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NEWS – MONDAY 26TH April 2021

NEWS – MONDAY 26TH April 2021

NEWS ROUNDUP

TAX NEWS – MONDAY 26TH April 2021

Tax authorities could seek clarification from PM over flat refurb

Boris Johnson may have to clarify with HMRC where the £58,000 used to refurbish his Downing Street flat came from and whether it should have been declared, the i reports. The Prime Minister would be “treated like any other taxpayer” to determine whether he derived any benefit in kind from any loans or donations for the refurbishment. It was reported last week that Tory donor Lord Brownlow was to chair a charitable trust, set up by Mr Johnson for “preserving Downing Street’s heritage”, and donated £58,000 into it to pay for the revamp. Downing Street says Mr Johnson has now covered all of the costs for the work, but it is unclear whether this was after a loan or donation had been made by Tory party donors. Fiona Fernie, a tax disputes and resolution partner at Blick Rothenberg, said: “HMRC will always look for clarification if there is a chance that money wouldn’t have been received by someone unless it was because of the position they were in. HMRC would not want to be seen not to seek clarification from the Prime Minister when it would from anyone else.”

The i , Page: 6

Investment trade body seeks abolition of taxes on UK funds

Proposals to make the City more competitive post-Brexit include a call from the Investment Association for the Government to apply a zero rate of value added tax to all UK funds.

Financial Times, Page: 2

UK public support green taxes to achieve net zero, survey finds  

With surveys suggesting increased public support for green taxes, campaigners argue ministers have a mandate for wholesale tax reform fit for a sustainable future rather than a fossil fuel economy.

Financial Times, Page: 3

CORPORATE NEWS – MONDAY 26TH April 2021

LCF administration costs hit £25m

Analysis shows fees and expenses charged or incurred by insolvency practitioners and lawyers working on recovering assets for bondholders exposed to the London Capital & Finance scandal have contributed to total costs approaching £25m. LCF failed after the Financial Conduct Authority said that it was misleadingly promoting high-risk bonds. Smith & Williamson , which is leading the administration of LCF as well as linked insolvencies of borrowers including London Oil & Gas and Prime Resorts, defended its costs after some bondholders criticised the fees as “exorbitant”. Finbarr O’Connell, partner at Smith & Williamson, said: “Our extensive investigation work … has led to us issuing legal proceedings against a number of parties with a view to recovering substantial funds. This robust action can’t be undertaken without incurring costs and fees.” FRP Advisory and CMB Partners, along with lawyers from Mishcon de Reya, have also worked on the insolvencies.

The Times, Page: 41

FINANCIAL SERVICES NEWS – MONDAY 26TH April 2021

EU will come round on financial services deal

It is in the EU’s own interests to agree a post-Brexit deal on financial services, says PwC’s global head of financial services John Garvey, who predicts that although an agreement may not transpire in the short term, the Europeans will eventually realise they need access to the London market. An aversion to shouldering the risk is also hampering the EU’s efforts to set up a new financial centre, Garvey adds, as none of their governments, particularly Germany, is comfortable with taking on the responsibility.

The Daily Telegraph, Business, Page: 3

SMEs NEWS – MONDAY 26TH April 2021

Small firms need a year to recover from pandemic

A survey of 500 SMEs by Nucleus Commercial Finance finds that small firms believe it will take an average of a year for their business to make up for lost revenue caused by the coronavirus crisis. The study indicated medium-sized businesses are most confident about their recovery while younger business owners are more optimistic about making up lost revenue. Chirag Shah, chief executive of Nucleus Commercial Finance, said: “While the trepidations of the pandemic and subsequent restrictions will have lasting effects for many British businesses, it’s encouraging to see such optimism among SMEs about their projected finances as they return to business as usual.”

The I, Page: 40

Nearly 4,000 businesses repay furlough grants

Research by UHY Hacker Young indicates that some 3,777 businesses have voluntarily repaid over £760m in furlough grants to HMRC. The firm says it is likely that many of these businesses claimed furlough money in the early stages of the pandemic as a precaution in case they ran into financial difficulties.

The I, Page: 42

ECONOMY NEWS – MONDAY 26TH April 2021

Data points to rapid recovery

Tracking data from Apple and Citymapper indicates that movement in cities has almost reached the post-Covid highs of last September, raising hopes of a strong comeback for the UK economy. Figures from Google suggest footfall in retail and restaurant hubs are down 30% compared to the 60% fall seen in February while data from Opentable show restaurant bookings last week were almost 40% down on normal levels. Meanwhile, data from Barclays suggests total spending was 15% above pre-Covid levels in the first week of the latest phase of reopening. Sanjay Raja, UK economist at Deutsche Bank, says he expects a 5% jump in GDP in a “roaring” second quarter compared to the previous three months. Fabrice Montagné, Barclays UK economist, adds that although the consumer-related fast data is heartening, it is labour market improvements that will in time prove much more critical to the sustainability of the recovery.

The Daily Telegraph

UK economy is on course for its best year of growth since WW2

Economists at EY Item Club predict GDP growth of 5% to 6.8% for 2021 – the highest rate since the Second World War. The economy is expected to regain its pre-pandemic size by the second quarter of 2022, they add, due to Britain proving “more resilient than seemed possible”. The final three months of this year should also see peak unemployment fall from 7% to 5.8%, EY said. Separately, the Deloitte Consumer Tracker shows every measure of confidence – from the state of the economy to general wellbeing and personal debt levels – improved over the first quarter. “The UK is primed for a sharp snap back in consumer activity,” said Ian Stewart, chief economist at Deloitte. “High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months.”

The Times, Page: 36 The Guardian, Page: 2 Daily Mail

Contact Paul Southward

Paul Southward

NEWS – WEEKEND TO 25TH APRIL 2021

NEWS – WEEKEND TO 25TH APRIL 2021

NEWS ROUNDUP

OTHER NEWS – WEEKEND TO 25TH APRIL 2021

SUNDAY

Time for citizens to take back control, scientists say

In an open letter published today, leading scientists say ministers and Government advisers are exaggerating the threat from COVID-19 and that all restrictions must be lifted on June 21 – the final date in Boris Johnson’s roadmap out of lockdown. They argue that with data showing vaccines reduce the risk of death by 98% and hospitalisations by more than 80%, COVID-19 is being turned into a mild disease in Britain. The letter’s 22 signatories include Professors Carl Heneghan and Sunetra Gupta from Oxford University, Emeritus Professor Hugh Pennington from the University of Aberdeen and Professor Robert Dingwall from Nottingham Trent University. “We are being told, simultaneously, that we have successful vaccines and that major restrictions on everyday life must continue indefinitely. Both propositions cannot be true,” the scientists write. They add: “Mandatory face coverings, physical distancing and mass community testing should cease no later than 21 June along with other controls and impositions. All consideration of immunity documentation should cease.”

The Sunday Telegraph, Page: 1 Sunday Express, Page: 1 The Mail on Sunday

“It is time to free up businesses and people to start really building back our economy and the nations health.”

TAX NEWS – WEEKEND TO 25TH APRIL 2021

SATURDAY

Investors in uproar over Biden’s proposed capital gains tax rise

Investors have lashed out at Joe Biden’s plans to double capital gains tax with Scott Minerd at Guggenheim Partners declaring the plans “insanity” while Anthony Scaramucci, founder of SkyBridge Capital, believes the proposals would “have deleterious effects on job creation and wage growth for middle-class workers.” Stocks fell following the announcement and cryptos such as Bitcoin and Ether fell sharply. Although the plans will face stiff opposition in Congress, fund managers warn that investors could dump “momentum” stocks as they seek to crystallise gains ahead of a tax hike. Alasdair McKinnon, manager of the Scottish Investment Trust, said the impact of Biden’s proposals would be felt across America’s stock market. “New capital gains taxes are unhelpful to all asset prices,” he said.

Financial Times, Page: 8 The Daily Telegraph, Page: 39 The Times, Page: 51 Daily Mail The Independent The Guardian, Page: 44

EU plans creeping tax harmonisation

The Express reports on plans touted by the European Commission to harmonise tax rates across the bloc for tobacco products. Pieter Cleppe, a research fellow with the Brussels-based Property Rights Alliance, said in a paper that the Commission is exploring ways to do this without EU Treaty change, “using health concerns as a pretext to obtain more power.”

Daily Express

HMRC deadline extension creates state pension headache

HMRC has warned that small business owners and those with ‘side hustles’ could miss out on state pension benefits if they filed their tax return after January this year.

Financial Times, Page: 2

SUNDAY

Conservatives should fight an international tax stitch-up

Hamish McRae asserts in the Mail on Sunday that if Joe Biden gets his tax hikes though Congress other countries would have cover for introducing similar measures too. The new administration wants to tax capital gains as income, raise corporation tax and introduce a global minimum tax rate. McRae says following the extreme pandemic spending by governments, raising taxes on the wealthy is logical and fair and hard to argue against. The Observer’s business leader lauds Biden’s move believing the tax hikes and trillions in stimulus are intended to tackle “deep-rooted inequalities” and that the UK Government should use Washington’s move to inspire its own plans to build back better. But Daniel Hannon contends in the Sunday Telegraph that plans for international tax harmonisation, with legal threats against those who resist, “would mark the birth of a high-tax cartel, and the rate would surely rise”. Socialists have long resented the fact that exorbitant taxes redistribute people rather than wealth, but without international competition this inconvenience would end, he says, as would the right of poor nation states to try and improve their lot through tax cuts. Ultimately, Hannan adds, low taxes improve revenue, employment and economic activity – all things needed to repair shattered post-pandemic public finances, but this seems to have been forgotten by Conservatives in the UK.

The Observer, Page: 56 The Mail on Sunday, Page: 122 The Sunday Telegraph, Page: 20

HMRC sends 18,500 fines to wrong address

HMRC has sent 18,500 fines to the wrong address with a software error said to be to blame for the fiasco, the Sunday Times reports. Accountants have reported finding demands for multiple taxpayers when opening envelops addressed to another taxpayer, with private codes and other reference numbers included in the correspondence. “This is an absolutely astonishing blunder,” said George Bull from RSM. “HMRC makes much of relying on self-employed workers getting their tax bills right, but appears incapable of managing its own data.” In a letter to the Association of Taxation Technicians (ATT), HMRC said: “We sincerely apologise and recognise that this is not in line with our Charter standards. We take all aspects of protecting data very seriously so there has been a lot of activity to understand this incident and mitigate future risks.” HMRC said it had taken urgent action to ensure the data breach did not happen again: “If any agents receive any correspondence for incorrect clients, we would ask that they return them to HMRC.”

The Sunday Times, Business, Page: 12

CORPORATE NEWS – WEEKEND TO 25TH APRIL 2021

SUNDAY

Stanlow refinery reaches with HMRC

Essar Oil, which controls the Stanlow oil refinery in north west England, has struck a deal with HMRC on its tax liability. The refinery produces a sixth of the country’s petrol and diesel and has now been thrown a £400m lifeline by the taxman amid fears it could collapse. Industry sources confirmed the “time to pay” deal reached with HMRC has removed the risk of insolvency. International travel restrictions have reduced demand while poor margins for refining alongside market volatility caused operating losses for the company.

The Sunday Telegraph

Charities ration services as pandemic bites

Fundraising experts warn that charities will inevitably have to ration their services after the pandemic left them struggling for cash. Some small operations are suspending services leaving others to pick up the slack. The Sunday Telegraph notes that between April 2020 and February, the Charity Commission saw a 25% increase in concerns being raised by auditors over reports and accounts. The main issue reported was insolvency or financial difficulties.

The Sunday Telegraph

Tate & Lyle auctions off primary products division

Tate & Lyle has been working with Deloitte for some time to figure out the best way to spin off its primary products division, with Apollo Global Management and Cerberus among the interested parties. City sources say a £1.2bn auction for the division is now underway.

The Sunday Telegraph, Business, Page: 1

SMEs NEWS – WEEKEND TO 25TH APRIL 2021

SUNDAY

Small firms suffer cashflow woes just as support is withdrawn

The Sunday Times talks to small business owners who, after being devastated by the pandemic, face paying back Covid loans before their cashflow has been repaired. One businessman said: “The speed at which the Government thinks you’re able to start hurling money back at them is crazy.” Craig Beaumont, chief of external affairs at the Federation of Small Businesses said the issue was common, adding: “The Government should be throwing everything it’s got at getting businesses across this ‘unlock’ phase and into the recovery, to avoid businesses falling at the final hurdle because of lack of cashflow.” But Steve Russell, head of restructuring services at PwC, says VAT deferrals, the furlough scheme and emergency loans are “not gifts. They are support schemes that need to be unwound.”

The Sunday Times, Business, Page: 3

PERSONAL FINANCE NEWS – WEEKEND TO 25TH APRIL 2021

SUNDAY

Families increasingly using deed of variation

Irwin Mitchell solicitor Sarah Paton says there has been an uplift of families changing the wills of elderly parents after they pass to help younger generations hit hard by the pandemic. “A deed of variation can be used to give a fixed sum or a proportion of the estate directly to the grandchildren of the deceased instead of the children,” she explains. Mike Hodges, partner at Saffery Champness, points out that families often decide it is better to wait until after the death to work together to rejig the will, to save the loved one distress. Using a deed of variation can also reduce inheritance tax liabilities by shifting assets directly to a younger person’s estate.

The Mail on Sunday

PENSIONS NEWS – WEEKEND TO 25TH APRIL 2021

SATURDAY

Drop in pension income more startling than expected

With the closure of final salary pension schemes looming, Lane, Clark & Peacock believes the drop in pension income is going to be more startling than first thought. Its research suggests that the average man retiring this year will have an annual income of £14,634 and a woman £10,042, including state pensions. But by 2045, a man retiring would have an income of £12,460, and a woman £10,797, in today’s money. Female income improves because more are expected to be able to claim full state pensions. Public sector workers will suffer less because many will still have defined benefit pensions. Steve Webb, a former pensions minister and partner at LCP, commented: “For years, salary-related pensions from private sector jobs have supported the incomes of the newly retired, and men in particular. But these pensions are disappearing much more rapidly than we thought. And new-style workplace pensions are not being built up quickly enough to take up the slack.”

The Times

SUNDAY

PENSIONS

More action needed to close pensions gap

The Sunday Times warns that more needs to be done to close the pensions gender gap and promote equal pay in retirement. The paper reports that research from the Prospect union has found that the gap for pensions stands at 40.3%, more than double the gender salary gap of 15.5% reported by the ONS. The SNP MP Patricia Gibson said it was unacceptable that all types of pension inherently discriminate against women. It is noted that last week, Guy Opperman, the Pensions Minister, said there was a “clear passion” for making women better off in older age.

The Sunday Times

PROPERTY NEWS – WEEKEND TO 25TH APRIL 2021

SUNDAY

Tax deadline leads to frenzied market

House prices have rocketed over the course of the stamp duty holiday and there is a buying frenzy as the deadline looms, reports the Sunday Times. Figures from HMRC show almost 191,000 homes were sold in March – the highest number in a single month since July 2004. But the savings from the Chancellor’s tax cut have long since been cancelled out by property price rises, the paper’s Carol Lewis claims.

