NEWS WEEKEND TO 17TH JANUARY 2021

NEWS ROUNDUP

TAX NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Chancellor rules out wealth tax

The Chancellor has reportedly opted against using an emergency wealth tax to help cover the cost of the coronavirus pandemic. The Mail’s John Stevens says th at while Rishi Sunak has been presented with a proposal that would see a one-off levy on those with assets of more than £500,000 – or couples with assets of £1m – including family homes and pensions, he is said to have privately ruled out the move, deeming it “un-Conservative” and against the party’s aspirational values. The proposal, put forward by the Wealth Tax Commission, said a 5% levy on wealth could raise £260bn. Former head of the Civil Service Lord O’Donnell believes that taxes will need to rise if austerity measures are to be avoided. Writing in the Commission’s report, he says that to avoid breaking a manifesto pledge, ministers may need to consider new taxes. He adds that governments have made “radical changes to taxes when there has been public understanding that change is needed”. While suggesting a wealth levy is not the way to go, Mr Sunak is considering proposals to raise capital gains tax. The Office for Tax Simplification has suggested cutting the tax-free sum for CGT and aligning rates with income tax bands of 20%, 40% and 45%, with the Institute for Public Policy Research think-tank estimating that such a move could raise an extra £90bn over five years.

Daily Mail, Page: 12

Tax office hit by backlog as deadline nears

David Byers in the Times says customer service at HMRC “has collapsed” ahead of the January 31 deadline for self-assessment tax returns, with a backlog seeing average waiting times for callers increasing from less than five minutes to more than 12 minutes in a year. Pointing to the impact of the coronavirus crisis, Sarah Saunders at RSM said the level of appeals is likely to be much higher than usual, adding: “I can’t help wondering if HMRC can cope with the extra administrative burden this will create.” Reflecting on delays, Mr Byers notes that 47.4% of forms were turned around within seven days of being filed in November, compared with 76.6% in October and 94.4% in November 2019. Helen Thornley from the Association of Taxation Technicians believes late-filing penalties should be pushed back, commenting: “We want greater understanding about the unprecedented pressures that accountants and tax advisers are under at the moment”.

The Times, Page: 61

HMRC urged to waive late-filing penalties

With the self-assessment tax deadline fast approaching, HMRC has been urged to waive penalties as filers struggle amid the coronavirus crisis. The ICAEW has requested the Government reconsider its stance on late-filing penalties due to the impact of the pandemic, with chief executive Michael Izza writing to HMRC to suggest fines should be waived for at least two months. Pointing to the disruption stemming from the latest nationwide lockdown, staff absences due to sickness and self-isolation and continuing postal delays, Mr Izza said resources are stretched, adding: “To relieve the mounting pressure on tax agents and their clients, we believe that HMRC should announce an automatic waive of late filing penalties as soon as possible.”

Daily Express

25k delay tax bills, while 1-in-4 freelancers plan to spread payments

HMRC data show that almost 25,000 people have opted to spread their tax bill over 12 months rather than paying it by the January 31 deadline, with the delays covering around £69.1m. Meanwhile, analysis from Which? shows that a quarter of self-employed workers plan to delay paying. HMRC has said it will be lenient to those who miss the deadline, will accept coronavirus as a reasonable excuse for being late and waive fines. The Revenue has also extended the appeals window by three months to April. Separately, the Guardian offers tips for those filling in their tax returns, noting that HMRC expects to see more than 12m submissions, with it thought that around 4m have yet to be logged.

The Daily Telegraph, Money, Page: 2 Financial Times, Money, Page: 2 The Guardian, Page: 50

100k call for stamp duty holiday extension

A petition calling for the stamp duty holiday to be extended beyond the March 31 cut-off has drawn signatures from more than 100,000 home buyers and sellers. Passing the 100,000 milestone means the matter must now be formally considered for debate in Parliament. More than 50 MPs have added their voice to calls for the tax break on property transactions to be extended by a further 12 months to help support the property market amid the coronavirus pandemic.

The Daily Telegraph

Loopholes for landlords

The Telegraph looks at ways landlords can save money on their tax bill, with Chris Etherington of RSM saying married couples and civil partners could use the stamp duty holiday to change the split of ownership on their buy-to-let, “which can bring tax benefits.” Zena Hanks of Saffery Champness offers advice for owners of holiday lets, noting that if HMRC considers the property a business, the owner will pay a rate of 10% when they sell it whereas the maximum CGT payable on a normal rental property is 28%.

