NEWS – WEEKEND TO 26TH APRIL 2020
NEWS – WEEKEND TO 26TH APRIL 2020
LOCAL NEWS – WEEKEND TO 26TH APRIL 2020
Spare a thought today for our Luton Office marathon man Chris Beard, who today should have been running the London Marathon, undaunted by the current restrictions Chris will be running the whole 26.2 miles locally whilst observing safe distancing, full report tomorrow. Come on Chris!
TAX NEWS – WEEKEND TO 26TH APRIL 2020
Betting companies win multibillion-pound rebate over slot machines
HMRC will have to pay out over £1bn to gambling firms Betfred and Rank Group after a court said they had wrongly been charged VAT on fixed-odds betting terminals (FOBTs) and other slot machines. Mr Justice Mann and Judge Thomas Scott found that VAT should not have been charged on takings from the FOBT machines because they were so similar to VAT-exempt gambling devices such as casino roulette wheels. Analysis by Rich Holm and Sarah Halsted of RSM says the “decision could result in significant refunds for the many leisure and gambling businesses that operated gaming machines during the periods in question and have an appeal stood behind these lead cases.”
Frasers Group settles tax dispute
Mike Ashley’s Frasers Group has announced that it has finally resolved a €674m (£589m) dispute with the tax office in Belgium and agreed to pay “an immaterial amount” to the Belgian tax authority. The company declined to comment on the exact sum paid. Last year, the company’s financial results were delayed after receiving the shock claim from Belgium. It subsequently split with its auditor Grant Thornton, replacing the firm with RSM. Frasers also revealed it has been refused an emergency Bank of England loan because it does not have the required credit rating.
The Daily Telegraph, Page: 30 The I, Page: 76 Daily Express, Page: 61
Company car users on furlough can save thousands of pounds
Furloughed employees can hand back company cars to their employer if they are not using them during the coronavirus lockdown, saving themselves thousands of pounds in tax, says John Hood at Moore Kingston Smith.
Companies based in tax havens should not get state aid
Tax campaigners are calling on the UK to follow the lead of countries such as France, Denmark and Poland which have imposed conditions on or banned companies based in tax havens altogether from claiming financial aid from the state. Robert Palmer, executive director of Tax Justice UK, said: “If the Government is going to bail out companies involved in tax havens, it needs to impose a series of conditions that means they are actually paying their fair share of tax.” Ed Davey, acting leader of the Lib Dems, went further saying: “Companies that have funnelled earnings offshore to avoid paying their fair share of tax do not deserve support when times get tough.” The Mail on Sunday details a slew of tycoons who live in tax havens but are using British taxpayers’ money to furloughed staff at the companies they run. Writing in the Sun, Karren Brady supports the idea that only those who are UK taxpayers should have access to financial aid. Sir Richard Branson, she says, “should ask the British Virgin Islands to bail him out.”
The Mail on Sunday, Page: 16, 17 The Sun, Page: 27
Need for stability post-COVID-19 could change attitudes to debt
Emma Dunkley reports in the Sunday Times on growing calls for changes to tax rules to make taking on debt less attractive, so companies are more resilient in times of trouble. With debt interest charges tax deductible, but no tax benefit to holding more equity, companies have found it “very attractive to run businesses with high debt levels,” says Peel Hunt’s head of research Charles Hall. Xavier Rolet, the former head of the London Stock Exchange, comments: “There is a need for a recalibration of the fiscal treatment of debt versus equity to boost economic growth, reduce the boom-bust cycle and help scale up innovative smaller businesses.”
Tax hearings postponed
The Sunday Times reports that tax tribunal cases have been suspended until June 30th, meaning anyone involved in a tax inquiry or a dispute with HM Revenue & Customs will have to wait for proceedings to go ahead unless they can agree a settlement outside a tribunal.
The Sunday Times, Business, Page: 10
SMEs TAX NEWS – WEEKEND TO 26TH APRIL 2020
MP questions whether lending rules are too tight
The Financial Conduct Authority (FCA) was questioned by MPs on Friday over whether rules intended to prevent risky lending in normal times are causing major delays in the administering of the government’s emergency business loan scheme. During a conference call between the regulator, MPs and banking industry representatives, Tory MP Kevin Hollinrake questioned whether there were “unfair requirements on the banks”. The call was held to discuss a plan for offering a 100% state guarantee on bank loans of up to £25,000 for “micro-firms” – the idea is backed by MPs and senior City executives. The Telegraph’s Ben Marlow questions why such a scheme is required given the success of the grant support package. He also cites RBS boss Alison Rose, who points out that even with full state backing. lenders will still be constrained by the Consumer Credit Act and have a duty of care to ensure customers are capable of rep ayment. But the Times’ Katherine Griffiths says the new policy will likely excuse banks from observing the Act, which covers loans of up to £25,000 to small businesses.