The Sunday Times, Page: 6

LEGAL NEWS – WEEKEND TO 25TH APRIL 2021

SATURDAY

Former subpostmasters cleared over accounting scandal

Almost 40 former subpostmasters who were convicted of theft, fraud and false accounting because of the Post Office’s defective Horizon accounting system have finally had their names cleared by the Court of Appeal. The Horizon system, developed by Fujitsu, was first rolled out in 1999 but from an early stage it appeared to have significant bugs that could cause the system to misreport. Horizon-based evidence was used by the Post Office to successfully prosecute 736 people. Lord Justice Holroyde said the Post Office “knew there were serious issues about the reliability of Horizon” and had a “clear duty to investigate” the system’s defects. But the Post Office “consistently asserted that Horizon was robust and reliable”, and “effectively steamrolled over any subpostmaster who sought to challenge its accuracy”, the judge added. In all, 39 of the 42 appeals were allowed on the grounds that the prosecutions were “an affront to the public conscience.” Lawyers for the group said they would be seeking compensation and an urgent criminal investigation into the actions of those at the Post Office.

The Daily Telegraph, Page: 11 BBC News The Times Daily Mail Evening Standard Daily Express, Page: 6

EMPLOYMENT NEWS – WEEKEND TO 25TH APRIL 2021

SATURDAY

Talent hunt kicks off as London firms launch hiring sprees

Financial services, legal, PR and construction companies across London are ramping up hiring with recruiters reporting a 349% jump in banking jobs advertised. But tech is driving job creation with KPMG’s quarterly tech monitor revealing that in the three months to March, UK tech sector firms hired staff at the fastest pace seen since the second quarter of 2019. Robert Walters’ UK managing director, Chris Poole, said: “March was incredibly busy for us. It almost felt like a line in the sand – it was incredibly busy across all sectors. Technology has been busy all the way through, but there has been a lot of pent-up demand within legal, within accountancy, within financial services. Even manufacturing, procurement, supply chain – it has been across the board.”

Evening Standard

FINANCIAL SERVICES NEWS – WEEKEND TO 25TH APRIL 2021

SATURDAY

Equivalence or no equivalence, London will stay financial services leader

KPMG ’s head of Financial Services Karim Haji has said if the UK and the EU fail to agree a deal on equivalence it won’t be the end of the world. Although it would “make life easier”, it was not mandatory for a successful financial services sector. “If you take a step back, the UK has been one of the leaders in financial services regulation and infrastructure, it’s one of the key innovators in the space as well, and one of the leaders in the world, and that’s why the UK has been successful in exporting financial services – that isn’t changing as a result of Brexit,” he continued. Mr Haji’s comments come after EU commissioner Mairead McGuinness said there was no pressure to reach agreement with the UK on financial services.

City AM Daily Express

ECONOMY NEWS – WEEKEND TO 25TH APRIL 2021

SATURDAY

UK economy rebounds with demand surging

Private sector activity grew at the fastest rate since November 2013 in April, hitting a reading of 60, according to IHS Markit’s purchasing managers’ index (PMI). This is up from 56.4 in the previous month and above the 58.2 forecast by economists. Service sector business activity rose from 56.3 to 60.1, while manufacturing output was up from 56.6 to 59.1. Chris Williamson, chief business economist at IHS Markit, said: “Companies are reporting a surge in demand for both goods and services as the economy opens up from lockdowns and the encouraging vaccine rollout adds to a brighter outlook.” Looking forward, Williamson added: “Business activity should continue to grow strongly in May and June as virus restrictions are eased further, setting the scene for a bumper second quarter for the economy.”

Financial Times The Daily Telegraph The Times The Guardian

UK retail sales jump

Data from the ONS show retail sales in Great Britain rose 5.4% in March compared with the previous month – a much stronger reading than the 1.5% forecast by economists. Sales of clothes was particularly strong rising by more than 17% while the easing of travel restrictions towards the end of the month led to an 11% increase in fuel sales. Howard Archer, chief economic advisor to the EY ITEM Club, said: “It does appear that many people were intent on having an enjoyable Easter break and this likely lifted retail sales later in the month.” Also commenting, Lisa Hooker, consumer markets leader at PwC, said: “Much though these figures will give cheer to the whole sector, retailers will be hoping that these positive signs translate into a sustained return to the physical stores as they reopen across the UK over the course of April. The real test of whether pent-up demand can be turned into actual sales w ill come with next month’s figures.”

Financial Times BBC News The Daily Telegraph The Guardian Daily Mail

Covid response pushes UK borrowing to highest since second world war

Figures from the ONS show UK government borrowing hit £303.1bn in the year ending in March, a jump of £246.1bn on the previous year when the figure was only £57.1bn. The coronavirus pandemic has driven the UK’s total accumulated public debt to £2.14trn, or 97.7% of GDP, the highest level since the early 1960s. As a percentage of national output, borrowing in the year between April 2020 and March 2021 stood at 14.5% – the highest since the financial year ending in March 1946. KPMG senior economist Michal Stelmach said rising debt was a consequence of shielding the economy from COVID-19.

Financial Times, Page: 2 The Daily Telegraph The Times The Times City AM The Guardian Daily Mail Daily Express, Page: 5

SUNDAY

Broadbent forecasts speedy recovery

The deputy governor of the Bank of England predicts “very rapid growth at least over the next couple of quarters” as Britons spend cash accumulated during the pandemic and save less of their forthcoming income. Ben Broadbent is more bullish than most of his Monetary Policy Committee colleagues on whether people will spend their savings but he warns that the year ahead is likely to be bumpy regarding inflation with multiple shifts in demand and supply.

The Sunday Telegraph

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NEWS – THURSDAY 15TH APRIL 2021

NEWS – THURSDAY 15TH APRIL 2021

NEWS ROUNDUP

TAX NEWS – THURSDAY 15TH APRIL 2021

Campaigners in tax credit debt call

Campaigners have called on ministers to write off old tax credit debts after it emerged payments to a number of Universal Credit (UC) claimants have been cut during the pandemic. HMRC has been deducting up to £100 a week from benefits to recoup mistaken tax credit overpayments and an investigation has shown that officials have targeted 47,000 low earners a week since January 18 because they were overpaid credits from up to 17 years ago. The analysis shows that HMRC has sent over 2.2m letters to UC claimants since 2016 telling them to expect deductions due to historical tax credit overpayments amounting to over £2bn, with claimants seeing £63m deducted from April to November last year. Sir Iain Duncan Smith, the former Work and Pensions Secretary, said clawing back tax like this was “a major mistake” causing “profound difficulties”. Stephen Timms, Labour chairman of the Work and Pensions Committee, said the process is “deeply unfair”, adding: “It shouldn’t be happening. These reductions ought to be suspended until the pandemic is over.” StepChange, Britain’s largest debt advice charity, said that almost one in five of its clients with Government debts had been told they had been overpaid tax credits.

The Times, Page: 12 Daily Mirror, Page: 2

Top tips ahead of the new tax year

Shashi Prashad and Jo Bateson of KPMG offer advice to businesses going into the new tax year, with guidance on issues including the super deduction which will allow companies to cut their tax bill by up to 25p for every £1 invested – a policy that was described by the Chancellor as “the biggest business tax cut in modern British history”. They also offer advice on research and development tax credits; emergency measures rolled out amid the pandemic, including VAT and business rates reductions; and a possible move to near real-time collection of income tax, corporation tax for small companies, and capital gains tax.

The Times

CORPORATE NEWS – THURSDAY 15TH APRIL 2021

Business insolvencies set to rise 26%

A report from trade credit insurer Atradius suggests global insolvency rates are set to rise by 26% this year, with state support amid the coronavirus pandemic having delayed insolvencies that would have occurred in 2020. The report, 2021: A turn of the tide in insolvencies, suggests that a number of markets are set to exceed the average by a significant margin, with failure rates in the UK expected to rise by 56%. The report also says 2021 will bring “new hope” as recovery sets in after a year of global recession. Global GDP saw a 3.7% contraction in 2020 but 2021 is expected to deliver growth of 6%. While the UK saw a 9.9% drop in GDP in 2020, Atradius forecasts the UK economy will expand 5.9% in 2021.

Financial Times London Loves Business

Trade body warns over Liberty collapse

ADS Group, a trade body that represents more than 1,100 employers in the aerospace, defence, security and space sectors, has written to Business Secretary Kwasi Kwarteng warning that the potential failure of Liberty Steel could see supplies of specialist metals disrupted. Liberty is under threat after the collapse of Greensill Capital, the commercial lender and main backer of the steel business’s owner, GFG Alliance. Liberty’s immediate survival depends on a standstill agreement being reached with Grant Thornton, Greensill’s administrator.

The Times, Page: 32

Flybe set to take-off again

Flybe is set to be relaunched after regulators granted the airline permission to return to the skies. The airline closed down in March 2020 but a new company affiliated with Cyrus Capital, which was part of a consortium that bough the airline in 2018, has bought Flybe’s business and assets. It will be known as Flybe Limited and is expected to fly many of the previously operated routes. The deal between Cyrus Capital and administrators at EY excludes Flybe’s aircraft, which were mortgaged to lenders by the previous owners, but includes Flybe’s take-off and landing slots.

The Daily Telegraph The Independent The Times

FINANCIAL SERVICES NEWS – THURSDAY 15TH APRIL 2021

Financial services firms see optimism increase

Financial services companies are seeing confidence in the economy surge at the fastest pace in more than seven years, according to a report from the CBI and PwC. The analysis shows that optimism rose at the fastest rate since December 2013 in March. A net balance of 52% of respondents said that they felt confident about the future, up from 44% in December. While businesses were hit during the most recent lockdown, a net balance of 43% said that they expected volumes to improve over the next three months. Businesses in the financial services sector expect profitability to rise in the next quarter, with a net balance of 32% forecasting higher profits. While employment fell for a fifth consecutive quarter in March, with a net balance of -12% reporting increased headcount, the pace of decline is expected to ease in Q2. Rain Newton-Smith, chief economist at the CBI, said: “It’s encouraging that financial services firms are feeling optimistic about the months ahead, likely warmed by the prospect of a phased reopening of the economy.”

The Times, Page: 34 City AM

City job listings surge

Morgan McKinley’s quarterly London Employment Monitor shows that financial services job posting s returned to growth in March. The sector saw a 70% increase in job postings and a 4.8% rise in job seekers. Available roles were up 50% year-on-year. Hakan Enver, managing director at Morgan McKinley UK, said: “As the vaccine rollout continues apace and the road out of lockdown clears, we are seeing the sector recover at a faster rate than anticipated.” Separate analysis shows that London remains a global financial centre, retaining second place behind New York in the Global Financial Centres Index, while PwC’s annual survey of chief executives revealed that the UK is a more attractive investment proposition than it was before Brexit. The Telegraph’s Simon Foy says the Morgan McKinley report appears to pour cold water on suggestions that Brexit would lead to a mass exodus of financial services professionals from the City. He notes EY analysis showing that 7,600 financial service s jobs have moved out of the UK due to Brexit, a “tiny proportion” of the UK’s finance sector roles and far less than many analysts had predicted.

Yahoo! Finance The Daily Telegraph, Business, Page: 2

EMPLOYMENT NEWS – THURSDAY 15TH APRIL 2021

Young black workers hardest hit by pandemic

Young black and Asian workers have been the hardest hit by the rise in unemployment during the coronavirus pandemic, a study by the Resolution Foundation think-tank has found. Over the past year, the UK jobless rate for young black people rose by more than a third to 35%, while for young people of Asian descent saw the jobless rate increased to 24%. For young white people, the unemployment rate hit 13%. Overall, the unemployment rate among 18 to 24-year-olds rose from 11.5% to 13.6% between Q2 and Q3 2020. The 18% increase marks the largest quarter-on-quarter rise among this age group since 1992. Kathleen Henehan, a senior research and policy analyst at the Resolution Foundation, said the furlough scheme “has done a fantastic job of minimising job losses amidst unprecedented shutdowns of our economy” but warned that the pandemic “has created a highly generationally unequal unemployment surge and widened pre -existing gaps between different ethnic groups”.

BBC News Daily Mail

PROPERTY NEWS – THURSDAY 15TH APRIL 2021

House prices hit record high

Analysis from Halifax shows that house prices have hit a record high despite rising at a slower rate than a year ago, hitting an average of £252,765. The report reveals a 5.7% year-on-year increase in Q1, with this down from a nearly five year high of 7% recorded last year. On a quarterly basis, prices rose 0.3% in the first three months of the year, marking a slowdown on the 2.5% increase seen in Q4 2020. Reflecting on the figures, AJ Bell analyst Laith Khalaf was optimistic about the outlook for the sector, saying: “While there might be a few bumps along the way, particularly at the end of the stamp duty…the property market has proved itself to be unbelievably resilient.” He notes that much of this “comes down to the efforts the Government and the Bank of England have made to make mortgage borrowing incredibly easy and cheap.”

Daily Express City AM

ECONOMY NEWS – THURSDAY 15TH APRIL 2021

Productivity rises amid the pandemic

Office for National Statistics data show that productivity increased last year, with output per hour, the main measure of productivity, increasing by 0.4%. The climb comes despite lockdowns causing economic output to shrink by almost 10%, with the headline figure increasing largely because the lower-paying and least productive jobs had borne the brunt of the pandemic. Output per worker in 2020 was 9.5% lower than in 2019. Howard Archer, chief economic adviser to the EY Item Club, said that “the sectors which saw a fall in their relative share of hours worked typically had lower productivity levels”, while higher productivity industries “increased their relative share of hours worked”.

The Times, Page: 34 Financial Times

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Paul Southward

NEWS – WEEKEND TO 21ST MARCH 2021

NEWS – WEEKEND TO 21ST MARCH 2021

NEWS ROUNDUP

TAX NEWS – WEEKEND TO 21ST MARCH 2021

SATURDAY

Treasury plans pay-as-you-go tax

The Treasury is planning a pay-as-you-go tax model in a bid to tackle evasion by freelance workers, landlords and investors, reports the Times. The measures, which will make it harder for people to hide their earnings, are based on a system used in New Zealand. The move will see annual or twice-yearly manual tax returns replaced with a system that sees tax paid throughout the year. Taxpayers would be given a digital tax account that is automatically updated by banks, investment managers, workplaces and pension providers, with information about earnings, investments and pensions logged. The reforms will be at the centre of HMRC’s ten-year tax strategy and will play a part in efforts to recoup the £31bn the Revenue believes people are not paying in tax each year. Chancellor Rishi Sunak believes the pay-as-you-go tax model could prevent people from failing to declare major earnings, including interest on investments and offshore bank accounts.

The Times, Page: 4

The truth is finally out as the government has always denied that Making Tax Digital was never about collecting tax earlier, but now we find it is.

Rate surge hits tax dividend

Analysis shows that a surge in market interest rates has wiped out more than two thirds of the £17bn the Chancellor sought to pull in via an increase in corporation tax. While Rishi Sunak is increasing the levy from 19% to 25% in 2023 as he looks to stabilise the national debt, market rates have moved higher on the back of a return of inflation and the possibility of a strong economic recovery, post-pandemic. HSBC economist Liz Martins said the increase in Government borrowing costs since the Office for Budget Responsibility fixed its forecasts will add £3.6bn to debt service spending in 2021/22, which rises to £12.2bn at the end of the parliament in 2025. Ms Martins said the Chancellor’s tax rise “might not reduce the deficit as much as he had hoped if those extra revenues end up going towards higher interest payments on government debt”.

