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NEWS – THURSDAY 29TH APRIL 2021

NEWS – THURSDAY 29TH APRIL 2021

NEWS ROUNDUP

TAX NEWS – THURSDAY 29TH APRIL 2021

HMRC to target tax evaders’ crypto assets

UHY Hacker Young has warned that a surge in interest in cryptocurrencies – alongside their climbing value – is likely to lead to increased scrutiny over their links to organised crime. The firm said that with organised crime becoming increasingly digital, there are concerns cryptocurrencies are being used by tax evaders, with HMRC set to demand data on cryptocurrency holdings from those it suspects of tax evasion in its “statement of assets” form. David Jones, director at UHY Hacker Young, said: “While criminals can still choose to not declare these assets, doing so gives HMRC another opportunity to bring criminal charges against them if their forensic work finds a hidden Bitcoin wallet.” Pointing to tax office concern that hidden wealth is “slipping through its fingers” due to the rise of cryptocurrencies and unsanctioned money transfer systems, Mr Jones added: “This demand for information is an important step in HMRC’s fightback against that”.

City AM Daily Express

7 in 10 willing to pay more tax to boost frontline workers’ income

A poll by the IE University Centre for the Governance of Change shows that seven in 10 UK workers are willing to pay more tax if it would boost the income of frontline workers. While 70% of UK and Swedish taxpayers would pay more tax to increase the wages of workers on the frontline, France was the only European nation not prepared to boost the wages of low paid workers, with 54% against the idea. Overall, the poll of 2,769 adults across nine European countries found that 61% of Europeans said they were willing to pay more in taxes in exchange for raising the salaries of essential workers.

The I, Page: 9

Think-tank: Independence could see tax rises

The Institute for Government (IfG) says an independent Scotland could face years of budget cuts and tax rises as it looked to manage its deficit, with the think-tank saying there would be an immediate need for “difficult fiscal choices” to address the gap between public spending and tax revenues. The IfG suggested that to cut the deficit and stop debt climbing, a newly independent Scotland could look to tax rises on immovable assets such as land or property, as well as rolling out spending cuts and launching policies to boost the economy.

The Herald

Samsung heirs to pay record inheritance tax

The family of Samsung Electronics chairman Lee Kun-hee will pay more than £7.8bn in inheritance taxes on his estate. Samsung said that the payment is one of the largest ever in South Korea and globally, noting that it is more than half of the value of the late chairman’s total estate. South Korea’s inheritance tax rate is the world’s second highest after Japan, coming in at 50% – with the rate rising to 60% for company shares inherited by large shareholders. In the UK and US the levy is set at 40% while across the Organisation for Economic Cooperation and Development, the rate averages 15%.

The Daily Telegraph Financial Times, Page: 4 The Times, Page: 34 The I, Page: 32 The Guardian The Independent Daily Mail City AM BBC News

Canada Finance Minister hails global tax plan ‘breakthrough’

Canadian Finance Minister Chrystia Freeland says a US proposal for a global minimum corporate levy is a “breakthrough moment” in international tax talks, with the OECD seeking agreement on a minimum rate.

Financial Times, Page: 6

HMRC in tax credit renewal reminder

Families are being urged to renew their tax credits to avoid losing out on support, with HMRC issuing 2.5m renewal packs to claimants, advising households to update their details by July 31.

Daily Mirror Daily Star

EMPLOYMENT NEWS – THURSDAY 29TH APRIL 2021

Barclays tops LinkedIn companies list

Professional network LinkedIn has released a ranking of the top 25 firms to build and sustain a long-term career, with Barclays identified as the best place to work for those keen to progress up the ladder. The Top Companies List identifies the organisations that offer growth, skills development opportunities and job stability. Tesco came second in the rankings, with NatWest third, BT fourth and PwC fifth. Deloitte (6th) and EY (8th) also made the top ten. Siobhan Morrin, news editor at LinkedIn, said the Top Companies List “provides a helpful resource of companies that offer skills development and stability, giving our members that added confidence when taking that first step towards their next opportunity.”

Daily Mail City AM

Women in North worst hit by pandemic

The IPPR North think-tank has published a study which shows that women living in the North of England have been disproportionately hit by the economic disruption caused by the coronavirus pandemic. The research found that almost half of northern women currently in work are in sectors that have been hardest hit by the coronavirus emergency, such as retail and hospitality. By comparison, men constitute around only a quarter of the workforce in these industries. The report also found most key workers in the North are women. IPPR North wants pay and working conditions for women across the region to be improved, and proper data to be amassed on inequalities.

The Independent

Police forces urged to exploit tax break

Police Federation chairman John Apter says forces should use tax breaks to target former soldiers in their bid to recruit 20,000 more officers. He has called on police forces and ministers to make the most of new rules that exempt firms and public sector bodies which employ military veterans from paying National Insurance contributions during the first 12 months of their employment.

The Daily Telegraph, Page: 13

INSOLVENCY NEWS – THURSDAY 29TH APRIL 2021

Scottish insolvencies expected to jump

R3, the trade body for insolvency and restructuring accountants, says the number of Scottish companies facing insolvency is expected to rise despite restrictions on the economy being relaxed, with the repayment of coronavirus-related Government loans set to hit firms that have been kept afloat by the support measures. Figures show corporate insolvencies in January to March were down 31% on Q4 2020 and 63% lower than the first quarter of last year. However, the number is set to climb in the coming months, with Tim Cooper, chair of R3 in Scotland, saying companies are “in a form of suspended animation” but warning that this “cannot last forever”.

BBC News

CORPORATE NEWS – THURSDAY 29TH APRIL 2021

Dixons Carphone to close airport stores

Dixons Carphone is to permanently close all of its outlets in airports, pointing to the impact of the Government’s decision to scrap tax-free shopping, with the retail scheme which enabled non-EU visitors to reclaim VAT paid on their purchases having been withdrawn on January 1. Dixons Carphone says it took the “difficult decision” to close the stores as it does not expect passenger numbers to recover sufficiently to compensate for the removal of airside tax-free shopping. The firm said staff employed at the stores will be offered roles elsewhere. Meanwhile, Dixons Carphone also revealed that strong recent sales mean it will repay £73m in furlough support.

The Times The Guardian Sky News

PROPERTY NEWS – THURSDAY 29TH APRIL 2021

Prices could climb £23k

Research from estate and lettings agent Barrows and Forrester suggests the extended stamp duty holiday could see the average house price climb by more than £20,000 this year. The analysis shows that since the Chancellor announced the tax break in July 2020, house prices across England have increased by an average of 0.84% each month, hitting £268,291. If this rate of growth continues, the average price could be £23,376 higher by the end of 2021. The South East of England, where typical prices have risen 0.87% month since the introduction of the stamp duty holiday, could see the biggest jump, with £31,176 added to the average if the current rate of increase is maintained.

Daily Express

ECONOMY NEWS – THURSDAY 29TH APRIL 2021

Business leaders set out recovery plan

A group of leading executives have set out a plan for a post-pandemic economic recovery, with the Covid Recovery Commission calling for the creation of at least one new globally competitive industry hub in every part of the UK by 2030. The commission, whose members include executives from firms including Tesco, Vodafone and AstraZeneca, is also calling for a radical overhaul of the Apprenticeship Levy, with the establishment of £10,000 lifelong training allowance for all over-25s. Tesco chair John Allan said the commission’s report goes beyond “purely economic measures”, arguing that there is a need for growth to be used to remedy widening social inequality.

BBC News

OTHER NEWS – THURSDAY 29TH APRIL 2021

Microsoft moving in on Big Four’s territory?

Andrew Orlowski in the Telegraph says that while Microsoft has always been competent with its developer tools, it is now able to add business analysis tools to its software, saying this may have the technology divisions of accountancy firms “looking nervously over their shoulders.” He adds that with Microsoft’s “industry-specific clouds” focused on business sectors such as retail, manufacturing and healthcare, “it has parked its tanks squarely on the Big Four’s lawn”.

The Daily Telegraph, Business, Page: 4

Contact Paul Southward

Paul Southward

NEWS – WEDNESDAY 17TH MARCH 2021

NEWS – WEDNESDAY 17TH MARCH 2021

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 17TH MARCH 2021

Tax claw back extension to boost small firms

The Telegraph’s Harry Brennan says 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. More than 130,000 incorporated businesses and more than 500 sole traders or partnerships should benefit. Chris Etherington of RSM says it is “important for self-employed workers not to overlook” the extension of the relief, which could prove to be very valuable.

The Daily Telegraph

CGT hike could hit homeowners

With the Office of Tax Simplification proposing an increase in capital gains tax, experts have warned that buy-to-let landlords and second homeowners could see the amount they owe increase by as much as £24,000 should they decide to sell. While the CGT rate currently stands at 18% for basic rate taxpayers and 28% for those in the higher rate threshold, the Office of Tax Simplification has called for CGT to increase in line with income tax rates to 20% at the basic rate and 40% at the higher rate. It has also suggested that an exemption on the initial £12,300 could be reduced to £2,000. Marc von Grundherr, director of estate agent Benham and Reeves, said the mooted changes “would act as nothing more than another nail in the coffin of the buy-to-let sector,” adding an increase would be “nothing more than a blatant attack” on landlords and second homeowners, especially those in higher tax thresholds.

Yahoo! Finance

Brexit delivers surprise for shoppers

Harry Wallop in the Mail looks at how shoppers have been hit by unexpected extra charges when buying goods from websites based in Europe since Britain left the EU. Michelle Dale, a VAT specialist at UHY Hacker Young, notes that post-Brexit, certain sales are now treated as exports.

Daily Mail, Page: 38

INSOLVENCY NEWS – WEDNESDAY 17TH MARCH 2021

Support sees insolvencies hit a record low

Figures from the Insolvency Service show business insolvencies fell to a record low last month, with 686 recorded in February. This is down 1,348 from the same month in 2020. The record low has been attributed to restrictions on winding up orders, delays in courts and leniency from creditors, with these helping keep firms afloat despite ongoing pressure brought about by the pandemic. Julie Palmer of Begbies Traynor has warned that insolvencies could surge as Government support for businesses and the wider economy is wound down. She said there will be a “marked increase” in the failure of zombie businesses, adding that there will also be firms “which find it difficult to kick-start themselves”. Margaret Carter of Azets has urged companies to prepare for pressure on their cash flow, telling management teams “who may have become complacent due to ongoing government support”, that “now is the time to review their plans and forecasts to see if they can survive the staged withdrawal of assistance and restrictions”.