People spend more in small shops
A survey by PwC has found that one in six people are now spending more money in small local shops and over one in five said they would continue to do so after the restrictions are eased.
Daily Mirror, Page: 4
BBB leaves lenders left in limbo unable to support small firms
As many as a hundred non-bank and fintech lenders are still waiting to be accredited by the British Business Bank (BBB) for the Treasury’s Coronavirus Business Interruption Loan Scheme (CBILS), the Sunday Telegraph reports, with many simply giving up. The BBB said almost 50 lenders have been accredited so far with 80% of SMEs having a relationship with those approved but Oliver Prill, chief executive of fintech firm Tide, said the process was “very slow” and risked the collapse of many small firms, the cost to the economy of which would far outweigh the incremental credit losses. Craig Beaumont, director of external affairs at the Federation of Small Businesses reiterated a call for the accreditation of more non-traditional lenders and for the government to underwrite 100% of loans under £30,000.
Half of eligible firms have not yet secured emergency funds
According to a report from the BBC Shared Data Unit, around half of companies eligible for the COVID-19 Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund have not yet received funding. The Government announced the grants, of £10,000 to £25,000, on March 17, and around half of the £12bn available has so far been distributed.
REPORTING TAX NEWS – WEEKEND TO 26TH APRIL 2020
Lookers postpones accounts again
Car retailer Lookers has postponed the publication of its 2019 accounts for a second time and for a further two months. The motor dealer decided to delay reporting in March because it found a suspected £4m fraud in one of its divisions. Subsequent investigations by Grant Thornton are said to have found accounting mismatches in other divisions. In addition to the fraud scandal, the Financial Conduct Authority is probing the way the company administers financing arrangements for customers buying cars on hire purchase.
CORPORATE TAX NEWS – WEEKEND TO 26TH APRIL 2020
Perth Airport impounds Virgin Australia jets
Court filings have revealed Virgin Australia owes £3.5bn to more than 12,000 creditors as Perth Airport impounded the airline’s jets on Friday over outstanding invoices. The carrier collapsed into bankruptcy protection last week after the Australian government rejected a £710m state loan request. Deloitte has been appointed to run the carrier’s insolvency process, with hopes that it will be rescued by a new owner.
Branson seeks rescue party for Virgin Atlantic
Virgin Atlantic has hired investment bank Houlihan Lokey to seek out a buyer for the loss-making airline after Sir Richard Branson put his attempts to secure a government bailout on ice, according to the Sunday Telegraph. EY has been put on standby should the carrier go into administration. Sources say interested parties include Lansdowne Partners, Temasek, Northill Capital, Centerbridge Partners and Cerberus Capital Management. Houlihan Lokey is aiming to complete the rescue by the end of May with Sir Richard continuing to bankroll the business in the meantime.
Four in ten firms fear collapse
Research from insurance consultant Mactavish has found that over 40% of businesses believe they will collapse into administration due to the disruption caused by COVID-19. Mactavish’s survey also found some 22% of company directors have tried to claim on their business interruption policies, while a further 21% are considering doing so, but many insurers are rejecting the claims. Elsewhere, the Sunday Times reports that over 260 small businesses have formed a group to take action against insurer RSA for refusing to pay out for disruption caused by the coronavirus outbreak.
Sunday Express, Page: 48 The Sunday Times, Business, Page: 1
Hyve calls in advisers amid trade show slump
Grant Thornton is expected to be appointed by exhibition and conference organiser Hyve as it struggles to shore up its finances after the COVID-19 crisis led to exhibitions and trade shows to be cancelled across the world.
The Sunday Telegraph, Business, Page: 5
PENSIONS TAX NEWS – WEEKEND TO 26TH APRIL 2020
Families urged to embrace ‘intergenerational financial support’
The Express reports that pensions have seen their values drop in recent weeks amid market turbulence. Claire Trott, head of pensions strategy at St. James’s Place, says that certain pensions, such as defined benefit schemes, will not be impacted at all, but for those in defined contribution pension schemes “it will take a little more thought and planning to decide if now is the best time to access benefits.” She also advises people to embrace intergenerational financial support, commenting: “Supporting other generations during this crisis can seem a daunting task if you don’t know what to look out for… Thinking about money as a family, rather than each generation trying to manage alone, is a great place to start and has the added benefit of introducing younger generations to financial planning.”
