NEWS – WEDNESDAY 14TH OCTOBER 2020
NEWS – WEDNESDAY 14TH OCTOBER 2020
TAX NEWS – WEDNESDAY 14TH OCTOBER 2020
Britain behind on tax competitiveness
Analysis by the Tax Foundation places Britain 22nd among the Organisation for Economic Co-operation and Development’s 36 advanced nations in regard to tax competitiveness. The think-tank places Britain 33rd on property taxes, 17th for corporation tax and 24th on income taxes. The analysis, a joint report put together with the Centre for Policy Studies, says tax rises reportedly being considered by the Treasury would take the country from 22nd to 30th in the headline index, with the Chancellor said to be weighing increases in corporation tax and capital gains tax to balance the books amid the COVID-19 pandemic. The Centre for Policy Studies has warned Rishi Sunak against increasing taxes in the middle of the coronavirus crisis and ongoing Brexit uncertainty, with its head of tax Tom Clougherty saying: “Trying to close the fiscal gap now … would be an act of self-sabotage.”
The Times, Page: 43 Daily Mail, Page: 8
Self-employed warned over pre-pay tax system
The Independent’s Kate Hughes says some of the UK’s 4.76m self-employed workers could be hit with tax bills which exceed their earnings next year. She says that issues may arise as the self-employed have been allowed to defer paying the tax they owe amid the pandemic, while also warning that such workers may also see “significant problems” as the tax system demands they pay their tax for the coming year in advance. The calculations for these pre-pay bills, she notes, are based on previous earnings and “won’t take plummeting real time income levels into account”. Pointing to analysis by mutual insurer Royal London, Ms Hughes says: “Many self-employed people may have to settle tax bills which bear no relation to 2020’s real earnings.”
The Independent, Page: 45
HMRC: 55k home workers use new tax relief portal
HMRC says 54,800 home workers have made tax relief claims via a new online portal since it launched on October 1 – with this equating to a rate of three claims a minute. The portal has been designed to process tax relief on additional expenses for employees who have been told to work from home amid the coronavirus crisis, with relief offered to help cover the extra costs associated with working remotely. While HMRC estimates that 5m people may be eligible to apply, Harry Brennan in the Telegraph crunches numbers from the Office for National Statistics, saying they suggest more than 7m people eligible to claim have yet to do so.
The Daily Telegraph, Business, Page: 4 Daily Mirror The Scotsman, Page: 40
Amazon to pass on digital tax
The Times’ Oliver Wright reports that Amazon will not be affected by the new digital services tax, with small traders who use its online marketplace set to bear the brunt. The paper reveals that the tech giant will not have to pay the levy on goods it sells itself, with the 2% charge only applying to revenues it receives from third-party sellers that pay to use its marketplace platform. Amazon says it will pass on this cost in higher fees. Andrew Goodacre, chief executive of the British Independent Retailers Association, has criticised the levy, saying: “All it has done is resulted in small sellers paying more and making less while Amazon gains further competitive advantage.” A Times editorial also takes aim at the digital services tax, saying that while it is a “well-intentioned attempt to level the playing field”, it is “hitting precisely the wrong target”.
EMPLOYMENT NEWS – WEDNESDAY 14TH OCTOBER 2020
Unemployment hits three year high
The UK unemployment rate has risen to its highest level in over three years, climbing to 4.5% in the three months to August, compared with 4.1% in the previous quarter. Figures from the Office for National Statistics (ONS) also show that redundancies have hit their highest level since 2009. The data show that an estimated 1.5m people were unemployed between June and August, with the number of people made redundant hitting 227,000 – an increase of 114,000. Overall employment has fallen by 480,000 since the start of the year, with 16- to 24-year-olds accounting for 60% of the decline. Meanwhile, HMRC data show that the number of staff on company payrolls rose by 20,000 in September.
CORPORATE NEWS – WEDNESDAY 14TH OCTOBER 2020
Firms urged to declare furlough errors
Companies have just one week left to disclose incorrect claims made to the Government’s furlough scheme, with HMRC having given employers an amnesty to come forward with errors before saying it will start “gloves off” investigations. Ministers last month said that up to £3.5bn of support through the jobs retention initiative may have been claimed fraudulently or paid out in error. BDO’s Richard Morley comments: “Given that HMRC has clearly started to actively follow up on tip-offs and potentially incorrect claims, including recent arrests, businesses and individuals should start reviewing their furlough claims now.”
Hostelry forced into liquidation
The General Tarleton restaurant and pub in Ferrensby has gone into liquidation, with liquidators from Begbies Traynor saying the closure was an “unfortunate cost” of measures designed to control the spread of coronavirus.
