NEWS – WEEKEND TO 5TH APRIL 2020
NEWS – WEEKEND TO 5TH APRIL 2020
CORANA VIRUS GOVERNMENT SUPPORT – LATEST
HMRC reimbursement for furloughed employees:
As the government release more details, here is the latest update for furloughed employees:-
TAX NEWS – WEEKEND TO 5TH APRIL 2020
McDonnell calls for wealth tax to cover COVID-19 measures
In his last act as Shadow Chancellor, John McDonnell has called for a wealth tax to fund the Government’s emergency response to the coronavirus crisis, adding a call for a windfall levy on the banking industry. Addressing the strain the cost of tackling the pandemic could put on the public purse, Mr McDonnell said: “We pay for it by introducing an immediate windfall tax on the banks and finance sector we bailed out when they brought about the crisis a decade ago.” He added a tax on multinationals and wealth levy on the richest band of society would also be welcomed.
The Times carries advice to a reader who questions whether they should be liable for capital gains tax on a home they bought for their parents. Zena Hanks from Saffery Champness says rules designed to prevent people from taking advantage of the tax system “do unfortunately catch people who, as in this case, are seeking to do a good thing,” while Jane Cleveland from Blick Rothenberg explains how any gain will be calculated for tax purposes.
The Times, Page: 63
HMRC issues coronavirus scam warning
HMRC has issued a warning about people using the COVID-19 pandemic to carry out scams, reminding taxpayers that the taxman will never text, email or phone to ask for bank details, a PIN or passwords.
Savers warned not to forget the end of tax year
Lucy Warwick-Ching offers guidance on allowances as the end of the tax year approaches, with BDO’s Paul Falvey noting that pensions generate higher rate tax relief on 2019/20 contributions.
Post crisis tax increases not inevitable, says EY
EY believes that low interest rates could mean Chancellor Rishi Sunak is able to avoid increases in personal tax to cover the cost of unprecedented measures designed to ease the impact of the coronavirus pandemic. With the Bank of England reducing the cost of borrowing to 0.1% and the popularity of Government bonds reducing the cost of raising cash for the Treasury, EY’s head of tax policy Chris Sanger believes that with “the cost of borrowing close to nil or maybe even negative at times … it’s about managing the debt and looking to the future to how you repay it rather than an emergency call to do so”. He added that we may be “moving into a new paradigm where these levels of debt we thought were untenable are actually more manageable over time.”
The Mail on Sunday, Page: 99
MP calls for exemption over ‘Virus Added Tax’
Chancellor Rishi Sunak has been urged to act over a tax loophole that could hit firms attempting to help tackle coronavirus. A tax rule which means firms pay full VAT on the value of anything they donate if it is not their “main” product could hit companies switching production lines to produce hand sanitiser, ventilators or masks. Liberal Democrat Layla Moran says this amounts to a “Virus Added Tax for businesses who are doing the right thing” and has called on the Government to offer a special exemption to help firms creating life-saving products.
The Sun on Sunday, Page: 10
Time running out for tax refunds
With the tax year ending today, the Sunday Express warns that time is running out for making a tax refund claim. It says that while rebates can be issued automatically by HMRC, claims can be put through manually and advises those seeking a last-minute attempt to claw back some cash that HMRC can be contacted on Sundays. Noting that tax refunds can be backdated for up to four years, it warns that any outstanding PAYE tax refunds for the 2015/16 tax year not claimed by today will be lost forever.
CORPORATE NEWS – WEEKEND TO 5TH APRIL 2020
Debenhams to file for administration
Debenhams is in danger of collapse as a result of the coronavirus outbreak. The department store chain is reportedly set to appoint administrators, with KPMG said to be among those on standby to handle the process. It is suggested that the move would be designed to shield the company from legal claims from creditors during the pandemic. The retailer, which employs 22,000 people, is currently in the process of closing around 50 stores in an effort to cut costs. All stores remain temporarily closed during the coronavirus crisis, with most of its workforce placed on furlough.
Restaurant chains caught in Darwinian moment
The FT looks at challenges that have left a number of restaurant chains on the brink, including the coronavirus shutdown. It notes that Byron has appointed KPMG to weigh its options.
Retailers hit by coronavirus
Topshop owner Arcadia Group is preparing to walk away from as many as 55 stores as the COVID-19 shutdown puts Sir Philip Green’s retail empire under increasing pressure. Arcadia is being advised by Deloitte and law firm Freshfields. Elsewhere, Debenhams’ owners have lined up accountants including KPMG to handle its possible collapse as the impact of the pandemic hits the retail sector, while Cath Kidston is set to appoint administrators in a move which puts 800 jobs at risk.
