NEWS – WEDNESDAY 1ST JULY 2020
NEWS – WEDNESDAY 1ST JULY 2020
TAX NEWS – WEDNESDAY 1ST JULY 2020
MPs to debate tax on tech giants
MPs will today debate final stages of the Finance Bill, including the first Digital Services Tax that will see a 2% levy on the revenues of search engines, social media firms and online marketplaces in a bid to curb tax avoidance. Fair Tax Mark has branded the 2% levy as “pretty tame”, while TaxWatch commented: “Britain must continue to push for international reform to ensure the billions in profits that US multi-nationals rip off UK taxpayers is taxed properly here.” Labour is set to table an amendment to the Bill that calls on ministers to tell MPs how much the tax is raising each year. Meanwhile, Bridget Phillipson, shadow chief secretary to the Treasury, backs the thinking behind the Digital Services Tax, saying big tech firms “make big profits but pay very little tax”. Writing in the Mirror, she says the Government has not gone far enough, saying: “We need a global solution, so companies can’t just change HQ to escape tax.” The paper highlights a study from TaxWatch which suggests five of the biggest tech firms – Google, Apple, Facebook, Microsoft and Cisco – avoided tax totalling £1.3bn in 2018, estimating that they had UK profits of £8.1bn but paid only £237m in taxes on them, an effective 2.9% rate.
Daily Mail, Page: 2, 37
PM will not rule out tax increase
Prime Minister Boris Johnson has not ruled out increasing taxes in a bid to help foot the country’s coronavirus bill. Asked whether taxes could rise, he said: “You know where my instincts are, what I would like to do. They are, of course, to cut taxes wherever you possibly can, but the difficulty we have is that we have a generational challenge now.” The PM said: “I remain absolutely determined to ensure that the tax burden, in so far as we possibly can, is reasonable and that we continue to be a dynamic, competitive, open market economy.” An increase would go against a Conservative manifesto pledge not to raise income tax, national insurance or VAT.
The Guardian, Page: 8 The Times, Page: 1 The Independent, Page: 8
HMRC in tax credit reminder
HMRC has advised tax credits customers that they need to notify the tax office of any changes in their circumstances or income by July 31. While most tax credit awards will be renewed automatically, the self-employed, those in receipt of taxable social security benefit, and those who have other income may need to review their total household income and tell HMRC if the information it holds is incorrect. If any information HMRC holds is incorrect or incomplete, customers may have to pay back any tax credits that have been overpaid, while some may also face a penalty.
Daily Express, Page: 46 Press Release
Text tax scam
Law firm Griffin Law has warned that self-employed workers are being targeted by a new text scam in which fraudsters pose as HMRC offering tax refunds, with a fake application website designed to harvest victim’s personal details.
Daily Mail, Page: 37
CORPORATE NEWS – WEDNESDAY 1ST JULY 2020
Alteri puts Harveys into administration
Distressed retail specialist Alteri has put UK furniture groups Harveys and Bensons for Beds into administration, little more than six months after acquiring them from South African conglomerate Steinhoff. PwC is looking to find a buyer for Harveys, with at least 240 jobs to be lost and a further 1,300 positions under review. Bensons for Beds was immediately bought back by Alteri, which plans to inject £25m of equity into the company. Zelf Hussain, joint administrator at PwC, said the group has seen cashflow pressures “exacerbated by the effects of coronavirus on the supply chain and customer sales.”
TM Lewin enters administration
Shirt maker TM Lewin has fallen into administration and is to close all 66 of its physical stores, with 600 employees set to lose their jobs. The company was bought just seven weeks ago by Stonebridge Private Equity through its subsidiary Torque Brands.
M&Co appoints advisers
Retail chain M&Co, which employs 2,700 people at 262 stores, has appointed advisers from Deloitte to consider options for the business, including a possible sale via a pre-pack administration.
Sky News The Guardian, Page: 31
Signature Living Hotel group collapses
Signature Living, which owns 60 hotels, has collapsed into administration owing £113m. Matthew Ingram and Michael Lennon of Duff & Phelps believe that a going concern sale of the company is now unlikely as there are “insufficient funds and assets available to enable the company to be rescued”.
Pre-pack deal best for Everest
The pre-pack sale of double-glazing company Everest was one of six offers for the firm which collapsed owing unsecured creditors almost £70m. FRP Advisory received six offers after an accelerated sale process launched in May in which 19 prospective buyers carried out due diligence. A bid from Better Capital was accepted after discussions with Duff & Phelps, which advised secured creditor Barclays.
