NEWS – WEDNESDAY 9TH DECEMBER 2020

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 9TH DECEMBER 2020

One-off 5% wealth tax would raise £262bn

A commission set up in April to establish whether a wealth tax could work in Britain has said a one-off tax of 5% on assets above £500,000, including pensions but excluding mortgage debt, would raise more than £260bn. About 8m UK residents would be liable to pay and the proposals suggest individuals would be allowed to pay in five equal instalments over five years, based on the market value of their assets at a specific date. The Wealth Tax Commission is led by Arun Advani, an assistant professor at Warwick University, Andy Summers, an associate professor of law at the London School of Economics, and Emma Chamberlain, a barrister at Pump Court Tax Chambers. They drew on the advice of 50 international experts. Lord O’Donnell, a former Cabinet Secretary, said in the report’s introduction: “It is broadly accepted that if the prime minister is to stand by his promise not to return to austerity then taxes will eventually have to rise. This will mean breaking another manifesto commitment. Or it means thinking seriously about new taxes.”

Financial Times, Page: 3 The Times, Page: 40 The Daily Telegraph, Business, Page: 4 The Guardian, Page: 43 The i, Page: 44

Kate Andrews: Wealth tax has dangerous implications for freedom

Writing in the Telegraph, Kate Andrews considers wealth taxes and the proposals in France and the US that have resulted in a backlash from citizens. Emmanuel Macron had to rapidly backtrack after thousands of people fled the country – the same is happening in California. Aside from implementation difficulties, wealth taxes are morally wrong, says Andrews: “Taxing wealth is a fundamental break in the social contract between taxpayers and government: people pay their taxes to help fund services on the understanding that their income and property ultimately belong to them, not the state. A wealth tax turns that on its head: it all belongs to the state, which can call it in whenever it sees fit. It has dangerous implications, not just for our economy, but for what it means to be an individual in a free society.” She goes on to argue that the “tax system may be overdue for an overhaul, with a focus on efficiency and fairness – but on both of those counts a wealth tax should be wiped from the list. It’s a non-starter for anyone who wants to get this country moving again.”

The Daily Telegraph, Page: 22

Government fails basic test on post-Brexit Britain

Sir John Redwood has expressed dismay at the Government during a debate in the Commons on The Taxation Bill for post-Brexit Britain. Sir John said he expected to hear how taxation would be transformed and how VAT was going to change to help business and consumers as the economy struggles out from under the shadow of the pandemic. “Instead we have six resolutions that are mainly about trying to make sure that they can get even more VAT out of people after we’ve left than before and they could have done that at any time.” Sir John continued: “Where is the vision, minister, that we are going to have a much better tax system after Brexit?”

Daily Express

Chancellor urged to be more upbeat on economy

Julian Jessop at the Institute of Economic Affairs has urged Rishi Sunak to be more optimistic about the economic outlook, arguing that the rollout of vaccines should help the economy get back on its feet, improving the public finances through growth in 2021 and removing the need for austerity or tax hikes.

The Daily Telegraph, Business, Page: 4

INDUSTRY NEWS – WEDNESDAY 9TH DECEMBER 2020

Auditors still failing to challenge company bosses, says UK regulator

The Financial Reporting Council’s latest report on audit quality has revealed that auditors’ failure to challenge companies on their numbers has been a factor in four out of five substandard audit processes in the past two years. The regulator said firms have “developed action plans and strategies to embed a challenge culture more consistently across their audit teams.” But with the pandemic heightening the need for challenge and scepticism the FRC has concluded that new initiatives are needed to promote a more robust auditing approach. The watchdog will in June next year host a conference on the culture of challenge, entitled “Audit firm culture: Challenge. Trust. Transformation” involving academics, other regulators and experts on culture from a wide range of sectors to share experience, ideas and good practice. Building on the output from this conference, the FRC will undertake a thematic review on building a challenge culture in audit firms. David Rule, the FRC’s executive director of supervision, said: “Robust, focused and independent challenge is vital to a high-quality audit, particularly at a time of prolonged heightened uncertainty . . . it should be front of mind for audit teams as they advance their planning for December 2020 year-end audits.”

Financial Reporting Council International Accounting Bulletin Financial Times, Page: 12 The Daily Telegraph, Business, Page: 7

SMEs NEWS – WEDNESDAY 9TH DECEMBER 2020

Small businesses increase use of open banking

Research from the Competition and Markets Authority has found that 50% of small business are now using open banking providers. The CMA’s Small Business Financial Landscape study, which surveyed 500 businesses with fewer than 50 employees, found almost three in five started to use these services in the past six months, with 90% saying that their interest in open banking was a direct result of the pandemic. The research also found 24% of small businesses now use cloud accounting while 21% are using cashflow forecasting tools. Constanza Castro Feijoo, small business engagement spokesperson for the Open Banking Implementation Entity, commented: “It is encouraging to see the UK’s small business community recognising that open banking can help to become more resilient, productive and profitable.”