Pension levy could treble, companies warned
Experts have warned that companies paying into the Pension Protection Fund (PPF), which safeguards the defined benefit schemes of about 250,000 workers and pensioners, they may be forced to treble their contributions to the lifeboat fund due to a rise in insolvencies and rock-bottom interest rates. Sir Steve Webb, former coalition pensions minister, said a firm paying £500,000 to the PPF could see its annual contribution rise from 0.4% to 1.26% of its deficit in its pension scheme. “A ‘perfect storm’ for individual firms could mean a trebling of the amount they have to pay in,” he added.
Public sector unions take government to court over pension reform
Four unions representing teachers, firefighters, police officers and other public sector workers are taking legal action against the Government for failing to deliver expected improvements to their pensions.
EMPLOYMENT NEWS – WEEKEND TO 26TH APRIL 2020
Loophole in furlough scheme leaves 100,000 out of job retention scheme
Analysis by the Institute for Employment Studies (IES) shows an estimated 100,000 people who left their jobs in March but didn’t start their new role until after the lockdown began are not eligible for financial support. Tony Wilson, director of the IES, urged the Treasury to extend the date to the end of March so that job movers could be included in the job retention scheme.
The Mail on Sunday, Page: 17
PROPERTY TAX NEWS – WEEKEND TO 26TH APRIL 2020
Families fear for future mortgage hopes
Millions of people may have had their hopes of getting a mortgage dashed by COVID-19 because many self-employed workers fear banks may not look kindly on borrowers whose income fluctuates, according to a report by Trussle. In addition, families who were ready to step on to the next rung of the housing ladder are said to be worried that purchases could be delayed by more than a year. The online mortgage broker also found that would-be buyers expected to wait more than five months on average before they resume their property search. This would mean few transactions taking place before winter, which is usually a quiet period for the property market.
PERSONAL FINANCE TAX NEWS – WEEKEND TO 26TH APRIL 2020
British households to spend £23bn less
Researchers at the Centre of Economic and Business Research expect British households to hold on to £23bn in savings in the months to come as people drastically rein in their spending. This is despite average incomes predicted to fall by £515 in the second quarter of the year.
FINANCIAL SERVICES NEWS – WEEKEND TO 26TH APRIL 2020
Poacher turned gamekeeper’ phenomenon in financial services
Ali Hussain in the Sunday Times reports that companies which offer financial advice are also setting up as claims management services, creating concerns that staff are recommending unwise investments and then further profiting from the payouts resulting from their original bad advice. Data from the FCA shows that 30 financial advice firms also offer claims management for mis-sold investments, and another 15 previously authorised to give financial advice now offer only claims management. Justin Modray from Candid Financial Advice comments: “It is disturbing that a financial adviser could theoretically profit from mis-selling investments or pensions, wind up their advice firm, then…profit from claims management for those clients against their original advice.”
ECONOMY TAX NEWS – WEEKEND TO 26TH APRIL 2020
UK starts getting businesses back to work
Britain should be in a position to start lifting the lockdown by mid-May, scientific advisers have told ministers, as the government discreetly advises businesses on how to resume work within the existing restrictions. A Downing Street source said: “If people are within the rules and follow social distancing guidance, we are more than happy for businesses to resume on that basis.” Ministers are also considering allowing larger groups of family and friends to gather in a “cluster” of up to ten people, according to the Mail, in an approach already being looked at in Scotland and Belgium. The Times reports that Chancellor Rishi Sunak is drawing up measures to allow non-essential businesses to reopen in a “safe and practical way” and ensure that offices and workplaces are free from coronavirus.
UK retail sales in historic drop as lockdown triggers shopping freeze
UK retail sales declined 5.1% in March from February, the Office for National Statistics reports, the largest drop since the agency started collecting the data in 1996. Clothing stores saw huge retail sales slumps of 34.8% even though the coronavirus lockdown only started on March 23rd. Food sales and online-only firms were the only to see growth as the lockdown bit the sector. Supermarkets and other food stores recorded a 10.4% jump in sales, while alcohol sales jumped 31.4%. Online sales were worth 22.3% of all UK retail sales.
Three years to recoup lost growth
EY Item Club ’s latest economic forecasts warn that the UK could take until 2023 to recoup the growth lost to the coronavirus lockdown, based on the assumption that it is lifted next month. A 6.8% slump in GDP during 2020 and a 7.5% slide in consumer spending is predicted. Mark Gregory, EY UK’s chief economist, said “businesses need to prepare for a period of prolonged change”.
Unlock, or Britain faces being the worst hit Western economy
Economist Gerard Lyons fears that if the UK does not begin to exit its coronavirus lockdown soon its economy could be the worst hit in the West. Writing in the Sunday Telegraph, he examines the assumptions around behaviour and the importance of avoiding a second wave of infections; suggesting geography and sector-specific risk assessment combined with a traffic light system indicating permitted activities can help mitigate the risk of unlocking the economy.
Contact Paul Southward