NEWS – WEEKEND TO 14TH MARCH 2021
NEWS – WEEKEND TO 14TH MARCH 2021
TAX NEWS – WEEKEND TO 14TH MARCH 2021
Economist calls for reform of wealth taxes
Jack Leslie, the Chief Economist at the Resolution Foundation, says the Chancellor should reform wealth taxes in order to raise funds. He states: “One of the really big trends in the economy over the last 30 years is that the overall value of the wealth people hold is worth around twice what it was 30 years ago. But at the same time, taxes on wealth has stayed completely flat, so we are essentially taxing wealth half as much as we used to.” Resolution Foundation published a report in January which revealed that almost £800bn of assets held by Britain’s richest households had been missed by official measures. Mr Leslie went on: “With the country facing a decade of mounting fiscal pressures, now is the time for Britain to do a better job of taxing its record levels of wealth by reforming our capital gains, inheritance and property taxes.”
Stormont: Paul Johnson to lead tax powers review
Paul Johnson, the director of the Institute for Fiscal Studies, is to lead a commission examining whether to give Stormont more taxation powers. Northern Ireland is the only one of the devolved regions not to have conducted a comprehensive taxation review of this sort. Finance Minister Conor Murphy commented: “As we hopefully begin to emerge from the pandemic, rebuilding and restoring our economy and wider society is the task in front of us. If we are to deliver on our social and economic priorities, it is vital that we have all the levers we need at our disposal. The work of the Fiscal Commission will inform that important discussion.”
Waterstones chief backs online sales tax
James Daunt, the CEO of Waterstones, has said an online sales tax may be the last chance to save the high street and accused large retailers of “acting in their own self-interest” by opposing it. Although the tax would hit Waterstones as well as online giants like Amazon, Mr Daunt said it could save hundreds of thousands of jobs. “This just seems such a straightforward and immediately executable tax and I just don’t understand why they don’t just do it.” Daunt does single out Tesco as being “on the side of the angels on this one” through its support for the tax, which he believes would be “a small price to pay for the greater good.”
The Mail on Sunday, Page: 126
SEISS: The tax implications of fourth and fifth grant
Simon Warne, Private Client Partner at Crowe UK, discusses some of the implications of the Self Employment Income Support Scheme (SEISS) grants with the Sunday Express. He warns those looking to claim SEISS in the coming months to bear in mind the tax implications of the scheme. Mr Warne said: “Our expectation is that both fourth and fifth grants will be taxable, as with previous grants. The fifth grant in particular has additional conditions attached, and come July, when applications open, taxpayers will need to carefully consider whether their turnover has indeed dropped to the required 30% to claim the higher grant.”
Brexit can be used to cut taxes and spark Britain’s green revolution
Sir John Redwood has told the Sunday Express he hopes the Government will revise VAT rates now the UK has left the EU. Although he doesn’t advocate for its complete abolition, the Tory MP does want to see the tax removed from products that will help with the country’s green revolution. “They want us to have different boilers, better heating controls and more insulation, all very good things,” he said. “Let’s take the VAT off them and show that we are going to use our freedom to shape our own taxes.”
CORPORATE NEWS – WEEKEND TO 14TH MARCH 2021
Questions for Gambling Commission after Football Index collapse
Football Index has had its betting licence suspended by the Gambling Commission after the firm collapsed into administration, costing football fans almost £90m. Some customers reported losing more than £100,000. The company allowed customers to buy imaginary “shares” in footballers and offered “dividends” based on player performances and their media profiles. But the company restructured dividends down last week “to ensure the long-term sustainability of the platform”, triggering a massive slump in the value of players. On Friday the company said it would have to find a new way forward and had hired Begbies Traynor to prepare this through an administration. The Gambling Commission was urged to investigate Football Index in December when a trader accused the online gambling company of operating like a Ponzi scheme and using “extremely misleading” language.
