NEWS – WEEKEND TO 24TH JANUARY 2021
NEWS – WEEKEND TO 24TH JANUARY 2021
SPORT NEWS – WEEKEND TO 24TH JANUARY 2021
Luton put on a heroic display against Premiership Chelsea as they make things tough for the London side. A great and entertaining display from Luton Town today.
TAX NEWS – WEEKEND TO 24TH JANUARY 2021
HMRC under fire over Covid late filing
HMRC has said that fines for filing tax returns late will be waived for those with a good COVID-19 related reason, but those for paying late will not and nor will interest. However, Jim Harra, the chief executive of HMRC, suggested that it was unlikely that a simple appeals format would be developed by January 31st, but said that no fines would be issued until the system was up and running. In a letter to accountancy bodies he said: “We know some taxpayers and agents will struggle to meet the deadline, especially given the current public health situation and related restrictions. We are carefully considering options that would significantly simplify the handling of reasonable excuse appeals for HMRC, taxpayers and agents.” But the Chartered Institute of Taxation is reportedly angry that HMRC has refused to automatically waive all late-filing penalties. Richard Wild from the institute said: “Dealing with appeals will create even more unnecessary work for taxpayers, agents and HMRC, not to mention the additional stress and concern. We find it difficult to reconcile HMRC’s stance with its charter commitments to its customers.” Tim Stovold from Moore Kingston Smith added: “HMRC will be tying up goodness knows how many people to deal with these appeals when we know that it doesn’t have the resources to deal with day-to-day stuff. It’s a really bad call in my view.”
Sunak preparing ground for autumn tax hikes
The Chancellor has begun preparing the ground for revenue-raising measures in an autumn Budget, according to the Telegraph, with the March Budget expected to focus on job creation and stimulating the economy. Rishi Sunak has been laying the groundwork for higher taxes in calls with groups of Conservative MPs, sources tell the paper, cautioning that demands for higher spending cannot be paid for by borrowing. One Tory MP said: “He’s talked about what the big revenue-raising levers are without committing to any – corporation tax, VAT, national insurance and fuel tax – which he’s pointed out has not been raised in 10 years.” However a source close to Mr Sunak denied that he had framed the discussion around major revenue-raising measures in the phone calls with MPs.
The Daily Telegraph, Page: 2, 34
Channel and British Virgin Islands added to tax haven blacklist
Members of the European Parliament have voted overwhelmingly in favour of adding more nations and territories to the list of non-cooperative jurisdictions, including UK overseas territories such as the British Virgin Islands, Guernsey and Jersey. The vote made clear that with the UK now out of the EU Britain’s overseas territories should be more closely scrutinised. Robert Palmer, the director of the Tax Justice UK campaign group, said: “Post-Brexit the UK tax havens have lost their protector within the corridors of Brussels. I’d expect to see the EU to ramp up pressure on places like Jersey to clean up their act. The UK itself has been warned that if the government tries a Singapore-on-Thames approach, with a bonfire of regulations and taxes, then the EU will act swiftly.”
Taxpayers amass £4bn HMRC bill
The amount of money moved on to HMRC’s Time To Pay payment plans, designed for people who cannot meet their tax bills on time, doubled over the first half of 2020, figures show. Almost 650,000 people have a total of £4bn of debt with HMRC while three million people face having to pay tax bills double the normal size by the Jan 31 deadline as bills already deferred from last year begin to pile up, according to accountants QuickBooks.
The Daily Telegraph, Money, Page: 1
The tax problems facing the Chancellor
The Sunday Times’ David Smith muses on the challenges facing the Chancellor as he wrestles with which taxes to increase and which Covid support measures to maintain beyond the March Budget. Smith says one move could be to improve investment relief alongside a plan to gradually raise the rate of corporation tax later. Rishi Sunak could also reform property taxes, which, taken together, are “messy and inefficient”. Finally, Mr Smith suggests freezing the personal allowance, bringing more people into the income tax net. Elsewhere, MP Andrew Griffith says in a piece for the Sunday Telegraph that Mr Sunak should avoid targeting reliefs enjoyed by entrepreneurs but should instead look to “tax the downstream harvest of growth” in the form of corporation tax hikes. The paper’s leader warns that a “high-tax Britain is not the solution to any of our problems” and urges Tory MPs to “see sense and relearn to love a small state that lives within its means.”
The Sunday Times, Business, Page: 9 The Sunday Telegraph, Page: 17, 18
Plan now for tax hikes, experts say
Speculation continues over whether the Chancellor will hike taxes in his March Budget to help replenish the Treasury’s coffers after the spending spree demanded by the pandemic. The Express cites Julia Rosenbloom, tax partner at Smith & Williamson, who warned in December that there could be “hefty tax rises” to come later this year. With the prospect of a wealth tax or hikes in CGT, Ms Rosenbloom urges people to plan ahead and make use of existing tax rules before they are changed.
