NEWS – WEDNESDAY 9TH SEPTEMBER 2020

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 9TH SEPTEMBER 2020

Private equity says tax rise would drive industry out of UK

The British Private Equity & Venture Capital Association is lobbying the Government not to increase taxes on carried interest – whereby a private equity executive’s share of profits is a carried interest in their fund rather than performance-related pay. This typically enables them to pay capital gains tax at up to 28% rather than income tax at up to 45%. Arun Advani, an academic at the University of Warwick, said: “Private equity is the only part of the UK’s financial industry that gets access to these lower tax rates for individuals. So, it would make sense for a government committed to supporting everyone in the financial sector to tax it at the same rate as income.” The Telegraph notes that Nat Rothschild tweeted that it was “indefensible” that carried interest is taxed at a lower rate than traditional stock option awards given to executives at UK companies. “It is another reason why the pool of listed companies is shrinking” he added.

Financial Times, Page: 12 The Times, Page: 38 The Daily Telegraph, Business, Page: 3

Tens of thousands of potential fraud cases relating to furlough scheme

Some 27,000 potential cases of fraud connected to the Government’s furlough scheme are to be investigated by HMRC, Downing Street has said. The news follows the disclosure on Monday by the head of HMRC, Jim Harra, that the department predicts a loss of £3.5bn resulting from people fraudulently claiming payments under the initiative. A Government spokesman said: “Where genuine mistakes have happened, HMRC will work with employers to correct claims, but if any claim is suspected of fraud or is based on dishonest and inaccurate information payments may be withheld or need to be repaid. HMRC won’t hesitate to take criminal action in the most serious cases.”

The Daily Telegraph, Page: 6 City AM The Times, Page: 12 Daily Express, Page: 4

Amazon paid less than £300m in UK tax last year

Amazon’s British subsidiaries paid £293m of direct tax in 2019 on revenues of almost £14bn. This is a 33% increase from the £220m paid in 2018 when revenues were 26% lower. Amazon does not reveal profits or corporation tax payments for its entire UK operation. Paul Monaghan, head of the Fair Tax Mark campaign, said: “Amazon is growing its market domination across the globe on the back of income that is largely untaxed – allowing it to unfairly undercut local businesses that take a more responsible approach. Contrived financial arrangements lie at the heart of Amazon’s success.”

The Daily Telegraph, Business, Page: 1 The Times, Page: 2 The Guardian, Page: 14 Daily Mirror, Page: 18 Daily Mail, Page: 19 The I, Page: 21

EMPLOYMENT NEWS – WEDNESDAY 9TH SEPTEMBER 2020

Haldane warns against furlough scheme extension

Andy Haldane, the Bank of England’s chief economist has warned the Government against extending the furlough scheme, arguing that it would interrupt the “necessary process of adjustment” that was already underway. Rejecting concerns about a spike in redundancies, Mr Haldane said it was the central bank and Government’s job to support the transition to new ways of working. In a City AM podcast, he said the pandemic has caused “lasting structural damage” to the economy and that “regrettably, some business will not make it through”. His comments come as figures from the Insolvency Service show that employers filed plans in June and July to make more than 300,000 job cuts. This would be in addition to the 730,000 employees already made redundant during the pandemic and the 300,000 self-employed people unable to find work.

The Guardian, Page: 33 City AM Daily Mail Daily Mirror, Page: 5

CORPORATE NEWS – WEDNESDAY 9TH SEPTEMBER 2020

Emergency insolvency rules must be extended

The Institute of Directors has called for emergency insolvency rules designed to give breathing space to struggling company directors to be extended or risk “company collapses and job losses”. Directors’ liability for “wrongful trading” was relaxed in response to the pandemic but is due to come back into force next month. Roger Barker, director of policy and corporate governance at the Institute, said: “Directors must be in a position to see their organisations through the crisis. They shouldn’t be penalised for acting responsibly amid unprecedented circumstances.”

The Times, Page: 38 Daily Mail, Page: 67

BM Advisory appointed as Joint Supervisors of Select CVA

BM Advisory ’s Michael Solomons and Andrew Pear have been appointed as Joint Supervisors of Select Fashion’s Company Voluntary Arrangement (CVA). Michael Solomons comments: “The retail sector across the UK has reported significant operating losses as a result of the COVID-19 lockdown, with a high number of store closures and a significant loss of jobs. Select Fashion, too, has been heavily impacted by the pandemic, making the previous lease arrangements unattainable if the business was to continue.”

Press Release

SMEs NEWS – WEDNESDAY 9TH SEPTEMBER 2020

Lloyds forced Bounce Back Loan users to open business accounts

The Competition and Markets Authority has criticised Lloyds Bank for forcing 30,000 small company owners to open fee-paying business accounts to get Bounce Back Loans from the Government’s support scheme. The customers were mostly sole traders running their businesses from their current account. Lloyds said it had no processes in place to lend to businesses through personal accounts and so asked them to open a business account. The bank alerted the CMA and has now agreed to a series of remedies to ensure that customers are not impacted.

The Daily Telegraph, Business, Page: 1 Daily Mail, Page: 65 The Times, Page: 36

British Business Bank seeks funding boost to drive UK recovery

Keith Morgan, the outgoing CEO of the British Business Bank, has said the bank should play an “essential role” in supporting small business growth as the country rebuilds after the coronavirus crisis.

Financial Times, Page: 2

ECONOMY NEWS – WEDNESDAY 9TH SEPTEMBER 2020

Jobs recovery evident but pay continues to fall

The latest Report on Jobs survey from the Recruitment and Employment Confederation and KPMG shows hiring increased last month for the first time since March. However, pay continues to fall as rising unemployment shifts the balance in the labour market from workers to business. Job placings for temporary workers grew at the quickest rate in 20 months while permanent placings rose only “marginally”. The loss of 750,000 jobs between March and July combined with the jobs lost among the self-employed was behind a continued fall in starting salaries in August, the report found.

The Times, Page: 38

Government to fund projects across home nations

The Telegraph details how the Internal Market Bill will enable the UK Government to fund projects UK-wide and support businesses or local authorities in Scotland, Wales and Northern Ireland. Since devolution, ministers in London have not been allowed to spend public money in certain policy areas. Alun Cairns, a former Conservative Wales secretary, said: “Although the primary role of this Bill is to protect the UK Market, it’s also the start of the Union fight back.”

The Daily Telegraph

OTHER NEWS – WEDNESDAY 9TH SEPTEMBER 2020

Improved air quality would give economy a £1.6bn boost

The UK could see a £1.6bn boost a year to the economy if air pollution was reduced to meet World Health Organisation guidelines, according to research by CBI Economics. The benefits would come from reductions in early deaths, sickness absence and improved productivity. Rain Newton-Smith, of the CBI, said: “Not only is there a clear moral responsibility to address air pollution and the impact it has on human health and the environment, there’s also a striking economic rationale.”

Yorkshire Post, Page: 2

Cost of coronavirus response over £200bn for first six months

The National Audit Office (NAO) says Government spending on over 190 measures in response to the coronavirus crisis has cost the Treasury £210bn so far. The NAO said £70bn of the promised funds had been spent, and there were a number of measures still to be fully implemented. The Treasury’s furlough scheme, with a price tag of £47bn, was the single most expensive intervention and £35.4bn of this has been spent so far.

The Guardian, Page: 8 The Times, Page: 12

Contact Paul Southward