UK taxpayer exposed to Gupta and Greensill via £1bn debt guarantees
The FT reports that BEIS officials are scrambling to determine the extent of taxpayer losses linked to the collapse of Greensill, with £1bn at risk via three Government guarantees. Elsewhere in the paper, Tom Braithwaite says big questions remain over the supervision of commercial lending, who will take the hit and when do we consider an entity like Greensill a systemic risk. It has also emerged that Greensill Capital borrowed almost €100m from its sister bank in Germany in the months leading up to its collapse, with such related-party loans subject to stringent regulatory requirements under German law. City AM reports that Sanjeev Gupta’s GFG Alliance is in negotiations with Grant Thornton, the administrators of collapsed Greensill Capital, over a “standstill agreement” between the two parties. It has been reported that Gupta could owe up to £3bn to the lender.
Virgin Active in restructuring talks
Deloitte is advising on a restructuring at Virgin Active in the hope the company can avoid administration. Progress has been made with landlords while its banks and shareholders are reportedly supportive. Virgin Active is hoping to complete a rescue deal in late April, but if this fails it would be put into administration and wound down rather than sold as a going concern, putting almost 2,500 jobs at risk.
The Times, Page: 54
High streets yet to feel full effect of pandemic
Over the course of the pandemic more than 17,500 chain stores and other venues closed, according to research was conducted by the Local Data Company and PwC. The study recorded a net loss of 9,877 outlets, the worst annual decline researchers have seen in more than a decade. However, Lisa Hooker, head of consumer markets at PwC, says the picture is likely to get worse before it gets better. “Much of the impact is a reflection of things that happened before the pandemic […] Unfortunately, there is still quite a lot to play out. You’ve seen the closures of the likes of Debenhams and Topshop and that’s happening in 2021 so they’re not even in our numbers.” However, on the bright side, Ms Hooker adds that as we emerge from the pandemic there “is an opportunity for operators, who can find the right location at the right time, to thrive, even despite the current uncertainty.”
Mazars warns of a potential “boom in insolvencies”
Data from Mazars show nearly 135,000 companies were showing strain this month, roughly three times the pre-pandemic average. Yet this is considered the calm before the storm, says the firm’s Paul Rouse, who adds that “significant amounts of business distress” would be felt once the Government withdrew its pandemic support measures.
Buddi gains new friend in Simon Collins
Former KPMG UK chairman Simon Collins has been recruited by the founder of Confused.com to chair her tracking business, Buddi, as it considers a £500m London float. Sara Murray founded Buddi as a tracking device for lost children but branched into work for police and healthcare services.
The Mail on Sunday, Page: 127
PROPERTY NEWS – WEEKEND TO 14TH MARCH 2021
Landlords and the pros and cons of incorporating
The Times looks at the pros and cons of incorporating buy-to-let property portfolios amid news that investors flocked to use the stamp duty holiday as a way of transferring properties into company structures without having to pay the extra tax. Some of the drawbacks are higher mortgage costs along with additional admin and audit costs. Mortgage interest tax relief is a big plus if the debt is large but a company director can only take £2,000 a year in dividends tax-free. Heather Powell from the tax advisory firm Blick Rothenberg said: “If you’re a small landlord who needs rental money on a month-by-month basis, it’s better to keep hold of your property and pay a bit more in income tax.”
EMPLOYMENT NEWS – WEEKEND TO 14TH MARCH 2021
Are culture wars driving interest in emotion-tracking technology?
The Telegraph reports on corporate interest in emerging technology which monitors the emotional state of employees and alerts managers if staff have been too assertive, for example. The piece notes how Deloitte’s in-house magazine urges management to examine the potential of “a behaviour-trainer device” which “might also feed the user a personalised check-in or intervention at the moment a certain emotional response has been registered, helping to develop individualised tools for self-regulation and control”. Such devices have raised ethical and practical concerns with experts pointing out that they use a base list of emotions which is widely disputed; miss vital context for the moods of workers, and risk discriminating against certain types of employees for simply being themselves.
