NEWS – WEEKEND TO 18TH OCTOBER 2020
NEWS – WEEKEND TO 18TH OCTOBER 2020
TAX NEWS – WEEKEND TO 18TH OCTOBER 2020
Tax warning for remote workers heading overseas
Tax advisers have issued a warning to Brits thinking of taking advantage of the increasing shift to remote working and opting to work from sunnier climes this winter, advising that they may face fines or investigations from foreign tax authorities if they stay too long, become resident in a foreign country for tax purposes and fail to declare their UK incomes. EY’s Stephanie King offers a warning over income tax in countries where no tax treaty with Britain is in place, while Robert Salter of Blick Rothenberg notes that even moving between nations within the UK could add to a tax bill.
The Daily Telegraph , Money, Page: 5
Portal opens for homeworker relief claims
The Guardian looks at tax relief available to people working from home, noting that a new online portal from HMRC simplifies the process that could return taxpayers up to £124.80. Suzanne Briggs, a partner at Blick Rothenberg, offers advice for those whose expenses linked to home working exceed certain levels and are looking to apply for relief on higher sums.
The Guardian , Page: 41
Wealth tax: FT Money readers are divided
Analysis of an FT survey on wealth taxes sees Tim Stovold of Moore Kingston Smith highlight that almost a third of respondents thought that the threshold should be greater than £5m.
MPs call for halt of wider MTD roll-out
The Public Accounts Committee has warned that it is unclear whether the Making Tax Digital (MTD) rules rolled out in 2019 have achieved their stated aim of reducing tax errors. As of April 2019, VAT-registered businesses and self-employed people with a turnover exceeding the £85,000 VAT threshold have to use specialist software when they file their returns. A report by the Association of Taxation Technicians says some small businesses have had to spend more than £5,000 on software and training. While HMRC wants all firms to adhere to MTD as of April 2022, the committee says this should be delayed until it is ascertained whether MTD is “reasonable and affordable”. The Chartered Institute of Taxation has backed the call for greater scrutiny of the changes.
The Sunday Telegraph, Business, Page: 9
Chancellor urged to reveal tax plans
The Sunday Times’ James Coney calls on Rishi Sunak to reveal his intentions in regard to taxes, saying it is time people were given “some clue” on how the Chancellor expects the country to cover the cost of the coronavirus outbreak. He notes Institute for Fiscal Studies analysis suggesting that the Government will need to raise £40bn a year to pay for the pandemic and says that while an Ipsos Mori poll found that most people are happy with tax rises, “you can’t really agree to something unless you know the specifics.”
CORPORATE NEWS – WEEKEND TO 18TH OCTOBER 2020
Boohoo auditor resigns
PwC has reportedly resigned as the auditor of Boohoo, amid reputational concerns following an investigation into working conditions that suggested some staff at the retailer were earning less than the minimum wage. A spokeswoman for Boohoo said: “PwC has not resigned … but a process has recently commenced to tender for a new provider of audit services.” The Telegraph reports that Boohoo has approached other audit firms in recent weeks to fill the void, noting that BDO has declined to be appointed.
Edinburgh Woollen Mill to close 50 stores
Edinburgh Woollen Mill has confirmed that 50 stores will shut with the loss of 600 jobs. The retailer, which is owned by billionaire businessman Philip Day, has already told property owners that up to 150 branches could shut this month, and is set to appoint FRP Advisory as its administrator.
Pandemic drives profit warnings to record high
EY analysis shows that the record for the most profit warnings issued in a single year has been broken after just nine months, with the coronavirus crisis driving a surge. The report says companies listed on the London Stock Exchange have issued 524 warnings, exceeding the 501 record seen in 2001. The study shows that 449 of these were due to the pandemic. Alan Hudson of EY says the pandemic and Brexit are likely to make autumn and winter “exceptionally difficult” for UK PLC.
