NEWS – TUESDAY 30TH JUNE 2020
NEWS – TUESDAY 30TH JUNE 2020
TAX NEWS – TUESDAY 30TH JUNE 2020
Report flags inequality in pensions tax relief
The Association of British Insurers has called for reform of pensions tax relief, saying the existing system widens inequalities between the sexes and different generations. It says analysis shows that lower earners and young workers are missing out on tax relief even though more are saving for a pension. Research by the Pensions Policy Institute think-tank found that workers earning less than £50,000 made up 83% of all taxpayers but received only a quarter of the pensions tax relief paid in relation to defined contribution pensions. The report concluded that the system favours higher earners, with the proportion of people who earn less than £30,000 but qualify for tax relief increasing from 52% to 62% due to automatic enrolment – while just 24% of tax relief goes to those in this bracket. It was also found that men are granted 71% of all pensions tax relief as they pay 69% of the contributions. The study shows that 42% of those who contribute to a defined contribution pension are under 40, yet this group only receives 27% of the available tax relief, while those in their 40s and 50s typically receive two and a half times as much tax relief.
Online shoppers may see delivery tax
Online shoppers could face a delivery tax, with Government advisors backing a measure mooted to counter the damaging effect on the environment that the surge in digital retail has brought. With the number of parcels shipped by online retailers climbing by 65% in five years, there has been a jump in the number of delivery vans on the road and an increase in cardboard and plastic waste from packaging. A report from the Department for Transport’s Science Advisory Council say a levy similar to the plastic bag charge would deter consumers from over-ordering and then returning items.
Daily Mail, Page: 27
CORPORATE NEWS – TUESDAY 30TH JUNE 2020
Wirecard woes put audit in the spotlight
Ben Marlow in the Telegraph looks at the scandal at Wirecard, saying it has raised questions over auditor EY, which failed to spot that almost €2bn was missing “despite looking after the books for a decade,” adding that KPMG flagged the matter after an independent audit failed to track down around €1bn in turnover. Mr Marlow says a class action investor lawsuit linked to the Wirecard scandal will “pile the pressure on EY to act”, with the firm’s reputation having already been “bruised by its involvement in other big corporate blow-ups”. He believes that Wirecard’s downfall should speed up the separation of audit practices from non-audit services but warns that “the industry has proven repeatedly, it is fiercely resistant to real change.” Elsewhere, the Times’ Oliver Moody looks at two class action lawsuits that accuse German f inancial watchdogs of negligence that allowed that accounting scandal to occur, saying many shareholders blame the Federal Institute for Financial Services Supervision and EY for not spotting problems at Wirecard sooner. The FT’s Tabby Kinder reports that EY has told partners via an internal note to expect difficult conversations with clients about the scandal at Wirecard. The paper’s Lex looks at the scandal, arguing that a “string of wearily familiar financial scandals” illustrate a number of built-in protections afforded to audit firms.
Lookers auditors say firm overstated accounts
An investigation by Grant Thornton has found that car dealership Lookers overstated profitability by £19m over several years, with overstated bonuses and “fraudulent expense claims” discovered. Lookers said that £4m is related to previously reported issues with one of the group’s operating divisions, with the remaining £15m linked to “the incorrect or inconsistent application of policies, processes and accounting standards”. Lookers said the Grant Thornton report also found areas where tougher financial controls and changes to the culture of the company are needed. The firm’s long-term auditor Deloitte said it would resign as auditor after the 2019 results, which have been delayed due to an ongoing probe, are published.
BBC News The Times, Page: 38 Financial Times, Page: 10 Daily Mail, Page: 68 The Independent, Page: 51 The Guardian, Page: 31 The Daily Telegraph, Business, Page: 3 The Sun, Page: 43 The Scotsman, Page: 37
Byron faces administration
Upmarket fast food chain Byron is to appoint administrators from KPMG, which has been trying to find a buyer for Byron since early May after it was hired as an adviser by the chain’s private equity owners Three Hills Capital Partners in March. KPMG is reportedly confident that it can agree a deal for the firm, most likely through a pre-pack administration which would protect the company from being taken over by its creditors.
The Daily Telegraph, Business, Page: 3 Financial Times, Page: 10 The Times, Page: 31 The Guardian, Page: 9 The I, Page: 45 Daily Mail, Page: 66 The Sun, Page: 43 Daily Express, Page: 48 The Scotsman, Page: 7 Yorkshire Post, Business, Page: 3 City AM Evening Standard
Restaurant Group CVA voted through
The Restaurant Group confirmed that the CVA of its leisure estate has been approved by landlords and other creditors. As a result, 125 loss-making outlets will close with the loss of up to 3,000 jobs while 85 of the remaining 160 restaurants in the division will have their rents cut.
