NEWS – WEDNESDAY 2ND DECEMBER 2020

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 2ND DECEMBER 2020

Don’t delay submitting your submitting your 2019/2020 self-assessment tax return talk us

With reference to the article below which suggests that 1.3m people may delay submitting their 2019/20 tax returns beyond the 31st January 2021 deadline, Paul Southward urges people to talk to KSK first.  Submitting your tax returns within the time limits not only avoids automatic penalties, it also gives you a “clean-slate” with the taxman.  Late tax returns is one reason why the taxman may launch an enquiry and if you are a director or a business partner those enquiries could extend to your business interests.  We can help you avoid penalties and unwanted attention from the taxman.  Contact Paul Southward or your usual KSK contact.

1.3m Britons set to delay tax returns

A survey conducted by online accountants TaxScouts shows that more than one million people plan to put off tax returns and risk having to pay £130m in fines to HMRC. While tax returns must be filed by 31st January 2021, almost 30% of those polled said the coronavirus crisis had made them more likely to put off dealing with their tax return. This equates to around 1.3m of Britain’s 4.5m freelance taxpayers. It was found that three in ten would wait until January to file their tax return, with 45% of these taxpayers planning on leaving it until the final week of the month and 6% planning to file on January 31. Those who miss the deadline face a £100 fine. Mart Abramov of TaxScouts warned that a “piling up” of deferred tax payments from 2020 and the first advanced tax payments in January, coupled with the financial impact of the pandemic and a tendency to delay tax returns until the last minute, could deliver “a perfect storm”. Lucienne Parry of Moore said many taxpayers would face tax bills twice the size of normal as they had already deferred their July 31 payment.

The Daily Telegraph  Paul Southward of keens Shay Keens Ltd urges you to contact KSK.

Tax system reform call

Sam Robinson, a senior researcher at think-tank Bright Blue, argues the case for tax reform in a piece for City AM. Pointing to the nation’s economic hit from the coronavirus outbreak, Mr Robinson says fiscal consolidation, including tax rises, “will undoubtedly be needed at some point”, adding that when the time comes for higher levies, “we will need a tax system that can cope with the scale of the challenge effectively.” Calling for reform, he says there are “structural problems” in the existing “outdated, byzantine” tax system.

City AM

CORPORATE NEWS – WEDNESDAY 2ND DECEMBER 2020

Debenhams set for liquidation

Department store chain Debenhams is to be wound down after Christmas, with the loss of up to 12,000 jobs and closure of 124 stores. The first branch closures are expected in the new year, with all expected to close down by the end of March. Debenhams has been trying to find a buyer, but its administrators have not received “a deliverable proposal”. JD Sports had been in talks over acquiring the chain but withdrew after Arcadia – which operated more concessions in Debenhams than any other retailer – collapsed into administration. Geoff Rowley of FRP Advisory – which has been running Debenhams since April – said while “all reasonable steps were taken to complete a transaction that would secure the future of Debenhams … a viable deal could not be reached.” He said the firm “remains hopeful” that alternative proposals for the business may yet be received. Considering the fates of Debenhams and Arcadia, Daniel Burke of Blick Rothenberg told the I, “they are simply not in touch with their target markets.”

The Times, Page: 37 The Daily Telegraph, Business, Page: 1 The Guardian, Page: 4 Financial Times, Page: 1 Daily Mail, Page: 16 The I, Page: 43 The Independent, Page: 47 Daily Mirror, Page: 9 Daily Express, Page: 8 The I BBC News

Rivals eye Arcadia brands

With retail group Arcadia having collapsed on Monday, administrators at Deloitte are searching for buyers for its brands, which include Topshop, Miss Selfridge, Wallis and Dorothy Perkins. Experts say that due to the size of Arcadia – which has eight brands and 466 stores – finding a single buyer is unlikely, meaning it is set to be broken up. Topshop, Topman and Miss Selfridge are expected to attract the most interest. Frasers Group, which owns House of Fraser and Sports Direct, has expressed interest in some of the brands, while M&S, Next and Boohoo, which has already acquired Oasis and Warehouse, have all been touted as possible bidders. Elsewhere, KPMG has been appointed as administrator to Redcastle, a subsidiary of Arcadia that owns the Topshop and Topman store on London’s Oxford Street.

Daily Mail, Page: 73 The Times, Page: 38

Caffè Nero creditors green light CVA

Caffè Nero’s landlords have backed a rescue deal that will see it renegotiate rents and shut some branches, with more than 90% of creditors who voted backing the CVA. The vote came a day after a takeover bid from Mohsin and Zuber Issa, the owners of petrol forecourt operator EG Group – a move rejected by the café chain’s bosses. Caffè Nero modified the CVA following the bid, saying that if the chain is sold in the next six months, creditors will have any arrears paid in full. The Times notes that under insolvency law, creditors can challenge the outcome of the restructuring plan within 28 days. Lawyers for EG Group have written to Caffè Nero, highlighting the possibility of a landlord revolt.

