NEWS – WEEKEND TO 7TH JUNE 2020
NEWS – WEEKEND TO 7TH JUNE 2020
TAX NEWS – WEEKEND TO 7TH JUNE 2020
COVID borrowers under scrutiny over tax
The Times reports that two of the biggest beneficiaries of the government’s COVID-19 emergency funding scheme paid no corporation tax last year. CNH, which owns lorry maker Iveco, borrowed £600m after having claimed €15.4m in credits at its British division between 2017 and last year. BASF received a £5.8m credit in 2018 according to its most recent UK accounts. The German chemicals giant was the largest recipient of the corporate financing facility borrowing £1bn. Additionally, British defence company Chemring is under investigation by the Serious Fraud Office while General Electric is fighting a £1bn claim from HMRC for alleged tax fraud. It’s oil services subsidiary Baker Hughes was also among the borrowers from the scheme. “The fact that the UK taxpayer has made substantial loans to companies that are under investigation by the SFO or are part of some tax avoidance structure demonstrates the lack of any meaningful conditions around government support for business,” George Turner, of Taxwatch, the think tank, said.
HMRC lets lockdown inspectors loose
Fiona Fernie from Blick Rothenberg outlines the targets HMRC will identify as it ramps up investigations as businesses start getting back to normal. Inspectors will be looking for those who cheated furlough rules or people claiming from the government’s self-employment income support scheme but who were no longer working in the business reported on their 2018-19 tax return. An HMRC source confirmed that investigations were back up and running, although no announcement was made. A spokesman said: “It would not be appropriate to publish a detailed running commentary about our operational response during the pandemic. We are prioritising work to support taxpayers, while tackling serious fraud, criminal attacks and those who promote tax avoidance.”
The Times, Page: 56 The Daily Telegraph, Money, Page: 8
Sharp spike in HMRC coronavirus scams
The number of scam emails purporting to be from HMRC climbed to 42,575 in March – up 74% since January, as criminals seek to exploit financial fears over the coronavirus outbreak.
PENSIONS NEWS – WEEKEND TO 7TH JUNE 2020
FCA announces ban on contingent charging
The Financial Conduct Authority has said it will ban contingent charging from October to “remove the conflicts of interest which arise where a financial adviser only gets paid if a (pension pot) transfer goes ahead.” The regulator said it has launched 30 enforcement investigations into firms that have given bad advice to customers about transferring out of their defined benefit pension schemes. The FCA also revealed that 745 pension transfer advice businesses, out of 3,000 operating in the market, have already given up their advice permissions after “feedback” from the regulator. The FCA action follows a 2018 parliamentary report which found British Steel pensioners had been pushed to transfer out of secure pensions by advisers who levied high charges when transfers went ahead. The FCA says it will contact 7,700 steelworkers outlining how to make a complaint, after a file review found that only about 20% of recommendations were suitable.
With dividends off the table, should investors explore other income options?
As FTSE 100 firms cut or cancel shareholder payouts, pensioners who rely on dividends to fund their income are being urged to rethink their strategy. Dan Mikulskis, a partner at investment consultants LCP, said investors should explore other income options including global infrastructure projects, high yield bonds, emerging market debt, and private credit, he adds. Others believe dividends will return soon however while AJ Bell investment director Russ Mould says the FTSE100 is forecast to yield 3.5% this year, which “looks relatively attractive amid record low interest rates”, despite being far from guaranteed.
Sunday Express, Page: 47
CORPORATE NEWS – WEEKEND TO 7TH JUNE 2020
Victoria’s Secret seeks buyer
Lingerie retailer Victoria’s Secret has fallen into administration putting 800 jobs at risk. The retailer confirmed on Friday that it has hired administrators from Deloitte after being impacted by the coronavirus virus lockdown. Rob Harding, joint administrator at Deloitte, said: “This is yet another blow to the UK high street and a further example of the impact the COVID-19 pandemic is having on the entire retail industry. The effect of the lockdowns, combined with broader challenges facing bricks and mortar retailers, has resulted in a funding requirement for this business.”
The Independent, Page: 43 Daily Express, Page: 59 The Sun, Page: 27 Daily Mail, Page: 3
Wirecard offices searched as prosecutors probe management board
Prosecutors in Munich have launched a criminal investigation into Wirecard CEO Markus Braun and other board members resulting in police searching the company’s HQ on Friday. Braun is being investigated on allegations of violating insider-trading rules. The move follows a complaint from BaFin, Germany’s financial watchdog, relating to potentially misleading statements made by Wirecard to investors ahead of the publication of a special audit by KPMG in late April.