Monsoon landlords agree rent deal
Monsoon Accessorize is to keep 57 more stores open than initially planned after a number of landlords agreed to new turnover-based rents. Administrator FRP Advisory now hopes to preserve 157 of the company’s 230 branches, saving 2,400 jobs.
The Daily Telegraph, Business, Page: 3
Sun sets on payday lender
Payday lender Sunny collapsed yesterday, with the coronavirus crisis hitting the already struggling company. The UK branch of Elevate Credit, which trades as Sunny, has asked administrators at KPMG to take over the business.
The Sun, Page: 45
Wirecard UK could enter administration but FCA lifts ban
Advisers from Alvarez & Marsal have been called in by Wirecard’s UK subsidiary, Wirecard Card Solutions. Options under consideration include placing the UK business into administration. Meanwhile, the Financial Conduct Authority last night lifted a ban on Wirecard Card Solutions payment activities – although it remains subject to restrictions on asset transfers and where customers’ money is kept.
EMPLOYMENT NEWS – TUESDAY 30TH JUNE 2020
Survey reveals firms’ fears over staffing
A YouGov poll has found that 42% of UK firms believe they will be forced to make redundancies as a result of coronavirus, while just 16% said that they expected to employ more people in a year’s time than prior to the outbreak. Manufacturing and financial services were among sectors where respondents were most likely to foresee employing fewer staff in a year than they did pre-lockdown. The poll also saw 47% of businesses say they had lower growth expectations in the wake of the pandemic, while 15% had higher expectations. Oliver Rowe, director of reputation and business research at YouGov, said that while these are “clearly difficult times” for business, some will use this opportunity to reassess their current model. “Lots of businesses already say they will have less need for physical space, as staff working from home becomes more accepted, and almost half expect to make more use of online systems and software than they did prior to lockdown,” he added.
SMEs NEWS – TUESDAY 30TH JUNE 2020
SME’s ‘bobbing on a on a sea of cheap credit’
Bank of England figures show that SMEs borrowed £18.2bn more than they repaid in May, exceeding the previous record of £589m seen in September 2016. Much of this was related to the Government’s Bounce Back Loan Scheme, a coronavirus support initiative which was launched in May. As of June 21, £28.1bn had been loaned under the scheme. Jack Izzard, director of support group The Great British Bounce Back, warns that “tens of thousands” of SMEs are “bobbing precariously on a sea of cheap credit”.
Daily Mail, Page: 65
PROPERTY NEWS – TUESDAY 30TH JUNE 2020
Report warns of housebuilding slump
A report from Shelter and estate agent Savills suggests that the COVID-10 pandemic could result in 125,000 fewer homes being built this year than expected, with the shortfall potentially increasing to 318,000 over the next five years, in a worst-case scenario. The study says just 4,300 social rent homes will be built this year – a drop of 30% from expected levels and the lowest number in any year since the Second World War.
The Guardian, Page: 7 The Daily Telegraph, Business, Page: 1 The Independent
ECONOMY NEWS – TUESDAY 30TH JUNE 2020
Record bank deposits in May
Bank of England (BoE) data show that UK households’ bank savings increased by a record amount last month, with deposits up £25.6bn in May to £1.5trn. Households have banked £57bn since March, the analysis reveals. The figures also show that repayments on consumer credit dropped to £4.6bn in May, down from £7.4bn in April. Samuel Tombs of Pantheon Macro said spending is likely to rebound over the summer, with reopened shops and businesses drawing consumers, but predicts that consumer spending will still be 5% below pre-virus levels by Q4, even if there is no second wave of coronavirus infections. BoE analysis also shows that there were just 9,300 mortgage approvals in May, down from almost 16,000 in April and 87% below February’s total. EY Item Club’s Howard Archer believes housing market activity is “likely to be limited in the near term at least by the major hit that the economy has taken”.
Treasury to borrow further £50bn
The Treasury is to borrow another £50bn in August, with this meaning borrowing will hit £275bn in the opening five months of the financial year. The update marks the third revision to the Treasury’s financing requirement since March. The Telegraph suggests the figures will spark concern that Britain will be paying for the coronavirus crisis “for years to come” through higher taxes.
The Daily Telegraph, Business, Page: 1 Financial Times
Contact Paul Southward