NEWS – WEDNESDAY 27TH JANUARY 2021

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 27TH JANUARY 2021

Billionaires aren’t just rich people, they’re policy failures

The Guardian’s Arwa Mahdawi discusses a report from Oxfam which reveals the combined wealth of the world’s 10 richest men has increased by $540bn since the start of the pandemic. Amazon boss Jeff Bezos saw his wealth increase by $13bn in one day last July – a record for the largest single-day increase in individual wealth ever recorded. The report on inequality comes as a growing number of countries discus wealth taxes as their assets drain away on funding pandemic rescue plans. Oxfam’s report will be harder to ignore this year, writes Mahdawi, who goes on to say that millionaires should be asked to pay their fair share via a more progressive tax system while billionaires shouldn’t exist at all: “Billionaires aren’t just super-rich people, they’re policy failures. A system in which 10 men can see their collective wealth increase by half a trillion during a global crisis can’t be fixed with a one-off wealth tax – we need greed taxes that prevent people amassing that much in the first place.”

The Guardian, Page: 3

UK government plans post-Brexit reform of investment industry

Tax reforms and innovative fund structures could be used to strengthen the competitiveness of the UK’s £9.9tn asset management industry, according to a consultation document published by the Treasury.

Financial Times

SMEs NEWS – WEDNESDAY 27TH JANUARY 2021

Small firms struggling with Brexit VAT rules

The Federation of Small Businesses has said that its members are facing “significant issues” as a result of leaving the EU VAT area, with one tax advisory firm noting that it was receiving up to 200 calls a week from worried companies. Selwyn Stein, managing director of VAT IT, a firm that helps reclaim the sales tax, comments: “They are calling us in a panic because their goods have been stopped and they don’t know what to do. They have become fearful about trading so are stopping shipments until they have a resolution.” A Cabinet Office spokesperson said help was available via a dedicated HMRC phone line and online. “Now the UK has left the EU customs union and single market, there are new rules and processes businesses will need to follow,” they said.

The Guardian

Lockdowns threaten a cascade of collapses

Begbies Traynor ‘s Real Business Rescue reports a near 80,000 rise in firms in distress in the fourth quarter of 2020, a 15% jump and a large share of the total 118,000 increase since the pandemic struck. Now almost 600,000 small businesses are on the brink as industry leaders call on the Chancellor to take action at the Budget. Craig Beaumont, chief of external affairs of the Federation of Small Businesses, said: “More than two thirds of small firms are now carrying some form of debt, with 40% of these saying the debt is now unmanageable.” Nikola Dacic, economist at Goldman Sachs, warned that “recent data shows emerging signs of tighter credit for SMEs and rising insolvency risks”.

The Daily Telegraph, Business, Page: 4 The Guardian, Page: 31

EMPLOYMENT NEWS – WEDNESDAY 27TH JANUARY 2021

Unemployment rate hits five-year high

The UK unemployment rate rose to 5.0% of the economically active population in the last quarter, spurred on by a record rise in redundancies. The new figures from the Office of National Statistics for the three months to the end of November showed an extra 202,000 unemployed, taking the jobless total to 1.72m, taking the unemployment rate to 5% for the first time since 2016. Redundancies rose 168,000 to a record high of 395,000. The hospitality industry was worst hit by the rise in joblessness, followed by manufacturing. In both sectors, the number of people unemployed was up by more than 50,000 on the previous year. Across all age groups, redundancies rose to a record high of 14.2 per 1,000 people. ONS deputy chief executive Sam Beckett told the BBC that the UK had not seen such rises in unemployment since the global financial crisis. Employment was still at “relatively high levels” compared with other countries, Ms Beckett said, but workers aged 16 to 24 were suffering some of the biggest falls in employment. However, she added: “We’ve currently got over 4.5m people on the furlough scheme, so that does complicate the picture when you’re trying to interpret what’s going on in the labour market”.

BBC News The Daily Telegraph City AM

CORPORATE NEWS – WEDNESDAY 27TH JANUARY 2021

Arcadia collapsed with £750m debt

Filings by Arcadia’s administrator Deloitte reveal that Sir Philip Green’s retail empire fell into administration owing its creditors £750m. According to analysis sent to creditors and seen by The Telegraph, Topshop and Topman had gross liabilities of more than £550m, while discount brand Outfit owed £80m. Creditors to Topshop and Topman are currently owed £82.2m, with overseas suppliers and property owners hit the hardest. At least 22 firms are owed between £1m to £3m each, including Savills and the owner of Westfield White City, the shopping centre. However, the listing “does not capture” unsecured amounts owed to the Arcadia retirement fund and unpaid VAT due to HM Revenue and Customs.