The Sunday Times, Business, Page: 1 The Sunday Telegraph
Virgin awaits bailout decision
Virgin Atlantic has asked the Government for a multi-million pound bailout to help it weather the coronavirus crisis, with the Treasury and advisers EY and Rothschild said to be reviewing the request and likely to deliver a decision within the next few days.
Sunday Express, Page: 47
Utilities call on ministers for support
Energy UK has called on the Government to create a fund that would enable utilities firms to offer customers payment holidays amid the COVID-19 outbreak. Firms in the sector have been hit by the Government shutdown which has seen reduced demand, with Simon Virley, head of energy at KPMG, saying: “For generators, power demand is already about 10% lower than normal at this time of year, leading to falling wholesale prices and more pressure on margins.”
Ad firms under pressure
The Sunday Times considers the climate for marketing and advertising firms and the toll the coronavirus crisis is taking. Looking at challenges to the sector, it says Facebook and Google threaten to make the multinational model obsolete, while the emergence of consultancies such as PwC as credible rivals also poses a threat.
SMEs NEWS – WEEKEND TO 5TH APRIL 2020
Coronavirus loan scheme updated
Chancellor Rishi Sunak has announced an overhaul of the emergency coronavirus business interruption loan scheme, banning banks from demanding personal guarantees on loans under £250,000. Under the revamped scheme, small firms will find it easier to qualify for loans while larger companies – with a turnover up to £500m – will be eligible for the first time. Michael Lassman of the Federation of Small Businesses welcomed the move but said the “devil is in the detail and there now needs to be a step change.” “Words are all very good but we need to see it being carried out. We will know by the middle of next week whether we’re getting somewhere,” he added.
Banks question loan scheme figures
Banks have criticised the British Business Bank (BBB), which administers the emergency small business loan scheme rolled out due to the COVID-19 outbreak, questioning data which suggests that many lenders have failed to take part. Although a report from the BBB show s that HSBC is the only large bank to have made money available through the Coronavirus Business Interruption Loan Scheme, spokespeople for Lloyds, Santander, Barclays or NatWest owner Royal Bank of Scotland insisted their banks have handed out cash. The BBB figures suggest fewer than 1,000 of the 130,000 firms to have expressed interest have benefitted from the scheme, with £91m of ultra-cheap credit given to small companies. Craig Beaumont of the Federation of Small Businesses says regular updates on the amount of loans being approved and rejected by banks is needed, saying: “We could see businesses going to the wall as well as the banks’ already battered reputations ruined. The sort of experiences that small businesses have so far received have to improve.”
Start-ups need a leg up
Matthew Lynn in the Telegraph says start-ups will have been hit hard by the coronavirus crisis, warning that orders will have collapsed, offices will have closed and venture capitalists will “have stopped returning your calls” – or imposed punitive terms. With this in mind, he urges the Government to deliver support including greater tax breaks for private investors and measures to ensure banks relax lending criteria.
The Daily Telegraph, Page: 34
Experian warns over SME cash reserves
A report from credit agency Experian seen by the Mail on Sunday suggests that half of Britain’s small businesses will run out of money within eight weeks without emergency financing. The paper says the document, which has been sent to the chief executives of Britain’s largest banks, shows that around 2.9m of the UK’s 5.8m SMEs – many of which are set to apply for interest-free loans designed to ease pressures brought about by COVID-19 – would deplete their cash reserves within two months even if they maintained half of their current income. It added that a quarter of small firms would be unlikely to survive for two weeks if their income dried up altogether.
The Mail on Sunday , Page: 95
Lifeline call for small firms
In a letter to the Sunday Telegraph, Andrew Harding, chief executive of management accounting at the Chartered Institute of Management Accountants, welcomes Government reform of its support for SMEs amid the COVID-19 outbreak. However, he warns that many firms are not being granted access to funds via the Coronavirus Interruption Loan Scheme and says small firms need “immediate access to some much-needed cashflow,” insisting: “It is about time we throw SMEs a lifeline they can really hold on to.”