The Daily Telegraph, Business, Page: 2 The I, Page: 45

Traynor: End of support will see firms fail

Ric Traynor, one of the founders of Begbies Traynor, says that the end of coronavirus-related support measures later this year could see a number of businesses fail, with a raft of liquidations and restructurings likely to follow when support packages like the furlough scheme are wound down. With the number of insolvencies falling by around 35% in 2020, Mr Traynor says Government support schemes have artificially kept businesses afloat. He told City AM: “Those businesses that have been protected and still have fundamental problems are going to face formal insolvency, and that’s why we expect the number of insolvencies to increase over the course of the next year or two”.

City AM

CORPORATE NEWS – WEDNESDAY 17TH MARCH 2021

MPs call for inquiry into Football Index scandal

MPs have written to Culture Secretary Oliver Dowden calling for a public inquiry into the collapse of gambling website Football Index, saying the matter highlights a need for reform of the gambling sector. Administrators Begbies Traynor were called in last week to assess options for restructuring the business and recouping money for creditors.

The Independent BBC News

ESG aims linked to more chiefs’ pay

The FT looks at moves to link executive payouts to ESG targets, with PwC analysis suggesting nearly half of ESG measures used in judging pay are not deemed “material” to shareholder value.

Financial Times, Page: 14

SMEs NEWS – WEDNESDAY 17TH MARCH 2021

Small Business Commissioner to target late payers

Liz Barclay, the former BBC journalist who will become Small Business Commissioner in June, will lead a Government drive to end the “toxic” blight of late payments to small businesses. She said this will help “take pressure off our phenomenal entrepreneurs”, arguing that small businesses have “to be able to turn their attention to their next client and next order rather than chasing up late payments and worrying about their cash flow”. Small Business Minister Paul Scully commented: “Having run small businesses for most of my professional life I know just how toxic delayed invoices can be.”

Daily Express, Page: 21

PROPERTY NEWS – WEDNESDAY 17TH MARCH 2021

House prices climb 12% in a year

Analysis by Halifax shows that Bury St Edmunds in Suffolk and Banbury in Oxfordshire have seen the biggest house price rises during the pandemic, with average prices up by more than a third. The analysis, which is based on regions with at least 100 house sales between the beginning of March 2020 and the end of February 2021, shows that Bury St Edmunds has seen the biggest jump, with the average sale price up 37% from £267,217 to £367,421. Banbury has seen average house prices rise 36%, from £283,830 to £385,556m, while third-placed King’s Lynn saw values climb 28%. The report shows that the typical value of a home in Britain is up 12% over the past year, climbing from £285,428 to £320,457.

Daily Mail

PERSONAL FINANCE NEWS – WEDNESDAY 17TH MARCH 2021

Savings rates hit record low

Analysis by Moneyfacts.co.uk shows that savings rates have fallen to record lows since the start of UK’s first lockdown, with the average easy access savings rate less than a third of what it was a year ago. The report says the typical easy access rate hit a record low of 0.16% at the start of March, falling from 0.56% on March 1, 2020. Moneyfacts.co.uk also found that there are 383 fewer deals on the market, including cash Isas, than there were last year, with 1,385 products.

Daily Mail

INTERNATIONAL NEWS – WEDNESDAY 17TH MARCH 2021

Poland and Hungary win court fight over turnover taxes

The Court of Justice of the European Union (CJEU) has rejected EU Commission appeals looking to challenge Polish and Hungarian taxes on turnover. The Commission had argued that the rules give unfair advantage to small businesses over their bigger, foreign rivals. Poland and Hungary challenged the Commission’s stance at the General Court of the European Union in 2019, with their success prompting the appeal. CJEU judges have now ruled that a Polish tax on the retail sector and a Hungarian tax on advertisements do not infringe EU law on state aid.

Daily Mail

Germany extends tax deferral

Germany will extend a tax deferral scheme designed to help firms hit by the impact of the coronavirus pandemic by three months. Finance Minister Olaf Scholz said applications for tax deferral can be submitted until June 30, meaning interest-free tax deferrals will be granted until the end of September.

Daily Mail

German regulator starts Greensill Bank insolvency proceedings

Germany’s financial regulator Bafin has submitted a filing to a court to start insolvency proceedings for Greensill Bank. The bank’s owner, Greensill Capital, entered insolvency last week after losing insurance coverage for its debt repackaging business. Greensill’s insolvency administrators Grant Thornton declined to comment.

Daily Mail

ECONOMY NEWS – WEDNESDAY 17TH MARCH 2021

Britons set for £50bn spending spree

A report from the Centre for Economics and Business Research (CEBR) and Isa provider Scottish Friendly suggests Britons will go on a £50bn spending spree once restrictions are lifted, spending money saved over the past year. The analysis says households intend to take more holidays and eat out more, with a quarter of the £192bn in savings accumulated amid the lockdown expected to be spent. While Scottish Friendly and the CEBR estimate that 26% of the savings would be spent, a recent Bank of England report suggested that 5% of the £125bn of excess savings generated between March and November 2020 would be spent.

The Guardian

OTHER NEWS – WEDNESDAY 17TH MARCH 2021

Audit reform to make directors accountable for failings

Reform of audit rules set to be published by Business Secretary Kwasi Kwarteng will see senior executives held responsible for accounting errors, with directors to be made accountable for the accuracy of their company’s financial statements. They will face fines and bans when failings occur. Under existing rules, it is company auditors rather than individual directors who are deemed responsible for the accuracy of financial statements. The overhaul comes in the wake of a number of accounting scandals which have prompted concern over weak internal controls, conflicts of interest and poor audit regulation. The reform will see the Financial Reporting Council replaced by the Audit, Reporting and Governance Authority, a regulator with increased powers that may be given oversight of the UK’s largest private companies as well as those listed on public markets. Other changes set to be rolled out include new rules for accountancy firms, with the Big Four set to be forced to split their audit and consultancy arms. The Mail’s Mark Shapland says that while Government action “stalled” under his predecessors, Mr Kwarteng has said audit reform is “one of his initial priorities”.

Daily Mail, Page: 66

Reform plan is encouraging

The Daily Mail’s Alex Brummer says it is encouraging that Business Secretary Kwasi Kwarteng is set to publish audit reform plans, saying previous business secretaries have “shown no urgency in bringing reforms to fruition.” However, he criticises indications that legislation may not be in place until 2023. Mr Brummer reflects on a need for reform, saying that a “list of audit mishaps … is endless” and “slow, bureaucratic and feeble regulation by the Financial Reporting Council is legendary.” He also highlights reports calling for reform from John Kingman, the Competition and Markets Authority and Donald Brydon.

Daily Mail, Page: 67

People miss sport in lockdown

Research by EY suggests that watching and participating in sport were two of the top nine things people missed doing during the initial lockdown period.

BBC News

I hope this was not government sponsored research!

Contact Paul Southward

Paul Southward

NEWS – MONDAY 1ST MARCH 2021

NEWS – MONDAY 1ST MARCH 2021

NEWS ROUNDUP

TAX NEWS – MONDAY 1ST MARCH 2021

Chancellor denies tax claim

Rishi Sunak has dismissed claims that he has privately told MPs he wants to raise taxes now so he can cut them before the next election, telling the BBC’s Andrew Marr: “I don’t recognise that”. Speaking ahead of the Budget on Wednesday, Mr Sunak would not confirm newspaper reports he is planning to freeze income tax thresholds or raise corporation tax in a bid to lower debt. The Telegraph reports that the Chancellor is considering freezing the point at which people start paying the basic rate of income tax and the threshold at which they begin paying the higher rate for at least three years, while corporation tax could rise from 19% to at least 22%. Speaking to Sky News’ Sophy Ridge on Sunday, the Chancellor said he “would like to be able to keep taxes low for people in general” but added that he wanted to “be responsible” with people’s money. BBC News notes that the former chancellor Lord Clarke believes Mr Sunak should consider raising VAT, national insurance and income taxes, while Martin Beck, senior economic adviser to the EY ITEM Club, has suggested repairing the public finances could wait and warned that “premature fiscal tightening could undermine recovery”. Writing in City AM, BDO’s Paul Falvey says Mr Sunak faces a “big challenge” to increase the tax take and support the individuals and businesses most severely impacted by COVID-19. Meanwhile, the Mail says the Chancellor could wait until his autumn Budget to deliver tax increases that may include increases to capital gains tax and national insurance for the self-employed, as well as cuts to pension tax relief. Elsewhere, Shadow Chancellor Anneliese Dodds has suggested she would like to see corporation tax raised, saying the UK needs to get “to a better place” on the levy.

The Times, Page: 8 The Independent The Daily Telegraph, Page: 4 Daily Mail, Page: 6 City AM BBC News

MPs: Now is not the time for tax rises

A Treasury Committee report says now is “not the time for tax rises”, warning increases may be needed in the future but in the current climate they could undermine the economic recovery. The cross-party group of MPs says public finances are on an “unsustainable long-term trajectory” and suggests the Government’s “tax lock” manifesto promise not to increase the rate of income tax, VAT or national insurance will come under pressure. The report suggests a “moderate increase” to the corporation tax rate could “raise revenue without damaging growth, especially if balanced with fiscally appropriate measures for business”, while stamp duty is “economically inefficient” and suggests a review of the tax treatment of the self-employed “long overdue”. The MPs have also suggested that businesses should be allowed to offset pandemic losses with a corporation tax refund. Mel Stride, chair of the committee, said: “With our public finances on an unsu stainable long-term trajectory, our clear message is that Budget 2021 is not the time for tax rises or fiscal consolidation.”

The Daily Telegraph, Business, Page: 1 The Times, Page: 33 Financial Times The Independent, Page: 4 BBC News

MPs call for business rates reduction

A group of northern Conservative MPs have called on Chancellor Rishi Sunak to cut taxes for retailers, saying there is the need for “a bold move to reduce business rates”. Members of the Northern Research Group of Conservative backbenchers have written to the Chancellor saying there is a need for “levelling the playing field between bricks and mortar and online retail”, saying reducing business rates from about 50% of market rent to about 35% will help achieve this.

