NEWS – WEDNESDAY 17TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 17TH FEBRUARY 2021

Sunak urged to follow Scotland on rates relief extension

Scotland has extended its business rates holiday, with Finance Secretary Kate Forbes announcing that the tax relief will apply to businesses in retail, leisure, hospitality and aviation – sectors which have been badly hit by the coronavirus outbreak – and will last until April next year. The move has prompted calls for Rishi Sunak to announce a similar policy, with industry leaders urging the Chancellor to confirm an extension before his upcoming budget. Jerry Schurder, head of business rates at real estate advisor Gerald Eve, said that with firms “on their knees” and desperate for further support, “they need to know now, rather than waiting until March’s Budget to find out what their obligations will be.” John Webber, head of business rates at property firm Colliers, has also urged Mr Sunak to act immediately. Analysis by real estate advisor Altus Group shows that the rates relief, which is due to end on March 31, saved 358,264 occupied retail, leisure and hospitality properties in England from paying around £10.13bn.

The Daily Telegraph

IFS: £60bn in tax rises needed

The Institute for Fiscal Studies (IFS) has warned that tax rises will be required to help foot the nation’s coronavirus bill, saying the Chancellor is likely to need to raise an additional £60bn via taxes over the coming years. However, due to ongoing economic uncertainty, the think-tank does not believe increased taxation should be rolled out in the March budget. The IFS has also called on policymakers to scrap stamp duty, arguing that such a move could help stimulate the economy. It has also suggested that support measures rolled out amid the pandemic should be extended before being phased out rather than being “cut completely in one go”, warning that extending the furlough scheme beyond a point where most restrictions have been eased “will actually choke off recovery”.

Daily Mail

Tax squeeze unlikely… for now

The Telegraph’s Jeremy Warner looks ahead to Rishi Sunak’s March 3 budget, saying that despite the £400bn deficit the UK is expected to see this financial year, the Chancellor is unlikely to impose an immediate tax and spend squeeze on the economy. He says most commentators agree doing so “would kill recovery from the effects of a year of repeated lockdowns stone dead”, adding that continued targeted support will “be the name of the game”. He goes on to suggest that the nation’s coronavirus spending will eventually have to be paid for with higher taxes.

The Daily Telegraph

Online sales tax may be on the way

Jess Sheldon in the Express reflects on speculation over the Chancellor’s upcoming budget, with changes to stamp duty, CGT, IHT and corporation tax said to be among possible announcements. Melissa Geiger of KPMG says an online sales tax is an option Rishi Sunak may be mulling, noting: “It is probable that any online tax would be passed onto consumers rather than being borne by the retailer.” Laurence Parry of Kreston Reeves says that while a potential online sales tax has been “vigorously opposed by global online retailers”, a surge in online sales has increased the likelihood of it being rolled out somewhere down the line. He adds: “The question is will that tax fall on shoppers or on business?”

Daily Express

Poll shows support for CGT rethink

A poll for campaign group 38 Degrees saw 61% of respondents say they would support an increase in capital gains tax that brought the levy in line with income tax. This comes after an Office for Tax Simplification report last year suggested that CGT is “counter-intuitive” and “creates odd incentives”, with the review suggesting reform of the tax could add £14bn to Treasury coffers. Tax Justice UK executive director Robert Palmer commented: “When the Chancellor raises taxes it is crucial those with the broadest shoulders take the strain; this poll shows the public agree.”

Daily Mirror, Page: 2

MPs: Tax perks can deliver a greener future

A report from the Commons Environmental Audit Committee will today call for greater tax incentives to drive a greener future. The MPs will propose tax cuts to make greener options more attractive to consumers and urge ministers to consider taxes on imports from countries where manufacturers do not face the same green levies as in the UK. Committee chair Philip Dunne wants the Chancellor to use the March budget to deliver “a tax system fit for net-zero Britain”.

The Times, Page: 8

Tax rise warning

A Mail editorial says the upcoming budget provides the Chancellor a “crucial opportunity … to chart a course for our economic recovery” and warns that tax hikes could “shackle consumer spending, enterprise and job and wealth creation at just the wrong moment.”

Daily Mail, Page: 16

The benefits of taxes borne

Robert Watts, compiler of the Sunday Times Rich List, looks at how companies could benefit from detailing their “taxes borne” – the total taxes paid including VAT and stamp duty. He says: “You might think companies would want to disclose how much they’re contributing to the public finances”, asking whether total taxes borne may seem “more significant than a lot of the glossy corporate social responsibility that often appears in annual reports”.

The Times, Page: 39

CORPORATE NEWS – WEDNESDAY 17TH FEBRUARY 2021

Moody’s: UK leads Europe for distressed firms

Research by Moody’s has found that the UK has the highest number of distressed companies in Europe. Across the continent, there were 113 companies with a B3 negative rating or lower in December, with the UK accounting for the highest proportion with 28 distressed companies. Kristin Yeatman, vice president and senior analyst at Moody’s Investors Service, said: “We expect the number of companies rated B3 and lower to remain broadly stable over the first six months of 2021 as defaults, upgrades, and withdrawals are set to outnumber downgrades at those levels.”

City AM

Red tape hits European SPAC market

Simon Foy in the Telegraph looks at special purpose acquisition vehicles (SPACs), citing Simon Olsen of Deloitte who says Europe’s SPAC market is being held back by its regulatory system, with red tape particularly apparent in London. “There is considerable investor interest and … should a European exchange be able to offer the right regulatory regime, they should be able to compete with the US markets”, he comments.