The Sunday Telegraph, Page: 17
EMPLOYMENT NEWS – WEEKEND TO 5TH APRIL 2020
Blanchflower sounds unemployment warning
David Blanchflower, a professor of economics at Dartmouth College and a former member of the Bank of England’s monetary policy committee, has warned that the economic hit from the coronavirus pandemic could see unemployment on both sides of the Atlantic surpass levels reached during the Great Depression of the 1930s within months. Drawing a comparison with US figures that suggest unemployment could reach 52.8m – around 32% of the US workforce – he said UK unemployment could rapidly rise to more than 6m people, or 21% of the workforce. Suggesting that the Government has “no idea of the scale of the problem it is going to have to deal with”, he comments: “We make some back-of-the-envelope calculations and they are scary.” Analysing the climate alongside University of Stirling economist David Bell, he said a dip in activity and resulting loss of jobs appears to be unfolding at least 10 times faster than in the recessi on triggered by the 2008 crisis.
The Guardian, Page: 38
Your financial and workplace rights in the COVID-19 crisis
The FT addresses issues related to employment and workplace rights in regard to the COVID-19 pandemic, noting that Grant Thornton has asked staff to take a voluntary sabbatical or pay cut.
PROPERTY NEWS – WEEKEND TO 5TH APRIL 2020
Tenants face court over commercial rents
The Mail on Sunday reports that a number of commercial landlords are turning to legal channels after shops and restaurants refused to pay rent during the Government-imposed shutdown. With sources within the industry saying that there are around 200 ongoing rent disputes between commercial property landlords and tenants, the paper says around two-thirds involve legal threats, including the suggestion that property owners could take leaseholders to court and have bank accounts frozen or the company wound up. Analysis by estate agent Knight Frank suggests landlords received a third of the £2.5bn rents due at the end of March after emergency laws were passed that prevent tenants from being evicted from premises before the end of June.
The Mail on Sunday
INSOLVENCY NEWS – WEEKEND TO 5TH APRIL 2020
Insolvency rules reform plea
Legal experts argue that an overhaul of insolvency rules is needed due to the COVID-19 outbreak, calling for the creation of a bankruptcy protection regime after the number of companies going bust jumped in the early weeks of the pandemic. Insolvency specialist Mark Phillips has put forward plans for a new light touch regime called “protective rescue administration” that would help businesses keep trading despite the ongoing shutdown. His plan would see administrators consent to a company’s management running the business while the administration framework protects it from being wound up or creditors making claims against its assets. He said: “You don’t want KPMG running a hairdressing salon. You want the management running it.” Meanwhile, law firm Freshfields has reportedly written to the Treasury proposing the formation of an insolvency task force designed to help manage corporate failures amid t he fallout of the coronavirus crisis. Separately, Christina Fitzgerald, a board member of insolvency trade body R3, says “adapting” existing restructuring tools is a priority. Data compiled for the Sunday Telegraph shows that there were 3,807 liquidations in March, up from 2,183 in February.
Boom on the horizon for insolvency firms
Michael O’Dwyer in the Sunday Telegraph says that the insolvency and restructuring sector is preparing for a boom as a swathe of businesses face challenges thrown up by the coronavirus outbreak. David Fleming, a debt and restructuring adviser at Duff & Phelps, tells the paper: “The diary is full of calls from half seven in the morning, and laptops are going down at midnight. You’re on calls relentlessly with directors and lenders. It has been very, very intense – very long hours and weekends.” Carl Jackson of business advisory Quantuma says: “I have no doubt that the rate of corporate failures will increase in this calendar year”.
ECONOMY NEWS – WEEKEND TO 5TH APRIL 2020
Services sector posts worst month on record
The IHS Markit/CIPS services purchasing managers’ index shows that the UK’s services sector – representing 80% of the economy – shrank at the fastest pace on record in March, sliding to 34.5 from February’s 53.2 on an index where a reading below 50 signals contraction. Tim Moore, economics director at IHS Markit, said: “Emergency public health measures to combat the COVID-19 pandemic continue to mothball business operations [and] force aggressive cutbacks on non-essential expenses.” Andrew Wishart, an economist at Capital Economics, believes the PMI – and a manufacturing index released earlier this week – were probably underestimating the scale of the economic fallout of COVID-19, forecasting a 15% fall in economic output in the period from April to June, “a larger fall in output than in the financial crisis or the Great Depression.”
Economists expect biggest slump in a century
Economists have warned that the economy is set to suffer its worst year for a century. Analysis from Nomura suggests the economy is set to shrink by 7.8% overall in 2020, marking the biggest hit since a 13% slump in 1921. George Buckley, UK economist at Nomura, said the crash would far surpass the 2008 financial crisis, which prompted a 4.2% decline, commenting: “The worst data we’ve seen since the depression of 1921 was during the final stages of the Second World War, when GDP fell by 4.6%.”
The Mail on Sunday, Page: 9
Contact Paul Southward.