The Guardian, Page: 1

Think-tank: 20 taxes should be axed

The Institute for Economic Affairs’ (IEA) believes the UK should scrap inheritance tax, stamp duty and almost 20 other taxes to simplify the tax regime. In its pre-Budget report, the think-tank has called for Chancellor Rishi Sunak to “simplify the tax system, reduce the overall burden of taxation, and eliminate many harmful distortions”. Among suggestions, it believes property taxes including council tax, the community infrastructure levy and business rates should be rolled into one “single land value tax”, while corporation tax and the diverted profit tax should be replaced “with a single income tax on capital income administered at the corporate level”.

City AM

Poll sees support for wealth and business taxes

A Savanta ComRes poll for the Independent shows 55% of people support a proposed increase in corporation tax, with just 16% of respondents opposed to an increase. The survey also saw 55% of those polled say they would support the introduction of a wealth tax on property or assets in a bid to top up public finances hit by the coronavirus crisis, with 18% against such a move. Around 43% of people said they would accept a 1p increase in income tax rates, with 28% opposed, while respondents were less keen on increases to council tax, VAT or fuel duty, with resistance also seen to the idea of reining in future pension rises.

The Independent

Tax rises needed but not yet

Looking ahead to Wednesday’s Budget, Hamish McRae in the I says the UK “will probably need some tax increases, but now is not the time to bring them in.” Saying that the books will need to be balanced due to the nation’s coronavirus bill, Mr McRae says taxation may be the way to go but believes there are two reasons to delay doing so, saying: “You don’t want to add to the fiscal burden before the economic recovery is secure”, and warning that “we do not know the scale of the tax increases needed to get the deficit under control.” In the Independent, James Moore considers the options open to Mr Sunak, saying tax rises “can clearly wait until such time as the economy can bear them.” Elsewhere, Roger Bootle, chairman of Capital Economics, argues that tax increases may hurt the recovery by dampening optimism, saying: “To clobber people and companies now with a raft of tax increases, before the recovery has even begun, would be tone deaf to the importance of confidence.”

The I, Page: 8 The Independent, Page: 30, 45 The Daily Telegraph, Business, Page: 2

Sunak to delay IR35 announcements?

Matt Fryer, head of legal services at Brookson Legal – the only Solicitors Regulation Authority accredited specialist IR35 law firm, believes it is unlikely that IR35 will be mentioned in Rishi Sunak’s upcoming Budget. Noting that reform has been delayed due to the pandemic, Mr Fryer said ministers are “keen to press on” with changes. He expects the Chancellor to wait until March 23 to confirm the reform, saying that the Budget is set to focus on stimulating short to medium term growth in the economy.

Daily Express

Britain should follow Ireland on corporation taxes

Sir Paul Marshall, chairman of hedge fund Marshall Wace and a member of the Government’s industrial strategy advisory council, suggests that Britain should take a page out of Ireland’s book on corporation tax, calling for the UK to “establish a clear, stable regime for corporation tax that is globally competitive and likely to attract rather than repel inward investment.”

The Times, Page: 37

INSOLVENCY NEWS – MONDAY 1ST MARCH 2021

Insolvency Service pays £453.4m in missing wages and benefits

Figures show that the Insolvency Service paid out £453.4m in missing wages and benefits to workers at firms that went bust last year, the highest total in a decade. The data, compiled by real estate adviser Altus Group, shows that payouts included £297.5m in redundancy pay. The analysis also shows that Government support rolled out amid the pandemic meant the number of firms going insolvent fell 27% compared to 2019. Calling for further support, Altus Group has urged the Chancellor to extend the business rates holiday.

Daily Express

INDUSTRY NEWS – MONDAY 1ST MARCH 2021

Buyout started Big Four break-up

The Telegraph interviews Andrew Coles, saying that in leading KPMG‘s pensions division through a £200m management buyout, he “fired the starting gun on a partial break-up of the Big Four”. It highlights that KPMG was the first of the Big Four firms to ban its consultants carrying out work for audit clients as part of an effort to avoid conflicts of interest, while Mr Coles says constraints around auditor independence were making it difficult for his part of the business to flourish within KPMG. The Telegraph notes KPMG is reported to be in advanced talks with buyout firm HIG Europe over a possible £400m sale of its insolvency and restructuring business, while Deloitte confirmed the sale of its own restructuring unit to consultancy Teneo for an undisclosed sum in February.

The Daily Telegraph, Business, Page: 4

CORPORATE NEWS – MONDAY 1ST MARCH 2021

30 pubs and restaurants close a day while distillery numbers jump

Research from CGA shows that an average of 30 pubs and restaurants a day have closed in the past 15 months. The report shows that 4,170 new sites have been recorded since December 2019 but the loss of 11,894 venues means three closures for every opening, with a net loss of 7,724 licensed premises. Meanwhile, the number of distillery businesses has risen by nearly a third amid the pandemic, with UHY Hacker Young saying the total jumped from 272 in 2019 to 351 last year, with this likely to have been fuelled by people using the lockdown to start craft spirits businesses.

The Times, Page: 8 The I, Page: 45

PROPERTY NEWS – MONDAY 1ST MARCH 2021

Dodds: Mortgage plan will further inflate property bubble

Shadow Chancellor Anneliese Dodds will today warn that a Government scheme to help first time buyers onto the housing ladder by encouraging banks to issue 95% mortgages will inflate the property bubble. Labour believes the initiative will make houses more expensive by increasing demand, with Ms Dodds set to say the plans “will do little to help more than a tiny proportion of Generation Rent – and look set to raise house prices even further beyond the reach of the rest.”

The Daily Telegraph

VAT cut on home repairs could boost economy

The Federation of Master Builders and the Royal Institution of Chartered Surveyors say cutting VAT on home repairs could give the economy a £50bn boost. The bodies, which are calling for a temporary cut from 20% to 5%, cite analysis from CBI Economics showing a five-year reduction would increase economic output by £51bn and create 345,000 jobs in construction and related sectors. They note that such a move would see the Treasury pull in £2.8bn less in tax receipts.

Daily Mail

EMPLOYMENT NEWS – MONDAY 1ST MARCH 2021

Jobless rate around airports above average

Parliamentary data shows that unemployment rates are higher around major airports. While the number of people claiming unemployment benefits went up 112% across the UK between January 2020 and January 2021, in areas around the UK’s top 20 airports it rose 145% on average. In the constituency which contains Heathrow the number of people claiming unemployment benefits has increased 221%, while around Gatwick it has increased 224% and near Stansted the rate has increased by 228%. The All Party-Parliamentary Group for the Future of Aviation said the data shows that airport communities are being hit hard by the pandemic and is calling for more support for the industry.

BBC News

A mutual support network pays dividends

The FT looks at work-based stress, citing a Deloitte report from January 2020 which found that the poor mental health among workers could cost firms £45bn a year.

Financial Times, Page: 12

Businesses draw up plans for hybrid working

With many firms launching reviews of working practices, preliminary findings from a poll of PwC staff show many favour working three or four days in the office.

Financial Times, Page: 2

ECONOMY NEWS – MONDAY 1ST MARCH 2021

Sunak set to extend support

Chancellor Rishi Sunak has indicated that his Budget will see a range of emergency coronavirus support measures extended, with the furlough scheme, bounceback loans, targeted VAT cuts and stamp duty reductions set to remain in place until June. Speaking ahead of his upcoming Budget, Mr Sunak said: “We went big, we went early and there’s more to come next week”. He suggested that support would be extended in line with the roadmap out of coronavirus restrictions set out by the Prime Minister, saying: “I want to support people and businesses along that path.” Mr Sunak told the BBC’s Andrew Marr that while the Budget will seek to provide support, he wants to “level with people” about the “shock to the economy” caused by pandemic, adding that he wants to “be honest” with the public about the pandemic’s impact on the economy and “clear about what our plan to address that is”. The Chancellor said making public finances sustainable “isn’t going to happen overnight”, warning that debt could “rise indefinitely” if borrowing continued after the recovery.

The Daily Telegraph BBC News

Labour fears Budget ‘triple hammer blow’

Labour has urged Chancellor Rishi Sunak not to raise taxes, cut welfare or freeze public sector pay in this week’s Budget, saying this would be a “triple hammer blow” that could undermine the UK’s recovery from the coronavirus crisis. Shadow Chancellor Anneliese Dodds is calling for a plan to protect jobs and businesses, urging Mr Sunak to maintain business rates relief and the reduced rate of VAT for at least six months to September; provide clarity on the future of support for the self-employed; and extend the furlough scheme. She will today insist the Budget should be about “rebuilding the foundations of our economy” with a “responsible plan that puts us on the path to a better, more secure future”.

The Independent

Economic growth to miss predictions

Britain’s GDP is expected to fall 4% in the first quarter of the year according to the EY Item Club, a downgrade on the 1.9% Q1 growth predicted by the Office for Budget Responsibility (OBR) in November. EY expects the OBR to revise down its forecasts after non-essential high street retail and hospitality were closed amid the latest nationwide restrictions in January. While the coronavirus vaccine rollout is expected to boost growth in the second half of 2021, EY expects overall growth for the year to be down on earlier predictions, forecasting 5% growth against official predictions of 5.5%.

The Daily Telegraph

Contact Paul Southward

Paul Southward

NEWS – WEEKEND ENDING 31ST JANUARY 2021

NEWS – WEEKEND ENDING 31ST JANUARY 2021

NEWS ROUNDUP

TAX NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

Top taxpayers revealed

The Sunday Times Tax List, which lists the taxes paid by the wealthiest people in the country, shows that 17 of the 50 who featured in last year’s rankings appear to be paying more tax this year, 16 are paying less tax this year, and a further 17 are paying so much less that they have fallen out of the top 50 altogether. The report says an individual of family needed to have paid £20.4m of tax to make it onto the list last year but this has fallen to £13.1m, a decline of nearly 36%. The list’s top 50 wealthy individuals or families were liable for around £3.18bn of tax, up 27% from £2.5bn last year. The Tax List names Bet365 founder Denise Coates Britain’s biggest taxpayer for the second year running, with her and her family paying £573m. Institute for Public Policy Research executive director Carys Roberts says the report highlights issues with the tax system. She said: “Last year’s rich list identified the UK’s 10 richest people and families, yet only two of them are listed among the 10 who paid most taxes in the last financial year.” “These glaring gaps show that our current tax system is no longer fit for purpose, it’s just too easy for some of the UK’s richest people to avoid paying taxes in the way that most ordinary families have to”, she added.

