NEWS – WEDNESDAY 20TH JANUARY 2021

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 20TH JANUARY 2021

Business and economists warn Sunak over tax plan

Rishi Sunak has been warned against a tax raid on businesses, with business leaders and economists voicing concern over reports that the Chancellor is considering increasing corporation tax in his March 3 budget as he looks to tackle the deficit. Matt Kilcoyne, deputy director of the Adam Smith Institute, believes that if he pushes ahead with the mooted increase, the Chancellor “risks slamming the brakes on an economy that looks like it is just about to get back up to speed and that is a fool’s errand.” Adam Marshall, the director-general of the British Chambers of Commerce, said: “Coming out of the worst economic crisis in a generation, we should be signalling that we want a positive and favourable environment for business in the UK”, adding: “The time now is to demonstrate that we are open for business. Far better to signal no immediate tax rises at all.” Tom Clougherty, head of tax at the Centre for Policy Studies, said Britain’s “unusually stingy treatment of investment costs means we lag behind many of our international competitors already”, warning that raising the corporation tax rate “would make matters much worse.” Julian Jessop, a fellow at the Institute of Economic Affairs, said he “despaired” at talk of tax rises amid ongoing Brexit disruption, insisting: “Now is not the time to raise any sort of tax.” Elsewhere, the FT’s Lex column reflects on a potential corporation tax increase, saying that as it is “so fuzzy and indirect”, it is “politically easier to hike than direct taxes on individuals”.

The Daily Telegraph Financial Times, Page: 24

HMRC eases debt-collection tactics

HMRC has stopped using debt collectors and threatening repossessions during the pandemic, reports the Times, with officials also suspending the use of “field force collectors” until the end of the lockdown. HMRC has confirmed its policy had changed, saying: “We are currently not contacting customers with tax debts via debt collection agencies.” It added that it is “focusing on customers who contact us for further support” in order to “understand their circumstances and work with them to find an affordable way forward”. The Times previously reported enforcement tactics it deemed questionable, with the tax office subsequently issuing apologies for letters accusing people of deliberately not repaying debts, saying the content was a “mistake” that did not reflect its current approach to debt collection. A Times editorial welcomes HMRC’s shift in stance and says that as the self-assessment returns deadline looms, HMRC should “show it has learned the lessons of this unedifying episode” by showing understanding in regard to challenges faced by small-business owners and the self-employed.

The Times, Page: 10 The Times, Page: 29

Late submissions likely as deadline nears

The Mail looks at pressures being faced ahead of the January 31 self-assessment tax return deadline. Highlighting concern over long waiting times at HMRC and extra work created by coronavirus, it notes an Association of Chartered Certified Accountants estimate that up to 2.5m taxpayers could miss the deadline and incur a penalty. The Revenue has said it will show leniency to those who file late due to the coronavirus pandemic, saying they will be able to appeal the £100 fine automatically issued for a late submission. Dawn Register, head of tax dispute resolution at BDO, says it is not right to fine those hit by coronavirus, noting that having to appeal creates work for the taxpayer, while Jamie Morrison, head of private client at HW Fisher, believes “the guidelines remain far too vague on what exactly counts as a coronavirus-related excuse.”

Daily Mail

Tax penalties double in six months

The value of penalties imposed by HMRC has doubled each month in the last six months. Figures show that £41m was collected from penalties in November 2020, a 97% jump from the £21m collected in May.

City AM

Transformative year for the tax system?

With speculation that the Chancellor may increase some taxes in his March budget as he looks to balance the books, the Express says inheritance and capital gains taxes are among those that may be “radically overhauled”. Finn Houlihan of ATC Tax suggests the coming year “looks set to be a transformative one for Britain’s tax system as the Government looks to restore the UK’s public finances to stability.”

Daily Express

Tice: ‘You can’t tax your way out of this crisis’

Richard Tice, chair of political party Reform UK, has urged the Prime Minister to cut taxes and regulation in a bid to boost the economy in the wake of the coronavirus crisis. He said cutting taxes will drive faster growth, insisting: “You can’t tax your way out of this crisis, you have to grow your way out of this crisis.”

Daily Express

CORPORATE NEWS – WEDNESDAY 20TH JANUARY 2021

Boards urged to improve AGM access

Responsible investment group ShareAction has written to FTSE 350 chairmen, urging firms to improve engagement with shareholders after the coronavirus pandemic caused scores of annual meetings to be held in private. The call comes after Financial Reporting Council analysis revealed that 81% of FTSE 350 companies held closed meetings last year in response to the pandemic.

The Daily Telegraph

Paperchase files intent to appoint administrators

Paperchase is filing a second notice to appoint administrators. The stationery chain, which boasts 173 stores and concessions, originally filed notice on January 5, handing it 10 days protection from its creditors, with the firm saying the latest coronavirus lockdown had put an “unbearable strain” on the retail sector. PwC has been lined up to handle the process.

The Daily Telegraph Financial Times City AM

Arcadia to shut 31 stores

Administrators at Deloitte are set to close 31 stores under the Arcadia umbrella, with many of the closures hitting branches o f Outfit. Arcadia is currently in the process of being sold off, with the deadline for bids having passed on Monday. Contenders reportedly include Next, which is bidding in partnership with US hedge fund Davidson Kempner; US retail giant Authentic Brands, which is linked to a joint bid with JD Sports; China’s Shein; and G-III Apparel, owner of the DKNY brand.

