NEWS – TUESDAY 2ND FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – TUESDAY 2ND FEBRUARY 2021

Sunak set to maintain triple tax lock

Rishi Sunak is to stand by the Conservatives’ triple tax lock, vowing not to increase income tax, national insurance or VAT. While Treasury officials have urged the Chancellor to rethink the tax lock, Mr Sunak has reportedly agreed with Prime Minister Boris Johnson that he will stand by a manifesto pledge not to increase rates for five years. With Mr Sunak looking to cover the cost of the coronavirus crisis, adhering to the triple tax lock could see corporation tax and CGT increased instead. City AM’s James Warrington says that while Mr Sunak is expected to announce only limited tax increases in the March 3 budget, larger increases could follow as the country emerges from the pandemic.

City AM Financial Times, Page: 2

Record number miss self-assessment deadline

HMRC figures show that a record 1.8m people missed the January 31 self-assessment tax return deadline, equating to 15% of the 12.1m returns due. The number of people missing the deadline was nearly double the 958,000 who filed late last year and more than double the 730,000 recorded in 2019. Those who missed the deadline will not face the normal £100 late payment fine, with HMRC waiving the charge due to challenges brought about by the pandemic, but they will see interest charges on unpaid tax at an annual rate of 2.6%. George Bull of RSM says the increase in late-payers shows “just how much people are struggling”.

The Daily Telegraph, Business, Page: 5 Financial Times, Page: 2

Contact Keens Shay Keens if you need assistance with your tax affairs.

MPs debate stamp duty petition

MPs yesterday debated a petition for a six-month extension of the stamp duty holiday, with it suggested that as the March 31 cut-off nears, buyers who miss the deadline could pull out of deals, driving a collapse in sales as property chains are broken. Labour’s Abena Oppong-Asare said an “overheating of the market now looks set to be followed by a crash of many people’s sales”, while Conservative MP Kevin Hollinrake urged ministers to taper the end of the tax relief, suggesting that buyers who had secured a mortgage offer by the end of February should have a further three months to complete their purchase after the current cut-off. Jesse Norman, Financial Secretary to the Treasury, said that the Government will continue to listen to concerns.

The Daily Telegraph

Sunak warned against tax rises

Ross Clark in the Mail says that while the Government “is up to its eyeballs in debt” and Chancellor Rishi Sunak will need to balance the books following the pandemic, with a double-dip recession likely, “now is not the time to be increasing taxes”. Pointing to reports corporation tax could rise from 19% to 24% and capital gains tax could be brought in line with income tax, Mr Clark insists higher taxes alone are not going to get Britain out of the “very deep fiscal hole” created by the pandemic. Elsewhere, Russell Lynch in the Telegraph urges Mr Sunak to “keep a wary eye” on the longer-term economic cost of increasing corporation tax, warning that a “raid on companies” could hit investment.

Daily Mail, Page: 16 The Daily Telegraph, Business, Page: 2

CORPORATE NEWS – TUESDAY 2ND FEBRUARY 2021

Ministers urged to work with business on lockdown exit

The CBI has called on the Government to work with the private sector to formulate a strategy for reopening the economy post-lockdown. The business body has written to Business Secretary Kwasi Kwarteng, urging ministers to outline a lockdown exit strategy, calling for details including what will be considered high or low-risk economic activity, whether there will be a return to tiered restrictions and what conditions need to be met to ease restrictions further. The letter also calls for further detail on the Government’s vaccination strategy and how officials will create “bespoke” reopening plans for industries most affected by the pandemic. CBI director-general Tony Danker told Mr Kwarteng there is “huge appetite among businesses to help the government create and deliver a roadmap out of lockdown that lasts, has national consensus and kick-starts our economic recovery as 2021 unfolds.”

City AM

Asos to buy several Arcadia brands

Asos will acquire the Topshop, Topman, Miss Selfridge and HIIT brands from Arcadia for £265m and will pay £65m for current and pre-ordered stock. Only 300 staff will be saved as part of the deal, meaning 2,500 redundancies, and Asos, which only operates online, has not bought any of the brands’ stores. Arcadia’s administrator Deloitte confirmed the Asos deal and also said other Arcadia brands Burton, Dorothy Perkins and Wallis were in exclusive discussions with a potential buyer.

The Daily Telegraph, Business, Page: 3 The Times, Page: 36 The Guardian, Page: 3 Financial Times Daily Mail, Page: 14 Daily Express, Page: 2 The Sun, Page: 12

Pharma firm appoints administrator

Begbies Traynor has been appointed administrator to Senzer, a pharmaceutical firm which developed and manufactured respiratory devices for medical cannabis use. The company failed to get enough backing to float on the Alternative Investment Market.

City AM Evening Standard

Pandemic drives online switch

Considering the impact the coronavirus crisis has had on the retail sector, Julie Palmer of Begbies Traynor says the pandemic “has accelerated the move from the high street to online.”

The Sun, Page: 12

PROPERTY NEWS – TUESDAY 2ND FEBRUARY 2021

Mortgage approvals hit highest level since 2007

Figures from the Bank of England show that mortgage approvals rose to 818,500 in 2020, exceeding the 789,100 recorded in 2019 and hitting the highest level since 2007. While the first nationwide coronavirus lockdown prompted a slump which saw fewer than 9,400 mortgage approvals in May, an all-time low, 103,381 loan applications were approved by banks and building societies in December, with a surge in activity in H2 as buyers sought to take advantage of the stamp duty holiday. The value of loans approved in December hit £22.3bn, the highest monthly level on record, while the value of loans across the year exceeded £171bn – the highest total since 2007.

