NEWS – WEEKEND TO 13TH DECEMBER 2020
NEWS – WEEKEND TO 13TH DECEMBER 2020
TAX NEWS – WEEKEND TO 13TH DECEMBER 2020
One in four Brits would flee wealth tax rather than pay
Responding to the Wealth Tax Commission’s proposals for a one-off 5% tax on those with assets worth over £500k, over a quarter of Telegraph readers say they will leave the country if it is imposed. In the FT, Richard Jameson, partner at Saffery Champness, says: “It is widely acknowledged that tax rises are going to play a part in rebuilding the public finances following the COVID-19 crisis.” Jo Bateson, partner at KPMG, warns that without relief on business assets, the tax would have “implications for investment and growth.”
The Daily Telegraph, Page: 3 Financial Times, Page: 3
John Redwood: “Bring on more Freeports!”
Conservative MP John Redwood has called for freeport plans to be ramped up as a no-deal Brexit looks increasingly likely. He said: “We need new areas freed of restrictions to enterprise and with low taxes to harness the UK’s potential as a trading and manufacturing nation. Let’s add more value to raw materials and components we import by building factories close to ports and using our natural advantages as a global trading nation. Let’s for example have more fish processing and meal preparation next to our fishing ports.”
Letter: Let’s not vilify HMRC too quickly
HMRC’s press officer from 2018-2020, Thomas Riley, sympathises with people being chased for tax despite them struggling under the strain of the pandemic. But he says for all the “emotional unintelligence” at the department, there are thousands of civil servants “going beyond the call of duty to help.” He concludes: “Although HMRC must be held to the highest standards, we should not always be so quick to cast it as a villain. Tax is fundamental to our society, and HMRC needs to collect it.”
The Times, Page: 38
Retirees with final salary pensions could be hit by wealth tax
A new wealth tax could hit people with final salary pensions, according to NFU Mutual, which warned that even modest defined benefit pensions could be hit with tax bills. The proposed one-off tax on assets exceeding £500,000 includes pensions, and if the “cash equivalent transfer value” of a pension was used to calculate pension wealth, a pension that pays out £10,000 a year could be worth as much as £330,000, easily pushing savers who own a property over the £500,000 threshold. NFU Mutual’s Sean McCann said there would be unintended victims of including pensions in the assessment of an individual’s wealth. Mike Hodges, of Saffery Champness, said the tax was “fraught with the danger of getting it wrong at the expense of people’s pensions”. He said: “The Government clearly needs to raise money now but imposing a wealth tax that will only pay out in future decades when people retire is not an answer to today’s problem.” An editorial in the Observer and Carol Lewis in the Sunday Times both say the plans will be difficult to swallow – and perhaps harder to get past voters.
The Sunday Telegraph, Business, Page: 9 The Observer, Page: 66 The Sunday Times, Page: 2, 3
INDUSTRY NEWS – WEEKEND TO 13TH DECEMBER 2020
Interview: Tim Martin
The Sunday Telegraph talks to Wetherspoon’s boss Tim Martin, who seems to have been pondering the issue of succession after a year of “absolute hell”. “I’m worried about who might take over because corporate governance rules guarantee eventual mediocrity or failure by sweeping away the mechanism by which the company is run,” he says. The Financial Reporting Council’s corporate governance code deems that a chairman is no longer independent after nine years in the role, and Martin has held the position since 1983. Martin continues: “A very good pub company or retailer has got to where it’s got to because of the culture. If you lose the culture you lose the business. Since the introduction of the current corporate governance regime, I don’t think there’s a single example of PLC that has over the last 30 years gone from strength to strength. It destroyed the supermarkets – Tesco, Sainsbury’s – when they ran them on a revolving door CEO basis, with revolving door non-execs; it hasn’t worked.”
