NEWS – WEDNESDAY 24TH JUNE 2020
NEWS – WEDNESDAY 24TH JUNE 2020
TAX NEWS – WEDNESDAY 24TH JUNE 2020
Tax policy tweaks that could kickstart the economy
City AM speaks to six tax experts to glean their ideas on how the UK Government could make changes to tax policy to help the economy bounce back from the coronavirus crisis. Among the responses are proposals to abolish corporation tax, treat capital investment in the same way as running costs, and creating an alternative minimum tax, requiring everyone earning more than £100,000 to pay at least a 35% tax rate on their income plus capital gains. Justine Delroy, head of tax and structuring at Addleshaw Goddard, said that, with wages deductible against profits for corporation tax, an increase in the deduction for every guaranteed day of work per week someone earning under the average wage is contracted to work could be introduced. Targeted at industries where zero-hours contracts are most common, the revenue could be used to provide some of the key workers in society with the predictable income streams.
CORPORATE NEWS – WEDNESDAY 24TH JUNE 2020
Intu battles for survival in crunch talks with lenders
Shopping centre owner Intu Properties has put KPMG on standby in case it cannot reach agreement with its creditors. Intu is seeking a standstill agreement on its debt and is in emergency talks with seven banks behind its £600m revolving credit facility. Rothschild and PwC are advising Intu, which has an extremely complicated debt structure. The Times notes that analysts predict that perhaps only 10% of retailers in Britain will pay their rent in full at June’s quarter payday tomorrow.
JD Sports buys back Go Outdoors in pre-pack deal
Outdoor clothing chain Go Outdoors has been bought back from administrators by owner JD Sports in a £56.5m pre-pack deal. Deloitte was hired to run the administration for Go Outdoors, which employs about 2,400 people across 67 stores. The chain was reporting heavy losses even before the coronavirus outbreak and JD Sports said it would need to be “fundamentally restructured”.
SMEs NEWS – WEDNESDAY 24TH JUNE 2020
The fourth of July can’t come soon enough
Kate Nicholls, the chief executive of UKHospitality, said “70% to 80%” of the sector will open on July 4th after Boris Johnson relaxed social distancing rules yesterday. However, Ms Nicholls added that reopening sites remains challenging because operators have so little time to prepare. Elsewhere, Federation of Small Businesses chairman Mike Cherry has also welcomed the government’s decision to further ease lockdown restrictions, stating that without cutting the two-metre social distancing rule one in five small firms would have to remain shut. Mr Cherry added: “We’d encourage everyone to support their local small businesses over the weeks ahead as more and more are able to reopen. This has been an incredibly difficult time, but there is now some light at the end of the tunnel. The fourth of July can’t come soon enough.”
Daily Mail Press Release
EMPLOYMENT NEWS – WEDNESDAY 24TH JUNE 2020
Glen promises progress with financial services diversity
City minister John Glen has pledged to speed up progress on diversity in financial services stating at the launch of third annual review of the Women in Finance charter that “real challenges that still remain” and that “we cannot afford to miss out on the best talent and leadership.” The Treasury’s work on the initiative was disrupted by the coronavirus outbreak. In an accompanying statement, Mr Glen said: “I look forward to seeing more firms meet their targets this year, and will continue to hold senior leaders accountable for delivering a more diverse and stronger workforce.” The Treasury’s annual review of progress found that of the 187 firms signed up to the charter before September 2018, 14% have set a goal to have an equal number of men and women in senior roles. Meanwhile, nearly 60% of firms set a target of 33% or above for female representation. On average women make up 32% of senior management – just below the 33% target the Treasury set for its signatories.
City AM Financial News
FINANCIAL SERVICES NEWS – WEDNESDAY 24TH JUNE 2020
UK’s post-Brexit financial rules add pressure on EU over market access
The Treasury has set out how it intends to regulate banks, asset managers, and derivative traders when the Brexit transition period ends, putting pressure on the EU to decide if it is sufficient to allow British groups continued access to its markets. Chancellor Rishi Sunak said the government plans to bring forward a review of EU capital rules for insurers, known as Solvency II and make existing retail customer disclosure rules known as PRIIPs function better. Mr Sunak added: “The government continues to believe that comprehensive mutual findings of equivalence between the UK and the EU are in the best interests of both parties, and we remain open and committed to continuing dialogue with the EU about their intentions in this respect.” The UK and the EU have committed to complete a review into equivalence by the end of the month.
Investors have faith in the City, but financial services must remain protected
Omar Ali, head of UK financial services at EY, comments on the state of play vis-à-vis Brexit negotiations and financial services. He notes recent figures showing the City remains the preferred destination for FDI and argues that London’s status as one of the world’s leading financial hubs is the result of decades of work. “Beyond FDI, we know from our Financial Services Brexit Tracker that 45 global banks, insurers, asset managers, and fintech firms have reaffirmed their commitment to the UK since the referendum in 2016,” he adds. The UK “should not be complacent,” continues Mr Ali, adding that “it remains essential that the sector is protected in the negotiations.”
