NEWS – WEEKEND TO 25TH OCTOBER 2020
NEWS – WEEKEND TO 25TH OCTOBER 2020
TAX NEWS – WEEKEND TO 25TH OCTOBER 2020
Complex tax system leaves one in five overpaying
Data collected by the online accountant Coconut indicate that nearly a fifth of Britain’s 5.3m sole traders and microbusiness owners face paying on average £722 too much each year, to the tune of £650m, by incorrectly calculating their taxes. More than half of sole traders admitted they failed to claim reliefs or deduct expenses from their tax bills, even if they suspected they were eligible. Experts blame an overly complex tax system for workers missing out on reliefs. Bill Dodwell, of the Office of Tax Simplification, said the huge number of breaks on offer meant taxpayers were not claiming the reliefs they were entitled to. He said of particular concern was claims for employee expenses and higher rate taxpayers failing to claim tax relief on pension contributions.
The Daily Telegraph, Money, Page: 3
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Self-employed fear unaffordable tax bills in wake of virus
The FT reports on fears that as many as 1m self-employed people could face tax bills bigger than their annual earnings following dramatic drops in their income compared to 2019-20. Andy Chamberlain, Director of Policy at IPSE commented: “Most years, payment on account is not a problem, but this year so many people and their business have been so badly impacted – particularly those groups who haven’t been able to access the Self Employment Income Support Scheme.” Elsewhere, the Independent reports on analysis by Labour’s Ed Miliband who estimates that, in areas under the most severe restrictions, the average self-employed worker in the arts or hospitality sectors will receive just £450 a month following revisions to the Chancellor’s job support scheme. Meanwhile, those with working partners, without children or owning their own home may not receive enough universal credit to plug the gap left by the reduction in financial support. And those with savings over £16,000 – often kept aside by the self-employed in anticipation of future tax bills – will be ineligible for the benefit. The Treasury hit back pointing to grants, tax write-offs, deferrals and other support measures put in place for the self-employed.
Financial Times, Money, Page: 3 The Independent, Page: 15
Wealth tax options
The Times runs through some possible ways the Government could tax people’s wealth as the Treasury looks to replenish its coffers. The Institute for Fiscal Studies said that the chancellor will need to raise £40bn extra each year from taxes to pay for the deficit caused by the coronavirus. Nimesh Shah, the chief executive of Blick Rothenberg, helps the paper outline the options along with Tim Stovold, a partner at Moore Kingston Smith.
Scrap 45p tax rate and abolish stamp duty to boost UK competitiveness
A report by the Centre for Policy Studies think tank advocates scrapping the 45p income tax rate and abolishing stamp duty, arguing that doing so would boost economic growth and see the UK rise from 22nd to ninth in the International Tax Competitiveness Index. The report, written jointly with the Tax Foundation, suggests tax cuts could be funded by extending VAT to cover far more goods and services, including scrapping food’s zero-rating. The Institute for Fiscal Studies previously claimed increasing the threshold at which people start to pay the 40p higher tax rate from £50,000 to £80,000 would cost billions and only benefit the wealthy. But the report questions whether abolishing it would cost any revenue, based on previous analysis. Daniel Bunn of the Tax Foundation warned: “The British tax system performs poorly due to policies that distort work and investment decisions.”
The Sunday Telegraph, Page: 4 The Sun, Page: 10
HMRC accused of backing off white-collar tax dodgers
The number of arrests made by HMRC fell by a third to 511 in the 12 months to April, compared with 782 over the previous tax year, according to analysis by RPC. The law firm said that the resources spent fighting such claims and the negative publicity has made HMRC less trigger happy in making arrests, something HMRC denies. The Sunday Times implies that with HMRC’s income from wealthy taxpayers going up it has taken its foot off the gas when it comes to white-collar tax dodgers. HMRC said it takes its responsibilities as a law enforcement agency very seriously and will only make arrests when absolutely necessary. It said that its investigators launched more than 12,600 civil and 600 criminal investigations in the past tax year. “We’re doing all this while tackling increasingly complex investigations and ever more sophisticated opponents,” it said.
Ready, steady, file: 100 days left to Self-Assess
HMRC is reminding Self-Assessment customers that there are just 100 days left to complete their tax return ahead of the deadline on 31 January 2021. HMRC’s Interim Director General of Customer Services Karl Khan said: “The vast majority of Self-Assessment customers complete their tax return by the 31 January deadline, but you don’t need to wait until January; you can send it back now and get it out of the way.”
CORPORATE NEWS – WEEKEND TO 25TH OCTOBER 2020
Suspicions raised about Asda takeover
The Independent’s Chris Blackhurst worries about Deloitte’s decision to step away from EG Group, the outfit run by Zuber and Mohsin Issa, who are buying Asda with TDR Capital. Blackhurst says the move may have been driven by corporate governance concerns but with no proper explanation coming from the auditor one could speculate that there is a more serious problem waiting to be revealed. He goes on to assert that the Issa brothers “ought to have got their ducks in a row beforehand” and that the City is starting to get twitchy. Deloitte, Blackhurst concludes, “should be telling us why they were prepared to go no further with this particular fairy story.”