The Daily Telegraph Financial Times City AM

Firms set to shrink office footprint

A study from Grant Thornton shows that over a third of UK mid-sized firms expect to reduce their office space. The poll of more than 275 business leaders saw 74% of those who said they expect to reduce their occupied space say they anticipate reducing their office footprint by as much as a quarter, while 12% say they are likely to reduce their space by up to half. Grant Thornton’s John Burgess commented: “Our research shows that as home working becomes the norm, and demand for office space reduces, businesses will be looking to scale back their property portfolios and optimise spaces to suit new working models.”

Evening Standard

Regions adding office space

Deloitte ’s crane survey shows that construction activity in Belfast, Birmingham, Leeds and Manchester is holding firm amid the pandemic, with the cities delivering nearly 2.5m sq ft of office space in 2020. This is an increase of more than 547,000 sq ft on 2019’s total. The report also shows that 3.61m sq ft of office space is under construction.

The Times, Page: 40

FINANCIAL SERVICES NEWS – TUESDAY 2ND FEBRUARY 2021

Interview: PwC’s Isabelle Jenkins

City AM carries an interview with Isabelle Jenkins, the recently-appointed leader of financial services at PwC. She says her new position is “very much a market-facing role” that calls on her to ensure the firm really understands its financial services clients and what their key issues are. On challenges she anticipates, Ms Jenkins says she expects “a lot of disruption in the industry” in the wake of the pandemic, saying she expects a lot of changes to business operating models and “quite a lot of M&A in the marketplace”. Ms Jenkins says London will “continue to be a really important global financial services centre”, adding that it has to evolve and needs investment.

City AM

EU urged to offer City post-Brexit access

Lobby group TheCityUK has called on EU officials to grant Britain’s financial services firms wide-ranging post-Brexit access, calling for the bloc to grant regulatory equivalence to the sector. TheCityUK said the EU should unilaterally grant equivalence for UK finance firms as it is “in the interests of customers and clients in the EU”. It has also urged the UK Government to offer greater clarity on what future financial regulatory cooperation will look like post-Brexit. TheCityUK chief executive Miles Celic said: “The industry is as eager to see structured regulatory cooperation on financial services between the UK and the EU, as it is to prevent cross-border barriers to justice and ensure certainty on the movement of data.”

City AM

EMPLOYMENT NEWS – TUESDAY 2ND FEBRUARY 2021

Pandemic drives fundamental shift in work

The Telegraph looks at the shift toward working from home brought about by the coronavirus pandemic, considering whether the appeal previously cited by many workers may have started to wane after an extended period away from the office and amid the bleaker winter months. It notes a Deloitte survey of chief financial officers which shows many believe the pandemic will trigger a fundamental change in the business environment, with 98% saying they expect flexible and home working to increase, with a five-fold increase in home working forecast by 2025.

The Daily Telegraph, Page: 10

INTERNATIONAL NEWS – TUESDAY 2ND FEBRUARY 2021

EC questions Apple tax ruling

Apple could be required to pay €13bn in back taxes in Ireland, with EU competition enforcers looking to overturn a verdict which they claim was a legal mistake. The European Commission said in 2016 that two Irish tax rulings had suspicious reductions on Apple’s tax but a General Court ruling last year said the Commission had not met the necessary legal standard to show Apple had an unfair advantage. The Commission, which has been attempting to clamp down on aggressive tax planning by multinational firms, has since appealed to the Court of Justice of the European Union.

The Daily Telegraph, Business, Page: 7 City AM

ECONOMY NEWS – TUESDAY 2ND FEBRUARY 2021

Manufacturing activity slows to three-month low

The IHS Markit/CIPS Purchasing Managers’ Index declined to 54.1 in January from 57.5 in December, as manufacturing growth slowed to its lowest rate in three months. The score was higher than analyst estimates of a 52.9 on an index where any reading above 50 shows growth. IHS Markit director Rob Dobson, who warned that the UK’s manufacturing sector “has come close to stalling”, said “a mixture of harsher COVID-19 restrictions and Brexit led to near-record supply-chain disruptions, lower exports and increased costs”. Chris Barlow, head of manufacturing at MHA, said UK manufacturing was “artificially boosted” in December as companies took measures to avoid anticipated chaos at ports as the transition period came to an end but warned that “Brexit trade friction is starting to bite.”

City AM Financial Times

Sunak to detail economic recovery plan

Chancellor Rishi Sunak is to unveil a plan for economic recovery ahead of his March 3 budget, with this expected to outline a medium-term investment and skills strategy. A source close to Mr Sunak said the Chancellor expects the medium-term strategy to be the final immediate term support package set out as part of emergency government support in the wake of the pandemic.

City AM Financial Times

OTHER NEWS – TUESDAY 2ND FEBRUARY 2021

Bookkeeper jailed

Bookkeeper Patricia Mann has been jailed for three years and nine months after it was discovered she stole more than £800,000 from a business that hired her to balance its books after it was defrauded by a previous employee. An investigation by external accountants found that she paid £801,000 from Vintage Wines into her own account, having told the firm it had a “substantial” cash flow deficit.

The Daily Telegraph, Page: 10

Contact Paul Southward

Paul Southward