NEWS – WEDNESDAY 22ND JULY 2020
NEWS – WEDNESDAY 22ND JULY 2020
TAX NEWS – WEDNESDAY 22ND JULY 2020
Making Tax Digital programme to be extended
HMRC has announced that the Making Tax Digital programme will be extended to firms with turnover below the VAT threshold of £85,000 from April 2022. Taxpayers who file self-assessment returns for business or property income of more than £10,000 a year will be brought into the programme the following year. The move has been criticised by Mike Cherry, chairman of the Federation of Small Businesses, who remarked: “The last thing we need is wholesale expansion of Making Tax Digital without the right support in place. Government should be backing small businesses and the self-employed to drive recovery from a severe recession,” noting that the proposed changes would “mean more costs and paperwork for small firms at a critical time.” Jesse Norman, financial secretary to the treasury, said the reforms were designed to bring the tax system into the 21st century. “Making Tax Digital will make it easier for businesses to kee p on top of their tax affairs. But it also has huge potential to improve the productivity of our economy, and its resilience in times of crisis,” he said.
NAO raises concerns over HMRC cuts
HM Revenue and Customs has been praised by the National Audit Office for shrinking the tax gap but concerns were raised over cuts to the number of tax audits taking place. While more funds have gone into early interventions to prevent non-compliance, cuts to other areas have reduced “by a third the number of traditional enquiries and audits investigating non-complying taxpayers over the past three years”, the audit office said. The NAO highlights the risk that reducing resources for compliance activity in areas with high returns could disproportionately affect the tax gap,” it added.
How to benefit from capital gains tax rules
Former tax director with Grant Thornton, Mike Warburton, writing in the Telegraph, advises readers on “how to make the most of tax breaks while you can.” He advises housebuyers to keep a record of all buying costs and sellers to do so for costs relating to preparing the property for sale, and notes ways for those involved in transactions to benefit from capital gains tax rules.
HMRC mulls new reporting requirements for tax advisers
New rules proposed by HMRC could see tax advisers required to provide more information to the Revenue. HMRC wants to remove an exclusion which allows them to withhold information from the authority, although advisers would still be able to withhold any material they think is not required for the purpose of checking a penalty position.
REPORTING NEWS – WEDNESDAY 22ND JULY 2020
FRC: Companies need to enhance COVID-19 reporting
The Financial Reporting Council has said that companies need to do more to explain the impact of COVID-19 on their performance. The FRC conducted a review of a selection of interim and annual financial statements with a period end date of March 2020, all of which had a post-UK lockdown period end date. The regulator said in reviewing interim financial statements, it considered the requirements of IAS 34 and whether the information provided in the interim accounts offered sufficient information to enable a user to understand the impact of COVID-19. The review found that although companies provided sufficient information to enable a user to understand the impact COVID-19 had on their performance, position and future prospects, some – particularly interim reports – would have benefited from more extensive disclosure. In summary, the FRC said companies should explain the significant judgements and estimates made in preparing their accounts and provide meaningful sensitivity analysis or details of a range of possible outcomes to support any disclosed estimation uncertainty.
Lebanon central bank chief in spotlight over $6bn boost to assets
The assets of Lebanon’s central bank were arbitrarily boosted by at least $6bn after an unusual application of seigniorage accounting. EY and Deloitte, who signed off the accounts, have declined to comment.
FINANCE NEWS – WEDNESDAY 22ND JULY 2020
Coronavirus loan schemes lend nearly £48bn in total
The Government’s coronavirus loan schemes have now lent nearly £48bn to businesses, with the bounce back loan (BBL) programme, under which the government backs 100% of loans up to £50,000 leaving the government at risk of being “saddled with the debts of insolvent small companies,” according to City AM. This comes as coronavirus support programmes such as the job retention scheme, which pays the wages of workers who otherwise might lose their jobs, are gradually withdrawn by the government. Meanwhile finance body TheCityUK is predicting a wave of defaults on some £35bn of corporate debt taken on during the crisis.
