NEWS – WEEKEND TO 30TH AUGUST 2020
NEWS – WEEKEND TO 30TH AUGUST 2020
TAX NEWS – WEEKEND TO 30TH AUGUST 2020
Self-Employed Income Support Scheme
Paul Southward provides guidance for claimants of the government support for the self-employed: –
Treasury officials call for tax hikes
The Sunday Telegraph’s Harry Yorke reports that Treasury officials are pushing for tax rises to help boost public finances hit by the coronavirus crisis, with Downing Street said to be resisting moves that could see the Exchequer pull in an extra £20bn a year. Sources tell the paper that proposals under consideration include aligning capital gains tax with income tax and cutting pension tax relief, with the introduction of an online sales tax and simplification of the inheritance tax system also mooted. Mr Yorke says that while Downing Street may not be opposed to some tax rises, especially the closing of perceived loopholes for the wealthiest in regard to capital gains and pensions, those around the Prime Minister fear a major tax raid risks derailing the economic recovery. He adds that senior Downing Street figures would rather reduce spending, with senior economists and business leaders also against increasing taxes, saying Chancellor Rishi Sunak’s focus should be on stimulating growth. Paul Johnson, director of the Institute for Fiscal Studies, says tax rises will be needed “eventually” but it is unlikely they will be rolled out soon due to uncertainty over the state of the economy. A Sunday Telegraph editorial argues against “massive tax hikes”, saying the Prime Minister and Chancellor “must go with their instincts and rule out these tax rises”. Elsewhere, the Sunday Times says Mr Sunak is planning a “£30bn tax raid” in November’s Budget, with increases in capital gains tax and corporation tax on the cards. An editorial in the same paper considers the mooted tax reform, saying that while “nothing should be done to jeopardise the recovery from the COVID-19 crisis in its early stages … the Government cannot allow the hole in the public finances to remain unfilled.”
Tax dodge informer payouts hit £473k
Analysis by law firm RPC shows that HMRC payments to those tipping the tax office about tax dodgers has increased, with informants paid £473,000 in the 12 months to April 2020 – up from £290,250 in the same period the year before. HMRC is currently investigating 30 cases, with more than a third relating to the financial services sector, according to Moore Kingston Smith. Businesses are required to have reasonable prevention procedures to stop their employees facilitating tax evasion. Tim Stovold, the head of tax at Moore Kingston Smith, said: “Even with the threat of criminal prosecutions and fines, compliance with these rules is patchy at best, with many businesses not even being aware of this regime.”
Treasury seeks ‘more robust’ rates system
The Treasury has warned of widespread evasion and avoidance of business rates, with the near-£5bn of reliefs granted to firms one of the avenues most commonly used to underpay. With reforms to business rates being considered, the Treasury’s consultation document on the issue says: “There is evidence that some ratepayers are avoiding paying rates through the misuse of reliefs, particularly empty property relief”. It adds: “The fundamental review of the business rates system will consider how the system can be made more robust to abuse.”
The Mail on Sunday, Page: 120
INDUSTRY NEWS – WEEKEND TO 30TH AUGUST 2020
Over two-fifths of financial services workers consider career change
According to research by KPMG and the Financial Services Skills Commission, COVID-19 has led 44% of financial services workers to consider a possible career change. Among those financial services workers looking for a career change, 13% said they would not choose the sector again for their next career move – rising to 16% of 18-30 year olds. Those who said they would not work in the sector again cited long hours (15%), long commutes (13%) and heavy regulation (9%) as key factors driving their decision. The survey showed the sector has retained its reputation for strong remuneration and career progression. Competitive salaries (54%) and good employee benefits, such as insurance and private healthcare (35%), were listed by employees as top drivers towards the sector.
FINANCE NEWS – WEEKEND TO 30TH AUGUST 2020
Fintechs keep £10m awards despite dropping commitments
Currencycloud and Modulr Finance have failed to meet commitments given to secure cash from the Banking Competition Remedies (BCR). However, neither of them will have to pay back the £10m they each received. The body, which is managed by Mazars, was set up to distribute £775m to boost competition in finance but has been criticised for a lack of transparency and accountability. Modulr said that it had delayed the rollout of a service enabling small companies to process payments through their accounting firms while Currencycloud has dropped a commitment to integrate its platform into three big accounting software systems. Aidene Walsh, a director at BCR, said: “The last quarter has been difficult for a number of awardees. BCR is keeping a close focus on awardees’ delivery and is reassured that they are adapting to deliver on their commitments to support UK SMEs that need access to business banking products.