The Times, Page: 49

City concerned over possible tax raid on pensions

The Telegraph reports that there is concern in the City that the Treasury is considering radical cuts to tax relief on pensions, with officials having signalled higher-rate tax relief on pensions contributions could be reduced. The paper says that while a pensions tax hike is not set to feature among measures being announced on March 23 – which has been dubbed “tax day” – reforms are being considered. The Chancellor is said to be considering limiting tax relief on pensions contributions to a flat rate of 20% or 25%. Experts have warned that a tax raid on pensions would hit millions of workers’ retirement prospects, leaving savers hundreds of thousands of pounds worse off in retirement. AJ Bell founder Andy Bell said: “Removing higher-rate tax relief would be politically toxic when people realise what it means for them”, while Peter Glancy of Scottish Widows said reform would be “horrendously difficult” to implement.

The Daily Telegraph, Business, Page: 31

A third of firms not ready for IR35 changes

With IR35 changes coming into effect from April 6, new research suggests that many organisations are not ready for the rollout of new tax legislation that will make businesses responsible for setting the tax statuses of contractors they hire. A Grant Thornton survey of 605 senior decision makers from mid-market businesses conducted in late January shows that 38% are not fully prepared for the transition. It was found that 13% had done only “minimum preparation” or were in the early stages of planning, while 25% had preparations underway but said they were not ready for the deadline.

Daily Express

Wealthy savers rush to VCTs

Wealthy savers are turning to risky tax-efficient investment schemes, amid a crackdown on pensions and fears of an increase in capital gains tax. The amount being put into venture capital trusts (VCTs) is rising rapidly as investors hunt for tax breaks. Investors can put up to £200,000 into these trusts each year and get 30% income tax relief, as long as VCT shares are held for five years. Investment firm Wealth Club has overseen £112.7m invested this way in the 2020/21 tax year, up 42.4% from the £79.1m invested in 2019/20.

The Times

Self-employed boosted by tax clawback

Thousands of small business owners who have lost money during the coronavirus crisis can claim more than £1bn in tax rebates to help mitigate losses, with ministers having announced an emergency extension to “loss carry back” rules. Previously losses could only be carried back one year to offset historical tax bills but the new measures enable firms to claw back profit and income taxes paid in the past three years.

The Daily Telegraph, Money, Page: 11

Taxing matters when selling a BTL property

The Telegraph’s Marianna Hunt and Rachel Mortimer offer advice on how landlords can save money on their tax bill, with guidance for those looking to sell a buy-to-let property. They note that some landlords may be able to reduce their CGT bill by claiming Private Residence Relief if the rental property has at some point been their main residence. Zena Hanks of Saffery Champness says the period where it was occupied as such will qualify for exemption from CGT, while Chris Etherington of RSM warns that moving into a rental property before selling it could store up CGT issues for the eventual sale of any other home the landlord owns.

The Daily Telegraph

Brussels sues Britain over Gibraltar tax breaks

The European Commission is suing the UK at the European Court of Justice over tax breaks given to companies in Gibraltar, saying Britain has failed to fully recover €100m of illegal state aid.

Financial Times, Page: 8

Will tax shake-up hit our FIC?

Mike Hodges of Saffery Champness advises an FT reader who has set up a family investment company on whether the Chancellor’s plans to raise corporation tax will affect their tax liability.

Financial Times, Money, Page: 14

SUNDAY

Tax day set to deliver a deluge of policy plans

Russell Lynch in the Sunday Telegraph says that while the “circus” surrounding the Budget “may be receding into the rear-view mirror”, Tuesday’s “tax day” means “the real action is still to come” for tax aficionados. With the ICAEW’s Anita Monteith saying she has cancelled all leave and is “waiting for the deluge to hit”, Mr Lynch says the deluge will take the form of around 30 consultations and calls for evidence on subjects including HMRC administration, taxation of the self-employed, and the future of capital gains tax and VAT. Ms Monteith says the Government “has actually been fairly clear that it wants to actually fix the tax system, rather than just fiddle”, adding that plans outlined on Tuesday could be a step toward “one of the biggest sea changes to our tax system that we have seen in a generation.” Chris Sanger, head of tax at EY, calls tax day the “thinking man’s Budget”, saying it is where the Chancellor “will imprint his vision on the future of the tax system.” On what tax day may bring, Richard Wild, technical head of tax at the Chartered Institute of Taxation, is expecting consultations on the sharing of information with HMRC by third parties, a move that would seek to improve the revenue harvested and cut out mistakes made by individual taxpayers. George Bull, a senior tax partner at RSM, says issues like indexing capital gains to inflation, as well as CGT’s interaction with inheritance tax, could feature.

The Sunday Telegraph, Business, Page: 6

Medical staff among biggest tax avoidance scheme users

Data from HMRC shows that health service staff are among the most prolific users of tax avoidance schemes, with one in five of people signing up to schemes designed to reduce their tax bills working in hospitals. Of those caught using tax avoidance schemes, bookkeepers were the most common participants, with healthcare workers second in the rankings. The HMRC report said: “There is a notable level of use of avoidance schemes within the healthcare sector. HMRC has already stepped in where promoters have targeted NHS workers returning to the workforce to support the UK’s COVID-19 response.” The tax office said it suspects that “the majority of people who used avoidance schemes didn’t look too deeply into the tax arrangements they were being offered.” HMRC noted that 30,000 workers are using avoidance schemes compared with 22,000 seven years ago, while nine in ten people who use the schemes earn under £50,000 a year. John Hood of Moore Kingston Smith notes that the use of such schemes can spread “like wildfire” in certain areas as workers in office jobs or big employment hubs copy each other.

The Sunday Times, Page: 6 The Sunday Times, Business, Page: 12

Red tape to be cut in IHT reform plans

The Treasury is expected to cut the red tape around inheritance tax this week, with changes set to be detailed on “tax day” to reduce the amount of paperwork families are required to fill out. It follows recommendations from the Office of Tax Simplification calling for the administrative burdens for those dealing with inheritance tax to be reduced. Jesse Norman, the Financial Secretary to the Treasury, said: “We want to cut red tape and make the tax system as simple as possible for people to use, especially during difficult times. The change is part of our wider drive to remove unnecessary paperwork and obstacles so that taxpayers can manage their affairs with less effort.” The reform plans due to be outlined on Tuesday will also see the Treasury publish an update on its consultation for an online sales tax, outline harsher measures against those who promote tax avoidance schemes and propose a move to force tax advisers to hold professional indemnity insurance.

The Sunday Telegraph, Page: 2

Sunak urged to opt against tax raids

Ahead of this Tuesday’s “tax day”, which will see the Treasury outline a series of proposals to reform the tax system, a Sunday Telegraph editorial has called on Chancellor Rishi Sunak to refrain from tax hikes. It argues that after a “crippling, historic raid unleashed at the Budget”, the last thing needed is a further increase in taxes. It urges Mr Sunak to opt against increases in capital gains tax, an assault on pension tax relief and a pay-as-you-go tax model for freelancers and investors, arguing that the latter would be “bureaucratic, undermine their ability to manage their financial affairs and deter entrepreneurial effort.” Noting that the economy and the budget deficit need to be addressed after the blow dealt by the coronavirus crisis, the piece argues that governments “cannot tax their way out of an economic crisis”. If the Conservatives try to do so, it adds, “they will also destroy the opportunities opened by Brexit.”

The Sunday Telegraph, Page: 17

Lib Dems call for tax break for small businesses

Liberal Democrat leader Sir Ed Davey has urged the Government to put small firms at the heart of a post-pandemic recovery, calling for a £5.5bn-a-year tax break for smaller businesses. He will today urge Chancellor Rishi Sunak to cut national insurance contributions for small firms by quadrupling the employment allowance from £4,000 to £16,000. Sir Ed will tell an online Lib Dem conference: “The UK’s economic recovery starts with small business. Small businesses are at the heart of every local community, and every local economy”. He will call on the party to “challenge the Chancellor to give small businesses a bold new tax cut to support thousands of new jobs.”

Evening Standard

CORPORATE NEWS – WEEKEND TO 21ST MARCH 2021

SATURDAY

Greensill sees job losses

Administrators of Greensill Capital have announced the first job losses since the lender collapsed into administration last week. Grant Thornton confirmed that 440 staff had been let go. The firm added that it is still seeking a buyer that could potentially save the rest of the Greensill business after a deal with private equity group Apollo Global Management fell through. It was also revealed that Greensill’s Australian parent company has been hit with claims for $1.35bn from creditors. Elsewhere, the FT looks at issues at Greensill, noting that auditors at KPMG were unable to verify the existence of certain invoices.

The Guardian, Page: 43 The Times, Page: 50 The I, Page: 77 Financial Times, Page: 14

SUNDAY

Conflict concern over Grant Thornton and Gupta

The Sunday Times reports that Greensill Capital administrator Grant Thornton faces conflict of interest claims after advising its biggest debtor, steel tycoon Sanjeev Gupta, on a string of deals. Shadow Chancellor Anneliese Dodds commented: “In the week that the Government launched what it called a major overhaul of the UK’s audit regime, it is important that the administration of Greensill Capital takes place transparently and that there is no question of any conflict of interest.” Grant Thornton said it had given “careful consideration to the code of ethics relating to such matters and satisfied ourselves that there is no threat to our independence as a result of any prior relationships.” Elsewhere, the same paper says that Grant Thornton will have to pursue Mr Gupta’s GFG Alliance for cash it did not pass on, adding that if GFG goes under, the situation “could descend into a legal battle between two sets of administrators”. Separate analysis of Mr Gupta’s affairs notes that he has tended to use small auditors for his accounts, including King & King and < strong>HW Fisher.

The Sunday Times, Business, Page: 1 The Sunday Times, Business, Page: 9 The Sunday Times, Business, Page: 4

CEO cyber fears climb

A PwC poll of more than 5,000 chief executives has found that 91% are concerned about cyber threats, up from 80% last year. Richard Horne, PwC’s UK head of cybersecurity, said: “For many organisations, up until a few years ago cybersecurity was seen as this technical thing that we left to the chief information security officer to deal with … Where many organisations are getting to is realising that every big business decision will impact your cyber-risk.”

The Sunday Times, Business, Page: 5

Societies warn on rents

A letter to the Sunday Telegraph warns that rents which have increased by 3,000% in a decade are forcing the Society of Antiquaries, the Geological Society and the Linnean Society towards costly relocations, threatening to disperse their priceless collections, libraries and archives. Signatories including Royal Academy of Arts chief executive Axel Rüger note a PwC estimate that the societies contribute £39.7m to the country every year in public value.

The Sunday Telegraph, Page: 17

Brewers serve up a pandemic success story

The Sunday Times looks at how craft brewers have navigated the challenges brought about by the coronavirus pandemic, highlighting UHY Hacker Young estimates that there are now more than 3,000 breweries in the UK, an increase of 200 over the past year.

The Sunday Times, Business, Page: 2

Fashion house calls in administrators

Sam Chambers in the Sunday Times muses on the issues that led to the collapse of fashion brand Ralph & Russo, which has appointed administrators from Begbies Traynor and Quantuma.

The Sunday Times, Business, Page: 2

FINANCIAL SERVICES NEWS – WEEKEND TO 21ST MARCH 2021

SATURDAY

Post-Brexit deal for the City nears

Britain and the EU are said to be close to striking a limited deal on post-Brexit financial services co-operation following months of negotiations, with partial regulatory equivalence on some financial products and a memorandum of understanding on regulation reportedly on the horizon. The Telegraph reports that the memorandum of understanding is expected to include agreement that regulators keep each other informed of their plans for taxation and measures to counter financial crimes.

The Daily Telegraph

Half of firms have no carbon neutral targets

A poll by EY suggests that financial services firms are struggling with net zero targets, with 51% saying they do not yet have a target in place to achieve carbon neutral status. The survey of financial services firms including 45 banks, 44 insurers and 29 asset managers saw 57% say the climate change regulatory agenda was proceeding at the right speed, while 34% said “very few” companies in the sector currently have the appropriate focus on sustainability. Gill Lofts of EY said: “While advancements have undoubtedly been made across the financial services sector, progress on sustainability is somewhat uneven amongst firms.”

City AM

EMPLOYMENT NEWS – WEEKEND TO 21ST MARCH 2021

SATURDAY

More than half of staff travelled to work last week

More than half of Briton’s workers returned to the office last week, according to Office for National Statistics analysis. In the week ending March 14, 53% of workers travelled to the office, with the move away from remote working coinciding with the reopening of schools in England and a decline in coronavirus cases. The report shows that the proportion of people who worked exclusively from home decreased six percentage points from the previous week, to 30%.

Daily Mail

SUNDAY

Super-rich utilise furlough scheme

An investigation by the Mail on Sunday reveals that a number of wealthy business owners have used the taxpayer-funded furlough scheme to pay staff. Analysis of official documents show that companies owned and run by super-rich individuals with a combined personal wealth of £19.4bn have taken money from the emergency scheme rolled out to protect jobs during the pandemic. MP Alexander Stafford, who sits on the Commons Business Select Committee, commented: “Those who could afford not to take the money should not have done so, and if they did they have a moral duty to pay the money back.” The Mail report follows a separate probe showing that billionaire tax exiles, Saudi royals and oil-rich Gulf states have claimed millions in taxpayer-funded furlough money. Robert Palmer, executive director for campaign group Tax Justice UK, said: “It’s pretty galling that tax exiles who have minimised their contributions in the good times are asking for a handout when things get tough.”

The Mail on Sunday The Observer

City firms eye office returns

US Investment banks are set to lead the return to the office, with the first wave of City workers preparing to head back to their desks. Several banks are preparing to open their offices again as soon as March 29, with Goldman Sachs, JP Morgan and Credit Suisse among those leading the charge as the Government’s ‘stay at home’ rule comes to an end. Amid the coronavirus lockdowns, only key traders and staff who have not been able to work from home have been allowed into offices. With official advice suggesting people should still work from home where they can, some firms are concerned they could be penalised for bringing more staff back to the office so soon. However, a banker has told the Mail on Sunday the Government gave “a nod and a wink” that they will not be punished for allowing staff to return.

The Mail on Sunday, Page: 121

Tech shift set to stay

The Sunday Times reflects on the impact of the coronavirus crisis, noting changes to working life. KPMG economist Yael Selfin expects some technology that has been utilised amid the pandemic to have a lasting change, saying she expects long-haul flights and business trips to be less common. She adds: “We’re going to come out of the pandemic much more environmentally and socially conscious, and more aware of our work-life balance”.

The Sunday Times, Business, Page: 2

SMEs NEWS – WEEKEND TO 21ST MARCH 2021

SUNDAY

Staff and owners apart on return expectations

Research shows that a third of SME owners expect staff to come back full time when lockdown ends in June, with this double the figure for employees, where 16% expect to return to work as soon as restrictions are lifted. In a survey conducted for Cignpost ExpressTest, it was found that 38% of 1,100 employees polled do not expect to return to the office for the foreseeable future, with a further 20% not expecting to return until the entire workforce has been vaccinated. By contrast, 51% of employers said they expect those who have been vaccinated to return to the office immediately.