The Times Daily Mail The Independent The Sun City AM

Low tax of directors ‘unjustified’ – IFS

The Institute for Fiscal Studies (IFS) has criticised a system which sees self-employed business owners paying thousands of pounds less tax than employees who are higher earners, saying preferential tax rates for business owner-managers are “unjustified and problematic”. The think-tank says those who run a business can pay themselves in dividends or capital gains rather than salary, with directors also able to use their company to hold cash, allowing them to manage what tax they pay. The IFS said these issues “get into the knotty weeds of the tax system” and “will be a mystery to most people other than tax practitioners, administrators and taxpayers personally affected by them.”

The Times, Page: 63

Filing advice as deadline nears

The I carries advice for taxpayers ahead of tomorrow’s official self-assessment deadline, noting that HMRC has announced that it will not issue the standard £100 fine on late filers as long as they submit by February 28. Rachel McEleney, associate tax director at Deloitte, notes that “much of the work on self-assessment tax returns will need to be done before the end of January, if interest is to be avoided.” Mark Kearsley, tax director at DSG Chartered Accountants, offers advice on charitable donations.

The I, Page: 68

Code check call

Rupert Jones in the Guardian advises people to check their tax code, saying that while experts say people should check their tax code as it may be based on outdated or incorrect information, many people file notice letters away without looking at them closely – or at all.

The Guardian, Page: 53

SUNDAY

Chancellor considering CGT increase

The Sunday Telegraph’s Christopher Hope reports that Rishi Sunak is considering an increase in capital gains tax, with the Chancellor mulling a move that would bring the charge in line with the higher levels of income tax. The speculation comes after a November 2020 report by the Office of Tax Simplification recommended closer alignment of income tax and capital gains tax rates. Mr Sunak is also reportedly considering increasing corporation tax from 19% to as much as 24%, with it suggested that this increase may be held off until later in the year. Mr Hope says a Conservative manifesto pledge that VAT, inheritance tax and National Insurance would not be increased has “left the door open” for the Chancellor to target CGT and corporation tax. John O’Connell, chief executive of the TaxPayers’ Alliance, has warned ministers against “hammering savers and entrepreneurs”, arguing that CGT is “a double tax that harms investment”, adding that this is “precisely what we should avoid if we want to kick-start growth and help create jobs”.

The Sunday Telegraph, Page: 2

Top taxpayers revealed

The Sunday Times carries its Tax List 2021, detailing the taxes paid by the wealthiest people in the country. It says the rankings reveal that the super-rich were already paying less tax before the coronavirus crisis, with the tax-take down “with the economy becalmed by uncertainty over Brexit during 2019”. The analysis of tax data that for many individuals is based on company results to the end of 2019 shows that just a third of those who featured in last year’s rankings appear to be paying more tax this year. It also shows a 36% decline in the amount of tax people needed to have paid to make the top 50, from £20.4m last year to £13.1m. The paper notes the contribution of musicians to public finances, with Ed Sheeran, Queen, Robbie Williams, The Beatles and Adele paying a combined £50m in tax last year, with Sheeran’s £28.2m tax bill the biggest contribution.

The Sunday Times, Tax List 2021 The Sunday Times, Page: 5

Tax compliance shows gender divide?

The Sunday Times’ Jessie Hewitson says that while HMRC does not hold data on the sex of tax avoiders or evaders, judging by announcements from the Revenue, big tax evaders are nearly always men. Nimesh Shah, CEO of Blick Rothenberg, says: “Getting things right with authorities tends to be higher up the agenda for our female clients. Our male clients place less of a priority on compliance and more on making profit.” George Bull at RSM also says it tends to be his male clients who get into trouble for tax-related issues, although he attributes this to the fact that you see more men in senior roles. Dr John D’Attoma, a lecturer in taxation at the University of Exeter Business School, comments: “Men respond more to the fact that they will get something, such as a public good, in return for their tax money … Women are compliant even when they do not expect anything in return.”

The Sunday Times, Magazine, Page: 32

Deadline day advice

While HMRC says it will waive its £100 penalty for late filing due to the impact of the coronavirus crisis, Harry Brennan in the Sunday Telegraph highlights that the annual tax return deadline is still midnight tonight, with taxpayers facing interest charges that will build up at a rate of 2.6% on any duties still left unpaid from February 1. With data showing that HMRC has cancelled more than 64% of the late payment penalties it has imposed since 2014, Graham Boar of UHY Hacker Young says taxpayers should appeal as the chances of success are high. Nimesh Shah of Blick Rothenberg says taxpayers should file by tonight to avoid paying over the odds, while ICAEW’s Caroline Miskin suggests those unsure of their liability could pay an estimated amount to save themselves from fines.

The Sunday Telegraph, Business, Page: 9

MP urges Sunak to make stamp duty holiday permanent

MP Bob Blackman says the stamp duty holiday rolled-out amid the coronavirus crisis “gave the economy a much needed shot in the arm” and argues that there is a “a strong case for giving the economy a booster shot” by making the temporary break on the levy a permanent fixture. Writing in the Sunday Telegraph, he says a permanent cut to stamp duty would address a “blockage in the system” by making it easier for older people to move into suitable retirement accommodation, freeing up family homes for movers and, in turn, properties for first-time buyers.

The Sunday Telegraph

Wealth tax on the way?

With speculation that the Chancellor will use his March 3 budget to outline how taxes will be raised in an effort to help foot the nation’s coronavirus bill, Connor Coombe-Whitlock in the Sunday Express considers the possibility of a wealth tax being rolled out. He suggests that a Wealth Tax Commission report exploring the merits of a one-off 5% wealth tax that would be applied to UK residents in possession of assets above £500,000 could be “foreshadowing an introduction”.

Sunday Express

REGULATION NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

Reform would see directors held to account

The Times reports that Business Secretary Kwasi Kwarteng is backing proposed new legislation that would hold company directors to account for serious corporate failings, signing off a consultation on laws to strengthen the country’s corporate governance regime and reform audit regulation and competition. Revealing that measures proposed would see a version of America’s Sarbanes-Oxley regime enforced in the UK, the paper says this would give the Financial Reporting Council powers to hold directors to account as well as auditors. The consultation follows Government-backed reports on auditing and corporate governance framework by Sir John Kingman, Sir Donald Brydon and the Competition and Markets Authority. Proposed reforms include measures to reduce the dominance of the Big Four in the audit market, with the FRC planning an operational split that would result in the firms ring-fencing their audit departments to reduce potential conflicts.

The Times, Page: 55

Kwarteng: audit shake-up a priority

Ben Wright in the Telegraph interviews Kwasi Kwarteng, with the Business Secretary saying one of his main priorities is shaking up the audit industry. He says the debate around audit reform “goes to the heart of capitalism”, adding: “People have got to see that it’s fair, that there are rules, and people get punished for disobeying them.” Mr Wright says that in recent years, much of the work in reviewing and verifying the financial information that companies release “has become concentrated in only a handful of firms, whose relationships with their clients have at times appeared uncomfortably cosy.”

The Daily Telegraph, Page: 34

CORPORATE NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

Topshop suppliers may get 1%

A report from administrators at Deloitte suggests Sir Philip Green’s family is likely to receive £50m from the sale of Topshop – while more than 1,000 suppliers to the fashion chain will get less than 1% of the money owed them. The report into the collapse of Topshop and Topman reveals that the chains owed at least £51m to 1,155 unsecured creditors, which include clothing suppliers and landlords. This figure does not include money owed to HMRC, with final debts for Topshop likely to be “materially higher” once tax and money potentially owed to the group’s pension fund are included. Meanwhile, online fashion retailer Boohoo is in talks with Deloitte as it looks to acquire Burton, Dorothy Perkins and Wallis, brands also in Sir Philip’s Arcadia group.

The Guardian, Page: 44 The Times, Page: 52 Financial Times, Page: 16

Confidence in London business rises

The latest Business Barometer from Lloyds Bank shows that business confidence in London rose five points to 3% during January, marking the first positive reading on the barometer since the coronavirus outbreak. Nationally, overall business confidence dipped in January as the third lockdown came into force, falling by three points to -7%, with economic optimism falling 34 points month-on-month to -10%. Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said that while confidence remains below average, “it is encouraging that business sentiment is still the second highest since the low of May 2020.” He added that the vaccine rollout programme has lifted confidence, “and that will hopefully buoy business optimism in the coming months.”

City AM

Lookers shares surge

Shares in car dealership Lookers rose 90% as the firm’s stock was finally readmitted to trading after the Financial Conduct Authority suspended shares in July 2020 after it failed to publish its full year results for 2019. While 2019’s results were published in November, the City watchdog waited until Lookers issued its H1 2020 results before readmitting the stock. Lookers has been under pressure following the discovery of a £19m hole in its figures. This led to the resignation of auditor Deloitte, which has now been replaced by BDO.

City AM

SUNDAY

Taxpayer liable for £50m Arcadia payoffs

The collapse of Sir Philip Green’s retail empire could see the taxpayer foot a £50m bill for redundancy payments, according to the Sunday Telegraph. A report from administrators Deloitte shows that statutory notice and redundancy payments owed to almost 13,000 Arcadia Group staff total £47.6m. However, Paul Zalkin of Quantuma notes that there is a legal “grey area” when businesses are bought out of administration, saying the new owners may be liable for the redundancy costs rather than the state. Deloitte is currently finalising terms for the sell-off of Arcadia’s brands, with Asos looking to buy Topshop, Topman, Miss Selfridge and HIIT, while Boohoo is bidding for Dorothy Perkins, Wallis and Burton. The Sunday Times highlights that online entities Asos and Boohoo paid just £48.1m tax on £4.5bn sales last year – far below the £160m in business rates paid by Arcadia Group and Debenhams. It notes that Next boss Lord Wolfson is calling for online retailers to be taxed at either 2% of turnover or 20% of profits, whichever is higher.