P2P Finance News

SMEs to benefit from new grant scheme

An SME fund providing grants to businesses struggling due to the pandemic has been announced by fintech lender Market Finance. Chief executive Anil Stocker commented: “These grants represent a small boost that will help the successful businesses pivot, scale or grow in 2021. It’s been a difficult year for most, but we can’t forget that a lot of businesses were good, strong and viable in 2019.” He went on: “In addition to the grant, we will offer the time and skills of our expert staff to help their leadership teams. Whether they need tech, marketing, finance or communications support, we will provide the resources to help them get to where they want to go.”

City AM

More small businesses seek advice on redundancy

Mentor, the HR and Health and Safety advice service run by NatWest, reveals that an increasing number of small businesses seeking advice on redundancy, furlough and absence, in the wake of lockdowns. Mentor said 49% of calls were related to redundancies.

Daily Express, Page; 35

PROPERTY NEWS – WEDNESDAY 9TH DECEMBER 2020

Billions in stamp duty overpaid

The Express reports on estimates that over £3bn worth of Stamp Duty Land Tax (SDLT) was overpaid due to poor advice, with stamp duty advisory practice Cornerstone Tax encouraging anyone who believes they may have overpaid to speak to them. David Hannah, Chairman and Chief Executive of Cornerstone Tax commented: “We currently have a number of cases before the courts on multiple dwellings relief, mixed use properties, and other important issues to the taxpaying public. We believe that it is vital to clarify exactly what the law means, to ensure that taxpayers are not at risk of paying too much tax, simply because the Revenue choose to word their guidance in a manner which favours them.”

Daily Express

UK extends ban on evicting commercial tenants

The UK is to extend a ban on commercial landlords evicting tenants until March 31 next year, Robert Jenrick, the communities secretary, said. However, those businesses that are able to pay their rent should do so.

Financial Times

CORPORATE NEWS – WEDNESDAY 9TH DECEMBER 2020

Large number of insolvencies predicted as furlough ends

Begbies Traynor chairman Ric Traynor has cautioned that the end of government furlough schemes will result in a wave of insolvencies among UK businesses. He remarked: “There are plenty of companies that are just avoiding insolvency to claim furlough money to protect staff. Once furlough ends, they will have to go down the insolvency root.” The firm expects a boom in business advising such distressed companies.

The Times, Page: 46 Evening Standard The i, Page: 44

EMPLOYMENT

Fewer permanent staff recruited during November

A monthly survey by KPMG and the Recruitment and Employment Confederation found that the number of permanent staff recruited fell for a second month in a row in November and dropped by its most since July. “A lot of demand for permanent staff (is) displaced to January as firms hope the COVID crisis is easing. For now though, temporary work continues to help businesses operate and people find jobs,” REC chief executive Neil Carberry said.

The Times, Page: 40 Reuters

ECONOMY NEWS – WEDNESDAY 9TH DECEMBER 2020

November grocery sales break records

The latest retail figures from Kantar show that November was the biggest month ever for the grocery market, with £10.9bn spent in store and online. The firm said that take-home grocery sales rose 11% during the 12 weeks to November 29, which was the fastest rate of growth since August. Meanwhile, Kantar said anxiety over Brexit was growing. Fraser McKevitt, head of retail and consumer insight, said: “The supermarkets and their suppliers are extremely concerned about the Brexit deal. In many ways, the supermarkets business is a logistics business and any friction at the border or any additional costs at the border will inevitably cause disruption.”

The Guardian, Page: 42 Daily Mail, Page: 73

Fitch says upgrades of major economies unlikely in 2021

Despite COVID-19 vaccines beginning to roll out Fitch Ratings has told Reuters that upgrades of any major economy are unlikely in 2021. Brian Coulton, Fitch’s chief economist said countries hit hard by the coronavirus will see the maximum economic boost from an effective vaccine. Coulton also said that the start of 2021 will be weak in Europe and the United States as a result of recently tightened restrictions and that the clearest benefits in annual growth numbers will be seen in 2022.

Reuters

INTERNATIONAL NEWS – WEDNESDAY 9TH DECEMBER 2020

Deutsche Bank head of accounting steps aside over Wirecard allegations

Munich prosecutors launched a criminal investigation into potential violations of professional duties during Wirecard audits last week, spurring the resignation of former EY partner Andreas Loetscher as Deutsche Bank’s head of accounting.

Financial Times

OTHER NEWS – WEDNESDAY 9TH DECEMBER 2020

Figures justifying second lockdown dramatically downgraded

Data used by the Government to justify the second lockdown has been quietly revised down, the Telegraph reports. Dr Daniel Howdon, a health economist at the University of Leeds, also noticed that ONS has been consistently revising down past data with each weekly publication. Many experts have complained that the data presented by the Government ahead of the lockdown was “riddled with errors” and exaggerated the need for a second lockdown, while Greg Clark, the chairman of the Commons science and technology committee, said the belated admission of errors was “of great concern”.

The Daily Telegraph

Destitution levels soared in the UK, even before the pandemic

The number of people experiencing destitution increased by more than 50% to 2.4m between 2017 and 2019, according to the Joseph Rowntree Foundation, which is calling for the Government to make permanent and extend a £20 uplift to the basic rate of benefits, along with other reforms to make the welfare system more generous.

Financial Times, Page: 3 The Guardian

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Paul Southward