Forward indicators improve for Taylor Wimpey
Taylor Wimpey, which restarted its marketing operation last month, has reported “a strong level of interest” from potential buyers of its new homes. The housebuilder also said that PwC would replace Deloitte as its external auditor, under rotation rules.
BoE offered ideas for easing the debt burden on companies
The Bank of England has been warned that between £32bn and £36bn of coronavirus support lending will prove “unsustainable” for businesses, which will find the debt hampers their growth. A report by the Recapitalisation Group, overseen by Aviva chairman Sir Adrian Montague under the auspices of TheCityUK, predicts the government’s three lending schemes will see lending boom from the current £27bn to £123bn by the second quarter of next year. The study proposes several ways the debt burden could be reduced, including exchanging troubled debt at larger businesses for preference shares, or swapping small businesses loans for contingent tax instruments. The Sunday Times notes that Treasury officials are also considering plans to get more pension fund money into private businesses by changing the rules on allocation of defined contribution scheme funds.
World’s richest banker weighs up bid for Travelex
Joseph Safra, who is ranked as the world’s richest banker, is weighing a takeover bid for airport currency giant Travelex. PwC has been appointed to find a buyer for the firm. Interest from the Safra family’s investment vehicle comes as Travelex wrestles with the impact of an apparent fraud at its parent company Finablr – a vehicle controlled by Indian tycoon Bavaguthu Raghuram Shetty.
The Mail on Sunday, Page: 114
Shopping centre owner puts KPMG on stand-by
Intu Properties has drawn up contingency plans ahead of critical talks with lenders, including lining up KPMG to handle a potential administration if it can’t win relief from its £4.5bn debt pile. CEO Matthew Roberts is seeking an 18-month standstill to repair the firm’s balance sheet.
PROPERTY NEWS – WEEKEND TO 7TH JUNE 2020
Moratorium on evictions in England and Wales extended by two months
The UK government said on Friday that a moratorium on evictions in England and Wales will be extended for a further two months, giving more protection to tenants who have fallen into rent arrears as a result of the coronavirus crisis. Housing Secretary Robert Jenrick announced the extension of the emergency measures, put in place in March and due to end on 25 June, saying: “Eviction hearings will not be heard in courts until the end of August and no-one will be evicted from their home this summer due to coronavirus.”
Financial Times The Guardian iNews
Landlords furious as Travelodge hands customers CVA vote
Travelodge has asked customers with room bookings to vote on a CVA proposal in an effort to stop property owners voting down plans to cut rent payments. Under the plans, Travelodge’s owners, Avenue Capital Group and GoldenTree Asset Management and investment bank Goldman Sachs, would inject £40m and make £100m of reserves available. But landlords say using the loophole to include customers in the vote drives “an oil tanker through centuries of property legislation” Travelodge said: “It is the requirement of any CVA that all unsecured creditors of the company … have the chance to vote if they so wish.”
EMPLOYMENT NEWS – WEEKEND TO 7TH JUNE 2020
Furlough fraud allegations double
HMRC is investigating almost 2,000 furlough scams, up from 795 on May 13, according to official figures. Protect, the whistleblowing charity, said its advice line had never been so busy with complaints about furlough fraud dominating calls. HMRC said furlough fraud “deprived public services of essential funding” and urged anyone aware of such abuses to contact its digital online reporting service.
The Daily Telegraph, Page: 5
SMEs NEWS – WEEKEND TO 7TH JUNE 2020
Small firms demand £52m from Hiscox
Hundreds of struggling small businesses are seeking £52m from Hiscox to cover losses they suffered during the COVID-19 pandemic. Lawyers for the Hiscox Action Group wrote to the insurer this week urging it to either pay up or take part in an accelerated arbitration process to settle the dispute.
The Daily Telegraph Daily Mail, Page: 85
Businesses face reckoning when support falls away
The Sunday Times reports on how City experts are thrashing out plans to avoid the mass collapse of businesses in a few months’ time when a series of liabilities built up during the pandemic become due and support schemes come to an end. Payment holidays on existing loans, overdraft extensions, delayed rent payments and temporary tax exemptions will all come to an end just when the economy starts to come back to life meaning another setback will be terminal for thousands of businesses. Duncan Swift, a former president of the insolvency trade body R3, said even without a second COVID-19 wave businesses will struggle: “If there is a significant uptake in orders but a weakened working capital base, that is when insolvencies will spike. The feeling is that it is three months off.”
