NEWS – WEDNESDAY 17TH MARCH 2021
NEWS – WEDNESDAY 17TH MARCH 2021
TAX NEWS – WEDNESDAY 17TH MARCH 2021
Tax claw back extension to boost small firms
The Telegraph’s Harry Brennan says thousands of small business owners who have lost money during the coronavirus crisis can claim more than £1bn in tax rebates to help mitigate losses, with ministers having announced an emergency extension to “loss carry back” rules. Previously losses could only be carried back one year to offset historical tax bills but the new measures enable firms to claw back profit and income taxes paid in the past three years. More than 130,000 incorporated businesses and more than 500 sole traders or partnerships should benefit. Chris Etherington of RSM says it is “important for self-employed workers not to overlook” the extension of the relief, which could prove to be very valuable.
CGT hike could hit homeowners
With the Office of Tax Simplification proposing an increase in capital gains tax, experts have warned that buy-to-let landlords and second homeowners could see the amount they owe increase by as much as £24,000 should they decide to sell. While the CGT rate currently stands at 18% for basic rate taxpayers and 28% for those in the higher rate threshold, the Office of Tax Simplification has called for CGT to increase in line with income tax rates to 20% at the basic rate and 40% at the higher rate. It has also suggested that an exemption on the initial £12,300 could be reduced to £2,000. Marc von Grundherr, director of estate agent Benham and Reeves, said the mooted changes “would act as nothing more than another nail in the coffin of the buy-to-let sector,” adding an increase would be “nothing more than a blatant attack” on landlords and second homeowners, especially those in higher tax thresholds.
Brexit delivers surprise for shoppers
Harry Wallop in the Mail looks at how shoppers have been hit by unexpected extra charges when buying goods from websites based in Europe since Britain left the EU. Michelle Dale, a VAT specialist at UHY Hacker Young, notes that post-Brexit, certain sales are now treated as exports.
Daily Mail, Page: 38
INSOLVENCY NEWS – WEDNESDAY 17TH MARCH 2021
Support sees insolvencies hit a record low
Figures from the Insolvency Service show business insolvencies fell to a record low last month, with 686 recorded in February. This is down 1,348 from the same month in 2020. The record low has been attributed to restrictions on winding up orders, delays in courts and leniency from creditors, with these helping keep firms afloat despite ongoing pressure brought about by the pandemic. Julie Palmer of Begbies Traynor has warned that insolvencies could surge as Government support for businesses and the wider economy is wound down. She said there will be a “marked increase” in the failure of zombie businesses, adding that there will also be firms “which find it difficult to kick-start themselves”. Margaret Carter of Azets has urged companies to prepare for pressure on their cash flow, telling management teams “who may have become complacent due to ongoing government support”, that “now is the time to review their plans and forecasts to see if they can survive the staged withdrawal of assistance and restrictions”.
The Daily Telegraph, Business, Page: 2 The I, Page: 45
Traynor: End of support will see firms fail
Ric Traynor, one of the founders of Begbies Traynor, says that the end of coronavirus-related support measures later this year could see a number of businesses fail, with a raft of liquidations and restructurings likely to follow when support packages like the furlough scheme are wound down. With the number of insolvencies falling by around 35% in 2020, Mr Traynor says Government support schemes have artificially kept businesses afloat. He told City AM: “Those businesses that have been protected and still have fundamental problems are going to face formal insolvency, and that’s why we expect the number of insolvencies to increase over the course of the next year or two”.
CORPORATE NEWS – WEDNESDAY 17TH MARCH 2021
MPs call for inquiry into Football Index scandal
MPs have written to Culture Secretary Oliver Dowden calling for a public inquiry into the collapse of gambling website Football Index, saying the matter highlights a need for reform of the gambling sector. Administrators Begbies Traynor were called in last week to assess options for restructuring the business and recouping money for creditors.
The Independent BBC News
ESG aims linked to more chiefs’ pay
The FT looks at moves to link executive payouts to ESG targets, with PwC analysis suggesting nearly half of ESG measures used in judging pay are not deemed “material” to shareholder value.
SMEs NEWS – WEDNESDAY 17TH MARCH 2021
Small Business Commissioner to target late payers
Liz Barclay, the former BBC journalist who will become Small Business Commissioner in June, will lead a Government drive to end the “toxic” blight of late payments to small businesses. She said this will help “take pressure off our phenomenal entrepreneurs”, arguing that small businesses have “to be able to turn their attention to their next client and next order rather than chasing up late payments and worrying about their cash flow”. Small Business Minister Paul Scully commented: “Having run small businesses for most of my professional life I know just how toxic delayed invoices can be.”