FIRMS NEWS – WEEKEND TO 30TH AUGUST 2020
Blow for Grant Thornton as court rejects £22m appeal
Grant Thornton has been held liable for negligence “of the utmost gravity” for failing to expose a fraud at its former audit client, AssetCo, with damages set at £22.4m. The firm was fined £2.3m by the Financial Reporting Council in 2017 over its audits of AssetCo. In a statement, Grant Thornton said: “The work in question, which was done in 2009 and 2010, fell short of the standards expected of us. The quality of our audits is a key priority for us, and we continue to invest significantly in our audit practice to ensure our audits deliver the necessary quality standards.” The FT points out that this is the first time a has court allowed a company to sue for losses it made as a result of business decisions taken on the back of a misleading audit, including the payment of dividends.
EMPLOYMENT NEWS – WEEKEND TO 30TH AUGUST 2020
PM blows back to work message with threat
Boris Johnson has come under fire for suggesting those who continue to work from home could be more vulnerable to redundancy than those who go into the office. Labour’s shadow business minister Lucy Powell said forcing people to “choose between their health and their job is unconscionable” while Tory MPs feared the comments would be seen as divisive and paternalistic. Nicola Sturgeon, Scotland’s First Minister, also criticised the approach, saying: “I will not countenance in Scotland any kind of narrative around this that is seeking to almost intimidate people back to work before, as a country, we have taken a decision that that is safe.” Objections also came from the Equality and Human Rights Commission and the British Chambers of Commerce, which slammed the Government’s “scaremongering” over its plans to rush workers back to the office. Although the CBI warned this week of “ghost towns” if people do not return to their workplaces, director general Dame Carolyn Fairbairn admitted her staff will be allowed to work from home until the end of the year.
PROPERTY NEWS – WEEKEND TO 30TH AUGUST 2020
Ban on evictions hands landlords £20,000 bill
The ban on landlords evicting tenants who find themselves unable to pay their rent due to the pandemic could leave landlords without any rental income for two years, according to the National Residential Landlords Association. The lobby group said with the time it takes for courts to hear eviction cases, combined with the extension of the eviction ban, landlords could be £20,800 out of pocket – based on an average weekly private rent of £200. Ben Beadle, of the NRLA, called on the Government to intervene and cover missed rent payments. He added: “Stopping landlords from legally ending failed and disruptive tenancies is not a solution. The Government must act to cover the costs of providing homes, they cannot expect landlords to foot the bill for their failure to support households.”
The Daily Telegraph The Times, Page: 9
Ashley requests meeting with PM over ‘crippling’ business rates
Mike Ashley has warned Boris Johnson of “disastrous consequences” for jobs, if the Government fails to the reform “crippling” business rates. In a letter to the PM with Chris Wootton, CFO of Frasers Group, Mr Ashley said: “We believe that the exchequer is putting the jobs of a significant percentage of the UK workforce at risk. Other businesses are entering insolvency from which they cannot feasibly return due to the crippling impact of business rates. Without change these businesses will simply disappear. We believe the Government can and should act now.” Mr Ashley and Mr Wootton requested a ten-minute meeting or call with Mr Johnson “at any time of the day or night, to discuss the issue of business rates and potential solutions”. The Government said in July that it would delay a revaluation for the tax until 2023 to “reduce uncertainty for business”.
HMRC: Duty cut yet to impact buying data
Myriam Toua in the Sunday Express analyses the property market and price activity since the sector reopened after the coronavirus lockdown. Provisional HMRC data shows that more than 70,000 properties were sold throughout July, marking a 14.5% increase on June – but data on prices has yet to show clearly whether there has been an increase. Rightmove’s property index, which is based on asking price rather than sold price, reported a 0.2% drop in prices in August, while Nationwide’s July index, which is based on mortgage lending, reported a 1.7% month-on-month increase and Halifax reported a 1.6% increase. While the Chancellor has introduced temporary cuts to stamp duty, HMRC says the move is unlikely to impact on buying figures until late August or early September.