The Daily Telegraph, Money, Page: 4

Brexit may deliver tax bill shocks for some

The Times’ David Byers says some Britons with property in the EU may “find some nasty surprises” in their post-Brexit tax bills, warning that some member states have written provisions into domestic law allowing them to levy different tax rates for non-EU citizens. Robert Pullen of Blick Rothenberg details that Spanish tax authorities do not allow non-EU property owners to deduct expenses, while EU citizens can. Gabriele Giardina, a partner at RSM in Milan, notes that not being an EU citizen does not change income or property tax liabilities in Italy.

The Times, Page: 64

SUNDAY

Sunak planning tax increases

Rishi Sunak is planning to begin raising taxes in March’s budget, with the Chancellor looking at ways to start rebuilding the nation’s finances after the blow dealt by the coronavirus crisis. The Sunday Times’ Tim Shipman and Caroline Wheeler say that after talks with the Prime Minister, the Chancellor is set to announce an extension of government support, including the furlough and business loan schemes, and could also extend the stamp duty holiday. They add that senior government sources have suggested that if the coronavirus vaccination programme proves to be a success, Mr Sunak could confirm measures designed to tackle the deficit, with corporation tax the first levy in line for an increase. While property taxes are not expected to be altered in the upcoming budget, officials are said to be exploring measures that could see council tax and stamp duty abolished in the future, with the charges re placed with a proportional property tax levied on the existing values of homes.

The Sunday Times, Page: 2

Housebuilders back extended stamp duty holiday

A number of developers and housebuilders have backed a Telegraph campaign calling for the stamp duty holiday to be made permanent. Sarwjit Sambhi, chief executive of developer St Modwen, said the levy is an “impediment” to some deals, arguing that “everybody recognises” scrapping the duty is good for the economy in the long run. Greg Fitzgerald, CEO of housebuilder Vistry, believes that “from a confidence perspective”, stamp duty is better off being axed or reduced as “you will get more money from housing transactions generating tax.” Rob Perrins, managing director of Berkeley Homes, commented: “Any transaction tax is a very bad tax”.

The Sunday Telegraph

Treasury yet to finalise pandemic excuse form as deadline nears

While HMRC has said it will show leniency to those who cannot submit self-assessment forms by the January 31 deadline due to coronavirus-related issues, the Treasury has yet to detail how people can get a penalty-free extension. Jesse Norman, financial secretary to the treasury, says details have yet to be finalised for the form that will help taxpayers avoid late-filing penalties. Meanwhile, the Sunday Express offers self-assessment advice ahead of the deadline, noting the option to set up Time to Pay plans. Jamie Morrison at HW Fisher warns that people will face the 5% automatic late payment penalty if they fail to make an arrangement by March 2, the trigger date for that penalty.

The Sunday Times, Business, Page: 15 Sunday Express, Page: 54

Stamp duty stance a stress test for ministers

Madeline Grant in the Sunday Telegraph argues that the stamp duty holiday should be extended, saying the Government’s position on the issue will be a stress test that points to whether the Conservatives “value freedom and a flexible, dynamic economy”. Ms Grant says stamp duty is a “universally illogical tax, driving harmful disincentives across the market” and “a tax on mobility and freedom”. She says that while it started as a low, simple tax, levied on relatively few properties, it has “mutated into a swollen cash cow afflicting huge numbers of transactions.” “As policies go, stamp duty is perhaps second only to rent control for its ability to unite economists in condemnation”, she adds.

The Sunday Telegraph

Digital assets and IHT

Connor Coombe-Whitlock in the Sunday Express looks at the inheritance tax implications when people fail to include their digital assets in their will, with a Law Society survey showing that 93% of people do not include digital assets such as email and social media accounts. With this in mind, Matt Parr of Lime Solicitors has warned that a person’s digital currency could be inaccessible when they die, causing financial loss to their estate. He advises people should leave a “breadcrumb trail for their executors to follow”.

