NEWS – TUESDAY 29TH SEPTEMBER 2020
NEWS – TUESDAY 29TH SEPTEMBER 2020
TAX NEWS – TUESDAY 29TH SEPTEMBER 2020
Tax clarity call
Philip Aldrick in the Times says that while “no responsible Chancellor would set tax policy in the middle of a pandemic … the issue of tax cannot be ignored.” Calling for clarity on the Government’s possible stance on taxation, he says the Treasury “set some hares running in the summer” with reports that corporation tax might rise from 19% to 24%, with CGT and pensions “also said to be under the microscope”, while business rates are being reviewed and the self-employed have been warned that their preferential income tax treatment will not last. Noting comment from Chris Sanger, EY‘s head of tax, Mr Aldrick says that if Rishi Sunak is planning a rethink of corporation tax, “why not say so?”
The Times, Page: 41
CGT rise ‘not in anyone’s interests’
Claire Madden, managing partner at Connection Capital, writes in City AM on rumours of a capital gains tax increase, saying: “Of all the potential tax rises that have been trailed in the press lately, it’s important to make the case for caution on increasing CGT – specifically as it relates to gains made from investments into SMEs. If the priority is to reboot the British economy – and I think most people would agree that it is – then any move that disincentivises investment in UK SMEs will threaten that goal.”
Tax relief for home-workers
The Independent looks at the costs involved with working from home, noting that HMRC says workers may be able to claim for tax relief for things they must buy for their job. This includes the cost of things such as heating and lighting the room the person works in and the cost of business telephone calls. However, tax relief will not apply to things used for both private and business use, such rent or broadband access. Those seeking tax relief for working from home can claim a base rate up to £6 a week of additional costs without having to provide any paperwork.
Prof: People underestimate taxes
In a letter to the Telegraph, Philip Booth, professor of finance, public policy and ethics at St Mary’s University, says people hugely underestimate the amount of tax they pay and, when they realise the amount, reverse their preferences for more government spending and taxation and instead favour lower government spending. He adds that a government committed to lower spending and taxation would benefit from making the tax system more transparent.
The Daily Telegraph, Page: 17
CORPORATE NEWS – TUESDAY 29TH SEPTEMBER 2020
Firms told not to ignore HMRC letters
Firms have been advised not to ignore letters from HMRC seeking clarification over their applications to the Coronavirus Job Retention Scheme. Catriona Donald, a senior tax manager for KPMG, said letters are being sent to businesses falling under HMRC’s “risky” profile. She notes that the scheme “was brought in quickly but the rules around it changed,” adding that there “was always a fear the scheme could potentially be used fraudulently.” Highlighting that HMRC is now taking a “more standard approach to compliance”, she advises firms who are contacted to “go back and have a look at their claims to see if they need to make any corrections.”
The Press and Journal, Page: 31
Pizza Hut agrees CVA
Pizza Hut’s creditors have agreed a CVA that will see 29 of its 244 restaurants close, putting 450 jobs at risk. The deal, which will see a reduction on rents, will protect about 5,000 jobs across the sites that will stay open. Announcing the CVA process earlier in September, Pizza Hut had said it did not expect sales to fully bounce back from the blow dealt by the coronavirus lockdown until well into 2021.
The Daily Telegraph, Business, Page: 3 The Guardian, Page: 31 The Times, Page: 38 Daily Mail, Page: 71 The Sun, Page: 41
Côte saved after pre-pack deal
Côte Restaurants has been acquired by new investors via a pre-pack administration, with private markets investment manager Partners Group snapping up the casual dining chain in a deal that secures the future of 94 restaurants and 3,148 jobs.
The Times, Page: 38
Fair Tax Mark for housebuilder
Housebuilder MJ Gleeson has been given a Fair Tax Mark under the initiative which recognises businesses that pay the right amount of tax in the right place at the right time.
Daily Mirror, Page: 44
SMEs NEWS – TUESDAY 29TH SEPTEMBER 2020
SMEs struggle to get bounce back loans
Concerns that a number of small firms missed out on government-backed coronavirus loans have led to calls for banks to ensure that no SMEs eligible for funding are “locked out”, with MPs saying lenders accredited under the scheme should re-open applications for bounce back loans. Mel Stride, chair of the Treasury Select Committee, said: “Accessing these loans may be a question of life or death for some of these businesses.” Pointing to reports that some eligible firms had missed out, he added: “If these reports are true, then it would be very concerning that businesses may be facing lengthy delays or are unable to access the scheme at all.” With it shown that of 28 lenders that have received accreditation to issue bounce back loans, just six are currently open to applications from new customers, Kevin Hollinrake, leader of the all-party parliamentary group for fair business banking, said a ll accredited lenders should “do the right thing”. He added that banks must “open their doors to new customers”. Shadow Business Secretary Ed Miliband has urged the Government to “work with lenders to ensure they reopen applications and assess them fairly”.