The Mail on Sunday

INDUSTRY NEWS – WEEKEND TO 21ST MARCH 2021

SUNDAY

UK audit reforms fail to address the real problem behind scandals

Professor Karthik Ramanna reflects on the Government’s audit reform plans, arguing that issues stem from boards and auditors’ lacking a systematic culture to “challenge chicanery when it presents itself”, not badly designed rules.

Financial Times

BUSINESS RATES NEWS – WEEKEND TO 21ST MARCH 2021

SUNDAY

Cash concern for councils

The Local Government Association (LGA) has urged ministers to look into new funding sources for councils, with the body warning that a planned shake-up of the business rates system must “recognise the importance of this income stream for funding key local services”. With the Treasury set to publish a number of consultations on future policy on March 23, officials are expected to deliver an interim report on a proposed overhaul of business rates. A quarter of council spending is funded by the levy but Richard Watts, chair of the LGA’s Resources Board, says local government confidence in business rates “as a reliable income source with a future has reduced”.

The Sunday Telegraph, Business, Page: 3

ECONOMY NEWS – WEEKEND TO 21ST MARCH 2021

SATURDAY

Government borrowing hits record February high

Office for National Statistics (ONS) data shows that public sector borrowing hit £19.1bn in February, with this £17.6bn more than in the February 2020 and the highest February borrowing since monthly records began in 1993. While the coronavirus pandemic drove up government spending, February’s borrowing came in below expectations, with City economists having forecast that the deficit would hit £21bn. The ONS data showed borrowing is on course to match the Office for Budget Responsibility’s forecast of £355bn for the 2020/21 financial year. The total for 2020/21 reached an estimated £278.8bn, pushing the UK’s total debt to £1.125tn and the debt-to-GDP ratio to 97.5%. The ONS report shows that the cost of financing the UK’s debts had remained stable over the last year, climbing from £4.2bn to £5.3bn.

The Guardian The Daily Telegraph Daily Mail Financial Times

Shopping habits shift since lockdown

Helen Dickinson, chief executive of British Retail Consortium, says shopping has “changed dramatically” in the year since the first coronavirus lockdown was put in place, saying the retail environment feels “a world apart” from a year ago and noting the “degree of uncertainty” felt in March 2020. With the lockdown seeing increased demand for online retailers while high street competitors have been hit by enforced closures and lower footfall, BDO’s Sophie Michael says that while online has seen “five years’ growth in one”, it has not offset lost in-store sales.

Evening Standard

SUNDAY

March PMI expectations drive GDP hope

Economists believe GDP could beat growth forecasts for the year as the economy weathers the latest lockdown better than had been expected. Initial readings from the Markit/CIPS purchasing managers’ indices (PMI), due to published on Wednesday, are expected to show that the service sector has edged back into growth while manufacturing continues to show expansion. On an index where a score above 50 indicates growth, the service sector is expected to post a 51 reading for March, up from 49.5 on February, while manufacturing is likely to repeat the 55 score seen the month before. Howard Archer, chief economic adviser to the EY ITEM Club, believes Britain’s 2021 growth forecast could be upgraded, saying: “Our forecast currently is for 5% GDP growth this year but that might go up by a reasonable amount. That is because we thought that GDP would contract by 4% in the first quarter, but we now think it will be lower than that.”

Sunday Express, Page: 51

Contact Paul Southward

Paul Southward

NEWS – TUESDAY 16TH MARCH 2021

NEWS – TUESDAY 16TH MARCH 2021

NEWS ROUNDUP

TAX NEWS – TUESDAY 16TH MARCH 2021

IR35 change to affect 170k contractors

The IR35 reform set to be rolled out next month could see around 170,000 self-employed workers forced to pay more tax. The Government says that the change will only apply to medium and large-sized businesses, meaning genuine freelancers and self-employed workers will not be affected by a shift that sees business take responsibility for deciding on a person’s tax status. The Express highlights research by the Association of Independent Professionals and the Self-Employed which shows that half of freelancers are planning to stop contracting in the UK after IR35 changes come into effect. The proportion is up from nearly a third the same time last year, when the legislation was originally due to come into force.

The Sun Daily Express

Cross-border workers call for tax law rethink

People who live in the Republic of Ireland but work in Northern Ireland are calling for changes to remote-working tax laws, with the current system seeing them have to pay tax in both states. While they can claim relief against tax already paid in Northern Ireland on their salary, the work must be conducted outside the Republic, meaning they cannot work from home.

BBC News

CORPORATE NEWS – TUESDAY 16TH MARCH 2021

IMF: Pandemic increases dominance of big firms

The International Monetary Fund says large companies have increased their dominance over the world’s advanced economies, with their concentration of revenues climbing during the pandemic. It attributed this in part to a rise in bankruptcies, which hit smaller companies hardest, and warned that the increase in dominance by larger firms could stifle growth. The report said: “We know from experience and IMF research that excessive market power in the hands of a few firms can be a drag on medium-term growth, stifling innovation and holding back investment.” It added that such an outcome “could undermine the recovery” and “block the rise of many emerging firms at a time when their dynamism is desperately needed.”

The Times

Business optimism increases

A new Accenture/IHS Markit survey has shown that business optimism in the UK is at a six-year high. The poll of 12,000 manufacturing and service companies saw 68% say they expect activity to increase in 2021, while only 11% foresee a decline. The net balance of +57% represents a steep increase on the +34% reading recorded in October. Rachel Barton, strategy and consulting lead at Accenture, said that it was “encouraging” to see businesses confident about bouncing back, commenting: “Although we are not out of the woods yet, it is important for UK business to take advantage of this confidence in order to build a sustainable recovery”.

The Daily Telegraph Sky News Evening Standard

Boost for manufacturing growth forecast

A survey by Make UK and BDO has shown strong growth plans among Britain’s manufacturers, with the sector expected to see growth of 3.9% in 2021. This marks an increase on a previous estimate of 2.7%. The survey also shows that the industry faced a 10% drop in output in 2020. ?

The Daily Telegraph Sky News

Law firm mergers drop to nine-year low

Law firm mergers have fallen to a nine-year low, as the economic downturn brought about by the coronavirus pandemic has left consolidator firms wary of making acquisitions. Data from Hazlewoods reveals that 107 law firm mergers were completed in 2020, down 25% on the 143 mergers that occurred in 2019 and less than half the 278 mergers that took place in 2011.

City AM

UK start-ups attract record $8bn in dash for growth

Tech Nation data shows UK tech sector attracted record investment of close to $8bn in Q1, with investment in fast-growing companies more than twice that seen in Q1 2020.

Financial Times

EMPLOYMENT NEWS – TUESDAY 16TH MARCH 2021

Bailey expects lower jobless peak

Bank of England governor Andrew Bailey has said unemployment is likely to peak at a lower level than previous estimates, with the Chancellor’s decision to extend furlough until September likely to limit the effect of the pandemic on jobs. Mr Bailey told BBC Radio 4’s Today programme: “I think it’s very helpful that the furlough scheme is now projected to extend beyond the end of the restrictions by a month or two, which should help to smooth that transition.” He warned, however, that “expecting a transition without some rise in unemployment I’m afraid is, is probably unlikely.” While the Bank’s most recent forecasts, which were made before the furlough scheme was extended, put the peak in unemployment at 7.5%, Mr Bailey said: “I would expect the next forecast to show the peak in unemployment will be lower.”

The Daily Telegraph

FINANCIAL SERVICES NEWS – TUESDAY 16TH MARCH 2021

Khan calls for financial services clarity

Mayor of London Sadiq Khan has called for the Government to provide greater clarity for the City of London post-Brexit, urging Chancellor Rishi Sunak to “address the concerns of London’s financial and professional services sector”. Mr Khan has called on ministers to secure equivalence for the financial services sector, saying this will “ensure a fair and level playing field.” He cited research from the Centre for Economics and Business Research which suggests the UK could lose £2bn of GDP each year from a smaller financial services sector post-Brexit. Mr Khan also warned that it is “essential that the Government’s immigration policy maintains and broadens the pool of international talent that industry can access.”

City AM

PERSONAL FINANCE NEWS – TUESDAY 16TH MARCH 2021

Three-quarters of millennials seek advice

A poll of 1,000 people by Prudential found that 74% of millennials and 58% of Generation Z have seen, or are going to see, a financial adviser, with this driven by financial difficulty and a desire to start investing. It also found that 32% of Generation X, 21% of Baby Boomers and 24% of those aged over 75 said the pandemic had specifically driven them to seek advice. The research also found that 53% of adults said the financial crisis caused by the pandemic had prompted them to seek advice from a financial adviser, with 33% of those having already sought financial advice and 20% planning to do so.

FT Adviser

INTERNATIONAL NEWS – TUESDAY 16TH MARCH 2021

Biden plots major tax rise

President Joe Biden is reportedly considering the first federal tax hike since 1993 as he looks to reboot the US economy. Plans said to be under consideration include raising corporation tax from 21% to 28%, increasing income tax on those earning over $400,000, making the estate tax more stringent and increasing capital gains tax on those making more than $1m. The moves would help fund a long-term economic plan focused on infrastructure, climate and education.

The Independent Daily Mail The Daily Telegraph

ECONOMY NEWS – TUESDAY 16TH MARCH 2021

Bailey: recovery may be quicker than forecast

Andrew Bailey, governor of the Bank of England, says the vaccine programme could see the economy outdo expectations in the coming months. However, he added that while he now saw “upside risks” to the Bank’s growth forecasts, new COVID-19 variants may still derail the recovery. Asked what sort of recovery the UK could expect, he told BBC Radio 4’s Today programme: “I’m now more positive, but with a large dose of caution.” His comments came as a monthly Ipsos Mori poll suggested public optimism over the UK’s economic outlook is at its highest since 2015. The survey saw 43% of respondents say they thought the economy would improve over the next 12 months, compared with 41% who thought the opposite. This lifted the economic optimism index to +2, up from -31 in February.

The Guardian

ONS updates inflation shopping basket

The Office for National Statistics’ (ONS) inflation shopping basket has been updated to reflect the impact of the coronavirus pandemic, with the statistics watchdog adding items such as hand sanitiser and home workout equipment to the list. With the pandemic driving an increase in remote working, casual clothing has been added to the basket as demand for formal office wear has declined. While smart watches, internet controlled light bulbs and electric hybrid cars are to join the price index, ground coffee and white chocolate are among items being removed from the list. Overall, the ONS has added 17 items in 2021, removing 10 and leaving 729 unchanged.

The Times Daily Mail BBC News Sky News City AM Evening Standard

Contact Paul Southward

Paul Southward

NEWS – WEEKEND TO 7TH MARCH 2021

NEWS – WEEKEND TO 7TH MARCH 2021

NEWS ROUNDUP

TAX NEWS – WEEKEND TO 7TH MARCH 2021

SATURDAY

Fraud fears over super deduction

Rishi Sunak has been warned that the super deduction tax cut announced in the Budget could be used for tax avoidance and fraud, with concerns raised that it could be manipulated by those seeking large tax breaks. The super deduction allows companies to deduct 130% of the value of plant and machinery from profits, with the Chancellor saying that in the two-year window it is active, it will be “the biggest business tax cut in modern British history.” Stuart Adam, senior research economist at the Institute for Fiscal Studies, warned that the scheme will “create a risk of tax avoidance and even potentially fraud” as companies try to find ways to “dress things up” as the investment required to secure the deduction. Ian Dickinson of UHY Hacker Young said every tax relief is open to fraud, adding that is why “HMRC is focusing its efforts towards constantly combating tax avoidance and tax evasion”. “There will be avoidance provisions in the legislation to stop the relief being used for contrived schemes, designed to get an artificial tax advantage,” he added.

The Daily Telegraph, Page: 35

Middle earners hit by charges aimed at the rich

Analysis by Blick Rothenberg shows that the annual take-home pay of many middle-income families has gone up just £6 in a decade, despite huge rises in the tax-free allowance. The report shows that families just within the 40% higher rate tax band face a number of restrictions aimed at wealthy taxpayers and are effectively paying more than £60 in tax for every £100 they earn above £50,000 due to the child benefit cap. This, the study highlights, is a higher marginal rate than someone earning £150,000. The Times’ Ali Hussain says the findings raise concern over the “insidious” effects of the Chancellor’s freeze on income tax thresholds and the pressure it will place on some taxpayers. Nimesh Shah, CEO of Blick Rothenberg, comments: “There has been too much political toying with these tax thresholds over the past ten years.”

The Times, Page: 61

Kwarteng: Strong growth could shift tax plan

Business Secretary Kwasi Kwarteng says the economy is on track for recovery, saying he is “bullish” about the country’s economic prospects. When asked by the Times if he thought the plan to increase corporation tax from 19% to 25% in 2023 would come to fruition, he said: “You could have strong growth. And clearly, if the growth is very strong the fiscal situation can change very quickly. 2023 is a long time away.” He added: “Two years can change everything. If there are very strong tax receipts, who knows what the taxation rate will be?”

The Times, Page: 10

Subtle Sunak readies a stealth attack on taxpayers

The FT looks at a new penalty system for late filing and paying of taxes, with Graham Boar at UHY Hacker Young saying the new regime is going to be much tougher for some taxpayers.

Financial Times, Money, Page: 6

Tax take plan ‘won’t cut it’

Philip Aldrick in the Times crunches the numbers on the nation’s finances, saying that to pay off debts while delivering the public services and basic level of income support that people want, the £29bn of tax rises set out on the Budget “won’t cut it.” He calculates that up to an extra £20bn of taxes “could easily be needed”.

The Times, Page: 55

Freeze a clever move around manifesto vow

Reflecting on the Budget, Sam Brodbeck in the Telegraph says freezing income tax allowances is a clever move as it means the Conservatives don’t break a manifesto promise of not raising income tax, national insurance or VAT but will still increase the tax take. “No one’s take-home pay is going to fall, but the bit HMRC keeps will slowly grow”, he adds.

The Daily Telegraph, Money, Page: 2

N Ireland sets up tax body in wake of corporate rise

Northern Ireland is setting up a fiscal commission that could see the province opt against increasing corporation tax rates when UK rates go up in 2023.

Financial Times, Page: 3

Landlords shrug off corporation tax increase

Buy-to-let experts do not expect landlords holding properties via company structures to change ownership arrangements despite the Chancellor’s decision to increase the corporation tax rate.

Financial Times, Money, Page: 2

What are the tax implications for someone working abroad?

Advising on the tax ramifications of working from abroad during the pandemic, Charlotte Hobrough of BDO says remote working overseas can result in obligations for an employer and an employee.

Financial Times, Money, Page: 10

Advice offered

Sean Randall of Blick Rothenberg and Chris Etherington of RSM offer a Times reader advice on the implications of buying a property while still having part-ownership of the family home with his wife, with the subject of capital gains tax among issues raised.

The Times, Page: 10

SUNDAY

Sunak eyes agreement on tax for online firms

Rishi Sunak is hoping international agreement on how to tax online companies’ profits can be achieved in the coming months, with the Chancellor hoping consensus on a levy can be in place by June’s G7 meeting. He said: “One of my priorities in the G7 this year, which I’ve already started work on, is to try and get international agreement on a new way to tax these companies.” Mr Sunak, who has already held talks about the new tax with US financial secretary Janet Yellen, said: “I spend a lot of time talking to my finance minister colleagues around the world about this issue.” Meanwhile, the Chancellor is also looking at a new online sales tax as part of a review of business rates, with the levy set to be included among measures outlined in the Treasury’s Tax Policies and Consultations Update on March 23.

