NEWS – WEDNESDAY 27TH MAY 2020
NEWS – WEDNESDAY 27TH MAY 2020
TAX NEWS – WEDNESDAY 27TH MAY 2020
No need to impose huge tax burdens to rescue economy
Writing in the Telegraph, Mike Warburton, a former tax director with Grant Thornton, runs through some ideas on how the Chancellor can avoid crippling austerity and a heavy tax burden as he repairs the economy after the coronavirus pandemic. Among his proposals is 5% of added VAT on luxury items, an end to the option for British companies to pay dividends tax free to offshore shareholders, a cut to stamp duty, lifting restrictions on EIS relief and a reversal to planned increases to NICs for the self-employed.
The Daily Telegraph, Business, Page: 5
Further tax deferrals possible for firm owners and self-employed
An Evening Standard article advises business owners and the self-employed who have been allowed to defer taxes during the lockdown period that HMRC is willing to offer further deferrals to those who still cannot afford to pay. The Time to Pay scheme will allow deferrals possibly right through until April 2021, with PAYE and National Insurance contributions to be considered case by case.
EMPLOYMENT NEWS – WEDNESDAY 27TH MAY 2020
Sunak considers bringing self-employed support to an end
The Chancellor is expected to make a decision on whether to end the government’s self-employment support programme within days. Rishi Sunak could also announce a ban on new entrants to the furlough scheme, which was recently extended until October. But the self-employment scheme, which pays 2m people up to £2,500 a month, is due to end in five days’ time. Andy Chamberlain, director of policy at self-employed trade body Ipse, said: “The Government will need the self-employed to kickstart the economy after coronavirus yet most of them cannot continue their work in the midst of this deadly pandemic and are relying on Government support to keep their businesses afloat.” Craig Beaumont, of the Federation of Small Businesses, called for a full extension until August to match the taxpayer-funded employee furlough scheme.
Mothers almost 50% more likely to have lost their jobs
A report by the Institute for Fiscal Studies (IFS) reveals women’s careers are at risk of “lasting harm” from the coronavirus lockdown with a survey finding mothers are 23% more likely than fathers to have lost their jobs, either temporarily or permanently, during the pandemic and 14% more likely to have been furloughed. Mothers are 47% more likely than fathers to have permanently lost their job since February. Women are overrepresented in the retail and hospitality sectors which have been among the hardest hit by the virus. “Mothers are more likely than fathers to work in the sectors that are taking the biggest hit from the lockdown,” the report sad. “This aspect is different from in previous recessions, in which male-dominated sectors suffered the most.”
CORPORATE NEWS – WEDNESDAY 27TH MAY 2020
Saffery Champness data shows law firms furloughing staff despite profits
The Telegraph notes that many professional services firms appear to have been taking advantage of state support schemes “even if they are in a position to ride out the economic crisis relatively unscathed,” quoting research by Saffery Champness and the Institute of Legal Finance & Management which reveal that the number of law firms that have furloughed at least some of their staff increased from 77% last month to 91% this month. Ian Johnson, a director at Saffery Champness, commented: “The results certainly do not show any evidence of a return to business as usual for law firms, and the vast majority are rightly still concerned with ensuring profitability during this turbulent time.”
Bombardier wants repayments and penalties suspended
Bombardier has told the government that its transportation unit will have to shut down without support. The company is asking for penalty payments to its rail franchise customers and bond payments to Transport for London to be suspended for several months.
McLaren to cut 1,200 jobs
McLaren is to cut 1,200 jobs with the majority in the UK as the COVID-19 pandemic decimates car sales. McLaren’s Formula 1 operation expects to lose about 70 people from its 800-strong workforce.
SMEs NEWS – WEDNESDAY 27TH MAY 2020
CLBILS loan size expanded to £200m by Treasury
Rishi Sunak has announced that over £32bn in loans and guarantees has been issued to firms so far during the coronavirus crisis. The Chancellor is extending the CLBILS loan size to £200m, with companies receiving help through this and the Bank of England’s Coronavirus Corporate Financing Fund (CCFF) to be asked to agree to not pay dividends and “exercise restraint on senior pay”. The £32bn includes 268,000 bounce back loans worth £8.3bn, and 36,000 loans worth over £6bn, according to the Treasury. Meanwhile, Ranald Macdonald, writing in City AM, argues that the government’s furlough scheme “does not solve the issues of zero/dramatically reduced sales or provide an answer to the capital investment required to start up again after lock down.”
PROPERTY NEWS – WEDNESDAY 27TH MAY 2020
UK property funds could remain frozen for months
Investors could find they are locked into property funds for months as the market is impossible to value due to the COVID-19 crisis, industry sources say, adding that some funds may need to restructure to survive. Ten big open-ended property funds tracked by Morningstar, with a total of £6.5m under management, stopped investors from getting their money out in mid-March, saying valuers could not accurately assess real estate assets in a plunging economy. With question marks over the future of office working, the retail industry in crisis and the housing market only just reopening, the price of property is set for a major readjustment, but a dearth of transactions means the scale of change is still unclear. “This is a crisis unlike any other,” said Ben Sanderson, a director at Hermes Real Estate Investment Management
ECONOMY NEWS – WEDNESDAY 27TH MAY 2020
June shopping surge will require retailers to invest heavily in safety precautions
Figures from data firm Springboard show consumers headed back to shops in force over the weekend leading to predictions of a rush to the high street when restrictions are lifted further next month. Diane Wehrle of Springboard said retailers will need to invest heavily to put measures in place to keep staff and customers safe. Separately, The British Retail Consortium, which represents high street stores, said the lockdown had cost non-food shops some £1.8bn in lost sales each week “and with sales expected to remain weak, even as shops begin to reopen, many retailers will still be in a fight for survival”.
Andy Haldane predicts rapid V-shaped recovery
The Bank of England’s chief economist has said the UK economy is on course for a short V-shaped recession following signs of a “modest recovery” in spending and business confidence. However, Andy Haldane also warned of a “paradox of thrift” unless the government can instil confidence in businesses and households. Meanwhile, global stock markets rose yesterday as lockdown measures across the world began to lift. The FTSE 100 closed up 1.2% boosted by big gains in travel shares.
INTERNATIONAL NEWS – WEDNESDAY 27TH MAY 2020
Wirecard postpones issuing annual results again
German payments company Wirecard has postponed the publication of its 2019 annual results for the third time this year because its auditor EY needs additional time to finish its work.
OTHER NEWS – WEDNESDAY 27TH MAY 2020
Brexit risks making London’s dirty money fight harder, say lawyers
City of London lawyers have warned that Britain will struggle to keep laundered money out of the country if co-operation with EU authorities weakens after Brexit.
Contact Paul Southward