The Sunday Telegraph, Business, Page: 1 The Sunday Times, Business, Page: 1 The Mail on Sunday, Page: 121

Virgin Active lenders to enter restructuring talks

Lenders to Virgin Active are reportedly looking to negotiate a restructuring of the company as its owners draw up a plan to help it survive the pandemic. Brait, which owns just under 80% of the gyms operator, is expected to present a formal restructuring plan to Virgin Active’s lenders in the coming weeks. Virgin Active’s landlords are set to be involved in the restructuring talks and are likely to be asked for reductions on future rent payments. Sources say Deloitte, which has been advising Virgin Active on talks with landlords since last year, has had its remit extended to include the restructuring talks. Virgin Active’s 2019 accounts, filed this month, included a warning from KPMG about its ability to continue as a going concern.

Sky News The Sunday Times, Business, Page: 3

UK firms eye EU moves

The Observer warns of a potential “exodus of investment and jobs” caused by Brexit, revealing that a number of UK firms could switch their operations to EU countries. Figures from the Netherlands Foreign Investment Agency show that by January 1, around 500 businesses – many of which are UK-owned, or UK-based with overseas owners – had made inquiries about setting up branches, depots or warehouses in the Netherlands, with the figure since increasing. While Austria’s economic affairs minister, Margarete Schramböck, has said inquiries from UK companies mulling moves to the country have increased threefold since the turn of the year, the British Chamber of Commerce’s branch in Brussels has also seen a number of inquiries from UK firms considering setting up in Belgium.

The Observer

Liquidator appointed to airline’s UK arm

KPMG has been appointed as liquidator to Norwegian Air Resources UK (NAR UK), Norwegian Air’s UK business. NAR UK is the airline’s UK crewing business and employs 1,100 staff based out of Gatwick Airport. Appointing a liquidator enables the staff to claim for state-funded redundancy payoffs. Norwegian recently called a halt to long-haul operations amid the impact of the coronavirus crisis, with KPMG saying the move means NAR UK “no longer had the necessary funds to meet its financial obligations”.

The Sunday Telegraph

Paperchase to trim supplier base

The Sunday Times looks at the deal which saw private equity firm Permira’s debt management business buy stationery chain Paperchase out of administration in a pre-pack deal. it notes that the company, which was advised by PwC, plans to trim its supplier base.

The Sunday Times, Business, Page: 10

Question marks over battery plan

The Sunday Telegraph considers start-up company Britishvolt’s plans to build a £2.6bn factory to create 300,000 lithium ion electric vehicle batteries each year. KPMG‘s Ben Foulser says there are “question marks” such as “the relative scale of automotive manufacturing and assembly in the future, and cost competitiveness”.

The Sunday Telegraph, Business, Page: 7

Interview: Moray MacLennan

The Sunday Telegraph carries an interview with M&C Saatchi CEO Moray MacLennan. It notes that the advertising group was last year hit by an accounting scandal when forensic accountants at PwC discovered accounting errors dating back to 2014 which stretch to £14m.

The Sunday Telegraph, Business, Page: 4

Automation expectations

Jill Treanor in the Sunday Times looks at the move toward automation and AI, citing Deloitte partner Justin Watson who notes that while 90% of organisations are using technology, only 10% are using it at scale.

The Sunday Times, Business, Page: 8

Taxpayer liable for £50m Arcadia payoffs

The collapse of Sir Philip Green’s retail empire could see the taxpayer foot a £50m bill for redundancy payments, according to the Sunday Telegraph. A report from administrators Deloitte shows that statutory notice and redundancy payments owed to almost 13,000 Arcadia Group staff total £47.6m. However, Paul Zalkin of Quantuma notes that there is a legal “grey area” when businesses are bought out of administration, saying the new owners may be liable for the redundancy costs rather than the state. Deloitte is currently finalising terms for the sell-off of Arcadia’s brands, with Asos looking to buy Topshop, Topman, Miss Selfridge and HIIT, while Boohoo is bidding for Dorothy Perkins, Wallis and Burton. The Sunday Times highlights that online entities Asos and Boohoo paid just £48.1m tax on £4.5bn sales last year – far below the £160m in business rates paid by Arcadia Group and Debenhams. It notes that Next boss Lord Wolfson is calling for online retailers to be taxed at either 2% of turnover or 20% of profits, whichever is higher.

The Sunday Telegraph, Business, Page: 1 The Sunday Times, Business, Page: 1 The Mail on Sunday, Page: 121

Virgin Active lenders to enter restructuring talks

Lenders to Virgin Active are reportedly looking to negotiate a restructuring of the company as its owners draw up a plan to help it survive the pandemic. Brait, which owns just under 80% of the gyms operator, is expected to present a formal restructuring plan to Virgin Active’s lenders in the coming weeks. Virgin Active’s landlords are set to be involved in the restructuring talks and are likely to be asked for reductions on future rent payments. Sources say Deloitte, which has been advising Virgin Active on talks with landlords since last year, has had its remit extended to include the restructuring talks. Virgin Active’s 2019 accounts, filed this month, included a warning from KPMG about its ability to continue as a going concern.

Sky News The Sunday Times, Business, Page: 3

UK firms eye EU moves

The Observer warns of a potential “exodus of investment and jobs” caused by Brexit, revealing that a number of UK firms could switch their operations to EU countries. Figures from the Netherlands Foreign Investment Agency show that by January 1, around 500 businesses – many of which are UK-owned, or UK-based with overseas owners – had made inquiries about setting up branches, depots or warehouses in the Netherlands, with the figure since increasing. While Austria’s economic affairs minister, Margarete Schramböck, has said inquiries from UK companies mulling moves to the country have increased threefold since the turn of the year, the British Chamber of Commerce’s branch in Brussels has also seen a number of inquiries from UK firms considering setting up in Belgium.

The Observer

Liquidator appointed to airline’s UK arm

KPMG has been appointed as liquidator to Norwegian Air Resources UK (NAR UK), Norwegian Air’s UK business. NAR UK is the airline’s UK crewing business and employs 1,100 staff based out of Gatwick Airport. Appointing a liquidator enables the staff to claim for state-funded redundancy payoffs. Norwegian recently called a halt to long-haul operations amid the impact of the coronavirus crisis, with KPMG saying the move means NAR UK “no longer had the necessary funds to meet its financial obligations”.

The Sunday Telegraph

Paperchase to trim supplier base

The Sunday Times looks at the deal which saw private equity firm Permira’s debt management business buy stationery chain Paperchase out of administration in a pre-pack deal. it notes that the company, which was advised by PwC, plans to trim its supplier base.

The Sunday Times, Business, Page: 10

Question marks over battery plan

The Sunday Telegraph considers start-up company Britishvolt’s plans to build a £2.6bn factory to create 300,000 lithium ion electric vehicle batteries each year. KPMG‘s Ben Foulser says there are “question marks” such as “the relative scale of automotive manufacturing and assembly in the future, and cost competitiveness”.

The Sunday Telegraph, Business, Page: 7

Interview: Moray MacLennan

The Sunday Telegraph carries an interview with M&C Saatchi CEO Moray MacLennan. It notes that the advertising group was last year hit by an accounting scandal when forensic accountants at PwC discovered accounting errors dating back to 2014 which stretch to £14m.

The Sunday Telegraph, Business, Page: 4

Automation expectations

Jill Treanor in the Sunday Times looks at the move toward automation and AI, citing Deloitte partner Justin Watson who notes that while 90% of organisations are using technology, only 10% are using it at scale.

The Sunday Times, Business, Page: 8

SMEs NEWS – WEEKEND ENDING 31ST JANUARY 2021

SUNDAY

Bank calls for revamp of lending scheme

Goldman Sachs analysis suggests that take-up of cheap loans provided to lenders under the Bank of England’s (BoE) Term Funding Scheme has been “well below” available levels, hitting just 4%, with it also failing to boost lending to small firms. Warning that higher usage of the Bank’s cheap funding did not lead to increased lending to small firms, Goldman has suggested the BoE could revamp the scheme by increasing its duration or boosting incentives to lend. Goldman also noted signs of “tighter credit availability” for SMEs at the end of 2020.

The Sunday Telegraph, Business, Page: 3

London SMEs most optimistic on growth

A poll from Hitachi Capital Business Finance shows that almost a third of SMEs that rely on the European market fear they will either shrink or have to close, while 28% that rely on the domestic market predict either contraction or collapse over the next three months. This compares to 22% who believe they will grow. SMEs in London were the most optimistic about their growth prospects, with 34% predicting expansion, just ahead of the 33% recorded in the North-East. Scottish SMEs were the least optimistic, with just 17% expecting growth. Small firms in Wales were almost as pessimistic, with 18% foreseeing growth.

Sunday Express, Page: 51

INSOLVENCY NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

2020 sees insolvencies drop

Figures from the Insolvency Service show that the number of personal insolvencies recorded in England and Wales fell to a three-year low in 2020. There were 111,424 individual insolvencies in 2020, with this down 9% on 2019 and the lowest annual figure since 98,897 were recorded in 2017. The Insolvency Service said corporate insolvencies fell by 27.1% in 2020 but rose by 16.9% between the third and fourth quarters. While Government support measures have helped keep firms afloat amid the coronavirus crisis, Colin Haig, president of insolvency trade body R3, said they had “deferred rather than deterred” the pandemic’s impact.

The I, Page: 67 The Times, Page: 58

SUNDAY

Profit warnings point to insolvency influx

A report from EY shows that the number of companies at risk of insolvency has doubled in the last 12 months. With 583 profit warnings last year, EY says 10% of FTSE 350 firms issued three or more profit warnings, noting that typically up to one in five firms that issue at least three warnings enter administration within 12 months. The report says th at while Government support amid the pandemic has helped prevent closures, an “influx” of insolvencies is likely to be on the horizon. EY’s Alan Hudson comments: “Insolvencies in the UK haven’t been dodged …They’ve been deferred.”

The Sunday Telegraph The Sunday Times, Business, Page: 2 Sunday Express, Page; 51

PERSONAL FINANCE NEWS – WEEKEND ENDING 31ST JANUARY 2021

SUNDAY

Borrowing to boom, post-lockdown

A poll from AA Financial Services suggests 21m people are considering taking out a loan this year. The survey saw 44% of respondents say they are planning to borrow money once the coronavirus lockdown ends, with new cars, family holidays and home improvements the most common reasons cited for borrowing cash. James Fairclough, director of AA Financial Services, says the survey results point to optimism among many people, adding: “It certainly seems that lockdown has prompted many people to reassess their financial affairs.” Data from the Office for National Statistics shows the pandemic has seen an increase in people borrowing, with 18% of adults doing so compared to 11% at the end of June last year.

