIL 2020

UK urged to follow Denmark on tax haven bailout restriction

Denmark has told companies registered in tax havens that they will not be eligible for bailout funds to help them through the coronavirus pandemic. Paul Monaghan, chief executive of Fair Tax Mark, praised the move but said the plan is limited by EU state aid law, mooting instead a system that would see companies that accept bailouts sign up to a set of binding fair tax principles. With Sir Richard Branson facing criticism after asking the UK government to bail out Virgin Atlantic despite not personally paying tax here, the Independent says Denmark’s restrictions have prompted debate on if the UK should follow suit.

The Independent, Page: 43

Three-in-four want post-coronavirus tax cuts

A poll by Survation and the Adam Smith Institute shows that almost three quarters of people believe tax cuts are needed to reboot the economy after the coronavirus crisis, with 72% of respondents calling for a reduction in taxes to “try and increase economic growth and jobs”. Among respondents aged 18-44, 44% “strongly supported” lower taxes after the coronavirus, compared to 33% of those 65 or older. Adam Smith Institute deputy director Matt Kilcoyne said that people “know that our lockdown is having a huge impact on our economy … they want an economic recovery and exit plan that includes tax cuts.”

City AM

IHT exemption for emergency services

The Telegraph says that while emergency services workers will be exempt from paying inheritance tax if they die in service because of coronavirus, a lack of awareness of the relief means some could miss out.

The Daily Telegraph, Page: 5

CORPORATE NEWS – TUESDAY 21ST APRIL 2020

Branson seeks taxpayer support

Sir Richard Branson has asked the UK government to bail out Virgin Atlantic, with some critics arguing that the billionaire should use a slice of his estimated £4.7bn fortune to support the airline. There have also been questions over his decision to seek financial assistance from the taxpayer when he has paid no personal income tax in the UK since moving to the tax-free British Virgin Islands 14 years ago. The High Pay Centre think-tank said it was “wrong” to inject taxpayers’ money into “companies who’ve done all they can to avoid paying tax in UK”. Sir Richard insists that the £500m required would be a commercial loan and repaid, insisting “it wouldn’t be free money”. Meanwhile, Virgin Australia is reportedly on the cusp of entering voluntary administration, with Deloitte lined up to act as an administrator.

The Times, Page: 5 The Daily Telegraph, Page: 7 Financial Times, Page: 7 Daily Mirror, Page: 5 The Guardian, Page: 3 Daily Star, Page: 5

EMPLOYMENT NEWS – TUESDAY 21ST APRIL 2020

Furlough scheme covers 1m workers on day one

The Government’s online application system for furloughing employees has launched, with huge numbers of employers expected to apply for inclusion in the scheme under which 80% of the wages of staff temporarily laid off as a result of the coronavirus pandemic will be paid, up to a maximum of £2,500 a month. Chancellor Rishi Sunak, who last week extended the furlough scheme until the end of June, announced that more than 140,000 companies employing a total of a million workers applied to the scheme on its first day of operation – with 67,000 claims in the first 30 minutes. The Chancellor said getting the Coronavirus Job Retention Scheme System up and running was a “remarkable story of public service”, noting that thousands of HMRC staff had either worked overtime or come out of retirement to assist in delivery of the initiative. The Revenue has deployed 9,500 staff to deal with queries.

The Daily Telegraph Financial Times, Page: 1 The Times, Page: 1 The Guardian, Page: 29 Daily Mail, Page: 11 The Independent, Page: 10 Daily Express, Page: 8 The Sun, Page: 6 Evening Standard

Firms freeze hiring schemes

The Guardian reports that a number of the UK’s biggest employers have cancelled or delayed recruitment schemes and internships due to uncertainty brought about by the coronavirus crisis, with PwC and BDO among firms that made changes to their recruitment plans because of the COVID-19 outbreak.

The Guardian, Page: 29

SMEs NEWS – TUESDAY 21ST APRIL 2020

Chancellor opts against full guarantee on loans

Chancellor Rishi Sunak has resisted calls for the taxpayer to underwrite 100% of loans designed to support small businesses being hit by the COVID-19 pandemic. Despite Bank of England governor Andrew Bailey saying a total guarantee on loans of up to £25,000 would help to unlock credit and former chancellors Sajid Javid and George Osborne offering similar sentiment, Mr Sunak said he was “not persuaded” that a total state guarantee was the way to go. Despite some commentators voicing concern over whether the Coronavirus Business Interruption Loans Scheme – which provides an 80% guarantee on loans to small companies – is getting enough money to firms who need it, Mr Sunak insisted that the British government’s economic response was already “more significant than almost any other developed country”.

The Times, Page: 4

Government announces start-up support

The Treasury has announced a new £500m loan scheme for high-growth start-ups, with this coming alongside £750m in grants to small and medium sized research and development businesses. The package includes investment for high-growth companies, which will offer cash loans of between £125,000 and £5m, with private investors at least matching the Government’s commitment.

The I, Page: 39 City AM

FINANCIAL SERVICES NEWS – TUESDAY 21ST APRIL 2020

Costs and regulation fail to stem growth of financial advice sector

Rising costs and widening regulation failed to halt the growth of the financial advice industry last year, according to a survey from fund data provider FE. Some 80% of IFAs reported an increase in new client numbers in 2019, in contrast to just 1.4% reporting a reduction. Some 85% of advisers said operational costs had increased during the period, with over 50% listing cost and regulatory burden as their businesses’ main concerns.

City AM

ECONOMY NEWS – TUESDAY 21ST APRIL 2020

BoE deputy governor: 35% GDP fall not unrealistic

Bank of England deputy governor Ben Broadbent has said the economy could shrink by as much as 35% in the second quarter. Echoing comments made by BoE governor Andrew Bailey who last week said he didn’t see “anything implausible” in a scenario set out by the Office for Budget Responsibility where GDP drops by a third, Mr Broadbent said such an occurrence is not “unrealistic”. The deputy governor for monetary policy said the BoE cannot be sure if the economy will see “scarring” or experience a quick rebound. On scarring, he said “the entire thrust of public policy as I see it is directed towards minimising those effects.” He also said monetary financing, when a central bank directly funds government spending, is not taking place as the BoE is not being forced to support spending.

The Daily Telegraph, Business, Page: 5 City AM

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Paul Southward