NEWS – WEEKEND TO 26TH JULY 2020
NEWS – WEEKEND TO 26TH JULY 2020
TAX NEWS – WEEKEND TO 26TH JULY 2020
Self-employed given 90 days to come clean on support
After HMRC received tip-offs that some workers may have overclaimed under the Self-employed Income Support Scheme (SEISS) the Treasury has given itself sweeping powers to issue penalty charges against people who may have claimed too much COVID-19 support. The scheme provided a taxable grant worth up to 80% of average profits for a period of three months, capped at £7,500. HMRC said there had been 2.7m claims worth more than £7.7bn in support. The Finance Bill, published on Wednesday, grants a 90-day amnesty period to self-employed workers, after which those who have overclaimed would face fines on a sliding scale of between 30% and 100%. Fiona Fernie, a partner at Blick Rothenberg, says: “HMRC has made it clear that they are receiving a large number of calls in relation to the scheme, although it does not specify whether those calls are anonymous tip offs, or people who fear they have claimed incorrectly ringing for advice, or a mixture of the two. It is likely that those calls are one of the principal factors prompting the publication of the guidance.”
HMRC demands VAT be charged on non-household waste
The Telegraph reports that HMRC has asked local authorities to charge 20% VAT for fees to drop off non-household waste at rubbish tips. Buckinghamshire County Council has been told to charge VAT from August 1, increasing the cost of disposing of a shed from £17.50 to £21, while the cost of disposing of a door or toilet will rise from £10 to £12. The council said it had previously not been charging VAT due to conflicting advice from its finance and legal departments. The paper notes that some other councils have included VAT in their prices. Richard McIlwain from charity Keep Britain Tidy said he is “concerned that imposing charges for certain wastes at household recycling centres presents a barrier to recycling and could encourage fly-tipping.”
Are there tax implications if I work from our holiday home in France?
The FT talks to Stephen Metcalf of Kreston Reeves and Liz Cuthbertson at Mercer & Hole about the tax implications of working from a holiday home abroad.
Regret over burdensome extra costs of MTD
HMRC’s decision to roll out its Making Tax Digital programme to all VAT-registered businesses, regardless of turnover, from April 2022, and landlords and unincorporated businesses with income above £10,000 from April 2023, will add hundreds of pounds of fresh costs, the Sunday Telegraph reports. HMRC said it was seeking to reduce “avoidable mistakes” in tax returns, which it said had cost the Exchequer £8.5bn in the 2018-19 tax year. But John Stewart of the National Residential Landlords Association, said many small businesses had seen no improvement in mistakes after using the software required. Tina Riches of the Association of Taxation Technicians, was wary of HMRC claims that the average transition cost for MTD for VAT would be just £109 per business. According to an ATT survey, 45% of respondents calculated that they had costs of between £109 and £500, with 12% spending more than £5,000. Elsewhere, MHA MacIntyre Hudson said compliance costs would be proportionately greater for small traders than larger businesses while Dawn Register of BDO said the timing was concerning: “To focus on this during a looming recession and given imminent Brexit preparations for some business, we do expect the timetable to raise eyebrows.”
The Sunday Telegraph, Business, Page: 9
Hammond: Government shouldn’t rule out a wealth tax
The former Conservative chancellor Philip Hammond has said although he was wary of the knock-on effects of a wealth tax the Government should not rule it out. The Sunday Times reports Hammond as saying: “A structural change will be necessary to deal with the impact of COVID-19.” However, he warned that capital would leave the country the moment the Tories looked serious about introducing a wealth tax. Elsewhere in the paper, Andrew Summers, an associate professor at the London School of Economics, talks about his work with the Wealth Tax Commission, which is drawing together data to better inform debate on the issue. “We will present a range of potential models for a UK wealth tax and what they could raise,” Summers said. “But we won’t make any recommendations on rates and thresholds. That’s for politicians.”
HMRC to consult on uncertain tax planning
The Chancellor is considering making it compulsory for big businesses to alert the taxman when they have used their own interpretations of the rules to pay less corporation tax, VAT, excise duty or other taxes. Rishi Sunak has asked HMRC to launch a consultation on the practice known as “uncertain tax planning” after learning that it loses the Treasury £6.2bn each year – equal to 18% of total uncollected taxes. Chris Sanger, head of tax policy at EY, commented: “Taxpayers will have to understand the thinking of the tax inspector, and do a bit of mind-reading. That’s a new burden.” Mike Warburton, former tax director at Grant Thornton, added: “If the law is uncertain, then they should change it to make it clear. It’s a basic human right for people and companies to know how they will be treated by the Government and its agencies.”