The Mail on Sunday

PROPERTY NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

Chancellor mulling stamp duty holiday extension?

The Mail’s Jason Groves says the stamp duty holiday could be extended to avert a slump in the housing market that could hurt the UK’s post-lockdown recovery. He says Chancellor Rishi Sunak is “under mounting pressure” to extend the deadline beyond the current March 31 cut-off, saying it is among measures being considered for the March 3 budget. MPs will debate calls for a six-month extension of the tax cut on Monday, with Conservative Elliot Colburn, who will lead the debate, saying some lenders have warned that 70% of current deals may fail to meet the current cut-off, after which many would collapse.

Daily Mail

FINANCIAL SERVICES NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

Finance firms see jump in whistleblowing

Figures show that the Financial Conduct Authority (FCA) received 347 reports from whistleblowers from finance firms warning that their employer was acting unfairly towards customers in 2019. This is almost five times more than the 73 the City watchdog received in 2017. The number of workers flagging concern over fraud, poor data security and detriment caused to consumers also rose, with between 110 and 160 reports made about each of these issues in 2019. The data, obtained through the Freedom of Information Act, also show that the FCA took action in just under half of cases in 2019, while in 6% of cases it took no action and the other 45% remained under investigation. Whistleblower charity Protect said around three quarters of financial whistleblowers work at either a bank or insurance firm, adding that finance was one of the industries it received the most complaints about.

The Daily Telegraph

INTERNATIONAL NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

Argentina imposes one-off tax

Argentina is imposing a one-off tax on its richest people as it looks to cover the cost of relief for businesses struggling due to the pandemic. Those with assets of more than £1.67m will have to pay about 3% on assets declared within the country and over 5% on assets held abroad. Officials hope the move will raise around $3bn. Money raised will also pay for medical supplies and help fund scholarships and social aid.

BBC News

ECONOMY NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

Economy seeing most damage since the first wave

Guardian analysis suggests Britain’s economy is suffering the most damage since the first wave of the coronavirus pandemic, with renewed lockdown measures among factors delaying the economic recovery. The paper says that the UK is “among countries leading the pack” on vaccinations, with economists suggesting this could increase the likelihood of the British economy outperforming others in the coming months, but also notes that the Chancellor is facing calls to provide further financial support before his March 3 budget, with the latest lockdown intensifying the pandemic’s hit to the economy. The Guardian analysis focuses on eight economic indicators – as well as the level of the FTSE 100 – to track the impact of coronavirus on jobs and growth. Flagging positives in the most recent analysis, the dashboard shows that the economy shrank by less than expected during the November lockdown, with GDP down 2.6% on the month, raising hopes that a double-dip recession can be avoided. Howard Archer, chief economic adviser to the EY Item Club, said: “The prospects for recovery are looking brighter. Once the economy has negotiated what is likely to be a challenging first quarter of this year, it will undoubtedly benefit from the vaccine rollout helping to boost consumer and business confidence.”

The Guardian

Kwarteng: We can’t spend our way to prosperity

Business Secretary Kwasi Kwarteng has warned that Britain cannot spend its way to prosperity. The Telegraph says that while Chancellor Rishi Sunak is “keen to rein in public spending and start setting out future tax rises” in the March 3 budget, he is facing calls for further public spending increases to boost the economy in the wake of the pandemic. In an interview with the paper, Mr Kwarteng says a “thriving private sector” is key, commenting: “Great public services rely on a thriving, dynamic open economy. The Chancellor is of the same opinion. We as a Government are not going to be able to spend our way to prosperity.”

The Daily Telegraph

SUNDAY

UK to apply to join trans-Pacific trade group

The UK is to formally apply to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a free-trade partnership that includes countries such as Australia, Canada and Japan and accounts for 13% of global commerce. International Trade Secretary Liz Truss is set to discuss the move with ministers in Japan and New Zealand this week as the UK looks to forge new post-Brexit alliances. Joining the CPTPP will cut tariffs on trading with its 11 members. Department for International Trade figures show that UK trade with the CPTPP was worth £111bn last year. The Federation of Small Businesses welcomed the plan, saying it would help firms “thrive and succeed more than ever”, while Confederation of British Industry president Lord Bilimoria said membership “has the potential to deliver new opportunities for UK business across different sectors.”

The Mail on Sunday Financial Times The I

OTHER NEWS – WEEKEND ENDING 31ST JANUARY 2021

SATURDAY

Football Transfers hit by ‘double whammy’ of Covid and Brexit

With Premier League teams spending just £65.1m on players so far this month, Deloitte analysis shows the last time total outlay in the January transfer window was below £100m was 2012.

Financial Times, Page: 2

Contact Paul Southward

Paul Southward

NEWS WEEKEND TO 17TH JANUARY 2021

NEWS WEEKEND TO 17TH JANUARY 2021

NEWS ROUNDUP

TAX NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Chancellor rules out wealth tax

The Chancellor has reportedly opted against using an emergency wealth tax to help cover the cost of the coronavirus pandemic. The Mail’s John Stevens says th at while Rishi Sunak has been presented with a proposal that would see a one-off levy on those with assets of more than £500,000 – or couples with assets of £1m – including family homes and pensions, he is said to have privately ruled out the move, deeming it “un-Conservative” and against the party’s aspirational values. The proposal, put forward by the Wealth Tax Commission, said a 5% levy on wealth could raise £260bn. Former head of the Civil Service Lord O’Donnell believes that taxes will need to rise if austerity measures are to be avoided. Writing in the Commission’s report, he says that to avoid breaking a manifesto pledge, ministers may need to consider new taxes. He adds that governments have made “radical changes to taxes when there has been public understanding that change is needed”. While suggesting a wealth levy is not the way to go, Mr Sunak is considering proposals to raise capital gains tax. The Office for Tax Simplification has suggested cutting the tax-free sum for CGT and aligning rates with income tax bands of 20%, 40% and 45%, with the Institute for Public Policy Research think-tank estimating that such a move could raise an extra £90bn over five years.

Daily Mail, Page: 12

Tax office hit by backlog as deadline nears

David Byers in the Times says customer service at HMRC “has collapsed” ahead of the January 31 deadline for self-assessment tax returns, with a backlog seeing average waiting times for callers increasing from less than five minutes to more than 12 minutes in a year. Pointing to the impact of the coronavirus crisis, Sarah Saunders at RSM said the level of appeals is likely to be much higher than usual, adding: “I can’t help wondering if HMRC can cope with the extra administrative burden this will create.” Reflecting on delays, Mr Byers notes that 47.4% of forms were turned around within seven days of being filed in November, compared with 76.6% in October and 94.4% in November 2019. Helen Thornley from the Association of Taxation Technicians believes late-filing penalties should be pushed back, commenting: “We want greater understanding about the unprecedented pressures that accountants and tax advisers are under at the moment”.

The Times, Page: 61

HMRC urged to waive late-filing penalties

With the self-assessment tax deadline fast approaching, HMRC has been urged to waive penalties as filers struggle amid the coronavirus crisis. The ICAEW has requested the Government reconsider its stance on late-filing penalties due to the impact of the pandemic, with chief executive Michael Izza writing to HMRC to suggest fines should be waived for at least two months. Pointing to the disruption stemming from the latest nationwide lockdown, staff absences due to sickness and self-isolation and continuing postal delays, Mr Izza said resources are stretched, adding: “To relieve the mounting pressure on tax agents and their clients, we believe that HMRC should announce an automatic waive of late filing penalties as soon as possible.”

Daily Express

25k delay tax bills, while 1-in-4 freelancers plan to spread payments

HMRC data show that almost 25,000 people have opted to spread their tax bill over 12 months rather than paying it by the January 31 deadline, with the delays covering around £69.1m. Meanwhile, analysis from Which? shows that a quarter of self-employed workers plan to delay paying. HMRC has said it will be lenient to those who miss the deadline, will accept coronavirus as a reasonable excuse for being late and waive fines. The Revenue has also extended the appeals window by three months to April. Separately, the Guardian offers tips for those filling in their tax returns, noting that HMRC expects to see more than 12m submissions, with it thought that around 4m have yet to be logged.

The Daily Telegraph, Money, Page: 2 Financial Times, Money, Page: 2 The Guardian, Page: 50

100k call for stamp duty holiday extension

A petition calling for the stamp duty holiday to be extended beyond the March 31 cut-off has drawn signatures from more than 100,000 home buyers and sellers. Passing the 100,000 milestone means the matter must now be formally considered for debate in Parliament. More than 50 MPs have added their voice to calls for the tax break on property transactions to be extended by a further 12 months to help support the property market amid the coronavirus pandemic.

The Daily Telegraph

Loopholes for landlords

The Telegraph looks at ways landlords can save money on their tax bill, with Chris Etherington of RSM saying married couples and civil partners could use the stamp duty holiday to change the split of ownership on their buy-to-let, “which can bring tax benefits.” Zena Hanks of Saffery Champness offers advice for owners of holiday lets, noting that if HMRC considers the property a business, the owner will pay a rate of 10% when they sell it whereas the maximum CGT payable on a normal rental property is 28%.

The Daily Telegraph, Money, Page: 4

Brexit may deliver tax bill shocks for some

The Times’ David Byers says some Britons with property in the EU may “find some nasty surprises” in their post-Brexit tax bills, warning that some member states have written provisions into domestic law allowing them to levy different tax rates for non-EU citizens. Robert Pullen of Blick Rothenberg details that Spanish tax authorities do not allow non-EU property owners to deduct expenses, while EU citizens can. Gabriele Giardina, a partner at RSM in Milan, notes that not being an EU citizen does not change income or property tax liabilities in Italy.

The Times, Page: 64

SUNDAY

Sunak planning tax increases

Rishi Sunak is planning to begin raising taxes in March’s budget, with the Chancellor looking at ways to start rebuilding the nation’s finances after the blow dealt by the coronavirus crisis. The Sunday Times’ Tim Shipman and Caroline Wheeler say that after talks with the Prime Minister, the Chancellor is set to announce an extension of government support, including the furlough and business loan schemes, and could also extend the stamp duty holiday. They add that senior government sources have suggested that if the coronavirus vaccination programme proves to be a success, Mr Sunak could confirm measures designed to tackle the deficit, with corporation tax the first levy in line for an increase. While property taxes are not expected to be altered in the upcoming budget, officials are said to be exploring measures that could see council tax and stamp duty abolished in the future, with the charges re placed with a proportional property tax levied on the existing values of homes.