The Daily Telegraph, Business, Page: 1 The Sun, Page: 43 The Times, Page: 34

Paperchase sold in pre-pack rescue deal

Stationary chain Paperchase is to be sold in a pre-pack rescue deal to a lender connected with Permira, saving about 1,000 jobs. PwC is understood to be acting as administrator-in-waiting to the chain.

The Daily Telegraph The Times, Page: 35

FINANCE NEWS – WEDNESDAY 27TH JANUARY 2021

Angel CoFund announces rebrand, launches new £30m fund

Angel CoFund has rebranded as ACF Investors, making the announcement alongside the launch of a new £30m fund for early-stage UK businesses. The “fast-track” Delta Fund will see ACF Investors invest alongside at least three angel investors who are new to the business, including at least one lead angel with “demonstrable sector expertise” who has committed more than £70,000 to the round. Managing partner Tim Mills said the fund had been driven primarily by the reduced supply of capital at the earlier stages. “There’s more capital than perhaps there has ever been, but most of that’s weighted to the later stages…we’ve seen a big drop off in angel activity”, he explained, adding that with the size of funding rounds reaching record levels, there is a “greater inclination to pile into companies that are already well funded”.

City AM

REGULATION NEWS – WEDNESDAY 27TH JANUARY 2021

UK to start talks with Switzerland on financial services deal

Rishi Sunak will today start formal talks with his Swiss counterpart in an attempt to broker a new post-Brexit financial services agreement for the UK. The Treasury said the talks would see the two sides try to deliver “a comprehensive mutual recognition agreement that would reduce costs and barriers for UK firms accessing the Swiss market” and vice versa. The talks are expected to cover a wide range of areas, including banking, insurance, asset management and capital markets. Mr Sunak said: “Our ambition is to deliver one of the most comprehensive agreements of its kind in financial services as part of our plan to seize new opportunities in the global economy now we have left the EU.”

City AM

PROPERTY NEWS – WEDNESDAY 27TH JANUARY 2021

Sellers deterred by end of stamp duty holiday

The supply of homes for sale has dropped sharply, according to property website Zoopla, driven by the ongoing lockdown and the looming end to the stamp duty holiday. The overall volume of homes for sale on Jan 17 was 6.4% lower than the same day in 2020. Meanwhile, Parliament has announced that a stamp duty extension would be debated by MPs on Feb 1st, after more than 100,000 people signed an online petition.

The Daily Telegraph, Business, Page: 3

PENSIONS NEWS – WEDNESDAY 27TH JANUARY 2021

Annuity rates fall to new low

Annuity rates hit record lows in 2020 continuing a trend of deterioration that has seen the guaranteed source of income lose value in five out of the past six years. Rates fell 6.4% in the 12 months since January 2020, according to Moneyfacts. This meant the average basic “single-life” annuity for someone aged 65 now only pays £4,590 a year from a £100,000 pot. Nathan Long of Hargreaves Lansdown said: “With rates remaining so low, it requires quite a lot of courage to buy an annuity using your entire pension.”

The Daily Telegraph

UK business rescues threatened by fears over pension regulator’s new powers

Uncertainty among professional advisers over how the Pensions Regulator will exercise new powers to punish individuals who damage company pension schemes could scupper business rescue deals, experts have warned.

Financial Times

ECONOMY NEWS – WEDNESDAY 27TH JANUARY 2021

IMF downgrades UK growth forecast for 2021

The IMF has downgraded its forecast for UK growth to 4.5% this year, compared to the 5.9% it anticipated in October. The IMF predicts improved growth of 5% for 2022. Eurozone countries have also been downgraded and will collectively register 4.2% growth this year, after a 7.2% fall. Globally, output shrank 3.5% in 2020, the worst year since World War II, but the IMF suggested it will expand 5.5% this year – more than the 5.2% previously pencilled in.

Daily Mail

OTHER NEWS – WEDNESDAY 27TH JANUARY 2021

Accountant stole £100,00 for kitchen and bitcoin

Accountant Jane Myhill is facing jail after stealing £100,000 from a nursery and spending it on a new kitchen and bitcoin. Myhill siphoned the funds from two top-rated daycare nurseries while her employer, Alice Bennett, was being treated for breast cancer.

The Times, Page: 13

Contact Paul Southward, [Tax Consultant]

Paul Southward