CORPORATE NEWS – WEDNESDAY 22ND JULY 2020
Ladbrokes Coral owner under investigation by HMRC
GVC, owner of Ladbrokes Coral, is coming under further scrutiny from HMRC in connection with the firm’s former Turkish online gambling business. Shares were down 9% on the news. HMRC yesterday informed the company that it was widening the scope of its investigation and is now examining “potential corporate offending” by an entity (or entities) within the GVC group. The Telegraph’s Ben Marlow finds it curious that GVC chief Kenny Alexander jumped ship just three days before the investigation was revealed to shareholders.
UK company insolvencies to rise sharply as state support measures unravel
Begbies Traynor warns of a sharp rise in company insolvencies as businesses face the “double whammy” of accruing liabilities and the withdrawal of state support schemes.
Financial Times, Page: 10 Yorkshire Post, Page: 18
SMEs NEWS – WEDNESDAY 22ND JULY 2020
Plan to relieve businesses of unsustainable debt
Sir Adrian Montague, chairman of TheCityUK Leadership Council, explains in the Telegraph how its proposals could help businesses convert, restructure and repay debts sustained through government-backed loans during the coronavirus pandemic. Viable but highly indebted SMEs should be allowed to convert their debt into a more manageable form, says Sir Adrian, while the smallest businesses could see their repayments means tested via the tax system, “perhaps using taxable profits as a measure of affordability”.
The Daily Telegraph, Business, Page: 2
PENSIONS NEWS – WEDNESDAY 22ND JULY 2020
Advice needs to improve to ensure pension freedom success
A survey of 115 advisers by Openwork has found 51% believe access to advice needs to improve to ensure pension reforms continue to work well. Some 56% of those polled also said they worried about low levels of consumer understanding despite the reforms being in operation for the past four years. Advisers were also concerned about the increased use of drawdown, with 68% of advisers saying non-advised drawdown was their biggest worry after four years of pension freedom.
PROPERTY NEWS – WEDNESDAY 22ND JULY 2020
HMRC announces lowest property sales figure ever
HMRC has revealed that property sales reached the lowest level on record in the three months to June, with 63,250 residential transactions in Britain that month, up 31.7% from May. North London estate agent Jeremy Leaf noted that the stamp duty holiday has resulted in buyers bringing decisions to move forward, commenting that “there is still concern that improved conditions will be relatively short-lived as economic news deteriorates and furlough support falls away.”
The Daily Telegraph Daily Express, Page: 47 City AM
Property revaluation put off to 2023
The Treasury risks condemning businesses struggling with the fallout from the coronavirus pandemic to paying business rates bills that bear “no relation to economic realities” after it delayed a reassessment of property values, experts have said. The Government said postponing valuations until 2023 would “reduce uncertainty for business” but Jerry Schurder, head of business rates at Gerald Eve, the property adviser, said: “This announcement does indeed ‘give businesses certainty’ – but only in that they now know their bills are going to remain unsustainably high.”
ECONOMY NEWS – WEDNESDAY 22ND JULY 2020
Spending review announced by Treasury
The Treasury has launched a review of government spending, set to be published in the autumn. Chancellor Rishi Sunak said, “tough choices” would have to be made as a result of the COVID-19 pandemic, with Whitehall departments urged to “identify opportunities to re-prioritise and deliver savings.” This comes as public borrowing in the first three months of the 2020-21 financial year increased to £127.9bn, according to the Office for National Statistics. Jeremy Thomson-Cook, chief economist at financial services firm Equals, commented: “The UK economy continues to burn, and the Government’s spending taps need to remain open for the foreseeable future in order to give businesses and consumers every opportunity to support each other as we gradually return to normality.”
OTHER NEWS – WEDNESDAY 22ND JULY 2020
UK ministers accused of turning blind eye to any Russian interference
A long-awaited parliamentary report into Russian influence in Britain has concluded that the Government has not done enough to probe possible Russian interference in UK democratic processes. The report also claimed lawyers, accountants and estate agents have acted “wittingly or unwittingly” as “enablers” for wealthy Russians who have links to the Kremlin.
Contact Paul Southward