The Mail on Sunday, Page: 125
EMPLOYMENT NEWS – WEEKEND TO 26TH JULY 2020
Lack of childcare leaves female workers vulnerable
Following a report from the Office for National Statistics last week showing that parents were nearly twice as likely to be furloughed as those without children, while women spent an average of an hour longer each day on childcare duties than men during lockdown, the Guardian reports on a survey showing how half of working mothers are unable to access the childcare they need to return to work. Joeli Brearley, the founder of the campaign group Pregnant Then Screwed, which carried out the survey, said: “The needs of working mothers have been completely ignored during this pandemic and, as many others have warned, we are now seeing that they are the first to go when jobs are cut – mothers are the sacrificial lambs for the economy contracting.” Sian Elliott, the women’s equality policy officer at the TUC warns that women are particularly vulnerable when the furlough scheme comes to an end. “We are looking at the reversal of decades of progress in women’s equality in the workplace, a widening of the gender pay gap and the gender pension gap – we are just storing up huge problems for the future,” she said.
The Guardian, Page: 1, 4-5
Labour calls for probe into Sports Direct wages
The shadow secretary of state for employment rights, Andy McDonald, is to ask HMRC to investigate pay levels at Sports Direct, which has been rebranded as Frasers Group, after the Guardian published findings of an undercover investigation into working conditions at the company’s warehouse in Shirebrook, Derbyshire. The paper found that workers were required to spend their 30-minute unpaid breaks on the warehouse premises, with law experts claiming this could mean that the workers should be paid for this time. The Guardian previously exposed how Sports Direct was breaching minimum wage law at its warehouse in 2015 leading to the company paying workers £1m in back pay.
The Guardian, Page: 10
SMEs NEWS – WEEKEND TO 26TH JULY 2020
Access to Covid support funding remains a struggle
The Telegraph’s Marianna Hunt reports on the difficulties small businesses have had accessing Covid support loans. High street banks are refusing to sign up new business accounts, leaving SMEs unable to access funding as they bank with smaller lenders that are not able to offer the bounce back loans. Kevin Hollinrake, a Conservative MP and co-chairman of the All Party Parliamentary Group on Fair Business Banking, said: “We’ve been encouraging small firms to shop around and use start-up lenders, and many have done so. But now they are being punished for it. It’s not right.”
The Daily Telegraph, Money, Page: 1
Commonwealth entrepreneurs should be able to register firms in the UK as “e-citizens”
The Prime Minister’s former business adviser James Sproule has called on Boris Johnson to allow entrepreneurs across the Commonwealth to register firms in the UK as “e-citizens”, as part of Mr Johnson’s push for a Global Britain. In a report published by the Centre for Policy Studies think tank, Sproule says the move would help entrepreneurs in developing countries draw investment directly while British investors would be given an opportunity to gain the “higher returns” available in developing countries, knowing that their investments would be protected by UK law.
Music venues get £2.25m rescue
The Government is to pay the rent and bills of roughly 150 music venues at severe risk of insolvency as part of a COVID-19 support package for the arts. Grants of up to £80,000 will also be available to help struggling venues around the country, the Sunday Times reports.
The Sunday Times, Page: 4
Cash owed to SMEs rockets
Research by Intuit QuickBooks suggests small businesses have seen a 20-25% increase in overdue payments since the beginning of the pandemic. SMEs were chasing £50bn in late payments before the outbreak started.
Sunday Express, Page: 43
CORPORATE NEWS – WEEKEND TO 26TH JULY 2020
Over 31,000 Yorkshire firms in distress
Begbies Traynor ‘s most recent Red Flag Alert research shows over 31,000 Yorkshire firms were suffering from financial distress in the second quarter of this financial year, up 8% on Q2 2019. Julian Pitts, Begbies Traynor’s regional managing partner for Yorkshire, warned that the more severe effects of the pandemic were unlikely to become apparent until the third quarter of the financial year.
Yorkshire Post, Page: 26
Jim Chanos pockets $100m from Wirecard short
The FT interviews Jim Chanos, the famous short-seller who has made $100m betting against Wirecard. One of the more recent red flags, says Chanos, was failing the forensic audit it had commissioned from KPMG.
Lazard hired to find new owner for Debenhams
London investment bank Lazard is set to be appointed to help Debenhams find a buyer as lenders seek to put the retailer on a more secure footing. FRP Advisory has been running what the company has described as a “light touch” administration and has been mapping out options with principle creditors including US-based Silver Point Capital, Alcentra, GoldenTree and Barclays.
The Mail on Sunday, Page: 123
PROPERTY NEWS – WEEKEND TO 26TH JULY 2020
Now’s the time to switch to a company structure
Analysis by digital mortgage broker Habito indicates that landlords who own properties in their own name would save hundreds of pounds a year in tax if they owned their homes through a company instead. Changes to the tax regime has made owning properties via a company more attractive, the Telegraph’s Adam Williams says, given its more generous tax rules, but moving properties into a company can incur both stamp duty and capital gains tax. However, the new stamp duty break means that landlords can transfer properties at lower cost than before.