Contact KSK if you need help with your tax planning.
SMEs NEWS – WEEKEND TO 24TH JANUARY 2021
Small firms give up on exports over Brexit red tape
Many small businesses in the UK will give up trying to export to the EU because of the red tape introduced by Brexit, the Times reports. Any UK company selling to a customer in the EU has to pay VAT and in some cases import duty. Shipping companies are also levying new charges to cope with their additional paperwork. Richard Asquith, a vice-president at tax advisory firm Avalara, estimates that up to a 20% of the sales of some 27,000 businesses involved in e-commerce exports to the EU have been affected by the new rules. “The fear is that having been a real success story in recent years many of these firms will just conclude there is no point in doing this anymore,” Mr Asquith said.
FCA tells insurers to make Covid payouts quickly
Insurers have been told by the Financial Conduct Authority not to create further obstacles for companies trying to make claims under business interruption policies after the Supreme Court this month found in favour of policyholders. The test case brought by the regulator was expected to affect up to 370,000 firms, which had bought cover from up to 60 different insurers. In a letter to insurance chief executives, Sheldon Mills, a director of the FCA, said the Supreme Court’s decision will mean more policyholders will have valid claims and some settled claims will have to be revised up.
Banks crack down on bounce back loan fraud
Hundreds of business accounts have been raided by banks including HSBC, Barclays, NatWest and Lloyds Banking Group after they were linked to suspected bounce back loans fraud, the Mail on Sunday reports. The National Audit Office warned last year that £26bn could be lost to loan fraud and the Treasury last week warned banks of the importance of fraud checks. A letter to one customer from HSBC, seen by the paper, revealed it had “formally terminated” a bounce back loan agreement and demanded that the customer “repay immediately all monies advanced to you.” The bank told the customer that a clause in the agreement meant it did not need permission to dip into the firm’s current account to recover some of the cash.
The Mail on Sunday, Page: 115
UK exporters advised to set up EU-based companies
Advisers working for the Department for International Trade (DIT) are encouraging small businesses in the UK to set up separate companies inside the EU in order to get around extra charges, paperwork and taxes resulting from Brexit, the Observer reports. Two businesses which export to the EU described to the paper how they would now set up an operation in the Netherlands so they can supply continental customers without the additional delays and costs. The Observer says it approached the DIT for comment but it did not respond.
CORPORATE NEWS – WEEKEND TO 24TH JANUARY 2021
BT’s Italian problem resurfaces
The Sunday Telegraph reports on a trial set to start this week involving BT Group’s Italian unit – BT Italia, which along with 20 defendants, is accused by prosecutors of attempting to conceal more than €280m (£250m) in losses and inflating revenues by falsifying contract renewals and invoices between 2013 and 2016. Among the defendants are Andrea Alessandri, an auditor of PwC at the time and former head of the audit team of BT Italia’s financial statements, who is accused of having certified false accounting. He will be joined by Richard Cameron, former chief financial officer of BT Global Services, and Corrado Sciolla, formerly BT’s head of continental Europe, who are also alleged to have been complicit in false accounting. They all deny any wrongdoing.
The Sunday Telegraph, Business, Page: 7
Asos leads bidding for Topshop
Asos has emerged as the frontrunner to buy Topshop, the main brand in Sir Philip Green’s fallen Arcadia empire. Asos is competing with fast-fashion rival Boohoo and the American group Authentic Brands, along with the Issa brothers of petrol forecourt empire EG Group fame. Administrators from Deloitte requested that final bids be submitted last Monday, the Sunday Times notes, adding that sources have cautioned that the situation was changing rapidly. The accountancy group is due to send its initial assessment of Arcadia’s financial position to creditors tomorrow and the Sunday Express suggests suppliers and other trade creditors are likely to take the brunt of the losses.
PENSIONS NEWS – WEEKEND TO 24TH JANUARY 2021
Savers need financial help with pensions
Experts have suggested that savers should be able use to the pensions advice allowance to help them pay for financial advice on final salary pension transfers. The allowance lets savers withdraw £500 from their pension three times to put towards the cost of retirement advice. However, it is only available to people who have defined contribution pensions as opposed to final salary (or defined benefit) schemes. Ros Altmann, a former pensions minister, said that members of final salary schemes should be given an allowance to pay for some advice. She said the pension trustees could fund the advice up front and deduct some of the benefits from the pension if the member stayed in the scheme. Without such a subsidy, savers often have to pay thousands of pounds in advice fees up front.
Fraud warning over pension transfers
According to figures from XPS Pensions, three quarters of “final salary” pensions in December triggered scam warnings. Savers have been warned to be on high alert for fraudsters, who have taken advantage of the pandemic to swindle the most vulnerable out of their life savings. Helen Cavanagh from XPS Pensions said the sharp increase was “extremely worrying”. She added: “Over half of all the scam warning signs identified over the month were fee-related, including members’ lack of understanding of the fees involved, which could indicate that members are transferring to arrangements that could be detrimental to their retirement outcomes.”