The Daily Telegraph, Page: 5

Investigation flags council’s failings

A leaked report shows a probe into property investments by Spelthorne Borough Council has uncovered serious failings around transparency, financial reporting and accountability. It is noted that the council’s auditor, KPMG, is investigating whether the local authority acted unlawfully by failing to comply with the prudential code.

The Times, Page: 42

SMEs NEWS – WEDNESDAY 17TH FEBRUARY 2021

Pandemic adds £173k to small firms’ debts

A study by cloud computing firm Sage suggests that the coronavirus crisis is likely to give SMEs an additional £173,000 debt pile each year. The report surveyed more than 1,000 small businesses and found that around half have taken out a pandemic-related loan, leaving firms with an average additional debt burden of around £173,000 once repayments begin. Almost a third of those surveyed said they were unsure how they would clear their debts. The report notes that SMEs have seen revenues slide by more than 20% on average during the latest lockdown, with this coming on the back of a 41% decline in revenue last year. On possible support measures, more than 70% of SMEs surveyed backed an extension of the VAT cut, saying it would provide “breathing space” and prevent wide-scale job losses.

City AM

38% of small firms plan to trade overseas

A survey of 791 small UK businesses has found that 38% are likely to trade overseas this year. The poll for digital challenger law platform Lawbite saw more than half of the manufacturing firms polled say they plan to trade in Europe, with just over a third saying they wanted to focus on Asia instead. Close to a quarter of respondents said they would conduct more overseas trade if the legal barriers were less complicated.

City AM

FSB Chair: Government must increase business support

Mike Cherry, chairman of the Federation of Small Businesses (FSB), has urged minsters to help companies that fell through the gaps in business support amid the coronavirus crisis, saying the Government “urgently needs to come forward with a road map to recovery and interventions”. Mr Cherry, who was speaking in response to the Treasury Committee’s Economic Impact of Coronavirus inquiry update, has proposed a Directors’ Income Support Scheme and suggests that building support initiatives according to what workers have missed out on would be the best remedy for those who have lacked support.

City AM

EMPLOYMENT NEWS – WEDNESDAY 17TH FEBRUARY 2021

London hardest hit by job losses

Analysis by the Institute for Fiscal Studies (IFS) shows that London suffered the largest number of job losses of any UK region amid the pandemic. The number of London employees on payrolls dropped 5.5% between February and December 2020, almost double the figure recorded in Scotland, which saw the second-highest number of job losses. The IFS said the coronavirus crisis has affected the jobs market across the UK, with every region recording an increase in losses over 2020. Northern Ireland was the least-affected region, with losses of almost 1.5%. The think-tank has warned that job losses are set to increase as the furlough scheme comes to an end. It notes that 8% of the UK workforce was still on furlough in December, with the rate in London higher, at 10%.

City AM

PROPERTY NEWS – WEDNESDAY 17TH FEBRUARY 2021

Firms mull office options

With the coronavirus crisis driving an increase in home-working and uncertainty over the future of office-based working, a CBI and PwC survey of financial services firms has found three-quarters are reviewing their office space requirements as expensive city centre sites go under-used.

Daily Mail, Page: 6

ECONOMY NEWS – WEDNESDAY 17TH FEBRUARY 2021

UK well placed to bounce back

Ambrose Evans-Pritchard in the Telegraph says the UK economy did not suffer a bigger contraction than the eurozone last year, despite some analysts suggesting otherwise. He says that it “never made sense that the UK’s output figures should have been exceptionally disastrous”, adding that close analysis of data points to a “story of apples and oranges”, arguing that confusion over figures is due to measurement models that has delivered “an epidemic of bogus quantification”. Mr Evans-Pritchard highlights that like-for-like nominal GDP contraction was 10% in Spain, 6.2% in France, 4.8% in the UK, 3.8% in Germany and 2.3% in the US. Neil Shearing from Capital Economics says the UK is “clustered in the middle of the pack with Germany, France, and Italy”, adding:” We might beat some of the others and get back to pre-pandemic levels by the end of this year, if there are no nasty surprises”;. David Owen of Jefferies comments: “The UK actually outperformed other countries in Europe slightly if you look at nominal GDP, and we’re expecting another outperformance this year.” On the impact exiting the EU may have on the UK’s economic bounce-back, Mr Evans-Pritchard says that while much has been made of the immediate economic shocks of Brexit, little has been said on the “silent offsetting effects”.

The Daily Telegraph

OTHER NEWS – WEDNESDAY 17TH FEBRUARY 2021

Support for Michael

Following the news that Bill Michael has quit as KPMG’s chairman following controversial comments he made in an online meeting, the Sun’s Jane Moore suggests the “blunt truth caused offence to a few hypersensitive types” while Ann Widdecombe in the Express says his only mistake was to apologise and quit.

The Sun, Page: 13 Daily Express, Page: 13

New high for cryptocurrency

Alys Key in the I reflects on bitcoin after the cryptocurrency hit an all-time high of more than £36,000, noting the asset’s volatility and citing Mazars’ chief economist George Lagarias who said: “We feel that, due to its volatility, bitcoin lacks many of the established qualities that make up ‘money’, such as being a stable store of value and unit of account.”

The I, Page: 42

Contact Paul Southward

Paul Southward