The Sunday Times, Page: 2

Housebuilders back extended stamp duty holiday

A number of developers and housebuilders have backed a Telegraph campaign calling for the stamp duty holiday to be made permanent. Sarwjit Sambhi, chief executive of developer St Modwen, said the levy is an “impediment” to some deals, arguing that “everybody recognises” scrapping the duty is good for the economy in the long run. Greg Fitzgerald, CEO of housebuilder Vistry, believes that “from a confidence perspective”, stamp duty is better off being axed or reduced as “you will get more money from housing transactions generating tax.” Rob Perrins, managing director of Berkeley Homes, commented: “Any transaction tax is a very bad tax”.

The Sunday Telegraph

Treasury yet to finalise pandemic excuse form as deadline nears

While HMRC has said it will show leniency to those who cannot submit self-assessment forms by the January 31 deadline due to coronavirus-related issues, the Treasury has yet to detail how people can get a penalty-free extension. Jesse Norman, financial secretary to the treasury, says details have yet to be finalised for the form that will help taxpayers avoid late-filing penalties. Meanwhile, the Sunday Express offers self-assessment advice ahead of the deadline, noting the option to set up Time to Pay plans. Jamie Morrison at HW Fisher warns that people will face the 5% automatic late payment penalty if they fail to make an arrangement by March 2, the trigger date for that penalty.

The Sunday Times, Business, Page: 15 Sunday Express, Page: 54

Stamp duty stance a stress test for ministers

Madeline Grant in the Sunday Telegraph argues that the stamp duty holiday should be extended, saying the Government’s position on the issue will be a stress test that points to whether the Conservatives “value freedom and a flexible, dynamic economy”. Ms Grant says stamp duty is a “universally illogical tax, driving harmful disincentives across the market” and “a tax on mobility and freedom”. She says that while it started as a low, simple tax, levied on relatively few properties, it has “mutated into a swollen cash cow afflicting huge numbers of transactions.” “As policies go, stamp duty is perhaps second only to rent control for its ability to unite economists in condemnation”, she adds.

The Sunday Telegraph

Digital assets and IHT

Connor Coombe-Whitlock in the Sunday Express looks at the inheritance tax implications when people fail to include their digital assets in their will, with a Law Society survey showing that 93% of people do not include digital assets such as email and social media accounts. With this in mind, Matt Parr of Lime Solicitors has warned that a person’s digital currency could be inaccessible when they die, causing financial loss to their estate. He advises people should leave a “breadcrumb trail for their executors to follow”.

Sunday Express

INSOLVENCY NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Insolvencies increase

The number of company insolvencies in England and Wales rose to 1,228 in December, data from the Insolvency Service reveals. This is up by 9.2% on December 2019 and marks the first increase since February, with Government support rolled out amid the coronavirus crisis helping prevent a number of company failures – with temporary restrictions on winding-up petitions also playing a part. Colin Haig, president of insolvency and restructuring trade body R3, said: “These figures show that the economic impact of the pandemic may now finally be pushing increasing numbers of struggling businesses and individuals over the line into formal insolvency”. The Insolvency Service said: “It is too soon to tell whether this represents an emerging trend.” Elsewhere, company insolvencies in Scotland fell by 36%, while Northern Ireland recorded a 79% decline. Data on personal insolvencies reveals a 38% increase in England and Wales over the last three months compared to the same quarter in 2019.

The Times, Page: 57

SMEs NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Court rules on business interruption payouts

The Supreme Court has ruled that insurers must pay out on disputed coronavirus business interruption claims, meaning small firms could share around £1.2bn in payouts. This comes as a result of a test case brought by the Financial Conduct Authority (FCA), with the ruling potentially affecting up to 370,000 firms holding 700 types of policies issued by 60 insurers. Judges rejected appeals from six insurance companies and largely supported the arguments made by the FCA and a group representing policyholders. The FCA says it will be working with insurers to ensure they “move quickly” to pay claims to businesses. The Supreme Court ruling follows an appeal from insurers who questioned a decision by the High Court, which had found in favour of policyholders on most key issues in September 2020. The Federation of Small Businesses welcomed the Supreme Court ruling, with chairman Mike Cherry saying many firms had been left in “financial limbo” by insurers refusing to pay out on claims for losses caused by the first national coronavirus lockdown. Rob Benson, head of insurance at Grant Thornton, said insurers will now need to review policy wordings in order to assess the impact on their potential liabilities.

The Guardian, Page: 43 The Daily Telegraph Financial Times The Independent, Page: 38 Daily Express, Page: 65 Daily Mail BBC News Sky News

CORPORATE NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

230 Jaeger jobs to go

Administrators from FRP Advisory say 233 staff will be made redundant following fashion brand Jaeger’s acquisition by Marks & Spencer, with 63 stores and concessions to close as they are not part of the deal. It said 22 head office staff and 211 store employees have been made redundant, while six head office workers and seven warehouse staff have been retained to assist FRP. M&S has reportedly paid around £5m for Jaeger, which fell into administration in November.

The I, Page: 78 Daily Star, Page: 11

Retailers form alliances for Arcadia bids

Interested parties will table their final offers for the remains of the Arcadia retail empire on Monday. The Times says Next is working with hedge fund Davidson Kempner on a deal that would see it take on Topshop and Topman’s operations, while JD Sports has formed a similar alliance with Authentic Brands. The paper notes that administrators at Deloitte this week closed 19 shops under the Arcadia umbrella with the loss of 278 jobs.

The Times, Page: 57

Babcock warns of potential hit to balance sheet

Defence contractor Babcock may be forced to cut the expected value of contracts and future income following an evaluation of its balance sheet and contract profitability, with the firm looking into the matter in a review being overseen by an independent accountancy firm, not usual auditor PwC.

The Times, Page: 52 Financial Times Daily Mail, Page: 110 The Sun, Page: 44

SUNDAY

Next in line for Topshop

With final bids due tomorrow, Next is seen as the frontrunner to buy Sir Philip Green’s Arcadia retail empire out of administration. The fashion chain is bidding for the group in partnership with US hedge fund Davidson Kempner. It faces competition from JD Sports, which has held talks with Authentic Brands over a joint bid, while Mike Ashley’s Frasers Group is also said to be in the running. Administrators from Deloitte are aiming to wrap up the sale of Arcadia by the end of the month.

The Sunday Times, Business, Page: 1

Ashley in Peacocks bid

Sports Direct boss Mike Ashley has bid around £65m for Peacocks, the discount fashion chain which collapsed in November. If the bid – which is said to be £5m below the figure sought – is not accepted, it is believed that Peacocks founder Philip Day or his associates are likely to buy the chain’s stores. Edinburgh Woollen Mill, another of Mr Day’s chains, was recently bought out of administration by Purepay, whose assets are pledged to Mr Day, with administrators from FRP saying the deal has saved 246 stores.

The Sunday Times, Business, Page: 4

Investors question Koovs collapse

Jamie Nimmo in the Sunday Times looks at the 2019 collapse of online fashion business Koovs. Noting that the firm was snapped up by founder Baron Alli of Norbury through a prepack sale, Mr Nimmo says shareholders have voiced concern that Baron Alli orchestrated a move to buy the firm on the cheap by secretly setting up a vehicle to buy it and lining up administrators for the deal without the knowledge of its advisers. Administrators from FRP and lawyers from RPC are investigating the matter.

The Sunday Times, Business, Page: 4

NCP withholds rent

NCP is in dispute with landlords, with the car park operator refusing to pay rent and calling in Deloitte to negotiate – a move that has prompted speculation that it may seek a CVA. NCP, which is owned by Japan’s Park24 and the state-backed Development Bank of Japan, has reportedly missed the December rent quarter payment. It is also said to have told landlords it is unable to pay monthly rents.

The Sunday Times, Business, Page: 1

ProCook owner weighs options

Daniel O’Neill, founder of kitchenware chain ProCook, may consider selling the business following an online sales surge amid the coronavirus lockdown. Mr O’Neill has hired consultants at KPMG to advise on options, saying an outright sale, a partnership with an existing retailer or an injection of venture capital are possible, while ruling out a stock market flotation.

The Mail on Sunday, Page: 123

Clarity needed on Autonomy

Oliver Shah says Autonomy founder Mike Lynch still has questions to answer over the sale of the software firm to Hewlett-Packard that has left him facing extradition to America on 14 counts of conspiracy and fraud and awaiting the outcome of a civil trial in the UK. Writing in the Sunday Times, Mr Shah notes that in a round-robin new year email to his contacts, Mr Lynch said a damning report into Deloitte‘s auditing of Autonomy was “troubling, because chief executives should be able to rely on their auditors for independent, accurate and fair advice”.

The Sunday Times, Business, Page: 9

Market to deliver 10% annual growth

Reflecting on the performance of Deliveroo, Sabah Meddings in the Sunday Times says the firm and its rivals have played an important role during the pandemic, with restaurants hit by lockdown restrictions increasingly relying on take-away services to survive. She cites Deloitte analysis which forecasts the delivery market to grow by 10% a year to an estimated £19bn by 2023.

The Sunday Times, Business, Page: 1

Looking at listings

Jill Treanor in the Sunday Times looks at firms that could float on the stock market in 2021, noting EY analysis showing that London was in third place behind US and Chinese markets for funds raised from floats last year.

The Sunday Times, Business, Page: 2

PROPERTY NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Loan woe for the self-employed

Some banks are refusing to provide mortgages to self-employed workers if they took coronavirus support loans or income grants, despite the Government and the banking watchdog saying the payments would not affect credit ratings. Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, said banks are referring applications from the self-employed to their manual underwriters automatically, meaning fewer self-employed people are being granted a mortgage. The Financial Conduct Authority has said making use of one of the financial support schemes should not prevent self-employed people from accessing credit. Meanwhile, analysis shows that Santander is limiting its mortgage products to 60% loan-to-value for the self-employed, while NatWest will ignore debts being cleared for employed borrowers when assessing affordability on a mortgage application but will still factor them in for the self-employed. TSB limit s new self-employed borrowers to mortgages with a maximum LTV of 75%, Halifax has placed limits on how much the self-employed can borrow, Metro Bank requires more bank statements from the self-employed than other applicants and Nationwide is limiting its 90% mortgage products to salaried employees only.

