NEWS – WEEKEND TO 28TH JUNE 2020

NEWS ROUNDUP

TAX NEWS – WEEKEND TO 28TH JUNE 2020

SATURDAY

The pensioner perks under the spotlight

The Times’ David Byers looks at some of the perks enjoyed by pensioners which could be under threat as the Chancellor eyes ways to raise cash to pay for the coronavirus crisis. The triple lock on pensions has already been slated as a target but free bus passes and winter fuel payments could also be in the firing line, suggests Byers. Ian Browne at wealth manager Quilter says the expected double-digit rise in the cost of the state pension “looks untenable both in terms of its fiscal sustainability and intergenerational fairness.” The exemption for those over the state pension age to pay NI could also be halted, suggests Nimesh Shah from Blick Rothenberg while Chris Etherington from RSM points to the winter fuel payment as a “poorly targeted benefit” which should be taken away from higher and additional-rate taxpayers. Dividend allowances could also be adjusted to raise capital.

The Times, Page: 64

Marston’s boss calls for tax cuts

Marston’s CEO Ralph Findlay has urged the government to provide pubs with ongoing business rates relief and to defer beer duty to help companies pull through the pandemic. He also called for VAT to be cut from 20% to 5% to boost consumer spending. His plea came as the company reported £40m in lost revenues and half-year pre-tax profits down over 70%. The brewing and pub group said it would open about 85% of its pubs in England when restrictions are lifted. Those which fail to make enough sales will be closed.

Financial Times, Page: 16 The Times, Page: 57 Daily Mail

Ireland’s reliance on foreign businesses a risk to state finances

Statistics published this week show ten companies paid a combined €4.4bn of Ireland’s €10.9bn in corporate tax receipts, or 7.5% of Ireland’s €59bn total tax take. Corporate tax receipts in Ireland have doubled since 2014, driven by the relocation of multinationals taking advantage of low tax rates. Revenue Commissioners estimate that 77% of Ireland’s corporate tax receipts were sourced from multinational firms; a dependence repeatedly described as risky by experts.

The Times

UK defers tax reporting deadline

The European Council announced earlier this week that states could push back the implementation of its DAC6 directive due to the pandemic. This gives companies and tax advisers an additional six months to prepare reports on cross-border tax arrangements. In the UK, HMRC said reports will now be due on Feb 28 2021.

Bloomberg Tax

SUNDAY

Sir Ronald Cohen: Don’t scrap Social Investment Tax Relief

The founder of buyout firm Apax Partners has said plans to scrap ­Social Investment Tax Relief, which offers a 30% upfront tax relief to investors in charities and other social enterprises, makes “zero sense” at a time when Government budgets are constrained and disadvantaged areas of society are suffering from the aftermath of the coronavirus. Sir Ronald Cohen, who now focuses on “impact investing”, called on ministers to instead raise the ceiling for the relief in line with the Enterprise Investment Scheme, which caps individual investments at £1m. Sir Ronald added: “If you think about it, private investment is the only way to supplement government spending, creating jobs and dealing with social issues, environmental issues. It’s the only way, there’s no other money around, and the Government should already be boosting incentives, not eliminating existing ones.”

The Sunday Telegraph, Business, Page: 3

Major’s prediction of tax rises dismissed

Former Conservative prime minister Sir John Major told the BBC yesterday that taxes would have to rise to pay for greater state involvement in social care after the coronavirus pandemic. Although Sir John admitted it would be a mistake to put up taxes before the economy had recovered, his remarks were roundly criticised by fellow Conservatives. Lord Lamont of Lerwick warned that raising taxes in the short term would “snuff out the recovery – which may be slow and gradual” while Sir John Redwood added: “The idea of increasing taxes is the complete opposite of what we need. We need to raise people’s confidence, allow them to keep more of the money they earn and to get their businesses under way again.”

The Sunday Telegraph Sunday Express

Will IHT be hiked to pay for virus rescue?

The Sunday Express wonders which taxes will be raised to help pay for the damage done by the coronavirus pandemic, with Blick Rothenberg partner Robert Pullen telling the paper that IHT could be the first to go up. Jonathan Scott, tax partner at Haines Watts points out that IHT was raised to 80% to help tackle public debt after WW2.