Half of all freelancers planning to quit
Research from the freelance trade body IPSE reveals that half of all freelancers plan to quit self-employment for good. A quarter of those planning to quit will seek work abroad while a sixth intend to return to full-time employment. One in 10 had plans to stop working altogether, IPSE said, while 11% said they would retire within the year. Since the pandemic started, the number of self-employed workers has dropped to fewer than 4.3m from more than 5m a year ago, reversing a decade-long upward trend. Upcoming tax changes will provide another blow to the self-employed. Andrew Chamberlain of IPSE said: “The pandemic has done disproportionate financial damage to the self-employed sector: after this, it simply cannot take the added hit of the changes to IR35.”
Hancock calls for improved sick pay
The Health Secretary has called for an increase in statutory sick pay to make it easier for people to take time off work if they are ill. Matt Hancock told the Government’s Covid-operations committee last week that the move would benefit the economy because it would reduce levels of sickness. But the Treasury has pushed back on the idea arguing that it would be too costly for employers.
SMEs NEWS – WEEKEND TO 14TH MARCH 2021
Almost 50,000 businesses register for rapid Covid tests for staff
UK businesses numbering some 48,000 have registered to take part in the Government’s free workplace testing programme. This will see rapid-result lateral flow tests used to return staff to the workplace. Matt Hancock, the Health Secretary, said it was “fantastic” news, adding that it marked “a huge step forward in getting businesses back on their feet and helping to keep people safe”. Current “stay at home” orders due to expire on 29 March under the Prime Minister’s roadmap for leaving lockdown. Businesses have until 31 March to register for the programme. Mike Cherry, national chair of the Federation of Small Businesses, said helping businesses to introduce testing was “fundamental to bringing the coronavirus under control”, while Matthew Fell, Confederation of British Industry chief UK policy director, said businesses appreciated the role mass testing could play “in a safe re-opening”.
City AM BBC News
EU trade slump a threat to SME exporters
Industry groups have warned that hundreds of small and medium exporters could be put out of business as delays and confusion at UK ports drags on. Although the UK Government has delayed the implementation of controls on imports, the EU has not, forcing many British firms to find a customs agent and a vet to certify that animal products are safe to enter the EU. With skilled customs agents and veterinarians in short supply, Rod McKenzie, head of public affairs at the Road Haulage Association, says delays and loss of exports would continue until at least the summer. Alex Altmann, a partner at Blick Rothenberg and the head of the firm’s Brexit advisory group, added: “There is no quick fix to this problem. What we need is an ‘exporter support scheme’ to help British companies.”
The Observer, Page: 1, 8
PENSIONS NEWS – WEEKEND TO 14TH MARCH 2021
Enemies of state pension ‘triple lock’ should not be so short sighted
Writing in the Daily Telegraph, Becky O’Connor, head of pensions at Interactive Investor, says an expected 4.6% increase in the state pension ‘triple lock’ next year might be an anomaly but it will benefit everyone, eventually. She says that without a meaningful state pension, many working age people would find they have to support their older relatives more, financially and otherwise. She also says that young workers might not realise it yet, but without a big rise in their own private pension provision, they could need that state pension when their turn comes around.
ECONOMY NEWS – WEEKEND TO 14TH MARCH 2021
UK economy suffered 2.9% hit in January
The UK economy shrank 2.9% in January and is likely to shrink 4% in the first quarter of 2021 due to lockdown disruptions. Jonathan Athow, an Office for National Statistics statistician, said: “The economy took a notable hit in January, albeit smaller than some expected, with retail, restaurants, schools and hairdressers all affected by the latest lockdown. Manufacturing also saw its first decline since April with car manufacturing falling significantly. However, increases in health services from both vaccine rollout and increased testing partially offset the declines in other industries.”