The Sunday Times, Page: 9 The Sunday Telegraph, Page: 2 The Mail on Sunday, Page: 24 Sunday Express, Page: 1 The Sun, Page: 16

1.1m miss tax filing deadline despite extension

HMRC figures show that around 1.1m people have still not filed their taxes and will now face fines, having missed the cut-off despite it being pushed back from January 31 to the end of February. Those filing late will not face the 5% surcharge for late tax payments this year, as long as they file and pay what they owe by April. They will, however, have to pay the 2.6% interest charge. Some who are struggling to pay can opt for a monthly payment plan, with over 665,000 payment plans already in place. Analysis shows that tax debts currently exceed £65bn, with around two fifths of this unmanaged debt.

The Sunday Telegraph, Business, Page: 9

IHT freeze to pull in £1bn

A five-year freeze on inheritance tax allowances revealed in the Budget will bring in £985m in extra revenue and result in thousands more people paying the 40% duty. More than 36,000 estates a year will pay the death duty by 2026, up from fewer than 25,000 in recent years, according to figures from the Office for Budget Responsibility. The Sunday Telegraph’s Harry Brennan says increased death rates amid the pandemic and booming house prices will push the IHT take to all-time highs by next year, pulling in £6.6bn a year by 2026, up from £5.1bn in 2020.

The Sunday Telegraph, Business, Page: 9

£8bn extra tax since pension freedoms

Ian Cowie in the Sunday Times considers the tax implications of pension reform, with HMRC data showing that nearly 1.6m people paid more than £8bn extra tax since pension freedoms were rolled out. Nimesh Shah, chief executive of Blick Rothenberg, comments: “Government propaganda around flexible pensions was all about choice, but their backdoor motive was to generate additional and accelerated tax revenue.” Meanwhile, Harvey Jones in the Sunday Express looks at the impact a freeze on personal allowances announced in the Budget will have, pointing to PwC calculations that someone aged 50 now could be £85,000 worse off in tax by the time they reach retirement if it stays fixed.

The Sunday Times, Business, Page: 11 Sunday Express, Page: 53

Tax return rethink

Self-employed workers who file their tax returns late may pay lower fines under plans being drawn up HMRC, with the tax office launching a points-based system to make the system “fairer and more consistent”. Andy Olymbios of PwC said the change “distinguishes between taxpayers with good governance who occasionally get things wrong and those who are persistently noncompliant.” UHY Hacker Young ’s Graham Boar said that while there is “quite a lot of help and support” for those struggling to pay, “if you bury your head in the sand and do not pay up, then you will get clobbered.”

The Sunday Times, Business, Page: 10

Self-employed voice Budget concerns

Changes in the Budget have left some self-employed people concerned they will end up paying higher taxes, with critics also concerned over exclusions in the £33bn coronavirus lifeboat fund for the self-employed. Victoria Price of EY comments that the Chancellor’s comments around ending tax breaks for the self-employed in the future “may signal a significant change in tax policy with tax treatment of employees and the self-employed possibly being equalised at some point.”

The Sunday Times, Business, Page: 10

Commission could examine NI tax powers

Northern Ireland’s Finance Minister Conor Murphy has proposed an independent commission that would examine the case for more devolved tax powers. A report commissioned by the Northern Ireland Council for Voluntary Action in 2015 suggested that income tax and stamp duty could be potential candidates for devolution.

BBC News

Super deduction to boost investment?

Russell Lynch in the Sunday Telegraph weighs the potential impact of the super deduction announced in the Budget, considering whether the move to allow firms to write off 130% of equipment and machinery outlay against their corporation tax bills will drive investment. The Office for Budget Responsibility predicts a 10% surge in business investment, he notes. Paul Falvey at BDO comments: “If you’re in a business which has relatively low capital expenditure … this sort of relief doesn’t really have a great deal of impact.” “What really matters to you is the rate of tax”, he adds.

The Sunday Telegraph, Business, Page: 5

Budget points to rethink of party principles?

Liam Halligan in the Sunday Telegraph highlights that the combination of higher corporation tax and frozen personal allowances will raise the tax burden to 35% of GDP by 2025 and asks if the Budget means the Conservative Party has “abandoned its small-state, pro-enterprise principles”, answering: “Potentially, but not yet.” Elsewhere, Martin Wolf in the FT muses on the Government’s economic vision, saying that the Chancellor’s decision to raise taxes, specifically those on business, moves away from Conservative orthodoxy.

The Sunday Telegraph, Business, Page: 2 Financial Times

Poll shows backing for Budget

A post-Budget poll by Opinium shows that 52% of respondents approved of it and only 12% disapproved, with 65% backing the freezing of personal tax allowances. Meanwhile, a YouGov survey saw 55% of respondents describe the Budget as “fair”.

The Sunday Telegraph, Page: 18

EMPLOYMENT NEWS – WEEKEND TO 7TH MARCH 2021

SATURDAY

ONS reveals high-vulnerability jobs

Office for National Statistics (ONS) analysis has identified the workers most likely to have suffered a pay cut due to the coronavirus pandemic, classifying non-key workers unlikely to have been able to work from home as being in “high-vulnerability jobs”. These include bricklayers, restaurant staff and IT engineers. The report says 32.4% of UK employees fall into the category and are more likely to have seen a reduction in working hours or wages, with 53% of furloughed staff employed in high-vulnerability jobs. It was found that 41.4% of jobs in the category saw pay reductions in the last year. The ONS report notes that more than a quarter of employees work in low vulnerability jobs, meaning they are likely to be able to work from home or are considered a key worker. Most professional occupations, including accountancy roles, fall into this category.

Daily Mail BBC News

‘Woke agenda’ warning

The Telegraph’s Matthew Lynn argues that by “embracing a politically correct agenda, firms are creating anarchy where there should be leadership”, before warning that “by embracing a woke agenda, firms are empowering staff to remove any senior manager they don’t like.” He also reflects on Dimple Agarwal stepping down from her leadership roles at Deloitte after complaints from staff of bullying and harassment and notes Bill Michael’s exit from KPMG.

The Daily Telegraph, Page: 34

UK leads diversity and inclusion charge

Michael O’Dwyer looks at how the UK is becoming the diversity and inclusion capital of the business world, with LinkedIn data showing that UK firms employ twice as many inclusion professionals per capita as any other country. He says that with Dimple Agarwal standing down at Deloitte, “the City lost one of its most powerful diversity champions.”

The Daily Telegraph, Page: 35

Job losses show gender imbalance

Jessie Hewitson in the Times questions why the Chancellor did not acknowledge that women have borne the brunt of pandemic-related job losses in his Budget, citing PwC analysis showing that 78% of roles lost in the first wave had been held by women.

The Times, Page: 62

SUNDAY

Women hit hardest by furlough and redundancy

Looking at the impact of the coronavirus crisis on employment, the Sunday Times’ Laura Miller cites PwC analysis showing that of the 15.3m people furloughed between July and October, 52% were women despite them making up 48% of the workforce, while between January to November redundancy increased 13% more for women than men. Larice Stielow of PwC said while jobs will return, they will not necessarily be the same, adding that without Government intervention “women will return to fewer hours, lower skilled, and lower paid jobs”.

The Sunday Times, Business, Page: 13

SMEs NEWS – WEEKEND TO 7TH MARCH 2021

SUNDAY

Chancellor to be quizzed on small firms’ debt

The Treasury Select Committee will this week ask Rishi Sunak how he expects small firms to repay debt taken on in the pandemic, with MPs to ask the Chancellor about the risk the issue poses to the economy. Committee chairman Mel Stride has warned: “The issue of debt recovery among small firms is particularly important because, if it goes wrong, vast waves of companies are going to go under.” Mr Stride has proposed a scenario where profitable firms repay loans earlier than struggling ones.

The Mail on Sunday, Page: 122

Free rapid coronavirus tests for all firms

England’s smallest firms have been included in an initiative that will see firms provided with free coronavirus testing kits, with officials announcing that all businesses, including those with fewer than 50 employees, will be able to sign up to the workplace testing programme. Mike Cherry, national chair of the Federation of Small Businesses, said workplace testing would be “fundamental” to bringing the pandemic under control. He added that it is “vital” that small firms are given the support they need “as they focus on staying afloat in extremely changing circumstances.”

Sky News

FINANCIAL SERVICES NEWS – WEEKEND TO 7TH MARCH 2021

SUNDAY

HK’s future as a hub uncertain

The Sunday Telegraph’s Louise Moon says uncertainty over how Chinese policies will fundamentally change Hong Kong raises questions over its future as a financial hub. She cites a KPMG report showing that the Hong Kong Stock Exchange ranked as the world’s second-largest IPO market in 2020, raising £36.3bn from 140 listings, trailing only New York’s Nasdaq.

The Sunday Telegraph, Page: 14

PROPERTY NEWS – WEEKEND TO 7TH MARCH 2021

SATURDAY

House prices up 5.2% in February

Figures from Halifax show that house prices rose 5.2% year-on-year in February, hitting an average of £251,697, although prices fell month-on-month, with a 0.1% decline on January’s average. Property values were 0.5% higher in the December to February quarter than in the September to November quarter. Halifax has welcomed the extension of the stamp duty holiday announced in the Budget, with managing director Russell Galley saying the move “has removed a great deal of uncertainty for buyers with transactions yet to complete.” He also said the new mortgage guarantee scheme will help buyers by increasing the availability of loans requiring a 5% deposit, adding that while mortgage approvals have reached record highs in recent months, “raisin g a deposit continues to be the single biggest hurdle for first-time buyers to overcome.”

The Guardian Daily Mail City AM BBC News

SUNDAY

Duty holiday extension could drive prices up

House prices are expected to hit record highs after the Chancellor announced an extension of the stamp duty holiday. With the cut-off pushed back from the end of this month to the end of June and the threshold tapered until September, Rightmove predicts the move will save an additional 300,000 home buyers up to £15,000 each. While the current stamp duty holiday has helped push house prices to a record high, the extension is likely to drive further increases. Office for National Statistics data show that prices rose 8.5% to an average of £252,000 last year. The Office for Budget Responsibility says 2021 could see a 5% climb, having increased its November forecast of 3.5%.

The Mail on Sunday

CORPORATE NEWS – WEEKEND TO 7TH MARCH 2021

SATURDAY

Frasers hits out at rate relief cap

Frasers Group, the owner of Sports Direct and House of Fraser, has warned it could be forced to close stores because of a limit to business rates relief introduced in the Budget. The Chancellor announced that a rates holiday will run until June 30 and then charges will be reduced to a third until March 2022. However, Frasers said that with relief capped at £2m, the support measure is “near-worthless” for retailers with lots of stores. It said it will have to review its portfolio to “ascertain stores that are unviable due to unrealistic business rates”, adding that the cap would make it “nearly impossible” to take on empty Debenhams sites.

The Independent

Aprirose seeks buyer for QHotels

Aprirose is reportedly seeking to sell QHotels, a chain of four-star properties which it spent £525m acquiring in 2017. The property investor is said to be working with advisers at PwC to offload the business.

Sky News

SUNDAY

Gupta owes struggling Greensill billions

Analysis shows that Sanjeev Gupta owes more than £3bn to Greensill, the finance house on the brink of administration. Mr Gupta’s GFG Alliance has bought steel and aluminium assets from a number of companies via invoice discounting, with the acquisition spree fuelled by Greensill’s supply chain finance funds. Greensill has been thrown into turmoil after Credit Suisse suspended its $10bn supply chain fund and Grant Thornton has been lined up to handle the imminent administration.

The Sunday Times, Business, Page: 1

Babcock CEO orders accounting policies review

Sabah Meddings in the Sunday Times looks at engineering services group Babcock International, highlighting that CEO David Lockwood has ordered a review of the group’s accounting policies by an independent firm. It will, she notes, examine the profitability of contracts and their value on the balance sheet, adding that PwC, Babcock’s auditor of 19 years, is “reportedly being shown the door”.

The Sunday Times, Business, Page: 8

Covid damaging but not disastrous for English football

Martyn Ziegler in the Sunday Times says the coronavirus pandemic has had a “damaging but not disastrous” impact on English professional football. He notes Deloitte estimates that Europe’s top 20 clubs will have missed out on more than €2bn of revenue across the 2019/20 and 2020/21 seasons due to the absence of fans, rebates to broadcasters and commercial impacts.

The Sunday Times, Sport, Page: 8

Shoe firm won’t step away from stores

The Sunday Telegraph’s Oliver Gill reflects on shoemaker Clarks following its takeover by private equity fund Lionrock Capital. Looking at its commitment to the high street as retail increasingly shifts online, he cites PwC’s Kien Tan who says: “For shoes, there will always be some customers who prefer shops as part of their purchase journey, even if they either do the research or complete the transaction online.”

The Sunday Telegraph, Business, Page: 6

ESG moves up the agenda

ESG has “moved steadily up the political and social agenda”, says Laura Onita in the Sunday Telegraph, with analysis suggesting that around 87% of UK investors expect their firm to prioritise ESG when it comes to deploying money. Sue Bonney, head of ESG at KPMG, says the “pressure around it makes it non-optional”. Noting that firms face pressure from consumers, employees, shareholders and lenders, Ms Bonney says: “If you are an organisation sitting in the middle of all those interest groups, it’s almost a business imperative to address it and not to kick the can down the road.”

The Sunday Telegraph, Business, Page: 8

PENSIONS NEWS – WEEKEND TO 7TH MARCH 2021

SATURDAY

Pension savers face steeper tax bills

The Telegraph’s Jessica Beard says “huge numbers” of pension savers will be hit with higher tax bills due to a freeze on the lifetime allowance. She cites figures suggesting that more than 290,000 workers already have pension wealth above the lifetime allowance but have not yet triggered the tax charge, while a report by Royal London suggests 1.25m non-retired people are projected to breach the allowance.

The Daily Telegraph, Money, Page: 1

Altmann: Boldness needed on fund assets

In a letter to the Times, former Pensions Minister Baroness Altmann commends the Chancellor for the “approach of spending today while promising tax rises tomorrow” apparent in his Budget but says the “main missing stimulus” was a “lack of boldness” in pushing more of the UK’s £2trn defined benefit pension fund assets into growth projects. This, she argues, would provide much better long-term returns for both the country and each scheme.

The Times, Page: 32

ECONOMY NEWS – WEEKEND TO 7TH MARCH 2021

SATURDAY

Capital exodus could lift GDP

Mazars economist George Lagarias believes that UK GDP could be boosted if changes seen during the coronavirus crisis take hold in the long term. Saying that a shift toward permanent remote working could see regional towns and cities grow, he suggested that “if the UK had a more even spread then GDP would rise,” although he warned that “there would be a lot of pain along the way.” Such a shift would hit central London property values and see job losses in retail, he suggested, noting that this would see a rise in the “frictional” rate of unemployment – the number of people unemployed for a short period as they move into a different role. The temporarily higher unemployment rate would be likely to trigger deflation, Mr Lagarias notes, even if GDP rises on the back of UK regions expanding.