CORPORATE NEWS – WEEKEND TO 13TH DECEMBER 2020
Mastercard back on the hook for fees
The Supreme Court has ruled that a landmark class action claim against Mastercard could be heard again after it was rejected three years ago. Mastercard is alleged to have forced shoppers to pay higher prices through fees that it charged merchants in the 16 years to 2008. If the company loses, it could be forced to pay consumers a total of £14bn. Rocio Concha, a director at the campaign group Which?, said: “This is a hugely important win for consumers.”
The Times, Page: 11 The Guardian, Page: 44
Tourist tax would cost 2,000 jobs at Heathrow
Some 2,000 jobs at Heathrow could be lost as a result of the Government’s decision to end tax-free shopping for tourists, according to the airport’s chief executive. John Holland-Kaye said the move could be the “final nail in the coffin” for many struggling businesses.
The Guardian, Page: 45 Daily Mail, Page: 95
US retail powerhouse targets Arcadia and Debenhams
Debenhams and Arcadia Group could both be taken over by the American retail giant Authentic Brands which is in discussions with the administrators of both companies, the Sunday Telegraph reports. Deloitte is running an auction of Sir Philip Green’s Arcadia empire under the codename Project Kane. Authentic chairman Jamie Salter has built up a reserve of more than $1bn during the pandemic and is backed by investors including Blackrock and Leonard Green & Partners. Authentic has already bought out bankrupt US retailers including Barneys and Forever 21, among others, and is involved in an attempted turnaround of the department store chain JC Penney. Associated British Foods, Marks & Spencer, Next and River Island are also sizing up bids for Arcadia brands.
SMEs NEWS – WEEKEND TO 13TH DECEMBER 2020
Premium hikes threaten small businesses
Research by the consultant Mactavish shows that some insurance premiums for SMEs have risen by 800% this year leading to fears that some businesses will not be able to afford to renew their policies. Chief executive Bruce Hepburn warned: “The timing couldn’t be worse for firms still being battered by the economic fall-out from the pandemic. For some SMEs, these unexpected cost increases could be the final nail in the coffin.” Meanwhile, a judgement from the Supreme Court on whether insurers should honour coronavirus claims made by SME customers on their business interruption policies could be issued before Christmas, affecting some 370,000 businesses.
Sunday Express, Page: 51
Lloyds joins NatWest and unblocks business account applications
Lloyds Bank and NatWest have opened up business account applications again after joining other big banks in blocking them due to high demand from customers seeking emergency bounce back loans and a massive rise in fraudulent applications. MPs on the Treasury committee will tomorrow grill senior bankers from NatWest, HSBC and Lloyds on why they blocked small firms. David Clarke, chairman of the Fraud Advisory Panel charity, said: “This is a business decision by the banks.” Fraud checks can be done “in 15 minutes.”
The Mail on Sunday, Page: 122
Three-quarters now spend more at local businesses
A survey by Nucleus Commercial Finance has found that 71% of shoppers are intentionally spending more money at local businesses due to the pandemic than they did last year, with 14% saying they have spent significantly more. Small businesses are recognising the change too, with 42% saying they feel better supported by locals since the pandemic began.
Sunday Express, Page: 52
EMPLOYMENT NEWS – WEEKEND TO 13TH DECEMBER 2020
Unemployment rate expected to stand at 5.1%
Data from the Office for National Statistics will on Tuesday show the unemployment rate rose and the number of people in work fell due to the unwinding of furlough in October. The furlough scheme was expected to end on October 31st, but the Chancellor extended it to the end of March. The ONS is expected to say the unemployment rate rose from 4.8% to 5.1% while the number of job losses rose from 164,000 to 250,000.
Sunday Express, Page: 52
PROPERTY NEWS – WEEKEND TO 13TH DECEMBER 2020
London faces “brain drain” hitting salaries, rents and house prices
Wages, rents and house prices could fall in London as white-collar workers choose to relocate elsewhere because of the pandemic. Paul Swinney, of think tank Centre for Cities, says the exodus will almost certainly mean a fall in salaries in the capital if employees no longer have to live near their work. The number of Londoners wanting to buy a home outside the city was 27% higher between May and October compared with the same period in 2019, according to Hamptons International. Demand for homes worth £1m or more was up by 86%. The Telegraph suggests London’s experience echoes that of San Francisco, which was already facing something of a brain drain pre-Covid because of its extortionately high living costs and taxes.