The Times, Page: 37 Daily Mail, Page: 73 The Daily Telegraph, Business: 3 The Sun, Page: 43

OECD report warns of lingering pandemic effects

The Organisation for Economic Cooperation and Development (OECD) has warned that businesses have borrowed so heavily amid the COVID-19 crisis that their performance will be affected for years to come. The OECD report warns: “A high level of debt combined with a high risk of default could undermine recovery.”

The Daily Telegraph City AM

INSOLVENCY NEWS – WEDNESDAY 2ND DECEMBER 2020

Rule change risks company rescues

Experts have warned the partial return of crown preference – under which certain tax debts take higher priority for repayment in insolvency cases – will see CVAs used less often, with Damian Webb, a partner at RSM Restructuring Advisory, warning that the policy would “severely constrain restructuring options”. Tim Symes, a specialist in insolvency at law firm Stewarts, said that as HMRC can insist on being paid in full in a proposed CVA, the plan “could instantly become dead in the water.” “HMRC will have gouged out such a large share from available assets that it won’t be worth unsecured creditors supporting it,” he added. Insolvency trade body R3 has also voiced concern over crown preference and asked for it to be suspended.

The Times, Page: 38

SMEs NEWS – WEDNESDAY 2ND DECEMBER 2020

Three-quarters of SMEs plan to invest

Research from Barclaycard Payments shows that 74% of SMEs are planning to invest in their business next year. The poll reveals that 66% of smaller firms felt more prepared for November’s England-wide lockdown than they were for the initial shutdown in March. While 36% said they were more mentally prepared, 32% said they had made changes to their business that had made it more resilient – with almost half of SMEs having boosted their online presence amid the pandemic. Konrad Kelling, head of small business at Barclaycard Payments, commented: “The past year has been incredibly difficult for SMEs … It’s reassuring to see that many have been able to take advantage of the lessons learned during the first lockdown to adapt their business”.

Daily Mirror, Page: 39

PROPERTY NEWS – WEDNESDAY 2ND DECEMBER 2020

House prices up 6.5%

Figures from Nationwide show that house prices are 6.5% higher than a year ago, with this the steepest increase since January 2015. Month-on-month, prices climbed 0.9% in November, hitting an average of £229,721. Nationwide research shows properties in national parks carried a 20% premium when sold, with homes on the outskirts of these areas also selling for 6% more than equivalent property elsewhere. Looking to what the future holds, Nationwide chief economist Robert Gardner said that the outlook remained “highly uncertain” and suggested housing market activity is likely to slow in the coming quarters, especially once the stamp duty holiday expires at the end of March 2021. Andrew Wishart, a property economist at Capital Economics, expects to see a 5% drop in house prices next year – but not a house price crash. Howard Archer, chief economic advisor to the EY Item Club, said that a recent increase in activity and strengthening of prices would “prove unsustainable sooner rather than later due to challenging fundamentals for consumers”.

The Times, Page: 43 The Daily Telegraph, Business, Page: 4 The Guardian Financial Times BBC News

INTERNATIONAL NEWS – WEDNESDAY 2ND DECEMBER 2020

Berlin watchdog reports EY over Wirecard audit

Apas, Germany’s audit watchdog, suspects EY partners knew a 2017 audit for since-collapsed payments company Wirecard was “factually inaccurate”. The regulator has reported the audit firm to prosecutors.

Financial Times, Page: 12

Canada announces plans for digital tax

Canada has announced a plan to tax corporations providing digital services, with the tax to be enforced as of 2022 and run until the Organisation for Economic Co-operation and Development develops a coordinated approach that ensures digital platforms pay their share of taxes.

The Independent

ECONOMY NEWS – WEDNESDAY 2ND DECEMBER 2020

OECD: UK economy to contract by 11.2%

The latest economic outlook report from the Organisation for Economic Cooperation and Development (OECD) suggests the UK’s post-pandemic economic recovery will lag behind every other major economy, bar Argentina. The OECD report forecasts that the UK economy will contract by 11.2% this year, with this steeper than the 10.1% fall in GDP it predicted in September. The OECD also downgraded its forecasts for UK growth to 4.2% in 2021, from 7.6% three months ago. The OECD said that, alongside the coronavirus crisis, Brexit poses a threat to growth, suggesting failure to secure a trade deal with the EU would see “serious additional economic disturbances in the short term” and have a “strongly negative effect on trade, productivity and jobs in the longer term”. Overall, the OECD said the global economy is set to shrink by 4.2% this year before rising 4.5% in 2021 and a further 3.75% in 2022.

Daily Mail, Page: 75 The Independent, Page: 8 The Guardian City AM

Manufacturing sees biggest jump in three years

Stockpiling ahead of the Brexit transition deadline prompted activity in Britain’s manufacturing sector to rise at the fastest pace for nearly three years in November, the latest survey from IHS Markit/CIPS reveals. The manufacturing purchasing managers’ index reading hit 55.6 last month, up from 53.7 in October on an index where a reading above 50 indicates growth. Howard Archer, chief economic advisor to the EY Item Club, said the increase in stockpiling and increased demand from the EU delivered an “appreciable lift to manufacturing activity” last month.
Daily Mail, Page: 75 The Guardian, Page: 39 The Daily Telegraph, Business, Page: 4 Daily Express, Page: 47 The Sun, Page: 43 City AM

Contact Paul Southward

Paul Southward