The Independent, Page: 40
Edinburgh Woollen Mill granted more time to find buyer
Philip Day’s Edinburgh Woollen Mill has been given permission to extend its notice of intent to appoint administrators giving it two more weeks to find buyers or new investors. The company has lined up FRP Advisory.
EG denies finance director intends to quit
The Sunday Times’ Sam Chambers reports on rumours that EG Group’s finance director, Michael Hughes, recently considered resigning amid governance concerns at the company, which has bought Asda in partnership with private equity group TDR. Chambers points to Deloitte’s decision to quit as auditor allegedly due to worries internal controls had not kept pace with EG’s rapid expansion. “When an auditor resigns, it causes real collywobbles,” a senior City source said. “The cornerstone of any investment is having confidence in the numbers presented to you. This isn’t going to help.” EG denies Hughes has resigned or intends to resign.
Ashley considers swoop on EWM brands
Frasers boss Mike Ashley is considering bidding for Austin Reed, Jacques Vert and Jaeger – brands held by Philip Day’s troubled Edinburgh Woollen Mill (EWM) Group. Buyers have been given the option of bidding for the brands together or separately.
EMPLOYMENT NEWS – WEEKEND TO 25TH OCTOBER 2020
Freelancers receive a third less support than employees
Research by Blick Rothenberg reveals that freelancers have been given almost a third less in state support than employees, who have received almost £5,000 more in salary subsidies during the pandemic. An employee earning the national average of £30,000 a year would have received £16,200 in wage subsidies if they had been furloughed for the full eight months that the Job Retention Scheme has been running – some 85% of the total £19,060 of support available. By contrast, a freelancer with the same earnings would have only been able to claim a maximum of £11,250 from the first two self-employed grants, Blick Rothenberg found. Chloe Jepps of the freelance trade body IPSE said the growing disparity in support was alarming. “There is a glaring disparity between support for employees and the self-employed in Britain and it looks like a growing societal divide. To stop the gap widening, the state must urgently fill the gaps and do the right thing by levelling up self-employed support,” she said.
INDUSTRY NEWS – WEEKEND TO 25TH OCTOBER 2020
MPs to probe Government’s use of consultants
The Mail reports on a probe by Parliament’s public accounts committee into how the Coronavirus Act allowed government departments to award highly lucrative contracts to consultants without putting them out to competitive tender. The paper cites research from Tussell detailing how the Big Four and others have benefited from contracts supporting Government efforts to tackle the coronavirus.
Daily Mail, Page: 12
ECONOMY NEWS – WEEKEND TO 25TH OCTOBER 2020
Renewed restrictions put recovery in peril
Business growth slowed in October with services suffering a sharp slowdown due to coronavirus restrictions, according to IHS Markit’s purchasing managers’ index (PMI) survey, which slipped to 52.9 from September’s 56.5. Demand for manufactured goods remains strong while property-related services were boosted by strong sales. The survey also showed that employment continued to fall for the eighth consecutive month. Paul Dales at Capital Economics said the findings support “our view that GDP will stagnate, if not contract, in the last three months of the year.” He added: “If the economy is heading for a double-dip, at least the second leg down will be smaller than the first.” Jacob Nell at Morgan Stanley suggests the UK could be heading for a “more volatile and complex W-shaped recovery, rather than the (relatively) V-shaped recovery we had previously expected.”
Sales are up, but consumers may now hold back
New figures from the Office for National Statistics show retail sales were up 1.5% between August and September, a 4.7% rise year on year and the fifth month running that sales have climbed. Third quarter sales climbed 17.4% compared to the three months before, a record quarterly rise, with internet orders accounting for 27.5% of sales, up from 20.1% in February. However, with consumer sentiment down this month, analysts expect spending to be subdued in the months ahead as the furlough scheme ends and unemployment rises. Howard Archer, chief economic adviser to the EY Item Club added: “Consumers may very well adopt a cautious approach to making major discretionary purchases given the uncertain economic environment.”
Sunak orders officials to publish economic cost of lockdown
The Chancellor has ordered Treasury officials to find a way to put COVID-19 data into context with the economic cost of local lockdowns. Rishi Sunak has asked civil servants to find ways to illustrate the “other trade-offs” amid concerns over the deaths and harm caused by coronavirus restrictions. Using economic data to contextualise the death and infection figures could mean illustrating the hit on GDP of taking a region from Tier 2 into Tier 3 or introducing a national circuit-breaker lockdown, for example. A source close to Mr Sunak said: “We have spent more than £200bn already over the past months. We have to be sensible.”
The Mail on Sunday
SMEs NEWS – WEEKEND TO 25TH OCTOBER 2020
SMEs fear second wave most
A poll by Nucleus Commercial Finance reveals 48% of SMEs are most concerned by the prospect of a second coronavirus wave. Some 28% fear consumers will rein in spending while a quarter fear they will not be able to recover from the pandemic’s impact on the economy. Chief executive Chirag Shah added: “SMEs are demonstrating considerable resilience, and we expect they will continue to do so.”