Yorkshire Post, Page: 5
INDUSTRY NEWS – WEDNESDAY 14TH OCTOBER 2020
BDO leads on listed firm audits
Analysis by Adviser Rankings, which collects auditor data, shows that BDO has overtaken PwC as the firm with the largest number of London-listed audit clients, having gained 36 in the 12 months to October. The additions mean BDO now has 310 listed audit clients while PwC has 307, 46 fewer than last year’s total. KPMG has 260, EY has 225, Deloitte accounts for 198, Grant Thornton has 111 audit clients, PKF Littlejohn has 82, while RSM has 78. The analysis shows that Deloitte, EY, KPMG and PwC audit every FTSE 100 company. City AM says the Big Four are in a period of change amid regulatory scrutiny on the back of a number of scandals, with the Financial Reporting Council having told the firms they have until 2024 to operationally separate their auditing sections. Commenting on the findings, BDO’s head of audit Scott Knight said: “Many tenders have been deferred this year due to pandemic-induced disruption, but we’re confident the market will continue to move in the current direction throughout 2021 as companies seek more choice and invest in quality.”
FRC in diversity call for accounting profession
The Financial Reporting Council (FRC) has called on the accounting profession to improve diversity in its senior ranks as women still hold less than a fifth of top jobs at the UK’s biggest firms. The accounting watchdog found that half of all students registered with professional accounting bodies are now women but a lack of representation persists in leadership positions. Women make up 37% of accountants but less than a fifth of partners at the biggest firms are female. The FRC’s Key Facts and Trends report also found that just 6.7% of partners at the sector’s largest firms are from ethnic minorities, while no firms with fewer than 200 employees were found to have any Black, Asian, and minority ethnic managers. FRC chief executive Sir Jon Thompson said: “Firms have a responsibility to ensure they are leading by example on diversity and inclusion and that they have appropriate policies in place to address any shortcomings. While t his year’s findings reveal that some progress has been made, firms without meaningful policies in place are dropping the ball.”
The Daily Telegraph The Times, Page: 44 Evening Standard
Professional services at risk post-Brexit
A House of Lords’ EU services subcommittee report has warned that UK-based accountants are among professionals at risk of losing contracts and jobs when Britain formally leaves the EU in January. The report accused the Government of ignoring the “hugely important” professional services industry in trade negotiations with the EU. The professional services sector, which makes up around 13% of the UK workforce, is the UK’s leading services export. The EU is the largest market for UK professional services, accounting for 37% of exports from the sector.
PENSIONS NEWS – WEDNESDAY 14TH OCTOBER 2020
Low interest rates push up DB deficits
The Bank of England’s decision to cut interest rates in response to the coronavirus crisis has increased defined benefit (DB) deficits, with UK pension schemes facing a funding hole of £166.1bn at the end of September. Deficits have increased by £26bn in the space of a month, and over the past year aggregate deficits have risen by almost £50bn. AJ Bell senior analyst Tom Selby says: “Low central bank interest rates place downward pressure on Government gilt yields, which is bad news for DB pension schemes as this pushes up the value of liabilities.” Former Pensions Minister Baroness Altmann said negative interest rates would make the problem even worse, commenting: “Negative rates make it even more difficult to fund pensions as final salary pensions cannot fall in value unless the employer is becoming insolvent.”
Daily Mail The Daily Telegraph
PROPERTY NEWS – WEDNESDAY 14TH OCTOBER 2020
Mortgage availability falls to 10-year low
Mortgage options for house hunters have more than halved in the last 12 months, with the number of loans available falling to a 10-year low, according to industry analysts Moneyfacts. Mortgage availability has drastically diminished since the start of the COVID-19 crisis and there are now 2,259 loans on the market. This represents a 54% drop compared to last October, when there were 4,955 deals available. Small-deposit mortgages have all but disappeared as banks limit their lending amid economic uncertainty. Most will no longer lend to borrowers with less than a 15% deposit. Just 51 mortgages are available to borrowers with a 10% deposit.
ECONOMY NEWS – WEDNESDAY 14TH OCTOBER 2020
IMF: COVID-19 will cost global economy $28trn
The International Monetary Fund (IMF) has warned that the COVID-19 pandemic will cost the global economy $28trn (£21.5trn) in lost output by 2025. The IMF said a stronger than expected performance in Q2 and Q3 means global output is likely to fall by 4.4% in 2020 compared with the 5.2% drop forecast in June. However, the organisation said that rising infection rates in some emerging market economies had forced it to pare back its estimate of the rebound in 2021 from 5.4% to 5.2%. For Britain, the IMF predicts the economy will decline by 9.8% this year, less than the 10.2% forecast in the summer. For 2021, the IMF expects Britain to see a recovery of 5.9%. Looking at the global picture, IMF chief economist Gita Gopinath warned that there is “tremendous uncertainty” about the future. On the impact of a second wave of COVID-19, she added that “the toll on economic activity would be severe, and likely amplified by severe financial market turmoil”.
Contact Paul Southward