Start-up support scheme launched
Start-Up Business Month, a scheme run by MHA Henderson Loggie, is to launch next month to provide advice to budding entrepreneurs, start-ups and small firms with less than two years of trading.
INDUSTRY NEWS – TUESDAY 29TH SEPTEMBER 2020
ICAEW: A quarter of audits are substandard
A review of audit quality by the ICAEW has found that around a quarter require improvement. Of 960 audit files reviewed in 2019, 18% required improvements and 8% needed significant improvement. The report says audits typically needed to improve because they lacked sufficient evidence, reached inappropriate decisions in key areas, failed to challenge management, or lacked adequate documentation. The ICAEW said audits of going-concern statements were an area of concern, having found evidence of “weakness in testing, insufficient scepticism and challenge of management, and inadequate documentation”. It also flagged the audit of property valuations among areas of particular concern. Michael Caplan, chair of ICAEW’s regulatory board, said: “Trust in the quality of audit underpins confidence in UK business. In the current economic climate this has never been more important.” The ICAEW does not review audits of public interest entities, which are monitored by the Financial Reporting Council. The Times offers a case study noting several scandals, including Deloitte’s fine for failures in its audit of Autonomy and probes into EY’s auditing of NMC Health and KPMG’s audit work at Carillion.
PROPERTY NEWS – TUESDAY 29TH SEPTEMBER 2020
Fears of UK house price bust rise after summer sales boom
With data from HMRC showing house prices in Britain reached a record high in August, Savills has predicted a short-term fall of 5% to 10%.
ECONOMY NEWS – TUESDAY 29TH SEPTEMBER 2020
IFS: Taxes or austerity needed to cover coronavirus cost
The Institute for Fiscal Studies (IFS) has warned that the Government will need to roll out tax increases or a fresh round of austerity due to the increase in public spending in the wake of the coronavirus outbreak. Ben Zaranko, economist at the IFS, said extra spending “could swallow up huge amounts of money, and leave some public services facing another round of budget cuts for their core services.” He added: “Avoiding that scenario would require the Chancellor to find billions of extra funding, paid for at some point through higher taxes.” Paul Johnson, director at the institute, said: “It is entirely inappropriate for the Chancellor to consider raising taxes this year or next, or possibly even the year after,” adding: “The longer-term answer is clearly that if we have a bigger state we will need more tax.” The think-tank said Government spending as a share of overall economic output could rise from its current level of 40% of GDP to possibly 45% by the middle of the 2020s. The IFS also pointed to the economic uncertainty brought about by the pandemic and urged the Chancellor to abandon any plans for setting out a multi-year spending review, suggesting a one year plan would be a better option.
The Times, Page: 2 The Daily Telegraph, Business, Page: 1 The Guardian, Page: 29
BoE deputy governor warns on negative rates
Sir Dave Ramsden, a Bank of England (BoE) deputy governor, has spoken out against setting negative interest rates. He told the Society of Professional Economists that negative rates “would be less effective as a tool to stimulate the economy.” While the Bank has cut rates to a record low of 0.1%, some policymakers have called for rates to be taken into negative territory, taking the cost of borrowing below zero. Sir Dave, a member of the BoE’s Monetary Policy Committee and deputy governor for markets and banking, said: “We’re continuing with a quantitative easing programme – no one is voting at present for negative rates.” He added: “I see the effective lower bound still at 0.1%, which is where Bank rate is at present.”
OTHER NEWS – TUESDAY 29TH SEPTEMBER 2020
Trump: Tax claims are fake news
Following a New York Times report revealing that Donald Trump paid $750 (£580) in personal taxes in each of his first two years in office, the US President says he has paid “many millions” of dollars in taxes. Mr Trump described claims that he paid no personal income tax in ten of the 15 previous years as “fake news”. Responding to the report which also says Mr Trump is personally responsible for $421m of debts, most of which fall due in the next four years, the President tweeted: “I paid many millions of dollars in taxes but was entitled, like everyone else, to depreciation & tax credits.” Matthew Lynn in the Telegraph says that while critics will say the reports show Mr Trump has been dodging taxes, is a “hopeless, failed businessman” and is teetering on the edge of bankruptcy, his tax returns “don’t show anything of the sort” and “don’t look much different to any busy entrepreneur.” He adds that all the tax returns tell us is that the President is a real estate tycoon, with debt, losses and tax write-offs “completely normal in that industry”.
Contact Paul Southward