The Daily Telegraph, Page: 4
PENSIONS NEWS – WEEKEND TO 13TH DECEMBER 2020
Red flag warnings causing huge delays on pension transactions
Pension providers have said that increased due diligence has given way to “over the top” scam screenings that are causing significant delays on certain pension transfers and switches. Both SIPP and small self-administered scheme providers have complained that scam red flags are being “over-used” and subsequent delays in legitimate transfers are causing consumer detriment. Richard Mattison, director at Whitehall Group, said delays in switches and transfers can cause a number of significant problems with losing deals, additional costs, bad will with vendors, among other things. Nathan Bridgeman, director of Westbridge Ssas, has also seen this as a growing issue. He said: “We have seen cases of third-party vendors pulling out of sales to Ssas as pension transfers have taken so long with unreasonable and unfair obstacles being put in place by the ceding schemes.”
ECONOMY NEWS – WEEKEND TO 13TH DECEMBER 2020
Bailey urges banks to keep lending
The Governor of the Bank of England, Andrew Bailey, has urged banks to keep lending and support the UK economy. Presenting the BoE’s latest Financial Stability Report, he said lenders had the “capacity to continue to support households and businesses” even if the economic chaos from coronavirus and Brexit was much worse than expected. Addressing Brexit concerns or a spike in coronavirus cases, Mr Bailey added: “What’s the Bank of England got in its armoury? The answer is a lot. We will use our tools as we did in March should we be in that situation.”
Reuters Daily Mail
Analysts expect stocks to fall as no-deal Brexit looms
Britain’s biggest banks saw their share price fall as much as 6% on Friday as analysts cut the odds of Brexit talks failing. Morgan Stanley warned they could fall further, perhaps by a fifth, in the event of no deal. The US bank told clients there was a “rising risk” of a no-deal Brexit which would lead the FTSE 250 to drop between 6 and 10%. JP Morgan cut the odds of a deal from 66% to 60% and suggested it could fall to 50% if there was no progress by Sunday night.
CBI chief expresses disbelief over Brexit
Adam Marshall, director general of the British Chambers of Commerce, writes in the Observer that businesses have still not been informed of the rules under which they will have to operate from January 1st. Marshall writes: “It is hard to believe that we still have to ask ministers for clarity on the nuts and bolts of trade – things like rules of origin, customs software, tariff codes, and much more besides – just a fortnight before the end of the transition period.” He added that the lack of clarity will mean that investment decisions will be delayed. “Without official guidance, many will pause long-term planning and hold back on investment,” he states.
QE will soon lose its efficacy, economists warn
Economists are warning that further quantitative easing will struggle to further stimulate spending and investment with the Bank of England on track to own half of UK government debt by the end of 2021. Bank of America economist Robert Wood suggested that QE “at this stage is defensive”, a tool that can “prevent tightening but cannot add more stimulus”. The comments follow the assertion from BoE Governor Andrew Bailey that rate-setters have plenty of ammunition ahead of a possible no-deal Brexit. Overall, analysts expect further QE before the Bank resorts to negative interest rates.
INTERNATIONAL NEWS – WEEKEND TO 13TH DECEMBER 2020
German audit watchdog chief faces probe over Wirecard share trading
The head of Germany’s audit watchdog is under investigation after he admitted to buying and selling shares in Wirecard whilst his own organisation was investigating the fraudulent payments company’s auditor.
OTHER NEWS – WEEKEND TO 13TH DECEMBER 2020
Obituary: Paul Sarbanes
Paul Sarbanes, the force behind the Sarbanes-Oxley Act that transformed the regulation of auditors and financial reporting, has died aged 87.
Contact Paul Southward