Sunday Express

CORPORATE NEWS – WEEKEND TO 28TH JUNE 2020

SATURDAY

Intu falls into administration

Intu Properties has collapsed into administration after the shopping centre owner failed to secure an agreement with its creditors. The company, which employs nearly 2,400 people and owns 17 shopping centres across the UK, failed to persuade lenders to grant a standstill on debt repayments before a Friday night deadline. KPMG was formally appointed on Friday to handle the administration of Intu as well as eight other subsidiary companies. Jim Tucker, a partner at KPMG and one of the joint administrators, said COVID-19 had exacerbated the problems facing retail, which were now feeding through to owners of retail property. Property analysts predict Intu, which has debts of over £4.5bn, will be broken up.

BBC News The Daily Telegraph, Page: 33 The Times, Page: 51 The Guardian, Page: 43 The Independent, Page: 40 Daily Mail, Page: 93 The Sun, Page: 6 Daily Express, Page: 8

Next and M&S consider Victoria’s Secret bid

Marks & Spencer and Next are reportedly among companies interested in lingerie retailer Victoria’s Secret after it fell into administration. The UK arm of Victoria’s Secret appointed administrator Deloitte earlier this month following a downturn in trading. Both retailers declined to comment, while Victoria’s Secret UK said it was still working with administrators at Deloitte to “review a range of possible outcomes”.

The Daily Telegraph Financial Times The Guardian, Page: 45

Bain swoops on Virgin Australia

American private equity firm Bain Capital has agreed to buy Virgin Australia which collapsed in April after the coronavirus pandemic shut down most air travel. However, Virgin’s 6,000 unsecured bondholders tabled a separate recapitalisation proposal with Deloitte on Wednesday which could frustrate the Bain deal.

The Times, Page: 54

SUNDAY

Sunny Loans on verge of administration

The payday lender Sunny Loans filed notice of intent to appoint administrators last week citing the economic uncertainty due to coronavirus as well as “continued regulatory pressure”. The company is owned by Texas-based Elevate Credit International

The Sunday Telegraph, Business, Page: 3

EMPLOYMENT NEWS – WEEKEND TO 28TH JUNE 2020

SUNDAY

Labour urges action to prevent unemployment crisis

The Labour party is urging the Government to maintain support for businesses that cannot yet fully reopen amid fears of soaring unemployment when the furlough scheme comes to an end in November. Shadow business secretary Ed Miliband said: “The scale of the economic emergency facing us is enormous. But the Government is pulling the rug from under businesses employing one million people by demanding they start bearing the cost of the furlough when they don’t even know when they can reopen”. The Treasury’s furlough scheme is funding more than 8m workers at an estimated cost of a £14bn a month. From the end of July, the state will no longer pay for employers’ national insurance and pension contributions and the scheme is wound up altogether at the end of October. In an interview with the Telegraph, Manpower’s UK managing director Mark Cahill agrees that support for certain businesses should be extended to avoid employment levels falling off a cliff.

The Observer, Page: 1, 5 The Sunday Telegraph, Business, Page: 1

REGULATION NEWS – WEEKEND TO 28TH JUNE 2020

SATURDAY

FCA orders Wirecard’s UK operations to cease activities

The Financial Conduct Authority (FCA) has ordered Wirecard’s UK subsidiary, Wirecard Card Solutions, to cease all regulated activities in order to protect customer funds. The move means customers of fintechs such as Pockit and Curve are unable to access their cash. Wirecard Card Solutions told the FT that it is taking steps to lift the suspension so business can resume as usual.

Financial Times, Page: 13 The Times, Page: 4 PYMNTS The Daily Telegraph, Page: 33 The Guardian, Page: 44 Daily Mail, Page: 95

ESMA told to probe BaFin response to Wirecard allegations

The European Commission has written to the bloc’s markets watchdog, the European Securities and Markets Authority (ESMA), calling for it to assess whether Germany’s financial regulator, BaFin, responded appropriately to allegations of improprieties at Wirecard. It also asked ESMA to assess if there was any evidence of “administrative or legal obstacles” that hampered the enforcement of reporting requirements. If BaFin is found to be in breach of union law it could be compelled to change its practices.

Reuters The Times, Page: 53 Financial Times, Page: 13

SMEs NEWS – WEEKEND TO 28TH JUNE 2020

SATURDAY

Coronavirus support for small businesses launched by Google

Google has launched a new campaign to help UK small businesses by making easier to find online. The company will also provide £25m worth of advertising credits and grants for small firms. Chancellor Rishi Sunak praised Google’s initiative and said the pandemic had been a “difficult time” for SMEs. “We will all play a part in this national effort to get the UK open for business again safely,” he said.