FT Adviser

OTHER NEWS – WEEKEND TO 7TH MARCH 2021

SATURDAY

Agarwal resigns over bullying allegations

Dimple Agarwal has stepped down from her leadership roles at Deloitte following reports hat she is under investigation over accusations of bullying and inappropriate working practices. The firm said Ms Agarwal, its diversity and inclusion champion, will give up her roles as deputy chief executive and head of people and purpose. Richard Houston, Deloitte’s UK chief executive, told staff that while he cannot comment on any of the allegations, he “will not tolerate behaviours or actions that are inconsistent with our global shared values.” The Mail notes the issue marks “the latest scandal to hit the Big Four”, highlighting that KPMG chairman Bill Michael last month quit after telling staff in a virtual meeting to “stop moaning” about the effects of the pandemic and lockdown.

The Daily Telegraph, Page: 33 The Times, Page: 39 Daily Mail, Page: 24 City AM

SUNDAY

Subscriptions surging

A Deloitte survey shows that 16% of 25 to 34-year-olds in the UK now have three or more subscriptions, with a jump in the numbers in the last three months of 2020.

The Sunday Times, Business, Page: 3

Accountants warn of ‘one-size-fits-all’ director rules

A survey of mid-sized UK accountants by law firm Kingsley Napley has found that half of the bosses polled fear plans to make company directors personally liable for misinformation in accounts will result in a drain on talent in boardrooms. While ministers are set to consult on proposals to shake up audit and corporate governance after a string of scandals, half of the accountancy bosses polled said existing rules are adequate and tighter regulation will discourage talented people from becoming directors. Julie Matheson, a regulatory partner at Kingsley Napley, said there is concern that firms may have to switch auditors because their current ones are not equipped to carry out public interest audits, adding: “Mid-market accounting firms would like to see a future regulatory regime that is proportional.” The Sunday Telegraph cites a boss from a Big Four firm who says that change is needed but regulations must reflect the differences between big and small firms, arguing: “A one-size-fits-all almost certainly doesn’t work”.

The Sunday Telegraph, Sunday, Page: 3

Contact Paul Southward

Paul Southward

NEWS – TUESDAY 2ND MARCH 2021

NEWS – TUESDAY 2ND MARCH 2021

NEWS ROUNDUP

TAX NEWS – TUESDAY 2ND MARCH 2021

Dodds suggests Labour would back rise in corporation tax

Shadow Chancellor Anneliese Dodds has indicated that Labour would back a gradual increase in corporation tax across this parliament, saying that while the party would not back an immediate hike in tomorrow’s Budget it is open-minded about future increases. Ms Dodds, writing in the Guardian, says it is “hard to find a serious economist who believes that immediate tax rises would achieve anything other than damaging Britain’s recovery”, but says there is “a clear long-term case for rises in the rate of corporation tax”. She also said Labour would support reforms to tighten corporation tax loopholes. The Guardian reports that Labour would not automatically oppose the freezing of the income tax threshold. Meanwhile, Ms Dodds, in a speech to Bloomberg, said Labour would be “guided by the economic situation” on when taxes should be increased. She pointed to “tremendous anomalies” in the tax system, noting a “big gulf ” in the way high street stores and online retailers are taxed.

The Guardian, Page: 1 The Times, Page: 13 The I, Page: 8 Daily Mirror BBC News

Hague: Some taxes have to go up

Former Conservative leader Lord Hague has said that some business and personal taxes “have to go up” to keep the nation’s debt burden sustainable, arguing that those who oppose increases to taxes in the current climate are buying into “dangerous illusions”. Writing in the Telegraph, Lord Hague says: “It pains me to say, after spending much of my life arguing for lower taxes, that we have reached the point where at least some business and personal taxes have to go up”. Pointing to “press briefings and speculation”, Lord Hague says the Chancellor is set to use his Budget to announce tax rises while adding to the “colossal support he has given to households and businesses since the pandemic began”. Saying that while there are “certainly circumstances” where lower tax rates generate more revenue, this may not be the case with the levies Rishi Sunak is reportedly considering raising. Lord Hague argues: “If the Chancellor chooses his measures judiciously, he can certainly raise more revenue with some higher tax rates.”

The Daily Telegraph, Page: 1 The Daily Telegraph, Page: 14

Government urged to keep SITR

Ministers are being urged to save Social Investment Tax Relief (SITR), a relief that helps social enterprises, community groups and charities deliver essential services. Big Society Capital is urging policymakers to protect SITR and give key organisations within the sector the power to reform it. The group has written to Jesse Norman, the Financial Secretary to the Treasury, outlining the reasons to keep SITR in place. They argue that the tax relief will help the Government fulfil its “levelling up” agenda by ensuring areas worst hit by the pandemic have access to funding. A poll shows that two-thirds of people support tax relief for businesses that aim to improve society and the environment.

Daily Express

Online sales tax may hit consumers

Connor Coombe-Whitlock in the Express considers the merits of an online sales tax, citing comments from KPMG’s Melissa Geiger who suggests that it is probable that such a levy “would be passed onto consumers rather than being borne by the retailer.” Suggesting that the Chancellor may see an online sales tax as a way to rejuvenate high street retail, Ms Geiger says it is “likely that something more comprehensive will be needed to help the high street.” Mr Coombe-Whitlock also notes the potential impact on smaller online retailers, with Beverley Wakefield of Vibrant Accountancy saying she is “concerned that small business owners will be penalised in new tax measures.”

Daily Express

Firms fear taxing time and Budget battering

Matthew Lynn in the Telegraph says most businesses are expecting a “battering” in the Budget, pointing to speculation over an increase in corporation tax, an online sales tax and a rise in capital gains tax. He suggests that among the possible tax rises, the Chancellor should “at least throw a few morsels in the direction of business”, proposing increased incentives for investment and a “radical simplification that sweeps aside dozens of fiddly reliefs and allowances”. Mr Lynn, questioning the need for tax increases, says corporate taxes are “always passed on to individuals one way or another, it is just a question of how and when”.

The Daily Telegraph

Fuel duty frozen but stealth taxes on the way

The Times says that while the Budget will see fuel duty frozen for the 10th year in a row, the Chancellor is expected to announce “a series of stealth taxes”, with the basic rate and higher rate thresholds for income tax set to be frozen at £12,500 and £50,000 respectively, with the lifetime allowance for pension savings also in line to be frozen.

The Times, Page: 13 The I, Page: 9

Chancellor may plant the seed for increases

Nimesh Shah of Blick Rothenberg suggests the Chancellor could use tomorrow’s Budget to “plant the seed” for breaking a manifesto promise not to increase income tax, national insurance and VAT, citing the “unprecedented times”. He also suggests a temporary windfall tax taking in income and capital gains “may be tested”.

The Times, Page: 13 The I, Page: 9

Sunak abandons the goal of low corporate taxes

Reflecting on a possible rise in corporation tax, the FT suggests an increase for a year or two could serve as “a windfall tax on the businesses that thrived in the pandemic”.

Financial Times, Page: 20

REGULATION NEWS – TUESDAY 2ND MARCH 2021

FRC delivers second Carillion audit report

The Financial Reporting Council (FRC) has delivered a second report into KPMG‘s audit work of collapsed construction firm Carillion, with the latest report covering the audit of Carillion’s financial statements for the year ended December 31, 2013. The FRC previously delivered findings on audit work between 2014 and 2017. The report will be published once KPMG has reviewed the findings. The regulator will then decide on appropriate sanctions

The Times, Page: 42

SMEs NEWS – TUESDAY 2ND MARCH 2021

£520m support for small businesses

Rishi Sunak is set to announce a £520m scheme that will help 130,000 UK SMEs access management training, technology advice and discounted software. The Help to Grow scheme will offer two streams, with the digital strand an online service offering free advice on how companies can improve their digital capability as well as vouchers for discounts on approved tech, while the management portion will provide subsidised training to “enhance the skills of leaders” in areas such as financial management and marketing. The Federation of Small Businesses welcomed the news but warned: “We cannot allow poor infrastructure through a lack of broadband or 5G to prevent small firms from getting a foothold on to important schemes like this.” The Chancellor said: “Brilliant small and medium-sized enterprises are the backbone of our economy – creating jobs and prosperity.” He added: “Help to Grow will ensure they are embracing t he latest technology and management training, fuelling our plan for jobs by boosting productivity.”

The Times, Page: 36 The Guardian, Page: 19 Daily Mail, Page: 8 The Independent, Page: 45 Daily Express, Page: 9

CORPORATE NEWS – TUESDAY 2ND MARCH 2021

Greensill funds frozen

Credit Suisse has suspended funds investing in Greensill Capital’s products, freezing $10bn worth of funds linked to Greensill, while SoftBank has substantially written down its $1.5bn investment in the lender. Greensill has appointed Grant Thornton to oversee a possible restructuring, saying it “could file for insolvency”. It is believed to be in talks over a $100m sale of its operating business to Apollo Global Management.

The Times, Page: 33 The Daily Telegraph, Business, Page: 8

 

Halfords reviewing tax perk payback

Halfords is to pay back £10.7m in furlough scheme cash to the Government after enjoying better than expected sales at the start of this year, however it has yet to confirm whether it will repay business rates relief, having previously said the issue was “under review”.

Daily Express, Page: 47 Sky News

Police probe Barcelona corruption

Barcelona CEO Óscar Grau is among four people who have been arrested as part of an investigation into an alleged misuse of funds and corruption at the Spanish football club. It is noted that PwC was last year employed to look into issues following an internal investigation.

The Guardian, Page: 45 Daily Mail, Page: 79 The Daily Telegraph, Sport, Page: 5 Financial Times, Page: 8

Paper talk

The Telegraph looks at the market for anti-Brexit newspaper The New European, with KPMG’s David Elms noting that it could “carve out a corner of the market and make a small profit” due to a low cost base and “niche but quite loyal” audience, while musing on how it could “increase the top line”.

The Daily Telegraph, Page: 4

PROPERTY NEWS – TUESDAY 2ND MARCH 2021

Housing market faces pressure

With Bank of England data showing borrowers took on an extra £5.2bn of debt for home purchases in January, Howard Archer, chief economic advisor to the EY Item Club, has warned that support to the housing market coming from the rise in the stamp duty threshold “has recently started to wane”. With it reported the Chancellor could extend the stamp duty holiday until June, Mr Archer says this “would likely provide near-term support to housing market activity and prices” but adds that the housing market is “likely to come under mounting pressure over the coming months”, saying the recent strengthening in the market “has been disproportionate given the economy’s contraction over 2020 and rising unemployment.”

The Daily Telegraph

Deloitte base sold

A consortium led by Hong Kong based real estate company Wing Tai Properties has agreed a £255m deal for London’s Athene Place, one of Deloitte’s UK bases. Henderson Park acquired the office in 2018 after Deloitte vacated the building, refurbishing the site and agreeing a pre-let back to Deloitte.

Evening Standard

EMPLOYMENT NEWS – TUESDAY 2ND MARCH 2021

CIPD: Apprenticeships levy ‘has failed on every measure’

The Chartered Institute of Personnel and Development (CIPD) says employer investment in training has fallen since the introduction of an apprenticeship levy in 2017, with a decline in apprenticeship starts and fewer going to young people. The HR industry body says total apprenticeship starts have fallen from 494,000 in 2016/17 to 322,500 in 2019/20, with the number of apprenticeships going to under-19s falling from 122,800 to 76,300 in the period. Peter Cheese, chief executive of the CIPD, said: “On all key measures the apprenticeship levy has failed and is even acting to constrain firms’ investment in apprenticeships and skills more broadly.” He warned: “Without reform it will act as a handbrake on employer investment in skills, damaging firms’ ability to recover from the pandemic.”

BBC News

Pandemic stalls women’s workplace progress

A report from PwC shows that the coronavirus crisis has halted and reversed years of women’s progress in the workplace, with women more likely to lose their jobs or be furloughed. The report says female-dominated industries have the highest share of furloughed jobs, with more than half of those on the scheme women, even though only 48% of the workforce is female. The report says the pandemic has halted nine years of “consistent gains towards women’s economic empowerment”, with PwC’s Laura Hinton saying the findings reveal the “very real” impact of the pandemic on women.

Daily Mail, Page: 12

Office return off the agenda?

Hugo Rifkind in the Times considers whether the end of restrictions will see a broad return to offices, noting that a number of large UK firms, including PwC, are looking into moving toward hybrid working. On what a shift toward remote work could mean for cities, he cites PwC analysis suggesting the population of London could decline by up 300,000 this year.

The Times, Page: 25

FINANCIAL SERVICES NEWS – TUESDAY 2ND MARCH 2021

43% of finance firms move jobs to the EU

A report from EY shows that 7,600 jobs in the financial sector have moved abroad because of Brexit, with 100 relocated since October. In total, 43% of businesses in the sector have moved or plan to move some of their operations or staff to the EU. EY found that Dublin and Luxembourg were the most popular alternatives to Britain. The firm’s Omar Ali commented: “Financial services firms across Europe have a number of chapters still to write before they can close the book on Brexit.” Meanwhile, more than a quarter of firms polled by EY said that Brexit was having a negative impact on their business.

The Times The Guardian, Page: 33

ECONOMY NEWS – TUESDAY 2ND MARCH 2021

Consumer credit falls in January

Bank of England data released yesterday shows that consumer borrowing fell at its fastest pace since May 2020 in January. The £2.4bn decline in unsecured lending to consumers was the steepest fall since the £4.5bn recorded in May 2020. January’s total takes the year-on-year fall to 8.9%, the biggest decline since monthly records began. The figures show that British lenders approved almost 99,000 mortgages in January, down from 102,800 in December. British households paid back £2.4bn of borrowing on credit cards, personal loans and overdrafts in the first month of 2021. The total amount outstanding on credit cards and loans shrank to £199.4bn, falling below £200bn for the first time since April 2017.

The Daily Telegraph The Guardian City AM

Manufacturing optimism up

The IHS Markit/CIPS Purchasing Managers’ Index for February increased to 55.1 in February from 54.1 a month earlier, with UK manufacturing activity returning to its highest levels since the start of the most recent lockdown. The index, where a reading above 50 signifies growth, shows that optimism rose to a 77-month high last month. Despite this, 58% of companies reported longer delivery times from suppliers. Rob Dobson, director at IHS Markit, commented: “The UK manufacturing sector was again hit by supply chain issues, COVID-19 restrictions, stalling exports, input shortages and rising cost pressures in February.” He added: “Look past the headline PMI and the survey reveals near stagnant production, widespread shipping and port delays and confusion following the end of the Brexit transition period.”

The Guardian City AM

OTHER NEWS – TUESDAY 2ND MARCH 2021

Ministers urged to invest in schools

A letter to the Times says disruption to education bought about by the coronavirus crisis means young people, especially those from low income or disadvantaged backgrounds, are “less equipped to demonstrate their potential and gain access to the opportunities they deserve.” Signatories including Deloitte chair Nick Owen urge the Chancellor to set out a national recovery plan for young people in the Budget, calling for extra investment in schools serving the hardest-hit communities for at least five years as a first step.