EMPLOYMENT NEWS – WEDNESDAY 1ST JULY 2020
Furloughed worker total hits 9.3m
Data from HMRC reveal that the number of furloughed workers increased to 9.3m last week, with the cost of the Government’s job support measures exceeding £33bn. Meanwhile the number of claims made for the Government’s self-employment income support programme was unchanged at 2.6m, while the value of claims was up to £7.7bn. The figures also show that the total cost of all support schemes including business loans is nearing £80bn. Meanwhile, the Taxpayers’ Alliance has suggested big companies should hand back taxpayer cash used to furlough their staff. With several firms pledging to do so, Taxpayers’ Alliance spokesman Jeremy Hutton said: “The spotlight may turn to those who hold public funds they did not need.” “Taxpayers are likely to remember those businesses that pulled out all the stops to help, and those that didn’t,” he adds.
The Daily Telegraph, Business, Page: 5 The Independent, Page: 56 Daily Mail, Page: 65 Daily Express, Page: 9 City AM
INDUSTRY NEWS – WEDNESDAY 1ST JULY 2020
Auditors keep falling into the same trap
Brooke Masters considers the auditing industry following the discovery of a €1.9bn accounting black hole at Wirecard, calling for reform that goes beyond splitting audit from consulting.
Letter: Wirecard puts fresh perspective on audit fees
In a letter to the FT, Paul Ormrod and Jim McGivern of Cashfac highlight the corporate revenue spent on audit in various countries, noting that Europe (0.13%) trails the US (0.39%).
SMEs NEWS – WEDNESDAY 1ST JULY 2020
Crisis prompts innovation
A survey by Be The Business suggests that the coronavirus crisis and resulting lockdown have driven small businesses to innovate, with more than half a million having changed or currently altering their operating model and a fifth introducing new services. Be The Business CEO Tony Danker said the early signs of an economic recovery can be attributed in part to this push toward innovation.
The Daily Telegraph, Business, Page: 7
REGULATION NEWS – WEDNESDAY 1ST JULY 2020
Lending scams climb amid crisis
Analysis of Financial Conduct Authority (FCA) alerts by BDO show that warnings over fake lenders have almost doubled during lockdown as fraudsters target those struggling financially due to the coronavirus crisis. The number of warnings published by the FCA related to subprime lending and debt management scams has increased by 85% over the last three months. There were 24 warnings relating to unregulated firms and suspected scammers published on the watchdog’s website between March and June, up from 13 in the same period last year. Richard Barnwell of BDO said: “With the number of scams rising significantly during lockdown, it would suggest that opportunistic fraudsters are using the coronavirus crisis as a chance to target this part of the consumer finance market.”
ECONOMY NEWS – WEDNESDAY 1ST JULY 2020
Economy sees worst contraction since 1979
The UK economy shrank more than first thought between January and March, contracting 2.2% where the Office for National Statistics (ONS) had estimated a 2% dip. This marks the biggest quarterly contraction since Q3 1979. Jonathan Athow, deputy national statistician at the ONS, said that all main sectors of the economy shrank “significantly” in March due to the hit from the COVID-19 pandemic. The services sector – which accounts for about three-quarters of UK GDP – shrank by a record 2.3% in Q1, with production down 1.5% and construction slipping 1.7%. EY Item Club’s Howard Archer believes April’s sharp contraction is likely to have been the low point, predicting that the economy will “return to clear growth in the third quarter with GDP expanding close to 10% quarter-on-quarter” as lockdown restrictions are eased further.
BBC News The Independent, Page: 51 The I, Page: 7 Daily Express, Page: 9 Daily Star, Page: 5
BoE economist predicts V-shaped recovery
Bank of England chief economist Andy Haldane, who also sits on the Bank’s interest rate-setting committee, says the economy is likely to see a V-shaped recovery. He told a webinar: “The recovery in both the UK and global economies has come somewhat sooner, and has been materially faster, than in the MPC’s May Monetary Policy Report scenario – indeed, sooner and faster than any other mainstream macroeconomic forecaster,” and said the loss in annual GDP could be far lower than first feared, at 8% against the 17% forecast last month.
The Independent, Page: 56 The Times, Page: 1 The Guardian, Page: 31 The I, Page: 42 Daily Express, Page: 7 Evening Standard
OTHER NEWS – WEDNESDAY 1ST JULY 2020
PM announces post-virus recovery plan
Boris Johnson has presented his plan for infrastructure investment that is designed to drive the economy in the wake of the coronavirus crisis. The Prime Minister outlined a £5bn “new deal” that will centre on investment in schools, hospitals, and the road and rail network, with Mr Johnson saying plans set out in the election manifesto will be speeded up and “intensified”. KPMG’s head of infrastructure Jan Crosby believes the programme should be “even more ambitious”, arguing that the £5bn does not “go very far” in terms of individual projects. Brendan Sharkey, head of construction and real estate at MHA MacIntyre Hudson, welcomed the PM’s pledge, saying it “is exactly what we need to keep work flowing to the sector and to shore up the future of SME construction firms.”
Contact Paul Southward