Sunday Express

INSOLVENCY NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Insolvencies increase

The number of company insolvencies in England and Wales rose to 1,228 in December, data from the Insolvency Service reveals. This is up by 9.2% on December 2019 and marks the first increase since February, with Government support rolled out amid the coronavirus crisis helping prevent a number of company failures – with temporary restrictions on winding-up petitions also playing a part. Colin Haig, president of insolvency and restructuring trade body R3, said: “These figures show that the economic impact of the pandemic may now finally be pushing increasing numbers of struggling businesses and individuals over the line into formal insolvency”. The Insolvency Service said: “It is too soon to tell whether this represents an emerging trend.” Elsewhere, company insolvencies in Scotland fell by 36%, while Northern Ireland recorded a 79% decline. Data on personal insolvencies reveals a 38% increase in England and Wales over the last three months compared to the same quarter in 2019.

The Times, Page: 57

SMEs NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Court rules on business interruption payouts

The Supreme Court has ruled that insurers must pay out on disputed coronavirus business interruption claims, meaning small firms could share around £1.2bn in payouts. This comes as a result of a test case brought by the Financial Conduct Authority (FCA), with the ruling potentially affecting up to 370,000 firms holding 700 types of policies issued by 60 insurers. Judges rejected appeals from six insurance companies and largely supported the arguments made by the FCA and a group representing policyholders. The FCA says it will be working with insurers to ensure they “move quickly” to pay claims to businesses. The Supreme Court ruling follows an appeal from insurers who questioned a decision by the High Court, which had found in favour of policyholders on most key issues in September 2020. The Federation of Small Businesses welcomed the Supreme Court ruling, with chairman Mike Cherry saying many firms had been left in “financial limbo” by insurers refusing to pay out on claims for losses caused by the first national coronavirus lockdown. Rob Benson, head of insurance at Grant Thornton, said insurers will now need to review policy wordings in order to assess the impact on their potential liabilities.

The Guardian, Page: 43 The Daily Telegraph Financial Times The Independent, Page: 38 Daily Express, Page: 65 Daily Mail BBC News Sky News

CORPORATE NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

230 Jaeger jobs to go

Administrators from FRP Advisory say 233 staff will be made redundant following fashion brand Jaeger’s acquisition by Marks & Spencer, with 63 stores and concessions to close as they are not part of the deal. It said 22 head office staff and 211 store employees have been made redundant, while six head office workers and seven warehouse staff have been retained to assist FRP. M&S has reportedly paid around £5m for Jaeger, which fell into administration in November.

The I, Page: 78 Daily Star, Page: 11

Retailers form alliances for Arcadia bids

Interested parties will table their final offers for the remains of the Arcadia retail empire on Monday. The Times says Next is working with hedge fund Davidson Kempner on a deal that would see it take on Topshop and Topman’s operations, while JD Sports has formed a similar alliance with Authentic Brands. The paper notes that administrators at Deloitte this week closed 19 shops under the Arcadia umbrella with the loss of 278 jobs.

The Times, Page: 57

Babcock warns of potential hit to balance sheet

Defence contractor Babcock may be forced to cut the expected value of contracts and future income following an evaluation of its balance sheet and contract profitability, with the firm looking into the matter in a review being overseen by an independent accountancy firm, not usual auditor PwC.

The Times, Page: 52 Financial Times Daily Mail, Page: 110 The Sun, Page: 44

SUNDAY

Next in line for Topshop

With final bids due tomorrow, Next is seen as the frontrunner to buy Sir Philip Green’s Arcadia retail empire out of administration. The fashion chain is bidding for the group in partnership with US hedge fund Davidson Kempner. It faces competition from JD Sports, which has held talks with Authentic Brands over a joint bid, while Mike Ashley’s Frasers Group is also said to be in the running. Administrators from Deloitte are aiming to wrap up the sale of Arcadia by the end of the month.

The Sunday Times, Business, Page: 1

Ashley in Peacocks bid

Sports Direct boss Mike Ashley has bid around £65m for Peacocks, the discount fashion chain which collapsed in November. If the bid – which is said to be £5m below the figure sought – is not accepted, it is believed that Peacocks founder Philip Day or his associates are likely to buy the chain’s stores. Edinburgh Woollen Mill, another of Mr Day’s chains, was recently bought out of administration by Purepay, whose assets are pledged to Mr Day, with administrators from FRP saying the deal has saved 246 stores.