The Times, Page: 16

Contact Paul Southward

Paul Southward

NEWS – MONDAY 15TH FEBRUARY 2021

NEWS – MONDAY 15TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – MONDAY 15TH FEBRUARY 2021

Chancellor warned over tax hike on ‘fragile’ self-employed

The Chancellor, who has previously suggested he would consider increasing national insurance contributions to even out an “inconsistency” between independent workers and employees, has been urged not to raise taxes on the self-employed. Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), has warned Rishi Sunak that people are “in an extremely fragile state”, with an increased tax burden “the last thing they are going to need”. A tax increase, he warned, could be the “straw that breaks the camel’s back”. He added that “If we care about our employment rate, if we care about people ’s business and if we care about the economy we should not be considering tax rises right now .”

Daily Express

Industry calls for reform of R&D tax credits

Trade bodies representing businesses focused on research and development have called for a reform of tax credits, saying this would boost the economy and attract investment into the UK. A report commissioned by industry bodies including the Confederation of British Industry warns that “outdated” rules do not allow companies to claim R&D tax breaks on capital spending, unlike in other countries including France, Spain and Japan. This, the report argues, means there are “far stronger incentives to physically locate new research facilities in other countries.” The trade bodies say altering the R&D tax credit regime so as to include capital spending could incentivise companies to invest in Britain, adding £4bn a year to the economy within a decade and creating at least 12,000 jobs.

The Daily Telegraph, Business, Page: 5

HMRC reduces checks on online sellers despite VAT fraud risk

Analysis by UHY Hacker Young shows that HMRC sent online retail platforms 80 data requests about sellers between April and December 2020, down from 2,684 requests in the 2019/20 tax year.

Financial Times, Page: 1

EMPLOYMENT NEWS – MONDAY 15TH FEBRUARY 2021

AI can give bosses a boost

Jonty Bloom of BBC News considers the implications of AI taking a greater role in the workplace and whether workers would be willing to take orders from a machine. Jeff Schwartz, a senior partner at Deloitte and a global adviser on the future of work, says he hopes AI bosses may help human counterparts improve their performance, suggesting that with a machine taking on more mundane leadership tasks such as compiling rotas and performance monitoring, human bosses will be freed up to concentrate on being better team leaders.

BBC News

Online classrooms democratise corporate training

The FT looks at executive training programmes, citing Deloitte’s Erin Clark who says a shift toward online learning opens leadership development training up to a wider number of people.

Financial Times, Page: 18

CORPORATE NEWS – MONDAY 15TH FEBRUARY 2021

Payday lenders criticised for not detailing compensation

High-interest lenders and their auditors have been criticised for failing to reveal how much they could owe customers who were mistreated, with many not detailing the cost of payouts over claims they breached City rules by offering customers unaffordable credit. Alan Campbell, founder of Salad Money, has warned that unaffordable borrowing continues partly because auditors do not always force companies to reveal the full liability they may face from potential compensation claims in their accounts. He believes that unaffordable lending practices will change if lenders “are burdened by the liability” of it being disclosed in their accounts. Michael O’Dwyer in the Telegraph notes that the auditors have not been accused of wrongdoing. He also highlights that a number of high-interest and payday lenders have gone bust despite their accounts being signed off by audit firms including Grant Thornton and Mazars.

The Daily Telegraph, Business, Page: 3

Voke creditors to take big hit

Unsecured creditors in Kind Consumer who are owed £46.5m are set to suffer heavy losses after it was sold via a pre-pack administration. The firm, which developed the Voke nicotine inhaler, was sold to OBG Consumer Scientific for £1.6m in a pre-pack sale agreed by administrator Smith & Williamson. The sale came last November, before legislation changes that reintroduced HMRC as a preferential creditor.

The Times, Page: 39

Sport bail-outs on the way

The Telegraph looks at a £300m Government bail-out for sports hit by the coronavirus crisis. The payouts, which will come mainly as loans rather than grants, follow audits by Sport England and Deloitte which have analysed the impact on clubs and competitions. The paper looks at “fault lines” which have appeared in several sports, with a number of debates over the allocation of money and level of support being offered.

The Daily Telegraph, Sport, Page: 25

Cruise ship retailer deploys CVA on the high seas

Harding Retail, which operates boutiques on cruise ships, has appointed KPMG to implement a CVA. Harding is reportedly asking suppliers to accept reduced amounts in settlement of unpaid invoices.

Financial Times, Page: 11

Rolls-Royce set to name CFO

Engineering group Rolls-Royce Holdings is expected to name former Deloitte partner Panos Kakoullis as its new CFO this week.

The Times, Page: 35 Sky News

New fund to support BAME entrepreneurs

The Times looks at Create Equity Fund, a new investment vehicle that will focus on investing in black, Asian and minority ethnic entrepreneurs with fledgling creative businesses, noting that KPMG is helping to hone the business plan.

The Times, Page: 40

‘Authentic’ leaders who lack adaptability, empathy and kindness are sure to fail

Andrew Hill reflects on corporate leadership amid the pandemic, considering the writings of sociologists Gareth Jones and Rob Goffee and commenting on Bill Michael’s departure as chairman of KPMG.

Financial Times, Page: 18

FINANCIAL SERVICES NEWS – MONDAY 15TH FEBRUARY 2021

London will remain Europe’s financial capital, says Raab

The biggest competition to the UK’s financial services sector will come from Asia and the US, says Foreign Secretary Dominic Raab, who believes that while EU financial capitals may “nick a bit of business here and there from the City” post-Brexit, they will not challenge London’s status as Europe’s global financial capital. Mr Raab said that while EU financial capitals may be able to compete with the UK for some business, “the problem is the measures they will take to achieve this will undermine their own competitiveness.” “The challenge to London as a global financial centre around the world will come from Tokyo, New York and other areas rather than those European hubs. Particularly if they start to erect barriers to trade and investment,” he added.

City AM

INTERNATIONAL NEWS – MONDAY 15TH FEBRUARY 2021

EY China faces mismanagement allegations

EY is facing whistleblowing claims in China, with the firm accused of looking the other way when large client Xinwei Group failed to disclose a risky stock purchase. Claims circulating on Chinese social media site Weibo have seen a whistleblower say that when she raised concerns, she was told by senior managers that the investment was not risky and the matter should be dropped. She claims her warnings were ignored by senior employees, with EY failing to raise them in the audit. A spokesman for EY China said the firm is “fully committed to offering the highest standards of audit services by leveraging robust audit methodology, tools and policies”. The claims come in the wake of Chinese regulators telling Deloitte to investigate similar claims made by a whistleblower who alleges there were five serious breaches of good practice between 2016 and 2017.

The Daily Telegraph, Business, Page: 3

ECONOMY NEWS – MONDAY 15TH FEBRUARY 2021

Financial crisis made sandwich generation more resilient

More than three fifths of those aged 40 to 59 feel they are better equipped to deal with the economic impact of the coronavirus crisis due to lessons learnt during the 2008 financial crisis. People in this age bracket – known as the ‘sandwich generation’ as they are likely to have responsibilities toward their children and their parents – say they built resilience amid the banking crisis and ensuing recession. A poll by investment house Killik & Co saw a fifth say they are now more cautious about spending, while one in ten have increased their emergency savings. The research comes as Financial Conduct Authority analysis reveals that more than 14m adults in the UK have low financial resilience, with a third expecting to cut back on essentials, one in ten likely to use a food bank and one in six expecting to take on more debt.

Daily Mail

OTHER NEWS – MONDAY 15TH FEBRUARY 2021

Why Michael had to go

Ruth Sunderland in the Mail looks at the departure of KPMG chairman Bill Michael, saying that while his supporters believe “mollycoddling employers have created a generation of snowflakes on the staff”, to say Mr Michael is the victim of a workplace culture war is “nonsense” She says Mr Michael “had to go” as the controversial views he expressed in an online meeting – “whether right or wrong” – are incompatible with leading a top accountancy firm. Ms Sunderland says the Big Four, as large employers of graduates and apprentices, can “play a part in creating a fairer, more socially-mobile and prosperous country”, adding that if you become a partner at one of the firms, “you sign up to be a champion of diversity.” Meanwhile, Max Pemberton in the same paper expresses his support for Mr Michael’s comments, saying he was right to tell staff they were in “a very lucky sector” and should stop whingeing.

Daily Mail, Page: 71, 49

Contact Paul Southward

Paul Southward

NEWS – WEEKEND TO 14TH FEBRUARY 2021

NEWS – WEEKEND TO 14TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – WEEKEND TO 14TH FEBRUARY 2021

SATURDAY

Starmer: ‘You can’t choke off the recovery by raising taxes’

In an interview with the Times, Labour leader Sir Kier Starmer talks about the steps the party has taken since its worse election defeat since 1935. As the interview turns to the economy, Starmer is reluctant to discuss specific policies but does say balancing the books should not be the priority while the economy is recovering. “Over the course of the recovery, tax rises are not the right way to ensure that we go forward to a more thriving economy,” Sir Kier says. “There’s an emerging view that I subscribe to that, in the short term, you don’t balance the books and you don’t choke off the recovery by raising taxes on the one hand or reverting to austerity on the other. You’ve got to get your economy to thrive.”

The Times, Page: 4

Budget tax rise targets: who will pay?

The Times takes a look at the most likely tax hikes the Chancellor could introduce in his Budget, with income tax and national insurance contributions probably most controversial considering raising these would break a Conservative Party manifesto pledge. Then there’s the equalisation of self-employed workers with employed people, but the Institute of Fiscal Studies said going ahead with this policy now could be seen as “downright perverse”, given the hardships faced by many self-employed workers in the pandemic. The paper goes on to consider the problems with cuts to pension tax relief, reducing the capital gains allowance and reforming inheritance tax.

The Times, Page: 64

John O’Connell: PM should emulate Churchill’s tax cutting strategy

New research from the TaxPayers’ Alliance finds that the tax burden now stands at its highest sustained level – based on a five-year average – since 1951. The tax burden next year will be an estimated 34.2% as a share of GDP. That will be the highest single year score since 1969-70. Writing in the Yorkshire Post, John O’Connell, the chief executive of the Taxpayers’ Alliance, says Boris Johnson should follow Winston Churchill’s example and drive the burden down. Tax cuts will be critical to a post-pandemic Britain trying to restore growth and prosperity, as Churchill noted when he said, “for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”.

Yorkshire Post

Sunak commits to 2021 deadline for global tech tax deal

Rishi Sunak confirmed his commitment in a G7 meeting yesterday to establish a new global tax on tech firms. The Chancellor said the new digital tax framework was a “key priority” and called on member nations to reach an “enduring multilateral solution” by the mid-2021 deadline set by the G20. Mr Sunak also called for cooperation on tax between the G7 and G20, as well as the Organisation for Economic Co-operation and Development.

City AM

EU members opt into detached worker provisions

HMRC have updated their National Insurance rules for UK workers operating in the EEA or Switzerland. The move came after the EU notified the UK that all member states will be applying for the detached worker provision, meaning that any workers who are temporarily moving between the UK and the EU will continue to pay into the social security system for their home state.

Daily Express

Expats stranded by pandemic face heavy tax toll

The FT examines the problems faced by oversees workers and business travellers who have been forced by COVID-19 travel restrictions to breach tax residency codes. Elsewhere, the Telegraph profiles some of the tech workers that have left behind the grind of city life for low-tax, sun-kissed countries now they are no longer tied to an office.

Financial Times, Page: 6 The Daily Telegraph, Page: 37

SUNDAY

Banks may pass savings details to HMRC

Banks and wealth managers may be asked to pass sensitive information directly to HMRC as tax authorities look to pull in around £5.5bn a year believed to be owed from earnings that taxpayers fail to mention on their tax returns. This comes as HMRC looks to close the £31bn tax gap – the difference between the amount of tax paid each year and what it believes should be paid. A review by the Office of Tax Simplification (OTS) has called on financial services firms to offer views on how they might send information on things such as interest payments, dividends, Gift Aid and pension contributions to the taxman. The OTS document said: “Instead of millions of individuals having to provide to HMRC details of potentially taxable income and gains on their investments, the review will consider whether it could instead be uploaded by their investment or wealth management company.” George Bull, a senior tax partner at RSM, said the plan raises privacy concerns, commenting: “All the bodies required to report financial data to HMRC would have to obtain national insurance numbers from individuals. The consolidation of so much data raises the spectre of data-hacking and identity theft on an unprecedented scale.” An HMRC spokeswoman said the OTS study was “an own-initiative review” by the group, rather than one commissioned directly by the Chancellor. Meanwhile, James Coney in the Sunday Times says addressing the tax gap could help Rishi Sunak balance the books, post-pandemic. He says the Chancellor need not “change any taxes to rake more of this in, you just need to improve the system”, with HMRC “already heading in this direction” through Making Tax Digital, which he says “formalises many informal payments that used to slip through the taxman’s net”.

The Sunday Times The Sunday Times, Business, Page: 11

Davis warns Chancellor over ‘damaging’ tax increases

Former Brexit Secretary David Davis has urged Rishi Sunak not to increase taxes in his March 3 budget, telling the Chancellor: “Growth must be the clear aim of our economic strategy for the next two years – not spreadsheet conservatism.” Writing in the Mail on Sunday, he says the Government “must extend a helping hand to the self-employed and small business owners by ensuring that we don’t destroy jobs by increasing the tax burden”. Mr Davis calls on Mr Sunak to avoid “damaging tax increases” that could hit Britain’s post-pandemic recovery, saying: “The mutterings that keep emerging from the Treasury about increasing taxes to balance the books are economically incomprehensible.” With it suggested that Mr Sunak could increase taxes as he looks to balance the books following the economic hit of the coronavirus crisis, Mr Davis argues that such a move &ldquo ;would not only be wrong, it would be completely counterproductive.” Mr Davis has suggested the Chancellor could “’take his lead” from former president Ronald Reagan who cut income tax rates to revitalise the US economy, saying: “Reaganomics was heavily criticised by conventional economists, but it led to a growth in GDP, a resurgence of business confidence, and a fall in unemployment rates”.

The Mail on Sunday, Page: 6

PROPERTY NEWS – WEEKEND TO 14TH FEBRUARY 2021

SATURDAY

Rishi Sunak considers six-week extension of stamp duty holiday

The Chancellor is considering extending the stamp duty holiday by six weeks, the Telegraph reports, in a move designed to prevent tens of thousands of buyers walking away from sales. The decision to raise the threshold for paying stamp duty from £125,000 to £500,000 in July was taken to bolster the economy and prop up the housing market. House prices have risen as a result and a conveyancing backlog now mean buyers are waiting months to complete. Rishi Sunak is looking at a limited extension through to mid-May which would help to alleviate fears that sales risk falling through after the March 31 deadline expires, but is said to oppose calls for a longer six month extension due to the “gratuitous” impact this would have on tax receipts. The paper also reviews property taxes overall, comparing levies in England with other countries and noting a push by Tory MPs to persuade Rishi Sunak to scrap stamp duty and council tax altogether and replace them with a proportional property tax.