PENSIONS NEWS – WEDNESDAY 24TH JUNE 2020
Thousands of UK steelworkers told to seek possible pension compensation
The Financial Conduct Authority has written to 7,700 former and current British steelworkers warning that those who have transferred out of the British Steel Pension Scheme since 2017 may have received unsuitable advice. In a review of advice given to scheme members, the regulator found only 21% of cases saw acceptable advice given. The remaining 79% was either unsuitable, or unclear. Megan Butler, executive director of supervision of the investment, wholesale and specialists division at the FCA, said: “Our findings are sufficiently concerning that we have taken the formal step of contacting you directly and encouraging you to act. You should check the advice you were given and, where appropriate, complain in order to seek any compensation you are potentially due.” Ms Butler added: “We encourage you to act, if you do nothing, you may end up with less money during your retirement than you should have done.”
ABI revives call for flat rate pension tax relief
The Association of British Insurers has called on the government to simplify the pension tax relief system, arguing it has worsened existing inequalities. ABI-commissioned research found the current system benefitted higher earners in particular and was less favourable towards women, the lower paid and younger workers.
REGULATION NEWS – WEDNESDAY 24TH JUNE 2020
Watchdog urged to probe Lendy auditor
The Financial Reporting Council is being urged to probe work undertaken by Moore Stephens for Lendy, the collapsed P2P lender which left about 9,000 investors nursing losses of nearly £152m. Moore Stephens, which is part of BDO, is facing questions over whether it failed to spot transactions totalling £6.8m made to entities registered in the Marshall Islands, which were allegedly made for the benefit of the company’s founders, Liam Brooke and Tim Gordon; why no warning was given over the poor state of Lendy’s finances in its final set of accounts; and whether it had fundamentally misunderstood the nature of the business. Lisa Taylor, of the Lendy Action Group, comprising about 1,700 investors, said: “Lendy’s auditors failed to accurately portray the company’s financial condition and risks.” A BDO spokesman said: “Due to our professional duty of confidentiality, we are unable to talk about the specifics of any individual audit.”
PROPERTY NEWS – WEDNESDAY 24TH JUNE 2020
House sales slowly recovering from COVID-19 lockdown
House sales showed signs of slow recovery in May, increasing 16% on the month before, but they were still at only half the level seen a year earlier. The figures from HMRC show that an estimated 48,450 residential property transactions took place across the UK during the month. This was 49.6% lower than the number seen in May 2019, when there were 96,050 sales recorded. HMRC said the figures should be taken with caution, as they were “provisional” and – due to the lockdown – based on incomplete data. Transaction numbers in the second quarter of this year have fallen to levels similar to those seen in late 2008 and in early 2009, following the financial crisis.
The I, Page: 44
ECONOMY NEWS – WEDNESDAY 24TH JUNE 2020
IHS Markit survey reveals UK economy is likely to see return to growth
IHS Markit’s flash purchasing managers’ index (PMI) has shown that the UK’s economic output reached a measure of 47.6 in June, up from 30 in May and close to the 50 level which signals growth. The firm’s chief business economist, Chris Williamson, remarked: “June’s PMI data add to signs that the economy looks likely return to growth in the third quarter, especially given the further planned easing of the lockdown from 4 July.” He went on: “June saw a record rise in the PMI for a second successive month, confirming that the economy is moving closer to stabilising after the worst of the immediate economic impact from the COVID-19 pandemic was felt back in April.”
The Daily Telegraph, Business, Page: 3 Daily Mail, Page: 68 Daily Mirror, Page: 36
INTERNATIONAL NEWS – WEDNESDAY 24TH JUNE 2020
Ex-Wirecard CEO is arrested on suspicion of false accounting
Wirecard’s former chief executive Markus Braun has been arrested on suspicion of false accounting and market manipulation, Munich based prosecutors have said. Mr Braun resigned last Friday after auditor EY refused to sign off the German payments firm’s 2019 accounts over a missing €1.9bn ($2bn). Wirecard said the missing sum was supposedly held in accounts at two Asian banks and had been set aside for ‘risk management.’ EY said after an audit of the business that banks had been unable to provide the account numbers for where the money was held, and yesterday Wirecard admitted the €1.9bn simply may not exist. Mr Braun had been in charge of Wirecard since 2002.
OTHER NEWS – WEDNESDAY 24TH JUNE 2020
Accountant loses mansplaining claim
A trainee accountant at KPMG who accused her boss of “mansplaining” when he asked her to dress more professionally has had her claims for unfair dismissal, harassment and disability and race discrimination dismissed. Zhihui Lu’s managers had raised concerns about her performance and erratic behaviour after she joined the company’s graduate trainee scheme. On one occasion, Ms Lu burst into a “loud and aggressive” tirade after she came into the office wearing jeans and a jumper and was told to wear smarter, more appropriate clothes by her male manager.
Contact Paul Southward