Sunday Express, Page: 43
Tax subsidy boost for Bond maker
An investigation by Tax Watch has revealed that Eon Productions, which makes the James Bond films, has received more than £100m in tax subsidies in the UK but regularly pays less than £500,000 in corporation tax. The probe found that Eon Productions transfers the ownership of films to Danjaq, a company based in the US, before release, selling them for a price “equal to the total cost of production less the amount received in respect of UK tax credits”. It is noted that there is no suggestion Eon or Danjaq pay less tax than legally required.
The Observer, Page: 3 The Mail on Sunday, Page: 123
EWM on the brink
Edinburgh Woollen Mill Group owner Philip Day is making “frantic efforts to salvage his retail empire”, reports the Sunday Telegraph’s Christopher Williams, who says the retailer has to convince administrators not to seize control. He adds that Mr Day is set to detail his rescue ideas in a conference call with FRP Advisory tomorrow, with the firm set to put EWM into administration unless an option ensuring creditors are left better off is presented.
Football clubs mull tax move
EFL football clubs may refuse to pay their taxes unless the Government offers financial support to clubs being hit by the coronavirus crisis. In a move that a source describes to the Sun as “the nuclear option”, some executives and chairmen have suggested that all clubs could stand together and refuse to hand over a monthly PAYE tax payment due to HMRC from each of the EFL’s 72 clubs on Thursday.
The Sun, Page: 68
G4S takeover could see £312m in fees
Bankers, lawyers, accountants and PR advisers could share £312m in fees as GardaWorld looks to buy security firm G4S, with a takeover document suggesting accountants are in line for up to £4m.
Reflecting on retail
The Sunday Times considers the climate for retailers, citing research by the Local Data Company and PwC showing that 11,120 shops that were part of chains closed between January and August, while only 5,119 opened.
The Sunday Times, Page: 7
INDUSTRY NEWS – WEEKEND TO 18TH OCTOBER 2020
Pension funds say FRC is ‘compromised’
The Local Authority Pension Fund Forum (LAPFF) has suggested that the Financial Reporting Council (FRC) is compromised by its links to the Big Four. Doug McMurdo, chairman of the LAPFF, has written to the FRC, accusing it of being “a creature of regulatory capture and compromised with the Big Four accounting firms”. He also claimed that the regulator supports revised international accounting standards that are less robust than those required by UK law. Mr McMurdo has also written to the Business Select Committee, saying that investor groups which support the international accounting standards “tend to be a less than qualified group … and don’t actually represent investors”. Pointing to the Corporate Reporting Users’ Forum (CRUF), to which PwC provides support and expertise, Mr McMurdo suggests “these purported investors have been corralled” by the audit firm. The LAPFF is an association of 87 local authority pension funds worth £300bn.
PROPERTY NEWS – WEEKEND TO 18TH OCTOBER 2020
End of stamp duty holiday to hit buyers
The Telegraph reports that up to 200,000 people risk missing out on stamp duty savings because of backlogs in the property market, with people agreeing a sale by next week said to only have a 50% chance of benefitting from the stamp duty holiday rolled out amid the coronavirus crisis. According to Centre for Economics and Business Research analysis, the tax break has boosted transactions by 6%. With the relief set to end on March 31, there are calls for an extension, with Vic Darvey, chief executive of Purplebricks, saying a further six to 12 months of the stamp duty holiday will “allow the pent-up demand to progress through the system,” while housebuilders Barratt and Redrow say an extension will help avoid a slump in sales.
The Daily Telegraph , Money, Page: 1, 2
Lockdown drives London exodus
Flic Everett in the Telegraph says lockdown has triggered an exodus to the countryside as working from home has made proximity to towns and cities less vital. She cites a PwC report showing that 34% of 45-to 64-year-olds living in London “expect to move to a different region, outside of London, the next time they move” – 16% up on the number seen in a pre-coronavirus poll.
The Daily Telegraph , Saturday, Page: 18
Banks pull low deposit deals
Home buyers face having to stump up more toward buying their property after TSB withdrew two-year mortgage deals requiring a deposit of less than 40%, while Barclays has ended mortgages for borrowers with less than a 25% deposit. The moves mean no high street banks are currently offering mortgages for those with equity under 15%. Bank of England analysis shows that the cost of the average five-year fixed mortgage has risen from 2.26% to 2.62% since June, with the typical two-year deal climbing from 2.02% to 2.38%. It was also found that September saw the biggest monthly increase in mortgage rates since 2009.