The Sunday Times, Business, Page: 4

Investors question Koovs collapse

Jamie Nimmo in the Sunday Times looks at the 2019 collapse of online fashion business Koovs. Noting that the firm was snapped up by founder Baron Alli of Norbury through a prepack sale, Mr Nimmo says shareholders have voiced concern that Baron Alli orchestrated a move to buy the firm on the cheap by secretly setting up a vehicle to buy it and lining up administrators for the deal without the knowledge of its advisers. Administrators from FRP and lawyers from RPC are investigating the matter.

The Sunday Times, Business, Page: 4

NCP withholds rent

NCP is in dispute with landlords, with the car park operator refusing to pay rent and calling in Deloitte to negotiate – a move that has prompted speculation that it may seek a CVA. NCP, which is owned by Japan’s Park24 and the state-backed Development Bank of Japan, has reportedly missed the December rent quarter payment. It is also said to have told landlords it is unable to pay monthly rents.

The Sunday Times, Business, Page: 1

ProCook owner weighs options

Daniel O’Neill, founder of kitchenware chain ProCook, may consider selling the business following an online sales surge amid the coronavirus lockdown. Mr O’Neill has hired consultants at KPMG to advise on options, saying an outright sale, a partnership with an existing retailer or an injection of venture capital are possible, while ruling out a stock market flotation.

The Mail on Sunday, Page: 123

Clarity needed on Autonomy

Oliver Shah says Autonomy founder Mike Lynch still has questions to answer over the sale of the software firm to Hewlett-Packard that has left him facing extradition to America on 14 counts of conspiracy and fraud and awaiting the outcome of a civil trial in the UK. Writing in the Sunday Times, Mr Shah notes that in a round-robin new year email to his contacts, Mr Lynch said a damning report into Deloitte‘s auditing of Autonomy was “troubling, because chief executives should be able to rely on their auditors for independent, accurate and fair advice”.

The Sunday Times, Business, Page: 9

Market to deliver 10% annual growth

Reflecting on the performance of Deliveroo, Sabah Meddings in the Sunday Times says the firm and its rivals have played an important role during the pandemic, with restaurants hit by lockdown restrictions increasingly relying on take-away services to survive. She cites Deloitte analysis which forecasts the delivery market to grow by 10% a year to an estimated £19bn by 2023.

The Sunday Times, Business, Page: 1

Looking at listings

Jill Treanor in the Sunday Times looks at firms that could float on the stock market in 2021, noting EY analysis showing that London was in third place behind US and Chinese markets for funds raised from floats last year.

The Sunday Times, Business, Page: 2

PROPERTY NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Loan woe for the self-employed

Some banks are refusing to provide mortgages to self-employed workers if they took coronavirus support loans or income grants, despite the Government and the banking watchdog saying the payments would not affect credit ratings. Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, said banks are referring applications from the self-employed to their manual underwriters automatically, meaning fewer self-employed people are being granted a mortgage. The Financial Conduct Authority has said making use of one of the financial support schemes should not prevent self-employed people from accessing credit. Meanwhile, analysis shows that Santander is limiting its mortgage products to 60% loan-to-value for the self-employed, while NatWest will ignore debts being cleared for employed borrowers when assessing affordability on a mortgage application but will still factor them in for the self-employed. TSB limit s new self-employed borrowers to mortgages with a maximum LTV of 75%, Halifax has placed limits on how much the self-employed can borrow, Metro Bank requires more bank statements from the self-employed than other applicants and Nationwide is limiting its 90% mortgage products to salaried employees only.

The I Daily Mail

SUNDAY

The year ahead for house prices

City AM ’s Jessica Clark considers the movement property values may see in 2021, saying the end of both the stamp duty holiday and Help to Buy could lead to a more subdued housing market. Howard Archer, chief economic adviser to EY Item Club, suspects house prices “could be around 5% lower than now by the end of 2021”. He believes the housing market is “likely to come under mounting near-term pressure” as the economy is affected by coronavirus restrictions, while there is “likely to be a fading of the pent-up demand effect”. Estate agency Knight Frank expects prices to remain flat this year, down from a previous forecast of 1% growth, while Savills expects net house price growth in 2021 to be close to zero. Real estate adviser Avison Young expects Q1 to be busy as buyers look to tie-up deals before the stamp duty holiday ends on March 31, while “it becomes harder to ascertain the likely trajectory” of the market over the rest of 2021.