CORPORATE NEWS – WEEKEND TO 30TH AUGUST 2020
Leaked reports blow apart Boohoo supply chain claims
The Guardian reports on third-party reports produced over the course of the last four years which suggest at least 18 factories in Leicester which supplied garments to fast-fashion retailer Boohoo had suspect pay practices. Audits say the factories suffered “critical” issues over record-keeping and could not prove they paid the minimum wage to workers. The reports come alongside whistleblower claims of other violations in Leicester’s factories. Nik Hammer, an associate professor in employment studies at the University of Leicester and author of a 2015 report on the city’s textiles industry, said: “We have long known these reports exist, but brands never release them.”
The Guardian, Page: 1, 10-11 Daily Express, Page: 8
Hastings advisers set for a £30m payday
The Times reports that bankers, lawyers and accountants advising on the takeover of UK insurer Hastings by Finnish financial services firm Sampo will share about £30m in fees from the work.
Moss Bros sizes up restructuring
Suit-seller Moss Bros has called in KPMG and could look to a CVA, having been hit by a ban on large weddings amid the coronavirus lockdown. The restructuring could see some of its 125 UK stores close and rent reductions at others, with talks with landlords over switching to rents linked to turnover yet to deliver an agreement.
The Sunday Times, Business and Money, Page: 1
Eat out scheme serves up a boost
Lloyds Bank analysis shows that spending in shops and restaurants was up 38% on days when the Government’s eat out to help out scheme was running, with spending just 2% lower this August than in August 2019. Mark Gregory, chief economist at EY, said the initiative has been “surprisingly effective”, adding: “Fair play to the Chancellor – it really did help give a short-term boost.”
The Observer, Page: 45
Essay service hit by tax bill
All Answers, a website that allows students to pay anonymous academics to write model essays, is facing a £1m tax bill after losing a tribunal. RSM’s Scott Harwood said HMRC ruled that All Answers was liable to account for output tax on the full fee charged to students.
The Sunday Times, Business, Page: 12
PENSIONS NEWS – WEEKEND TO 30TH AUGUST 2020
Size of final salary pension transfer values soar during lockdown
Lane Clark & Peacock has found that the average value of defined benefit pension transfers reached £556,000 in the second quarter of 2020 – a rise of 30% compared with the previous quarter. Although the value of pots being withdrawn has increased, the number of people choosing to pull their money out has fallen by 25%. “It’s no surprise that this quarter has seen such a dip in pension scheme members asking for quotations, or taking up quotations they had already received, given that it coincided with the height of the pandemic,” said Bart Huby, a partner at Lane, Clark & Peacock. “But it seems as though those with the largest pensions have been the least likely to be put off from completing a transfer.”
Financial Times The Times, Page: 57
One in four women miss out on staff pension
Research by the Resolution Foundation think-tank shows that 24% of working women are not eligible for an automatic enrolment pension, compared with 15% of men. The discrepancy is partly down to rules which mean that companies only need to enrol staff in a work pension if they earn £10,000 or more in a single job, with this excluding many part-time workers, who are predominantly female. Office for National Statistics data shows that 39% of female employees worked part-time last year, compared with 11% of men. The Resolution Foundation study says women are also more likely to be under-enrolled than men, with this particularly common in low-paid industries. Resolution Foundation economist Foundation Hannah Slaughter said: “The problem is particularly acute among agency workers and those on the minimum wage, where around one in ten workers are not getting the pensions they deserve.”
SMEs NEWS – WEEKEND TO 30TH AUGUST 2020
Investment flows up North
The North’s fast-growth businesses continued to attract investment during despite the coronavirus crisis, according to the Venture Pulse Survey by KPMG Private Enterprise, which shows venture capital totalling £263m backed 82 businesses across the North in the first six months of 2020.