Sunak mulls tax incentive for SMEs
The Chancellor is considering using a range of tax incentives to help small businesses and encourage recruitment. Possible moves include increasing the employment allowance for SMEs to support hiring as the economy comes out of the COVID-19 pandemic. The Sunday Telegraph reports that Treasury officials are drawing up plans for a jobs package in the Autumn with infrastructure, skills and tech set to be three key planks of the new measures.
WEALTH MANAGEMENT NEWS – WEEKEND TO 7TH JUNE 2020
Pandemic will accelerate digital change
Traditional wealth management is being forced to accelerate its adoption of digital communications due to the coronavirus pandemic, as opportunities abound for efficiencies through digitalisation.
ECONOMY NEWS – WEEKEND TO 7TH JUNE 2020
PM drawing up comprehensive recovery package
Boris Johnson has tasked ministers and officials with finding ways to kick-start the economy under a legislative agenda provisionally entitled the ‘Great Recovery Bill’. A package of measures could include suspending Sunday Trading laws and adjusting licensing laws to fast-track approval for cafés and pubs to serve food and drink outside. Planning restrictions on high street properties will also be simplified, making it easier to switch between shops, retail and residential uses. Meanwhile, the FT and Telegraph report that the Treasury has dampened expectations of a summer Budget, with Rishi Sunak, the Chancellor, wanting to “take stock” and shift his stimulus package of tax cuts and spending commitments to the autumn. Mr Sunak will still announce some limited measures next month, but this would not be a “Budget or mini-Budget”, an ally of the Chancellor told the FT.
Consumers’ reluctance to spend puts brake on UK recovery
The reluctance of consumers to spend in the final week of May has stalled the UK’s economic recovery with public caution putting further pressure on the Treasury to stimulate activity.
Johnson to ramp up plans for rebuilding Britain
Boris Johnson will accelerate major infrastructure plans in the coming weeks, including the building of new hospitals, as the PM prepares a blueprint to rebuild Britain following the coronavirus pandemic. The Sunday Telegraph has learnt that a speech by Johnson in coming weeks will outline a domestic agenda, including an autumn budget and a major review of departmental spending. The Prime Minister is also expected to outline a major research and development drive, with a government team set to hold talks with universities about funding projects relating to energy, data infrastructure, robotics, and synthetic biology. A Whitehall source said: “People are worried that they will face another decade of austerity and cuts to public services to pay the bill for coronavirus – this is not going to happen. The PM wants to explain that rebuilding after this crisis won’t be a repeat of 2008.”
Post-COVID regulatory bonfire needed to spur economy
Writing in the Sunday Telegraph, Mark Littlewood, the director general of the Institute for Economic Affairs, outlines three ways Boris Johnson can help encourage growth in the UK economy. Firstly, costs associated with employment must be reduced, such as the minimum wage and auto-enrolment. Next, Britain’s planning restrictions will need an overhaul so new emerging businesses can quickly convert buildings for different uses. Thirdly, “the Department for Business, Energy, Innovation and Skills should be rebadged and repurposed as the Department for Deregulation.” Regulations suspended during the COVID-19 crisis should be permanently scrapped as the first step to reducing the “mountains of petty red tape which are impeding economic growth.”
The Sunday Telegraph, Page: 16
OTHER NEWS – WEEKEND TO 7TH JUNE 2020
Chancellor nominates ex-Treasury official as UK fiscal watchdog chair
Rishi Sunak has nominated Richard Hughes to take over from Robert Chote at the Office for Budget Responsibility. Torsten Bell, chief executive of the Resolution Foundation, where Mr Hughes currently works, said the chancellor had “made an excellent choice” in nominating Mr Hughes. He joined the Treasury in 2000 and left government in 2008 to join the IMF for eight years. “Richard has made a huge contribution to economic policymaking over the past two decades both independently of and within governments around the world,” Mr Bell added.
Lagerfeld’s accountant disappears
The wife of Karl Lagerfeld’s accountant has dismissed claims he has run off with the designer’s fortune following rumours he had disappeared. Lucien Frydlender was “very sick” and in Paris convalescing, his wife said. Lagerfeld, who died in February 2019 aged 85, has left a fortune estimated at £200m. Mr Frydlender is thought to be the only person with enough knowledge of the assets to be able to execute Lagerfeld’s wishes.
Daily Mail, Page: 32
UK delays pledge to follow EU green finance rules post-Brexit
The UK Treasury’s reticence to sign up to partially developed EU rules on sustainable finance could make the issue the first big financial services regulatory battleground following Brexit.
Contact Paul Southward