The Daily Telegraph, Money, Page: 3
INTERNATIONAL NEWS – WEEKEND TO 26TH JULY 2020
Wirecard may prompt another attempt at audit reforms
Joe Brennan writes in the Irish Times on the complications of reporting amidst the COVID-19 pandemic and the difficulties users of financial statements will have interpreting key judgements. Brennan makes reference to historic accounting scandals and the Wirecard debacle; noting ongoing attempts to tighten regulations for the auditing of public-interest companies. He points to the recent edict from the UK Financial Reporting Council requiring the Big Four to separate their audit and consulting divisions and quotes Fergal O’Briain, head of finance and administration at the Irish Auditing & Accounting Supervisory Authority (Iaasa) who says: “Regulators globally are aware of the FRC views on this matter and will be monitoring the changes and the impact of those changes. To date, in Ireland, this is not an area which has been identified as a change required to improve audit impact.”
ECONOMY NEWS – WEEKEND TO 26TH JULY 2020
UK retail sales and services rebound in June
New data from the Office for National Statistics (ONS) show sales volumes rose by 13.9% in June compared with the month before, bringing total sales across the country close to last year’s levels. Helen Dickinson, chief of the British Retail Consortium, said: “Though a month of growth is welcome news, retail is not out of the woods yet. The pandemic continues to pose huge challenges to the industry, with ongoing store closures and job losses across the UK.” Separately, the IHS Markit/CIPS UK composite purchasing managers’ index jumped to 57.1 in July from 47.7 in June. The manufacturing reading rose to 53.6, up from 50.1, and services rose from 47.1 to 56.6. Chris Williamson, chief business economist at IHS Markit, said: “The surge in activity in July will fuel expectations that the economy will return to growth in the third quarter after having suffered the sharpest contraction in modern history during the second quarter”.
UK recovery could take four years
It could take another four years for the UK economy to return to pre-pandemic levels, the EY Item Club says, pointing to evidence that consumers are sticking to habits learned during the lockdown period. The forecasters predict that output will shrink by 11.5% this year, well below previous expectations, while unemployment will more than double to hit 9% by the end of the year. Howard Archer, economist at EY Item Club, blamed “much more pronounced” consumer caution. “The UK economy may be past its low point but it is looking increasingly likely that the climb back is going to be a lot longer than expected.”
REGULATION NEWS – WEEKEND TO 26TH JULY 2020
Politicians call for clean-out of foreign influence in the City
Senior MPs are calling for new laws requiring bankers, lawyers, accountants and lobbyists to publicly disclose work carried out for politically connected actors as part of efforts to limit foreign influence in British politics. Neil O’Brien, a member of the China Research Group of MPs, said the state should also have powers to block firms from assisting certain individuals. “There’s no disincentive to take the money at the moment if you are a lawyer or PR firm in London,” he added.
PERSONAL FINANCE NEWS – WEEKEND TO 26TH JULY 2020
Working in a different country could cost you more in taxes
The Sunday Times’ talks to tax experts about the possible consequences of working from abroad. Anne-Marie Welch, a tax partner at RSM and Robert Salter, a partner at Blick Rothenberg offer advice; principally on double-taxation agreements and what sort of activities could effect your tax bill.
OTHER NEWS – WEEKEND TO 26TH JULY 2020
Call for four-day working week to boost economy
The left-wing think tank Autonomy suggests moving to a four day working week would help boost Britain’s ailing economy. The Government would cover the cost of the lost fifth day with a “Short Working Time Subsidy Scheme” with workers encouraged to use their extra free time spending money. The scheme, which would cost over £20bn a year, has been backed by union Unite and Norwich Labour MP Clive Lewis. Will Stronge, Director of Research at Autonomy, said: “Instead of propping up an already failing economy, the government could act to save jobs and create more desirable working patterns for the future.” But Matt Kilcoyne of the Adam Smith Institute believes this “is not a vision many people should be enthused by,” adding that the Government should not prop up failing businesses.
Treasury set for radical shake-up
The Treasury will undergo a transformation under Boris Johnson and the Chancellor, Rishi Sunak, with plans already in motion to bring in a venture capitalist-style approach to projects to speed up delivery. In a speech on Tuesday, Steve Barclay, the Chief Secretary to the Treasury, will outline how the Treasury will become the “new radicals” and welcome a team of analysts and developers from Silicon Valley firms to refresh the orthodoxy. Mr Barclay will point to the speed at which policies were delivered during the height of the coronavirus pandemic, and say: “If the wheels of Government can be made to spin this fast in a crisis with all the added pressures of lockdown, why can’t it happen normally?”
Contact Paul Southward