City AM

FINANCIAL SERVICES NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Equivalence delay may drive divergence

Industry sources say with the EU refusing to grant UK financial services access to the single market, Britain may be forced to diverge from EU rules. Citing Brussels insiders, the Telegraph says the European Commission has no immediate plans to provide British firms in 28 sectors market access through equivalence. While the UK granted the bloc equivalence in several areas of business in November, Brussels will not grant equivalence to UK firms unless the Government details how far it plans to diverge from EU rules in the future. Miles Celic, chief executive of TheCityUK group, said that both markets are “dynamic and as they evolve the likelihood, and value, of equivalence will shrink”, while Professor Sarah Hall of Nottingham University, said equivalence should be seen as a “perishable good”, arguing that the longer it takes for a decision to be made on it, “the more likely it is that UK based financial service firms will take decisions to operate without equivalence”.

The Daily Telegraph

SUNDAY

Financial services and the future

The Sunday Telegraph’s Michael O’Dwyer weighs the post-Brexit climate for financial services, saying that Chancellor Rishi Sunak believes leaving the EU will “reinforce the UK’s position as a globally pre-eminent financial centre”. Tony Gaughan, leader of global asset management at Deloitte, says: “The industry would like more opportunities to bring the broader aspects of investment management and servicing industries back onshore into the UK,” while Richard Hammell, Deloitte‘s UK head of financial services, says the UK may want to “economically invest disproportionately” in infrastructure and technology so as to be the “leading centre for the digital future of financial services.”

The Sunday Telegraph, Business, Page: 5

ECONOMY NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

GDP falls 2.6% in November

Data from the Office for National Statistics (ONS) shows GDP fell by 2.6% month-on-month in November, with the decline pushing the economy toward a double-dip recession. GDP fell to 8.5% below its pre-pandemic level in November, with the slide driven by the second national coronavirus lockdown in England. Analysis shows that GDP dipped 3% in the first three months of 2020 before registering a record 19% fall in Q2 – a period that saw the UK in its first nationwide coronavirus lockdown. While Q3 saw a record jump of 16% as growth returned, analysts expect Q4 to see another dip. With tough new restrictions currently in place, Q1 2021 is forecast to show a decline, meaning two consecutive quarters of falling GDP and a second recession. Chancellor Rishi Sunak said the ONS figures highlight the scale of the challenge being faced, saying: “It’s clear things will get harder before they get better”. James Smith, research director of t he Resolution Foundation, says that while the economic story “is of only the second-ever double-dip recession on record, the story of the year will be a vaccine-driven bounceback in economic activity”. Suren Thiru, head of economics at the British Chambers of Commerce, believes a “clear and comprehensive plan is urgently needed to support the economy throughout this year.”

The Times The Guardian The Daily Telegraph City AM BBC News

SUNDAY

Labour says Universal Credit cut will damage the economy

Labour has warned that the economic recovery from the coronavirus crisis will be damaged unless the Chancellor extends a £20-a-week increase in universal credit. Rishi Sunak is reportedly planning to give benefit claimants a £500 payment as an alternative to a £20-a-week benefit uplift to universal credit put in place to help people amid the pandemic. Responding to reports of the mooted one-off payment, shadow work and pensions secretary Jonathan Reynolds warned that with Britain facing “the worst economic crisis of any major economy,” winding down support by cutting universal credit “will be devastating for families already struggling to get by, and leave unemployment support at a 30-year-low.” He added that the move “will damage our recovery.” Torsten Bell, CEO of the Resolution Foundation think-tank, said it would be “madness” to decrease basic unemployment benefits at a time when t he economy needs a boost from consumer spending.

City AM The I The Independent

OTHER NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Veganuary news

The Independent’s Kat Smith looks at the benefits and realities of embracing veganism, noting a study by Blue Horizon and PwC suggesting it would take just 10% of the global population switching to plant-based alternatives to reduce CO2 output by 176m tons by 2030.

The Independent, Page: 52

Contact Paul Southward

Paul Southward