The Daily Telegraph, Business, Page: 3 Daily Mail BBC News

CEO confident over Superdry future

Superdry CEO Julian Dunkerton says he is confident about the fashion chain’s future despite auditors having repeated a going concern warning after shop closures and losses relating to the coronavirus crisis. While the first saw half-year losses of £18.9m, Mr Dunkerton said Superdry had approached its lenders for a covenant waiver, adding: “We have £130m of untouched liquidity, we haven’t even gone overdrawn.”

The Times, Page: 40

Funding values Multiverse at £147m

Multiverse, an education start-up started by former Prime Minister Tony Blair’s son Euan, has secured new funding from venture capitalists thought to value the business at as much as £147m. The firm, which helps young people who do not want to go to university find apprenticeships, has more than 300 clients including KPMG.

The Guardian, Page: 23 The Sun, Page: 4

EMPLOYMENT NEWS – WEDNESDAY 20TH JANUARY 2021

Lifeline lined up for freelancers

Freelance workers excluded from state support amid the coronavirus crisis may be granted a lifeline, with a group of MPs calling on the Chancellor to include them in the final round of self-employed grants. While many newly self-employed workers were excluded from help as they had never filed tax returns, by the time February’s round of grants are issued they will have filed full-year accounts, with the tax return deadline coming on January 31. Esther McVey, co-chair of the All-Party Parliamentary Group (APPG) on Gaps in Support said: “Too many of those who made the leap into self-employment have been denied desperately-needed help because of a quirk of timing.” The APPG has called on HMRC to publish an explanation of why it cannot help freelancers and other groups that have been excluded from support initiatives. A number of MPs have written to Rishi Sunak over the matter, while Andy Chamberlain of freelancer trade body IPSE insists: “There should be no reason not to extend support grants now.”

The Daily Telegraph The Guardian, Page: 37

Government to review workers’ rights

Business Secretary Kwasi Kwarteng has confirmed the government is to review EU labour laws but insists there will be no dilution of workers’ rights. He told the Business, Energy and Industrial Strategy Committee that his department is carrying out a consultation with business leaders on EU employment regulations, with the working time directive, which sets a maximum 48-hour week, among rules being evaluated. Mr Kwarteng said the UK will maintain “a really good high standard for workers in high employment and a high-wage economy”, adding that suggestions ministers could look to “whittle down standards” are “not at all plausible or true.” Mr Kwarteng told MPs there would be no “bonfire of rights”. Shadow business secretary Ed Miliband voiced concern over the review saying: “A government committed to maintaining existing protections would not be reviewing whether they should be unpi cked.”

The Guardian BBC News

INTERNATIONAL NEWS – WEDNESDAY 20TH JANUARY 2021

EY HK staff told to work 16-hour days and weekends

EY’s Hong Kong staff are under pressure to work until 11.30pm each week night, and give up their weekends during their busiest periods, according to a series of leaked emails. An email from one manager t old staff they should be working 16-hour days and expect to spend one entire weekend day in the office, plus another half-day working from home. In a concession to staff, the manager said they could stop working at 7:30pm on Friday nights.

City AM

Bank sues over tax bill

Deutsche Bank, TP ICAP and two German lawyers are being sued by independent private bank M.M. Warburg & Co in Hamburg in an attempt to recoup a large tax bill it was ordered to pay over controversial Cum-Ex trades. The deals see investors rapidly trade shares to earn duplicate tax refunds. The practice ended in Germany in 2012 but may have cost the taxpayer more than €10bn.

City AM

ECONOMY NEWS – WEDNESDAY 20TH JANUARY 2021

Poll reveals increasing cash refusal

A poll from consumer group Which? suggests that the coronavirus pandemic has accelerated a move toward a cashless society, with 34% of respondents saying they have been unable to pay with cash when making a purchase at least once since March. The study found that grocery stores, pubs and restaurants were the businesses most likely to refuse a cash payment. One in 20 people polled said they rely on cash, while one in seven said they would struggle without it, and two-fifths view cash as an essential backup. Jenny Ross of Which? says ministers must “urgently make the Financial Conduct Authority responsible for tracking cash acceptance levels”, noting that legislation to protect cash promised almost a year ago has yet to be introduced. Natalie Ceeney, author of the Access to Cash Review, says the survey shows that a refusal to accept cash is “creeping into the wider UK economy”. John Howells, CEO of Link, said the ATM network estimates that cash usage will have halved by the end of 2021 compared to the start of the pandemic.

The Independent BBC News

KMPG: Recovery may take two years

KPMG estimates that the economy could take two years to recover from the coronavirus crisis, saying it should be back at its pre-pandemic size by the first quarter of 2023. It believes the rollout of coronavirus vaccines should help boost growth in the second half of this year, suggesting GDP could be up 4.2% in 2021, with the forecasts assuming all vulnerable groups are vaccinated by April.

The Times, Page: 44

Contact Paul Southward

Paul Southward