The Daily Telegraph The Daily Telegraph, Money, Page: 4

FINANCIAL SERVICES NEWS – WEEKEND TO 14TH FEBRUARY 2021

SATURDAY

UK should exploit EU’s war on ‘equivalence’

The Telegraph’s Ambrose Evans-Pritchard comments on the EU’s determination not to grant equivalence to UK financial services companies, arguing that Brussels risks violating international law if it continues with this selective treatment. The non-discrimination principle of the World Trade Organisation makes clear that selective treatment of one state for political reasons is strictly forbidden. The EU grants broad equivalence to Canada, Australia, the US, and others, Evans-Pritchard point out. “All WTO members with equivalent standards have to be treated equally. Refusal to do so goes against the whole Most Favoured Nation principle,” said one expert advising the Government. The consensus seem to be, however, that instead of a unilateral abrogation of the trade agreement (which the UK could rightfully pursue considering the EU’s parallel breach of the Good Friday Agreement), Britain should “focus on the cutting-edge areas of fintech where the UK already has a huge advantage” and be “super-aggressive in pushing for global trade deals elsewhere.”

The Daily Telegraph

SUNDAY

Amsterdam takes London’s trading crown

The Observer considers the climate for the UK’s financial services sector after it was revealed that Amsterdam has stolen London’s crown as Europe’s major share trading centre, with an average €9.2bn of shares a day bought and sold on the Dutch city’s three main exchanges last week compared with €8.6bn in London. Kevin Ellis, chairman of PwC, comments that London “has a scale that isn’t easily replicated” but suggests the City “does have to evolve to ensure its ongoing relationship with the EU and all of its trading partners.” The paper notes EY analysis showing that, up until October 2020, Dublin was the most popular location for financial services companies moving jobs out of London.

The Observer, Page: 55

CORPORATE NEWS – WEEKEND TO 14TH FEBRUARY 2021

SUNDAY

Burberry hands back tax relief

Burberry is to voluntarily pay the Treasury tax it saved from an emergency business rates holiday, with this coming despite the fashion firm’s stores remaining shut. The move makes Burberry the first non-essential retailer to hand over tax on business premises forced to close under lockdown rules. Some retailers that have been able to trade throughout lockdown have given up the business rates tax relief, including a number of supermarkets. Analysis by Altus Group shows 14 retail groups have returned £2.2bn to the Treasury.

The Mail on Sunday, Page: 121

Night-time economy in support call

Representatives of nightclubs, music venues and bars – as well as a number of MPs – have written to Chancellor Rishi Sunak calling for a £4.5bn rescue fund for Britain’s night-time economy, warning that without help the sector “will all but collapse”. They acknowledge the “unprecedented interventions” the Chancellor has already made to support the economy and the wider hospitality sector, but warned that “significant parts” of the economy involving businesses that operate between 6pm and 6am had “fallen through the cracks of the support already offered”. The letter calls for a grant scheme, as well as extensions of the furlough scheme, business rates relief and a reduction in VAT.

The Mail on Sunday

PENSIONS NEWS – WEEKEND TO 14TH FEBRUARY 2021

SUNDAY

Cost of cutting pension contributions outlined

Savers risk losing nearly £11,000 from their pension if they cut back on their contributions to get through the coronavirus pandemic. Nest, the government-backed work scheme, said that workers have reduced their average contributions by £8 a month since April 2020. Analysis by Interactive Investor reveals that cutting contributions by £8 a month would mean that a 21-year-old basic-rate taxpayer would have almost £11,000 less at retirement at 68. For a higher-rate taxpayer, who would get greater tax relief on contributions, cutting £8 a month would leave them with £12,500 less at retirement.

The Sunday Times

Sunak to target pensions?

Jessica Beard in the Sunday Telegraph says that with the Chancellor looking to restore public finances after the blow dealt by the coronavirus crisis, the tax benefits of pensions are under threat. Experts, she says, have warned that retirement savings “will make for rich pickings in a Treasury tax raid”. Tim Stovold of Moore Kingston Smith believes the 25% tax-free pension cash benefit is at risk and is “too generous”, warning it is “inevitable” the Government would cap the amount savers could withdraw under the rule. He added: “The risk of this happening eventually is high. It may not be in this budget though, as it doesn’t immediately collect large amounts of tax.”

The Sunday Telegraph, Business, Page: 9

ECONOMY NEWS – WEEKEND TO 14TH FEBRUARY 2021

SATURDAY

UK economic contraction deepest since 1709

Data from the Office for National Statistics show that despite the economy growing by an unexpected 1% in the final quarter of last year, it still suffered its worst annual performance in more than three centuries with output down by 9.9% – wiping out seven years of economic growth. Most of the slump occurred during the first lockdown in the spring but a surprise recovery was seen in the final quarter of 2020. The Chancellor, Rishi Sunak, said that the figures underscored the “serious shock” that the economy was facing because of the pandemic. “While there are some positive signs of the economy’s resilience over the winter, we know that the current lockdown continues to have a significant impact on many people and businesses,” he said. The GDP figures are “less bad than expected”, says PwC chief economist Jonathan Gillham, but the economy is still 8%smaller than it was pre-Covid. “To put this into perspective, every person in the UK is roughly £3,300 worse off than they were in 2019 on a net basis.”

The Times The Daily Telegraph Financial Times City AM

SUNDAY

Economists warn over Brexit disruption

Economists have warned that post-Brexit disruption to trade cannot be dismissed as mere “teething problems”, arguing that it points to structural issues which could hit UK GDP for several years. Andrew Goodwin, chief UK economist at Oxford Economics, said “non-tariff barriers” such as additional form-filling, queueing and regulatory obstacles to trade are hitting a number of sectors. He adds: “The onus now is on the Government to find ways of boosting growth in other ways.” Thomas Sampson, associate economics professor at the LSE, said there was “some truth” that disruption at the borders is down to “teething problems but added: “There are also permanent changes which are going to make trading harder, even once everyone understands the new system.” Prof Anand Menon, a political scientist at King’s College London, said: “Some of it is teething problems, but the vast majority isn’t”.

The Independent

Javid: Factor nature into wealth of countries

Former Chancellor Sajid Javid has said that countries’ wealth can no longer be calculated on GDP and financial assets alone and must be overhauled to include the value of their nature as well. In an interview for the Sunday Telegraph, he calls for a new international financial organisation to price up biodiversity and carbon, in a major overhaul that would put a “cost to nature of the resources we use”.

The Sunday Telegraph

SMEs NEWS – WEEKEND TO 14TH FEBRUARY 2021

SATURDAY

Northern firms enjoy healthy VC backing

Research by KPMG reveals that northern businesses attracted more than £100m in venture capital investment in the fourth quarter of 2020. The firm’s Global Venture Pulse Survey found that £102m was raised across 47 deals, representing 12% of all UK deals by volume, but only 3% of all UK deal value. Nationally, the report found that £11.7bn of VC investment was made into UK scale-up businesses across 1,969 deals in 2020.

Insider Media

INTERNATIONAL NEWS – WEEKEND TO 14TH FEBRUARY 2021

SATURDAY

Head of German accounting watchdog faces compliance probe

The German government is investigating whether the president of Germany’s accounting watchdog violated internal compliance rules when he joined the supervisory board of listed German wholesaler Metro AG in 2017.

Financial Times

REGULATION NEWS – WEEKEND TO 14TH FEBRUARY 2021

SATURDAY

FRC expects further delays in transition to ARGA

The Financial Reporting Council (FRC) is postponing an expansion of its enforcement division due to the lack of Government action on audit reform, the Times reports. The FRC is due to be replaced by a tougher regulator but the Government has yet to confirm the timetable for bringing forward legislation to create the new watchdog. Although the FRC anticipates having to expand its supervision and enforcement team, it has decided to put this off until at least next year and “until the Government’s public policy position is clearer”. Sir Jon Thompson, its chief executive, said that the council had assumed a “further two-year transition period” to create the new watchdog, known as the Audit, Reporting and Governance Authority (ARGA), in 2023.

The Times, Page: 57

OTHER NEWS – WEEKEND TO 14TH FEBRUARY 2021

SATURDAY

Bill Michael quits as chair of KPMG UK

KPMG UK chairman Bill Michael has resigned after a leaked conference call revealed how he’d told colleagues they were fortunate to have the jobs they had and should stop moaning about the pandemic. He also said he thought the concept of unconscious bias was “complete and utter crap”. Mr Michael’s no-nonsense approach was old fashioned and abrasive, the FT suggests, with some at the firm believing his temperament was counter to the culture they wanted to pursue. The Telegraph’s Ben Marlow also described Michael as direct – “a salt-of-the-earth Aussie” – but agrees with those who “think we could do with a few more Michaels in the world, and that his sacking is just another example of liberal wokery getting out of control.” Marlow points out that much of the discontent with Michael was due to the cost-cutting exercise he’d embarked on – relations became “toxic” as partner pay slumped to a mere £572,000 last year and underperforming staff were ejected. But Marlow too points to the generational differences many bosses will be experiencing, with younger workers requiring their job to be “fun” and for the company they work for to have a genuine social conscience. Perhaps, Marlow contends, if Michael is guilty of anything it is “failing to understand that the world he has been working in for decades has changed.” Or maybe, he concludes, “there’s an unconscious bias against straight-talking Australians?”

The Daily Telegraph, Page: 25 The Daily Telegraph, Page: 35 BBC News Financial Times, Page: 1 The Ti mes, Page: 9 Daily Mail, Page: 56 The Guardian, Page: 27 Daily Express, Page: 63

Give your loved one a tax break this Valentine’s Day

HMRC is encouraging married couples and people in civil partnerships to sign up for a tax break this year. Marriage Allowance offers individuals the chance to transfer part of their Personal Allowance to their husband, wife or civil partner, which could reduce their tax by up to £250 a year. For some couples, this could mean a backdated payment of up to four years of claims which could be as much as £1,188.

Press Release

SUNDAY

Luxury watch market clocks huge growth

The Sunday Times looks at the luxury watch industry, noting Deloitte research showing that it has more than doubled in size to £17bn since 2000.

The Sunday Times, Page: 24

Contact Paul Southward

Paul Southward

NEWS – FRIDAY 12TH FEBRUARY 2021

NEWS – FRIDAY 12TH FEBRUARY 2021

NEWS ROUNDUP

TAX NEWS – FRIDAY 12TH FEBRUARY 2021

Treasury mulls freeze on personal allowances

The Treasury is considering scrapping the planned increases in personal income tax allowances in next month’s Budget, according to the Telegraph. The move would keep both the £12,500 and £50,000 thresholds in place and raise £6bn in revenue by 2024-25. Tory MP Andrew Griffith backed the idea while Mike Brewer, the deputy director of the Resolution Foundation, said: “There are good reasons that freezing income tax allowances is tried and tested revenue raiser – it’s a classic stealth tax, a way to improve the fiscal outlook without generating much uproar.”

The Daily Telegraph, Page: 1

Chancellor needs to cut working people’s taxes – Habib

The prominent Brexiteer Ben Habib told a meeting of the Bruges Group that Rishi Sunak should cut the tax burden on working and middle-class people in order to stimulate growth in the economy. Mr Habib said: “We need to put more money, money that’s earned not grants, but we need to put more money in the pockets of the working class and middle classes who have actually seen us through this pandemic. You do that by cutting taxes which burden them the most which is VAT, National Insurance, taxes on fuel, council tax. These are taxes which need to be looked at very carefully. The spenders in our economy are the middle and working classes.”

Daily Express

Britain kicks off G7 presidency with call for tax on big tech

Rishi Sunak is expected to call on tech giants to pay more in tax after seeing their profits explode during the pandemic. The Sun reports that the “Amazon and Facebook Tax” will be top of the Chancellor’s agenda when he meets with his G7 counterparts later today.

The Sun

PERSONAL FINANCE NEWS – FRIDAY 12TH FEBRUARY 2021

FCA report: ‘quarter of Britons struggling financially’

The Financial Conduct Authority’s new Financial Lives Survey reveals that the pandemic has left one in four Britons with “low financial resilience”, with young people and ethnic minorities more likely to have become vulnerable. The watchdog found that the number of people who are over-indebted, have low levels of savings, or low or erratic earnings increased from 10.7m to 14.2m during 2020. The report also suggests there are now 27.7m adults with “characteristics of vulnerability” such as poor health, low financial resilience or recent negative life events, up 15% on February 2020. Nisha Arora, the FCA’s director of consumer and retail policy, called the findings “worrying”, adding: “It is likely the picture will have got worse since we conducted the survey”. AJ Bell analyst Tom Selby warned that “financial vulnerability is like blood in the water to scammers”, and urged consumers to be careful as “there has already been a surge in scam activity since the pandemic started”.

Financial Times The Daily Telegraph Evening Standard

PENSIONS NEWS – FRIDAY 12TH FEBRUARY 2021

Minimum pension age set to rise

The minimum pension age is set to increase to 57 in 2028 under plans unveiled in a government consultation. At present, people aged 55 can access their retirement funds but the Treasury wants to see this age-limit increased by two years from April 2028. Raising the normal minimum pension age to age 57 could encourage individuals to save longer for their retirement, and so help ensure that individuals will have financial security in later life. The rise will maintain a 10-year gap between the point someone can access their private pension and the state pension age.

Professional Adviser Pensions Age

SMEs NEWS – FRIDAY 12TH FEBRUARY 2021

Small businesses to be offered grants to cope with Brexit disruption

The Government is to create a £20m Brexit support fund to help small businesses handle changes to trade rules with the EU and to prepare for further changes to import controls in April and July.

Financial Times, Page: 3

FINANCIAL SERVICES NEWS – FRIDAY 12TH FEBRUARY 2021

EU’s attacks on the City of London could be self-defeating

The proportion of euro-denominated swap trading done in London fell from about 40% last July to 10% in January, according to IHS Markit. Trading of euro swaps at EU venues rose to 25% of the market from 10% while trading on US marketplaces more than doubled to 20%. The news comes after data showed that Amsterdam overtook London as Europe’s biggest share trading hub in January. Some experts argue that the trading shift is largely symbolic considering the relatively small profits involved and that the EU’s intransigence over passporting for financial services will ultimately damage the EU, cutting itself off from access to one of the world’s deepest capital markets, potentially leaving Europe’s banks more vulnerable. PwC’s global head of Brexit policy Andrew Gray comments: “There is obviously a need in Europe for investment to be more linked to capital markets than it is to bank lending … I’ m not sure that is necessarily supported by effectively ringfencing Europe as a whole, limiting the amount of capital flows and effectively placing further burden on the banking sector to provide funding for investments.”

Financial Times The Daily Telegraph, Business, Page: 4 The Guardian, Page: 36

ECONOMY NEWS – FRIDAY 12TH FEBRUARY 2021

Haldane predicts double-digit growth next year

The Bank of England’s chief economist Andy Haldane believes British households will embark on a massive spending spree once they are liberated from the coronavirus lockdown. With an estimated £250bn saved up due to the restrictions, Mr Haldane is predicting a recovery “to remember”. He believes that a year from now, “annual growth could be in double-digits.” In an article for the Daily Mail, he contends that the public are “desperate to get their lives back” and the rollout of the vaccines means we’re on the cusp of “enormous amounts of pent-up financial energy” being released.

Daily Mail, Page: 1

INTERNATIONAL NEWS – FRIDAY 12TH FEBRUARY 2021

Accounting watchdog told Wirecard it did ‘not want’ to investigate fraud

The FT reports that Wirecard was told in 2016 by Germany’s accounting watchdog that it did “not want” to formally investigate fraud allegations raised by short sellers.

Financial Times

Contact Paul Southward

Paul Southward