The Times City AM
Reopening Britain’s hospitality businesses
The Metro talks to experts about the efficacy of Rishi Sunak’s restart grants for hospitality businesses. Russell Nathan, head of hospitality at HW Fisher, says that the package announced in the Budget “doesn’t go far enough”. He explains: “The majority of hospitality businesses have lost 60% of their annual profit in the last six months and this £5bn restart grant only accounts for around £1,600 per employee in the UK hospitality sector. Businesses cannot see beyond the next quarter and they are struggling to pay rents now, with another five months to go before revenue can start to bounce back.” Silvia Rindone, retail partner at EY, suggests that the retail and hospitality sector now has some of the clarity it needs to be able to plan for recovery, adding that to achieve success businesses now need to “make the bold, strategic decisions necessary to position for longer-term growth.”
OTHER NEWS – WEEKEND TO 14TH MARCH 2021
Mathias Cormann set to head OECD
Australia’s long-time former finance minister, Mathias Cormann, is set to take over as chief of the Organisation for Economic Co-operation and Development (OECD). Opposition to Mr Cormann came from Greenpeace, among others, who argued that his record on tackling the climate crisis made him a poor choice for the role. Mr Cormann hit back at the criticism saying he was “absolutely committed to ambitious and effective action on climate change”, but that there were different ways to achieve it. Greenpeace International’s executive director Jennifer Morgan said OECD member states had missed an opportunity to “disqualify anyone with a history of blocking climate action from senior international appointments.” During his campaign for the OECD job Mr Cormann pledged to deploy “every policy and analytical capability available through the OECD to help economies around the world achieve global net-zero emissions by 2050”.
FRC probes Deloitte’s audit of Lookers
The Financial Reporting Council (FRC) has launched an investigation into Deloitte’s audit of Lookers for the years to the end of December 2017 and 2018. The move comes after the car dealership uncovered potential fraud within the company last year and appointed Grant Thornton to investigate its books. This probe revealed more than £25m of accounting irregularities dating back across 2017, 2018 and 2019. Deloitte resigned as Lookers’ auditor after the 2019 results were published stating that it had raised concerns over financial controls with the business but these had not been properly addressed. The Financial Conduct Authority has investigated Lookers, made certain concerns clear, but has not sanctioned the company. BDO is now the dealership group’s auditor. The Times’ Robert Lea says certain aspects of Lookers’ governance need resolving: “the same auditor w as in place for 14 years, reporting to a finance director who used to be one of its employees and who was also a former right-hand man to Lookers’ largest shareholder. All overseen by the same chairman in the driving seat since 2006.”
Financial Times, Page: 16 Financial Reporting Council The Daily Telegraph, Page: 33 The Times, Page: 55 The Times, Page: 51 Daily Mail, Page: 109 The I, Page: 82 The Independent, Page: 39 The Sun, Page: 44 Daily Express, Page: 63 Yorkshire Post, Page: 28 The Scotsman, Page: 38
Who cares about climate change? Apparently not CEOs
A poll by PwC shows that although the proportion of CEOs worried about climate change and its impact on business rose this year, 27% reported being “not concerned at all” or “not very concerned”.
ECB’s quantitative easing pledges fail to convince
Ambrose Evans-Pritchard reports in the Telegraph on how the European Central Bank is trapped in its quantitative easing programme and is now effectively forced to keep buying bonds on a mass scale to stop markets repricing the “Club Med” debt risk. “Italy’s implicit insolvency would become explicit overnight,” he says. The bank’s decision on Thursday to counter US bond market contagion with more QE pledges degenerated into incoherence,” he adds. Meanwhile, a legal filing by a group of 16 German economists and businessmen accuses the ECB of “blatant monetary financing of states” in breach of Article 123 of the Lisbon Treaty. The move could result in a harsher backlash than we saw last May, when judges ruled that the ECB had “manifestly” breached the principle of proportionality with mass bond purchases and was acting ultra vires. Analysts say ECB policy is contradictory, with Christine Lagarde’s claim last week that the ECB is not pursuing “yield curve control” but is trying to control financial conditions essentially amounting to one and the same thing.
Contact Paul Southward