The Mail on Sunday
A need for deeds advice
A Sunday Times reader seeks guidance on the viability of adding their son to the deeds of the family home, with Lynne Rowland from Moore Kingston Smith offering advice.
The Sunday Times, Business, Page: 15
EMPLOYMENT NEWS – WEEKEND TO 18TH OCTOBER 2020
Women and lower-paid hit hardest by WFH
Research from the Centre for Economic Policy Research (CEPR) suggests that women and lower paid workers have seen the biggest decline in productivity due to the national lockdown. These groups, who are more concentrated in the sectors where working from home is difficult, report lower productivity at home, on average. Sectors where productivity has seen the biggest increase amid the coronavirus lockdown included more male-dominated ones, such as IT and finance. The study also found that people who said they get much less done at home “report declines in wellbeing comparable to the effect of an unemployment shock”.
‘Covid generation’ face jobs crisis
Research from a leading labour-market expert suggests up to 1m young people are set to be hit by a jobs crisis on the back of the coronavirus pandemic. Paul Gregg, professor of economic and social policy at Bath University, said 16-to24-year-olds who are not in full-time education or employment will face significant barriers to work when the furlough scheme ends this month. The report warns that without broader support from ministers, a “Covid generation” who will struggle to find work will be created. It warns that, on top of the furlough scheme winding down, the scarcity of new positions and the arrival of school and college leavers in the job market will hit young people’s prospects.
PERSONAL FINANCE NEWS – WEEKEND TO 18TH OCTOBER 2020
End of free banking if rates turn negative?
David Duffy, the boss of Virgin Money, has warned that banks could start charging for basic services if interest rates turn negative. He said banks would make “slow and incremental” changes to test which services customers are willing to pay for. Isabelle Jenkins, head of banking at PwC, comments: “Anything is possible now on negative interest rates. Banks make money in the difference between what they make on lending, and what they pay for savings. And we’ve seen those revenues squeezed considerably. So a lot of banks are having to look at other ways to make money and one of the ways to do that is fee-based accounts.”
The Mail on Sunday, Page: 124
FINANCIAL SERVICES NEWS – WEEKEND TO 18TH OCTOBER 2020
ESG funds forecast to outnumber conventional funds by 2025
According to research from PwC, ESG funds will increase their share of the European fund sector from 15% to 57% by 2025.
PENSIONS NEWS – WEEKEND TO 18TH OCTOBER 2020
16% of self-employed pay into pension pot
Just 16% of Britain’s self-employed workers are saving into a pension, according Institute for Fiscal Studies (IFS), a marked decline on the 48% recorded in 1998. This equates to more than 3.5m people of working age who are not putting money aside into a private pension. For those not paying into a pension fund, the most common reason given was affordability, with a lack of trust in pension firms and not understanding how pensions work also common reasons. In contrast, automatic enrolment, rolled out in 2012, has increased the number of employees saving into a pension, with nearly 80% of working-age employees contributing to a scheme in 2018. Mike Cherry, national chairman of the Federation of Small Businesses, said the “worrying” IFS figures highlight “yet another area where the self-employed don’t enjoy the same benefits as employees”.
Pensions hope for low-paid workers
An anomaly in the pensions system could be rethought following a Treasury consultation which ended this week. The net pay anomaly affects 1.7m people who earn £10,000-£12,500 in a single job, with these workers enrolled in a company’s pension scheme but not paying any income tax. If their employer uses a net pay scheme, the most common set-up for companies, they do not get any tax relief on their pension contributions. They should get 20p for every £1 they contribute, as with basic-rate taxpayers, as an incentive to save into pensions. The Treasury says it is concerned about the impact of pensions tax relief on low earners.