Yorkshire Post, Business, Page: 29
Small firms at risk as landlords refuse to compromise
Business bosses have warned that their firms are at risk because landlords are unwilling to negotiate on rent. Mike Cherry, chairman of the Federation of Small Businesses, has urged ministers to consider measures to protect small companies that are close to collapse “because their rent is too high and landlords won’t compromise”. Mr Cherry, who says many small firms have long leases, argues that it is “wrong for otherwise-viable small businesses to go under just because they’re tied into paying high rents that their landlords would not be able to charge new tenants in the current climate”. Meanwhile, Labour MP Stella Creasy has told Housing Secretary Robert Jenrick that she has received complaints about landlords taking public subsidy for their own businesses while continuing to charge their tenants full rent. Melanie Leech, chief executive of the British Property Federation, argues that a number of small landlords who rely on property as their only or main source of income are being put at risk by “large, well-capitalised tenants who are refusing to meet their rental obligations”.
SMEs look to cut costs
A survey by Hitachi Capital Business Finance shows that 61% of SMEs are looking to cut costs, up from 39% at the start of the year. The number of smaller firms targeting cashflow improvements as a priority rose from 22% to 32%, while those reviewing their borrowing commitments nearly doubled to 21%. Hitachi Capital managing director Gavin Wraith-Carter said more business owners are treating these issues as top priorities, adding: “Many are making important decisions on reshaping their business so they can compete in the new economic climate.” The poll also saw 27% of SME owners say they have had a positive third quarter, compared to 14% in Q2.
Sunday Express, Page: 44
PERSONAL FINANCE NEWS – WEEKEND TO 30TH AUGUST 2020
Maturing Child Trust Funds set to hand 18-year-olds up to £70,000
The FT reports on the child trust funds set to mature on September 1st, which Moore Kingston Smith says could now be worth as much as £70,000, providing parents maximised their contributions.
ECONOMY NEWS – WEEKEND TO 30TH AUGUST 2020
Bailey: BoE ‘still has firepower’ to help economy through pandemic
Andrew Bailey insists the Bank of England, along with other central banks, still has tools available to it with which it can tackle a recession. The Bank’s Governor told the Jackson Hole symposium, an annual gathering of central bank luminaries: “We are not out of firepower by any means, and to be honest it looks from today’s vantage point that we were too cautious about our remaining firepower pre-Covid.”
£500bn hit from home-working
Analysis suggests £480bn could be wiped off the economy over the next four years if workers fail to return to offices, with Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research and a former chief economic adviser to the Confederation of British Industry, saying the economy will not return to its pre-pandemic size until 2025 if home-working continues in its current form. With a number of firms saying some staff may never return to the office full-time, Mr McWilliams has warned that a broad shift to remote working could hit the economy as it would leave a hole in economic activity generated by commuting and socialising, with large numbers of small businesses in town and city centres relying on income from staff and professionals. The British Chambers of Commerce says Britain is in the “eye of a storm” that will strike this autumn unless ministers take action that enables the economy to function more normally again.
The Mail on Sunday, Page: 117
Risk expert in recession warning
Philip Thomas, professor of risk management at the University of Bristol, warns that “driving the economy into deep recession” could cause unnecessary deaths and argues that it is “essential that we get back to work”. Looking at efforts to curb the coronavirus pandemic and avoid a second wave, he calls for policymakers to change tack, saying a “controlled spread” of COVID-19 will help avoid the loss of more lives to “national impoverishment”. Prof Thomas, who notes that national debt has risen above £2trn for the first time, adds that “by failing to reopen the economy, we are killing people.”
The Mail on Sunday
OTHER NEWS – WEEKEND TO 30TH AUGUST 2020
Scrapping small councils could save £3bn
A report by PwC for the County Councils Network claims that replacing small councils with larger unitary authorities would “drive forward the devolution and levelling-up agendas” of the Government and also save nearly £3bn.
The Daily Telegraph, Page: 10
In memoriam: Frank Dunphy
The Guardian carries an obituary of Frank Dunphy, who after taking night classes in accountancy, provided tax advice to music hall artists and circus acts. He went on to become the “business brains” behind artist Damien Hirst’s lucrative career.
The Guardian, Journal, Page: 6
Designer thought OBE was tax bill
Fashion designer Amanda Wakeley was scared to open the letter revealing she was being awarded an OBE because she thought it was a tax bill. With the brown envelope arriving at her office and being handed over by her accountant, she said: “I thought, ‘Oh God, here we go, it’s a tax demand which I really don’t need’.”
The Mail on Sunday, Page: 34
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