Tax reform possible as UK looks to foot virus bill

Kate Hughes in the Independent looks at possible measures policymakers might consider as the country looks to balance the books in the wake of the coronavirus crisis, noting that the Office of Tax Simplification has suggested changes to capital gains tax (CGT). Describing the news as “ominous”, she says it could potentially mean heirs face double taxation through CGT and inheritance tax (IHT). Graham Boar at UHY Hacker Young suggests the proposed changes are “designed to increase tax revenue and add complexity rather than simplify CGT”, adding: “They would also create some huge winners and losers.” Lesley Davis of law firm Shakespeare Martineau says CGT and IHT are “easy hits, as exemptions can simply be withdrawn or removed” but warns that “doing this leaves the taxpayer fully exposed.” Ms Hughes also suggests pension tax relief could be an area with potential fo r reform.

The Independent, Page: 19


Shell paid no corporation tax in Britain

Anglo-Dutch oil firm Royal Dutch Shell paid no corporation tax in Britain last year, although it paid $7.8bn in corporate income tax and $5.9bn in royalties in other jurisdictions, having seen pre-tax profit of $25.5bn. Analysis shows that the UK gave Shell $116m as oil companies can claim tax relief to help offset costs related to decommissioning oil wells, either deducting costs or claiming back duties they have previously paid.

The Times, Page: 45 Financial Times, Page: 12

Scottish business confidence slips

A survey from ICAEW shows that business confidence in Scotland has fallen into negative territory, with the coronavirus crisis and Brexit uncertainty hitting firms. Half of businesses said customer demand presents a challenge, while a third said competition in the marketplace was an issue. Companies reported a decline in profits in the year to date, while the proportion flagging late payments as an issue is up compared to 2019. David Bond, ICAEW regional director for Scotland, said: “Businesses hope for a better year ahead, but any new lockdown measures could clearly have an impact on a recovery.”

The Scotsman, Page: 40


£4bn green strategy to create 250k jobs

The Government is to invest £4bn in creating 250,000 new green jobs as part of its plan to hit net zero emissions by 2050. Boris Johnson has published a 10-point strategy to achieve the goal, emphasising potential jobs that the so-called green industrial revolution could bring to regions that have suffered industrial decline.

BBC News Financial Times City AM


Bailey: Pandemic is changing the economy

Andrew Bailey, governor of the Bank of England (BoE), says positive results from trials of coronavirus vaccines could trigger a surge in investment by removing some of the uncertainty that has held back spending. Development of successful vaccines, he added, would be a “a big step forward” for the economy. Mr Bailey told a TheCityUK conference that while nobody was sure how permanent any economic changes would be, his “best guess” was that there will be “lasting changes”. He went on to say that the pandemic may spur “a reversal of the period of low productivity growth”. He also suggested that loosening financial regulations could drive large scale “productive investment” that would support the country’s post-coronavirus recovery. Elsewhere, BoE deputy governor Dave Ramsden has warned of the economic impact of the crisis, saying as much as £490bn would be lost to the economy over the next three years.

The Guardian, Page: 36 The I, Page: 42 Financial Times City AM Reuters

KPMG: Growth will be weaker without a Brexit deal

KPMG has warned that failure to secure a Brexit deal will hurt economic growth, with chief economist Yael Selfin saying the economy will expand by just 4.4% in 2021 with no agreement secured with the EU. Without a deal, the UK will not return to pre-pandemic levels until 2024, she adds. Ms Selfin says that if a partial Brexit deal which excludes the services sector is agreed, output will grow by 7.2% next year and the economy will bounce back to its pre-coronavirus peak by 2022. The KPMG report suggests that growth would hit 10.1% next year if the UK and EU maintained existing relations.

Daily Mail, Page: 66 The Independent, Page: 49 The Guardian

Investors fear long-term recession

A survey of over 1,000 investors by FJP Investment shows that 62% fear that the Government’s handling of the coronavirus pandemic will result in a long-term recession. In regard to Brexit, 41% said they are concerned over the impact of the UK’s exit from the EU on their finances, especially as a trade deal with the bloc has yet to be agreed. The proportion concerned by Brexit jumps to 53% for those with portfolios worth over £250,000.

City AM

Scottish retail sales slip

The latest monthly monitor from the Scottish Retail Consortium (SRC) and KPMG shows that total retail sales in Scotland decreased by 8.5% last month compared with October 2019.

The Scotsman, Page: 14 The Press and Journal, Page: 29


FRC warns over cash flow mistakes

The accountancy industry has been criticised by the Financial Reporting Council (FRC) after basic errors were uncovered in cash flow statements. The watchdog said it continues to identify errors in statements, prompting it to publish a review detailing many of the issues faced in their preparation and providing information on how cash flow statements can be improved. FRC executive director of supervision David Rule said: “It is frustrating that we continue to identify basic errors in relation to cash flow planning which, in most cases, were easily identifiable from a desktop review of the financial statements.” He added that the FRC expects companies to perform “robust pre-issuance reviews” to ensure cash flow statements and related notes comply with regulatory requirements and are free from errors. The review also looks into the disclosure of liquidity risk, noting the relevance of the issue during t he coronavirus pandemic and the effect it is having on businesses. Although it says liquidity risk disclosures have improved, the FRC adds there are still improvements to be made.

City AM


HMRC in scam warning

HMRC has warned people to be wary of scammers trying to take advantage of the annual tax return deadline, saying fraudsters often pretend to be from the Revenue to contact victims. With the January 31 deadline on the horizon, HMRC has warned consumers that they may be targeted by fake tax rebate or tax refund scams. Figures show that officials responded to more than 846,000 referrals of suspicious HMRC contact from the public in the last year, as well as 15,500 malicious web pages and over 500,000 cases of bogus tax rebate services.

Daily Star, Page: 19 Daily Express

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Paul Southward