NEWS – TUESDAY 9TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – TUESDAY 9TH FEBRUARY 2021

Entrepreneurs will flee Britain if CGT rises

Ocado CEO Tim Steiner has warned the Chancellor that hiking capital gains tax will lead to entrepreneurs selling their businesses or fleeing the country. “If you start a business and there’s a 20% capital gains tax regime, if capital gains tax moves to 45%, you’ve got to make an extra 45% increase in the value before you’re going to end up with the same amount of money,” he said at an event organised by the Centre for Policy Studies, a centre-right think tank. He continued: “We need to encourage people to come to the UK, we need to encourage people to stay in the UK and we need to encourage people to grow big businesses in the UK.”

The Times, Page: 36

Chancellor warned against hiking taxes too early

Rishi Sunak has been urged by the National Institute of Economic and Social Research not to raise taxes too early or he’ll risk undermining the economic recovery. Although increases in income tax, which is among the preferred tax rises, should wait until the country has stabilised, they should be gradual; but they are justified the NIESR said, and preferable to cuts to investment or spending on social care and education.

Daily Mail, Page: 14

A wealth tax is the economic buffer rich nations need

Tim Bond says in the FT that a wealth tax is the logical solution for the US and the UK to tackle post-pandemic financing, inequality and the threat of spiralling inflation.

Financial Times, Page: 25

INDUSTRY NEWS – TUESDAY 9TH FEBRUARY 2021

Consultancies collect £17m

Data from HMRC shows that consultants collected £17m from the Government’s border controls last year, as ports were forced to prepare for the end of the Brexit transition period. Deloitte earned the most from contracts linked to border plans, gaining £4.9m from 33 invoices billed with HMRC. Meanwhile, EY and PwC earned £4.3m and £3.8m each while PA Consulting and McKinsey also earned £3.1m and £1.8m respectively. Tamzen Isacsson, chief executive of the Management Consultancies Association, said: “Brexit, combined with COVID-19, has created an unprecedented workload for the UK Government with the need to set up and plan new systems to cover border control, trade, agricultural policy and immigration as well as many other complex policy areas. The consultancy sector has supported the UK in these efforts, providing vital skills.”

The Daily Telegraph, Page: 4 The Times

CORPORATE NEWS – TUESDAY 9TH FEBRUARY 2021

HPE drags Deloitte into Lynch case

The trial into alleged fraud by entrepreneur Mike Lynch over the sale of software firm Autonomy has taken a fresh twist after Hewlett Packard Enterprise demanded the High Court consider the findings of an independent accounting tribunal in January into Deloitte‘s role as auditor of Autonomy. Dr Lynch is fighting separate proceedings this week to extradite him to the US on charges including conspiracy to defraud. HPE claims Dr Lynch and Sushovan Hussain, Autonomy’s chief financial officer, under reported the company’s costs and falsely inflated revenues and profits before the deal.

The Daily Telegraph, Business, Page: 1

Boohoo to buy Burton, Dorothy Perkins and Wallis brands for £25m

Boohoo has agreed to buy Burton, Dorothy Perkins and Wallis out of administration, marking the final stage in the break-up of Sir Philip Green’s Arcadia fashion group. The £25.2m deal to buy the three remaining brands out of administration does not include any of their 214 UK stores, according to administrators from Deloitte, putting about 2,450 jobs at risk. Approximately 260 jobs will be moving with the brands to Boohoo, mainly head office functions such as brand design, buying and merchandising, and the digital part of the business. It comes days after rival internet fashion firm Asos snapped up the Topshop, Topman and Miss Selfridge brands, but not its shops, triggering 2,500 job losses.

BBC News Financial Times, Page: 14 Bloomberg The Times, Page: 38 The Daily Telegraph, Business, Page: 3 The I, Page: 43 The Guardian

PENSIONS NEWS – TUESDAY 9TH FEBRUARY 2021

Gender pension cap causing mortgage crisis for older borrowers

New research from Responsible Life, an equity release provider, has found that a mortgage retirement crisis could be brewing because baby boomer couples applying for a mortgage have a gender pension gap seven times the national average. The difference between pension income for men and women stands at 270% among retired couples applying for a mortgage, compared with a national average of 40%. Steve Wilkie of Responsible Life said the disparity could explain the low uptake of “retirement interest-only” mortgages. The Pensions Policy Institute found that there were 50% more women than men approaching retirement without any private pension savings. The think-tank said women taking time away from work to look after family was historically the biggest contributor to the pension gap.

The Daily Telegraph

Covid set to shave as much as £60bn from corporate pension costs

New analysis from XPS Pensions has suggested that the cost to companies of “final salary” pension schemes could fall by as much as £60bn because of the impact of COVID-19.

Financial Times

ECONOMY NEWS – TUESDAY 9TH FEBRUARY 2021

Economy will take two years to bounce back

The National Institute of Economic and Social Research has warned that the economy will take another two years to recover from the pandemic. The think-tank said that GDP would expand by only 3.4% in 2021, down from an earlier forecast of 5.9%. It blamed “uncertainty about the path of the virus and the effectiveness of vaccines against strains.” Hande Kucuk, a deputy director at the institute, said that by 2025 the economy would still be about 6% lower than it would have been had COVID-19 never hit. The NIESR added that people would hold on to their savings because of fears about the economic outlook. Meanwhile, unemployment would rise as the job retention scheme ends. The jobless rate is expected to hit 7.5%, or 2.5m.

The Times, Page: 36 City AM The Guardian, Page: 27 Daily Mail, Page: 14

UK consumer spending slumps during latest lockdown

Consumer spending fell in January at the fastest rate in seven months, according to Barclaycard. Overall consumer spending shrank by 16.3% in year-on-year terms last month – much sharper than the 1.9% fall in November. Raheel Ahmed, head of consumer products at Barclays, said: “As the impact of the latest lockdown start to take its toll, we’ve seen particular sectors struggle, as physical premises across the UK were forced to close.” Spending in supermarkets was up 17% while online spending rose 73% compared with January last year.

Financial Times The Times The Guardian The I, Page: 12

OTHER NEWS – TUESDAY 9TH FEBRUARY 2021

Luxembourg denies it is a tax haven

Luxembourg has denied claims it is a tax haven after media outlets including Le Monde in France alleged the Grand Duchy has scores of ghost companies without staff or offices with the sole aim of hiding funds and wealth from tax collectors.

The I, Page: 2

Contact Paul Southward

Paul Southward