The Daily Telegraph The Independent, Page: 45

PENSIONS NEWS – WEEKEND TO 28TH JUNE 2020

SATURDAY

Key workers being targeted by pension transfer scammers

APJ Solicitors has said that there has been an uptick in the number of key workers being targeted by scammers to transfer their pensions into high-risk self-invested personal pensions. The law firm said that it has been contacted by an increased number of NHS staff and other key workers who have been convinced to transfer their pensions and lose thousands of pounds in the process.

Pensions Age

PERSONAL FINANCE NEWS – WEEKEND TO 28TH JUNE 2020

SUNDAY

Cash Isas grow in popularity

HMRC figures show people earning £150,000 or more a year have as much as £84,530 stashed in Isas. By contrast, savers earning less than £5,000 a year have just over £13,000. Data for the year to April 2018 show savers earning £10,000-£19,999 have an average of just over £23,000 in their Isa, while people earning £30,000-£49,999 typically have about £29,000. Figures also show 450,000 people stopped saving into stocks and shares Isas between 2017-18 and 2018-19, while the use of cash Isas went up by 21%.

The Sunday Times, Business, Page: 14

ECONOMY NEWS – WEEKEND TO 28TH JUNE 2020

SATURDAY

FTSE 100 ends week down 3.2%

London’s FTSE 100 outperformed world stocks on Friday closing up 0.2% on a defensive rally. However, the blue-chip index was down 3.2% on the week having recovered more than 35% since March and remains down about 18% this year. “There are still big question marks over how willing households will be to go out and spend if fear of the virus lingers. And we are concerned that a second wave of unemployment will reduce the ability of households to spend,” said Ruth Gregory, senior UK economist at Capital Economics. “As a result, we suspect that the initial strong rebound will peter out in the second half of 2020 and that the Government and the Bank of England will need to do more.” Some of the gains were helped by the pound slipping due to fears over the UK’s trade deal with the EU. The next round of Brexit talks are set to begin on Monday.

Reuters

SUNDAY

Johnson set to reveal revival plan tor UK economy

Boris Johnson will on Tuesday announce plans to revive the British economy in the wake of the coronavirus epidemic. Speaking to the Mail on Sunday, the PM promises the UK will bounce back and that he will be “doubling down” on his pledge to level up the distribution of wealth across the country. A special taskforce dubbed “Project Speed” has been set up to reduce the time it takes to deliver “high quality infrastructure”, Mr Johnson will say on Tuesday, with projects in the pipeline including new hospitals, prison places and schools. Mr Johnson told the paper: “This has been a huge, huge shock to the country but we’re going to bounce back very well. We want to build our way back to health. If Covid was a lightning flash, we’re about to have the thunderclap of the economic consequences. We’re going to be ready.”

The Sunday Telegraph, Page: 1 The Sunday Times, Page: 2 The Mail on Sunday, Page: 1 The Sun, Page: 10 The Observer, Page: 1 Sunday Express, Page: 1, 4

CBI: UK private-sector activity suffered record Q2 fall

British economic output suffered a record 20% fall in April, according to the Confederation of British Industry (CBI), whose monthly growth indicator dropped to -71 in June from -63 in May, its lowest since the series began in 2003. “These figures show the full impact of coronavirus on the economy after three months of shutdown. However, there are signs that we’ve hit rock bottom,” CBI economist Alpesh Paleja said. Separately, a quarterly survey from the British Chambers of Commerce (BCC) will this week show Britain suffered the biggest drop in economic activity since the report was first published 31 years ago. The manufacturing and services sectors fell to record lows in Q2, underlining the severe impact of the COVID-19 crisis.

Reuters The Sunday Times, Business, Page: 1

INTERNATIONAL NEWS – WEEKEND TO 28TH JUNE 2020

SUNDAY

Philippines investigates Wirecard’s local partners

Regulators in the Philippine’s have launched an investigation into Wirecard’s partners in the region after the German payments processor admitted that €1.9bn supposedly held in two Philippine banks probably never existed. Bloomberg reports that Germany’s state-owned development bank KfW is facing potential losses of €100m as a result of Wirecard’s collapse. Finally, Reuters reports that Wirecard has said it would proceed with business activities after filing for insolvency and expects a provisional administrator to be appointed by judicial authorities shortly.

Financial Times Bloomberg Reuters

OTHER NEWS – WEEKEND TO 28TH JUNE 2020

SUNDAY

Six companies in ‘Project Birch’ rescue talks with Treasury

The Treasury is in talks with six companies as part of its programme to provide state aid to strategically important businesses. Celsa Steel UK, Jaguar Land Rover and Tata Steel are among them.

Financial Times

Contact Paul Southward

Paul Southward