SMEs NEWS – WEEKEND TO 18TH OCTOBER 2020
SMEs positive on Q4 conditions
Research by Hitachi Capital Business Finance has found that 73% of SMEs believe that conditions will either improve or stay the same during Q4, an increase of three percentage points on the previous survey. The poll saw 27% of smaller firms say they foresee growth in the period, up from 14% during the lockdown but down on the 36% in a poll before the outbreak. Joanna Morris, head of insight at Hitachi Capital, said: “Our data suggests small businesses are reacting positively to the current circumstances”.
Sunday Express, Page: 44
INTERNATIONAL NEWS – WEEKEND TO 18TH OCTOBER 2020
SEC eases rules on auditor conflicts of interest
The US Securities and Exchange Commission has relaxed rules on audit independence, giving auditors and clients greater flexibility in judging potential conflicts. Deloitte, EY, KPMG and PwC have all welcomed the move.
Biden to target wealthy with tax
US presidential hopeful Joe Biden plans to increase taxes for high earners, with US millionaires and British green card holders facing a 500% tax rise under his mooted reform. Mike Hayes of Moore Kingston Smith said many would benefit from American-British tax treaty reliefs but the wealthiest would end up paying thousands more.
The Daily Telegraph , Money, Page: 2
ECONOMY NEWS – WEEKEND TO 18TH OCTOBER 2020
Business leaders: Economy not ready for no-deal
With the Prime Minister suggesting that Britain may exit the EU with no trade deal in place, business leaders have voiced concern that Britain’s economy is ill-prepared for a no-deal Brexit. Carolyn Fairbairn, director-general of the CBI, said: “After four years of negotiations and so many hurdles crossed, this is no time to give up.” She argues that a deal is “the only outcome that protects Covid-hit livelihoods at a time when every job in every country counts.” Mike Cherry, the national chairman of the Federation of Small Businesses, said firms are not ready for a no-deal Brexit, noting that the transition period ends in just ten weeks. With businesses being told to prepare for Brexit at a time when many are having to navigate fresh coronavirus restrictions, Mr Cherry said many “simply don’t have the time or money to make adjustments, even if they want and need to.” The Organisation for Economic Co-operation and Development has warned that a no-deal scenario would leave the UK economy 6.5% lower in the next few years than if existing arrangements with the EU had remained.
The Guardian, Page: 5
Consultant contract costs hit £56m
The Independent looks at contracts related to the coronavirus emergency awarded by the Government, noting that Whitehall departments have spent more than £56m on consultants from firms including Deloitte and PwC.
The Independent , Page: 13
Inflation expected to hit 0.4%
With official statistics due out this week, it has been forecast that inflation will climb to 0.4%, with the Consumer Prices Index (CPI) for September set to reflect the end of the Eat Out to Help Out scheme. Forecasts from EY Item Club, which uses the Treasury’s computer model of the economy, suggest the modest increase – from August’s 0.2% – will be followed by a more substantial increase in 2021. On average, economists predict the CPI to rise from 0.8% this year to 1.5% next year.
The Mail on Sunday
OTHER NEWS – WEEKEND TO 18TH OCTOBER 2020
Firms failing to hold reserves
BBC News ’ Howard Mustoe looks at the climate for UK businesses amid the coronavirus crisis, saying that some may not have set enough aside for a rainy day. With University of Sheffield research showing that 28% of FTSE 100 companies spent more in dividends and on buying their own shares in the last financial year than they generated in net profits, professor Adam Leaver, who led the research, said paying out “too much to the shareholders … has left firms with too little in the way of reserves to manage this situation or indeed any potential downturn”. Figures from the Office for National Statistics suggest 41% of UK businesses have less than six months of cash reserves, compared with 34% which have more than six months, while more than a fifth are unsure how much they have. Mr Mustoe points to Financial Reporting Council research showing that investors would like more disclosure on reserves and the affordability of dividends.
Ministers spend £400k on anti-bias training
The Sunday Telegraph reports that ministers have spent more than £400,000 on unconscious bias training. While civil servants usually take compulsory courses covering similar issues, an extra £416,644 has been spent on further face-to-face courses in the last two financial years. It is noted that the Department for Work and Pensions paid KPMG £112,500 for 720 staff to be trained in 2018/19.
Contact Paul Southward