Daily Express, Page: 21
PROPERTY NEWS – WEDNESDAY 17TH MARCH 2021
House prices climb 12% in a year
Analysis by Halifax shows that Bury St Edmunds in Suffolk and Banbury in Oxfordshire have seen the biggest house price rises during the pandemic, with average prices up by more than a third. The analysis, which is based on regions with at least 100 house sales between the beginning of March 2020 and the end of February 2021, shows that Bury St Edmunds has seen the biggest jump, with the average sale price up 37% from £267,217 to £367,421. Banbury has seen average house prices rise 36%, from £283,830 to £385,556m, while third-placed King’s Lynn saw values climb 28%. The report shows that the typical value of a home in Britain is up 12% over the past year, climbing from £285,428 to £320,457.
PERSONAL FINANCE NEWS – WEDNESDAY 17TH MARCH 2021
Savings rates hit record low
Analysis by Moneyfacts.co.uk shows that savings rates have fallen to record lows since the start of UK’s first lockdown, with the average easy access savings rate less than a third of what it was a year ago. The report says the typical easy access rate hit a record low of 0.16% at the start of March, falling from 0.56% on March 1, 2020. Moneyfacts.co.uk also found that there are 383 fewer deals on the market, including cash Isas, than there were last year, with 1,385 products.
INTERNATIONAL NEWS – WEDNESDAY 17TH MARCH 2021
Poland and Hungary win court fight over turnover taxes
The Court of Justice of the European Union (CJEU) has rejected EU Commission appeals looking to challenge Polish and Hungarian taxes on turnover. The Commission had argued that the rules give unfair advantage to small businesses over their bigger, foreign rivals. Poland and Hungary challenged the Commission’s stance at the General Court of the European Union in 2019, with their success prompting the appeal. CJEU judges have now ruled that a Polish tax on the retail sector and a Hungarian tax on advertisements do not infringe EU law on state aid.
Germany extends tax deferral
Germany will extend a tax deferral scheme designed to help firms hit by the impact of the coronavirus pandemic by three months. Finance Minister Olaf Scholz said applications for tax deferral can be submitted until June 30, meaning interest-free tax deferrals will be granted until the end of September.
German regulator starts Greensill Bank insolvency proceedings
Germany’s financial regulator Bafin has submitted a filing to a court to start insolvency proceedings for Greensill Bank. The bank’s owner, Greensill Capital, entered insolvency last week after losing insurance coverage for its debt repackaging business. Greensill’s insolvency administrators Grant Thornton declined to comment.
ECONOMY NEWS – WEDNESDAY 17TH MARCH 2021
Britons set for £50bn spending spree
A report from the Centre for Economics and Business Research (CEBR) and Isa provider Scottish Friendly suggests Britons will go on a £50bn spending spree once restrictions are lifted, spending money saved over the past year. The analysis says households intend to take more holidays and eat out more, with a quarter of the £192bn in savings accumulated amid the lockdown expected to be spent. While Scottish Friendly and the CEBR estimate that 26% of the savings would be spent, a recent Bank of England report suggested that 5% of the £125bn of excess savings generated between March and November 2020 would be spent.
OTHER NEWS – WEDNESDAY 17TH MARCH 2021
Audit reform to make directors accountable for failings
Reform of audit rules set to be published by Business Secretary Kwasi Kwarteng will see senior executives held responsible for accounting errors, with directors to be made accountable for the accuracy of their company’s financial statements. They will face fines and bans when failings occur. Under existing rules, it is company auditors rather than individual directors who are deemed responsible for the accuracy of financial statements. The overhaul comes in the wake of a number of accounting scandals which have prompted concern over weak internal controls, conflicts of interest and poor audit regulation. The reform will see the Financial Reporting Council replaced by the Audit, Reporting and Governance Authority, a regulator with increased powers that may be given oversight of the UK’s largest private companies as well as those listed on public markets. Other changes set to be rolled out include new rules for accountancy firms, with the Big Four set to be forced to split their audit and consultancy arms. The Mail’s Mark Shapland says that while Government action “stalled” under his predecessors, Mr Kwarteng has said audit reform is “one of his initial priorities”.
Daily Mail, Page: 66
Reform plan is encouraging
The Daily Mail’s Alex Brummer says it is encouraging that Business Secretary Kwasi Kwarteng is set to publish audit reform plans, saying previous business secretaries have “shown no urgency in bringing reforms to fruition.” However, he criticises indications that legislation may not be in place until 2023. Mr Brummer reflects on a need for reform, saying that a “list of audit mishaps … is endless” and “slow, bureaucratic and feeble regulation by the Financial Reporting Council is legendary.” He also highlights reports calling for reform from John Kingman, the Competition and Markets Authority and Donald Brydon.
Daily Mail, Page: 67
People miss sport in lockdown
Research by EY suggests that watching and participating in sport were two of the top nine things people missed doing during the initial lockdown period.
I hope this was not government sponsored research!
Contact Paul Southward