Sunday Express, Page: 45
Banks look to debt collectors to recover bounce back loans
UK Finance is working on creating a centralised debt collection body to recover of tens of billions of pounds of government-backed small business loans as banks prepare for wave of defaults and fraud cases.
PROPERTY NEWS – WEEKEND TO 25TH OCTOBER 2020
Commercial property deals backfire for councils as rents dry up
The Observer considers the lost income from commercial property investments councils have suffered since the pandemic began. Some councils have been accused of reckless behaviour after having borrowed heavily from the public purse to pursue returns on property to offset budget cuts. However, concerns have been raised that authorities dependent on rents from largely empty office blocks and struggling shopping centres may find it increasingly difficult to service the huge debts they have built up. Don Peebles, the head of policy at the Chartered Institute of Public Finance and Accountancy, said public money is being misused: “It is like somebody going to a building society to borrow money to buy a house, but instead of buying the house they put it on a horse.”
The Observer, Page: 25
Retailers insist on pandemic clauses for new leases
Retailers are demanding new leases include “pandemic clauses” that stipulate rent payments will be reduced should the shop be forced to close in a local lockdown. The clauses are typically structured so that the rent is halved during a period of enforced closure. In instances where a lease is based on turnover, the base rent will typically fall by half.
PENSIONS NEWS – WEEKEND TO 25TH OCTOBER 2020
Fewer pay into pensions since onset of pandemic
Figures from Hargreaves Lansdown show 14% of people have lowered the amount of money they are paying into their pension since the COVID-19 pandemic struck, while 11% have cut contributions entirely. However, experts have warned that not saving enough now is a mistake that can be hard to correct later. Helen Morrissey, pension specialist at Royal London, comments: “The concern is that once contributions are stopped or reduced the employee may forget to resume them.”
WEALTH MANAGEMENT NEWS – WEEKEND TO 25TH OCTOBER 2020
Pandemic makes world’s billionaires – and their advisers – richer
Private banks have enjoyed a pandemic-driven boom with the assets of the world’s super rich soaring after wild market moves and a sharp increase in the value of tech and healthcare stocks.
Gabelli resists investors’ attempt to wind up trust
Smith & Williamson , Investec, Rathbones and C G Asset Management are pushing for the Gabelli Value Plus Trust to be wound up amid claims of a poor performance. However, Associated Capital Group, whose executive chairman is billionaire financial analyst Mario Gabelli, is the trust’s biggest investor with a 27% stake and has voted against proposals to have the fund liquidated. James Burns, a fund manager at Smith & Williamson, said: “Shareholders have voted and we want our clients to get their cash back.”
OTHER NEWS – WEEKEND TO 25TH OCTOBER 2020
Treasury scraps VAT exemption on PPE
The cost of disposable face masks is set to rise by a fifth from next week after the Treasury decided to scrap the VAT exemption on Personal Protective Equipment (PPE). The 20% VAT levy, usually charged on items of PPE, was temporarily waived at the beginning of May. The Treasury confirmed that VAT would apply to PPE from 1 November but advised firms to reclaim it as a business expense. An official said the cut was only ever intended to ensure the flow of supply to healthcare.
The Daily Telegraph, Page: 7 The Guardian, Page: 2
Bim Afolami: Why do liberals have such low expectations for black people?
Conservative MP Bim Afolami asks in the Mail on Sunday why successful black people such as himself get abused by liberals who claim to be anti-racist. Afolami was accused by a Liberal Democrat activist in his constituency of not being an authentic black man because he went to Oxford and lives in a nice village. Citing a project he initiated to introduce disadvantaged young people from all ethnicities to the world of work and government, which included a trip to a KPMG office, Mr Afolami says: “People of any background or colour should aspire to achieve whatever they set their minds to.” Mr Afolami goes on to add that he is not complacent, conceding that more black faces are needed in boardrooms, but “quotas and shortlists say to young people of colour that they cannot succeed unless white candidates are taken out of the way.” He continues: “When I see my black Conservative colleagues […] I see people who are not just politicians of great ability but people who were all very successful in their careers before politics.” Mr Afolami goes on: “We are Conservatives because we believe in opportunity for everybody. We do not believe that you should be kept in your place because you are black, Asian or, indeed, white from a working-class background. The bigotry of many in the Left is insidious and hidden.”
The Mail on Sunday
Johnson’s obduracy driving the reasoned to despair
In his column in the Mail on Sunday, Peter Hitchens rails at Boris Johnson’s management of the Covid crisis, describing the PM as a “mad giant” stamping across the landscape destroying small businesses and obliterating jobs as he goes. With the “funny money” he’s flinging about soon to run out, Hitchens fears that “anger is the only force that will bring this misery to an end […] Can nobody reach him, while there is still time?”
The Mail on Sunday, Page: 25
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