NEWS – WEDNESDAY 7TH APRIL 2021
NEWS – WEDNESDAY 7TH APRIL 2021
TAX NEWS – WEDNESDAY 7TH APRIL 2021
Global corporate tax deal edges closer after US backs minimum rate
European countries have backed US plans for a global minimum corporation tax, but UK and EU leaders have reiterated that the taxation of digital services would need to be linked for a deal to succeed. Meanwhile, the International Monetary Fund’s chief economist Gita Gopinath has stated that the organisation has long favoured adoption of a global minimum tax on corporate profits. Gopinath said on Tuesday that current disparities in national corporate tax rates had triggered “a large amount” of tax shifting and tax avoidance, reducing the tax base on which governments could collect revenues to fund needed economic and social spending. Chris Sanger, head of tax policy at EY, points out that if lots of countries to agree to a global solution then “there will be an advantage to any headquarter location that does not implement a global minimum tax.” Meanwhile, Eamonn Butler, director of the Adam Smith Institute, warned the plans would “represent the creation of a cartel designed to minimise competition and disadvantage consumers”.
IR35 – Self-employed to pay more tax
New laws have come into force meaning around 170,000 self-employed workers are set to pay more tax. The change to off-payroll working rules – IR35 – hits those working in the private sector who pay less tax by setting themselves up as private companies. For now, contractors who work for small businesses will continue to determine their own employment status. However, contractors providing services to medium or large-sized private sector clients will need to get an employment status determination from the client. Ed Molyneux, co-founder of accounting software firm FreeAgent, told The Sun he is worried the change will “come too soon” for many contractors. He said: “This is the most significant tax change in the freelance and contracting economy for years. It essentially pushes many people who are contracting within the private and private sectors into quasi-employment, albeit without any of the protections that they would receive if they were actual employees. But those who will be most impacted are the same freelancers and contractors who have been worst affected by the pandemic, and who are still dealing with the ongoing economic fallout from it.”
The Sun Daily Express
EMPLOYMENT NEWS – WEDNESDAY 7TH APRIL 2021
Pandemic turns finance professionals on to more flexible working
New research indicates that 54% of financial services employees want alternative working patterns offered to them, such as flexible hours or the option of remote working. The study by Deloitte of 2,000 financial services employees found half (52%) wanted their employer to let them work from wherever they liked in the UK, and a quarter (24%) wanted their employer to enable them to work outside the UK post-pandemic. However, 34% felt that remote working had made their relationships with colleagues more superficial, although 45% felt their sense of autonomy had increased during the same time. Payal Vasudeva, financial services future of work partner at Deloitte, said: “Changes to how people work need to be reinforced by meaningful employee experiences. This could be a sense of belonging, purpose or greater flexibility in the hours they work and where they work from. There is not a one-size-fits-all approach. The new world of work is not about presenteeism but empowerment. Employees should be able to make some choices in how and where they work that makes them their most productive.” Separately, Grant Thornton’s CEO David Dunckley reveals that 88% of the firm’s staff want to spend less than half of the working week in the office after the pandemic.
City AM Financial Times, Page: 12
CORPORATE NEWS – WEDNESDAY 7TH APRIL 2021
Peacocks bought out of administration by consortium of investors
All 1,850 store staff currently on furlough at Peacocks, as well as 150 head office and support roles are to be retained after it was announced that the chain is to be bought out of administration by a group of international investors, led by Peacocks’ former chief operating officer, Steve Simpson. Former owner Philip Day is providing the financial backing for the management buyout in the form of a deferred loan, while a group of unnamed investors are injecting cash into the business to allow it to restart trading. Tony Wright, joint administrator of the business from FRP Advisory, commented: “Jaeger and Peacocks are attractive brands that have suffered the well-known challenges that many retailers face at present. We are in advanced discussions with a number of parties and working hard to secure a future for both businesses.” Meanwhile, Mike Ashley’s Frasers Group said that it was frustrated with the unwillingness of administrators at FRP “to engage substantively” or “to provide key financial information” so it could make an informed offer for the chain. Frasers is to raise its concerns with the All Party Parliamentary Group on Fair Business Banking which is conducting an in-depth investigation into standards in the UK insolvency profession, in response to claims that some practitioners are prioritising lenders’ interests over those of business or other creditors.
SMEs NEWS – WEDNESDAY 7TH APRIL 2021
Recovery loan scheme now open to applications
The recovery loan scheme is now open to applications, with the aims of supporting smaller businesses with additional finance to manage cashflow, growth and investment as they steer a path towards a sustainable recovery. The maximum amount of a facility provided under the scheme is £10m per business and £30m per group. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. Businesses can choose from term loans, overdrafts, asset finance and invoice finance, subject to the lender being accredited for each of these finance types. Businesses that have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme, although the amount they have borrowed under a previous scheme may in certain circumstances limit the amount they may borrow under RLS. Interest and fees will be paid by the business from the outset and the annual effective rate of interest and upfront and other fees cannot be more than 14.99%.
REGULATION NEWS – WEDNESDAY 7TH APRIL 2021
Pimfa warns advisers over post-Brexit regulation
FT Adviser reports that Pimfa has issued a warning to advisers on new regulations being introduced post Brexit, in particular the Investment Firm Prudential Regime. The warning comes as the Financial Conduct Authority, Prudential Regulation Authority and the Treasury are all bringing forward regulations which Pimfa says will have significant impacts on UK wealth managers and large advisory firms.
ECONOMY NEWS – WEDNESDAY 7TH APRIL 2021
UK economy expected to outperform US and Europe next year
The UK’s economic growth will outpace that of the US and Europe next year due to the Treasury’s vast spending programme and the successful rollout of vaccines, according to the International Monetary Fund (IMF). In its World Economic Outlook, the IMF predicted UK growth of 5.3% in 2021 and 5.1% next year, after taking one of the biggest GDP hits from the pandemic. Global growth is expected to bounce back to 6% this year, followed by a 4.4% rise in GDP in 2022. This comes after a 3% contraction in 2020. Despite its vaccine struggles, the eurozone will still enjoy growth of 4.4% in 2021, the IMF predicts. However, the organisation did warn of “multispeed recoveries” with the developing world lagging behind and growing financial risks from booming markets and high-levels of business borrowing.
Optimism rises for manufacturers as sales and orders improve
The manufacturing industry lobby group Make UK has revealed that almost half of businesses in the sector had seen sales and orders improve since the start of the year. Investment is also set to rise in direct response to the Chancellor’s “super-deduction” tax cut. However, Verity Davidge, policy director at Make UK, said: “One swallow doesn’t make a summer and, with the economy at a crossroads, there is an urgent need to consider how we make a structural change to permanently increase investment in the future.” The growing confidence of manufacturers is echoed by research from BDO, which said 86% of mid-sized businesses are planning to hire more staff in the next six months.
OTHER NEWS – WEDNESDAY 7TH APRIL 2021
Billionaires buoyed by crisis while businesses languish in debt
Despite the hit taken by corporates form the pandemic the wealth of the world’s billionaires has only risen, with the 10 richest people on the planet now worth a combined $1.15trn (£830bn) having grown their fortunes by around two thirds over the past year. According to Forbes’ annual world billionaires list, there are a total of 2,755 billionaires in the world whose fortunes add up to $13.1trn, a big jump on the year before when there were 660 billionaires worth a combined $8trn. For most businesses, however, the pandemic has led to increased debt with the Telegraph pointing out that Europe is now facing €1.8trn wall of debt, maturing in the next four years.
Contact Paul Southward