The Sunday Telegraph
PROPERTY NEWS – WEEKEND TO 24TH JANUARY 2021
Ending stamp duty holiday will hit second-steppers hardest
Data from estate agency Savills show that homeowners in the most expensive parts of the country who are trying to move up the housing ladder will lose out most when the stamp duty holiday ends on March 31. House prices have risen faster for terraced houses than flats, meaning the gulf for upsizers moving out of their first home is wider.
The Daily Telegraph, Page: 33
Sunak plan to end UK stamp duty holiday boosted by housing boom data
Rishi Sunak’s plans to end the stamp duty holiday have been bolstered by new data showing a boom in house prices and transactions during the COVID crisis, the FT reports.
ECONOMY NEWS – WEEKEND TO 24TH JANUARY 2021
Latest PMI figures induce double-dip fears
The latest Purchasing Managers’ Index (PMI) survey from IHS Markit/CIPS found a “steep slump in business activity” during January as lockdown measures continued, and warned that “a double-dip recession is on the cards”. The survey came in with an overall reading of 40.6 – the lowest for eight months. A figure below 50 implies contraction. “A steep slump in business activity in January puts the locked down UK economy on course to contract sharply in the first quarter of 2021, meaning a double-dip recession is on the cards,” said Chris Williamson, chief business economist at IHS Markit. “Services have once again been especially hard hit, but manufacturing has seen growth almost stall, blamed on a cocktail of COVID-19 and Brexit, which has led to increasingly widespread supply delays, rising costs and falling exports.”
Government borrowing in December was third highest month on record
The UK Government borrowed £34.1bn last month, the highest December figure on record and the third-highest borrowing figure in any month since records began in 1993. Government borrowing for this financial year has now reached £270.8bn, which is £212.7bn more than a year ago, the ONS said. The independent Office for Budget Responsibility has estimated that borrowing could reach £393.5bn by the end of the financial year in March. The increase in borrowing has led to a steep increase in the national debt, which now stands at £2.13trn. The UK’s overall debt has now reached 99.4% of GDP – a level not seen since the early 1960s. Rishi Sunak, the Chancellor, said the borrowing binge was the “fiscally responsible thing to do” but cautioned that “we should look to return the public finances to a more sustainable footing” once the recovery begins.
Sales for 2020 show largest annual fall since records began
Office for National Statistics (ONS) figures show that although there was a slight rise in retail sales in December (0.3%), the figure for 2020 as a whole saw sales down 1.9% making it the largest annual fall since records began in 1996. Clothing sales plummeted by more than 25% as non-essential retail was closed for much of the year due to coronavirus restrictions. But online spending surged by 46.1%, the highest annual growth in a decade. Ian Geddes, head of retail at Deloitte, said the figures proved the “importance of an online shopfront and engaging virtual shopping experience”. “Whilst the role of the physical store will remain competitive, the wider retail landscape will likely see reinvention. A new era of ‘hyper-localisation’ and ‘fast fail’ shops could herald a revived and more relevant high street longer-term,” he said.
Sunak expected to introduce incentive schemes in March
The Sunday Express talks to Darren Moore, the Group Commercial Director at TaxAssist Accountants, about what the Chancellor might do to boost the economy in his March Budget. Mr Moore doesn’t think Rishi Sunak will bring back the Eat Out to Help Out scheme, but does predict other incentives will be put in place to encourage investment, employment and consumer spend. “We don’t expect to see a reintroduction of the scheme, but we may see the Government introduce similar measures to support consumer demand in those sectors hardest hit by the pandemic, such as hospitality and the arts. We also hope to see further incentives to support employment. We have already seen the introduction of new apprenticeship schemes and these are likely to be extended and enhanced,” Mr Moore said. “Other options could include enhanced funding for training, possible reductions in payroll taxes (such as employers’ national insurance) or more direct contributions towards payroll costs for eligible businesses.”
OTHER NEWS – WEEKEND TO 24TH JANUARY 2021
Households fear losing savings due to Covid crisis
A new survey, for Comparethemarket, has found that more than a third of UK households have not managed to save any money since the first coronavirus lockdown began last year, and more than half are worried about running out of savings. Comparethemarket found that 52% of households were spending savings and 53% were concerned they would run out of money. The same proportions said they felt less financially secure now than in previous lockdowns, while 10% of families said if lockdown restrictions continued beyond April they were worried they would not be able to pay their mortgage or rent. Laith Khalaf, an analyst at AJ Bell, commented: “It is clear that the young, the self-employed and those on lower incomes have borne the brunt of the financial damage inflicted by the pandemic. But more affluent households with steady, undisturbed income streams have found themselves awash with cash, as spending options have been severely curtailed by ongoing lockdowns.”
Contact Paul Southward