The I Daily Mail

SUNDAY

The year ahead for house prices

City AM ’s Jessica Clark considers the movement property values may see in 2021, saying the end of both the stamp duty holiday and Help to Buy could lead to a more subdued housing market. Howard Archer, chief economic adviser to EY Item Club, suspects house prices “could be around 5% lower than now by the end of 2021”. He believes the housing market is “likely to come under mounting near-term pressure” as the economy is affected by coronavirus restrictions, while there is “likely to be a fading of the pent-up demand effect”. Estate agency Knight Frank expects prices to remain flat this year, down from a previous forecast of 1% growth, while Savills expects net house price growth in 2021 to be close to zero. Real estate adviser Avison Young expects Q1 to be busy as buyers look to tie-up deals before the stamp duty holiday ends on March 31, while “it becomes harder to ascertain the likely trajectory” of the market over the rest of 2021.

City AM

FINANCIAL SERVICES NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Equivalence delay may drive divergence

Industry sources say with the EU refusing to grant UK financial services access to the single market, Britain may be forced to diverge from EU rules. Citing Brussels insiders, the Telegraph says the European Commission has no immediate plans to provide British firms in 28 sectors market access through equivalence. While the UK granted the bloc equivalence in several areas of business in November, Brussels will not grant equivalence to UK firms unless the Government details how far it plans to diverge from EU rules in the future. Miles Celic, chief executive of TheCityUK group, said that both markets are “dynamic and as they evolve the likelihood, and value, of equivalence will shrink”, while Professor Sarah Hall of Nottingham University, said equivalence should be seen as a “perishable good”, arguing that the longer it takes for a decision to be made on it, “the more likely it is that UK based financial service firms will take decisions to operate without equivalence”.

The Daily Telegraph

SUNDAY

Financial services and the future

The Sunday Telegraph’s Michael O’Dwyer weighs the post-Brexit climate for financial services, saying that Chancellor Rishi Sunak believes leaving the EU will “reinforce the UK’s position as a globally pre-eminent financial centre”. Tony Gaughan, leader of global asset management at Deloitte, says: “The industry would like more opportunities to bring the broader aspects of investment management and servicing industries back onshore into the UK,” while Richard Hammell, Deloitte‘s UK head of financial services, says the UK may want to “economically invest disproportionately” in infrastructure and technology so as to be the “leading centre for the digital future of financial services.”

The Sunday Telegraph, Business, Page: 5

ECONOMY NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

GDP falls 2.6% in November

Data from the Office for National Statistics (ONS) shows GDP fell by 2.6% month-on-month in November, with the decline pushing the economy toward a double-dip recession. GDP fell to 8.5% below its pre-pandemic level in November, with the slide driven by the second national coronavirus lockdown in England. Analysis shows that GDP dipped 3% in the first three months of 2020 before registering a record 19% fall in Q2 – a period that saw the UK in its first nationwide coronavirus lockdown. While Q3 saw a record jump of 16% as growth returned, analysts expect Q4 to see another dip. With tough new restrictions currently in place, Q1 2021 is forecast to show a decline, meaning two consecutive quarters of falling GDP and a second recession. Chancellor Rishi Sunak said the ONS figures highlight the scale of the challenge being faced, saying: “It’s clear things will get harder before they get better”. James Smith, research director of t he Resolution Foundation, says that while the economic story “is of only the second-ever double-dip recession on record, the story of the year will be a vaccine-driven bounceback in economic activity”. Suren Thiru, head of economics at the British Chambers of Commerce, believes a “clear and comprehensive plan is urgently needed to support the economy throughout this year.”

The Times The Guardian The Daily Telegraph City AM BBC News

SUNDAY

Labour says Universal Credit cut will damage the economy

Labour has warned that the economic recovery from the coronavirus crisis will be damaged unless the Chancellor extends a £20-a-week increase in universal credit. Rishi Sunak is reportedly planning to give benefit claimants a £500 payment as an alternative to a £20-a-week benefit uplift to universal credit put in place to help people amid the pandemic. Responding to reports of the mooted one-off payment, shadow work and pensions secretary Jonathan Reynolds warned that with Britain facing “the worst economic crisis of any major economy,” winding down support by cutting universal credit “will be devastating for families already struggling to get by, and leave unemployment support at a 30-year-low.” He added that the move “will damage our recovery.” Torsten Bell, CEO of the Resolution Foundation think-tank, said it would be “madness” to decrease basic unemployment benefits at a time when t he economy needs a boost from consumer spending.

City AM The I The Independent

OTHER NEWS WEEKEND TO 17TH JANUARY 2021

SATURDAY

Veganuary news

The Independent’s Kat Smith looks at the benefits and realities of embracing veganism, noting a study by Blue Horizon and PwC suggesting it would take just 10% of the global population switching to plant-based alternatives to reduce CO2 output by 176m tons by 2030.

The Independent, Page: 52

Contact Paul Southward

Paul Southward

NEWS – TUESDAY 5TH JANUARY 2021

NEWS – TUESDAY 5TH JANUARY 2021

NEWS ROUNDUP

TAX NEWS – TUESDAY 5TH JANUARY 2021

Lord’s report calls for better tax avoidance information

The House of Lords’ Economics Affairs Committee says people need to be better informed about tax avoidance schemes and says it is “troubled” that people on lower incomes are becoming caught up in loan schemes while those behind the schemes remain unpunished. The committee’s New powers for HMRC: fair and proportionate? report says that evidence it received in 2018 suggests that HMRC has “spent considerable time and resources focusing on individuals who participated in disguised remuneration schemes, while some of those who promoted such schemes have continued to be able to profit from their activities.” The report says taxpayers need “better information about schemes so that they can see through a promoter’s sales pitch and recognise when they are being sold an aggressive tax avoidance scheme.”

Yorkshire Post

EU firms question post-Brexit tax rules

A number of European retailers have stopped delivering to the UK due to new tax rules that came into force when Britain exited the EU on January 1, with new rules seeing VAT now being collected at the point of sale rather than at the point of importation. This means overseas retailers sending goods to the UK need to register for UK VAT and account for it to HMRC. A UK Government spokesperson said: “The new VAT model ensures goods from EU and non-EU countries are treated in the same way and that UK businesses are not disadvantaged by competition from VAT-free imports.”

BBC News Financial Times, Page: 2 Daily Mirror

OECD warns governments to rethink constraints on public spending

OECD chief economist Laurence Boone has urged governments to use fiscal policy – increased public spending and lower taxes – to help drive the post-pandemic economic recovery.

Financial Times, Page: 4

CORPORATE NEWS – TUESDAY 5TH JANUARY 2021

Business leaders call for greater support amid new lockdown

Business leaders have warned that the new coronavirus lockdown announced by Boris Johnson could put the future of many firms at risk. British Chambers of Commerce director general Adam Marshall, who described the latest restrictions as a “body blow to our business communities”, said firms will understand why the Prime Minister felt compelled to act to address a surge in infections, “but they will be baffled and disappointed by the fact that he did not announce additional support for affected businesses alongside these new restrictions.” Mike Cherry, national chairman of the Federation of Small Businesses, fears the lockdown will cause widespread business failures and job losses unless support is provided “on an equal scale to these unprecedented curbs on economic freedom”. TUC general secretary Frances O’Grady said that without more support, jobs will be lost and businesses will close, cal ling for targeted help for hard-hit industries. In a similar call, Roger Barker, director of policy at the Institute of Directors, said the Treasury must “bolster support for the worst affected sectors” and reinforce the discretionary grant scheme. CBI director general Tony Danker said businesses “will continue to step up in the national interest to support the NHS, employees and customers”, while noting a need to “acknowledge that the economic impact of these new restrictions is significant.”

The Times, Page: 34 Daily Mail

INSOLVENCY NEWS – TUESDAY 5TH JANUARY 2021

Landlords warn of CVA abuse

The British Property Federation, whose members include some of Britain’s biggest commercial property owners, has called on ministers to act over what it claims is abuse of the insolvency framework. The body has written to Corporate Responsibility Minister Lord Callanan, highlighting that retailers and hospitality groups are increasingly turning to CVAs and warning that this form of insolvency can disproportionately hurt landlords by triggering rent cuts and site closures. Melanie Leech, chief executive of the federation, told Lord Callanan that some wealthy individuals and private equity backers have “cynically” used the coronavirus crisis as an excuse to “shift on to property owners the cost of years of failings and under-investment”. With it shown that creditors less affected by the CVA often receive a greater share of the vote than the landlords, the federation wants ministers to ensure that the voting procedure is fairer. It argues that the votes of those set to be hardest hit must carry greater weight than those of unaffected creditors.

The Times, Page: 38

EMPLOYMENT NEWS – TUESDAY 5TH JANUARY 2021

Restaurant industry job losses jump by 163%

Almost 30,000 job losses were recorded across restaurants and casual dining firms in 2020, with the coronavirus crisis driving a 163% jump in job cuts as restrictions designed to fight the spread of the virus hit the sector. Figures compiled by the Centre for Retail Research show that 29,684 jobs were lost, far exceeding the 11,280 job losses reported across the sector in 2019. The report also shows that branch closures by hospitality firms hit 1,621 – a 75.8% jump on the 922 closures recorded in 2019.

The Independent The Guardian Daily Mirror

Pandemic speeds technological change

The Telegraph looks at the threat AI and robotics poses to jobs, with research suggesting that the coronavirus crisis has accelerated the pace of technological change. It notes that, pre-pandemic, the OECD suggested that across wealthier nations 9% of jobs were at high risk of automation and PwC estimated that a third of UK jobs were at risk. A report from McKinsey says 59m jobs – a quarter of the total – are now estimated to be at risk from automation, with almost half already at risk before the coronavirus outbreak.

The Daily Telegraph, Business, Page: 4

PROPERTY NEWS – TUESDAY 5TH JANUARY 2021

Mortgage lending hits 13-year high

Figures from the Bank of England show that mortgage approvals hit the highest level in 13 years in November, with 104,969 approved. This was up on the 98,338 recorded in October and marks the biggest total since August 2007. The surge has been attributed in part to the stamp duty holiday rolled out to boost the market after it was hit by the coronavirus outbreak and resulting restrictions, with the temporary relief on the levy driving activity and boosting prices. Figures from building society Nationwide show that house prices rose by 7.3% in December, marking the biggest annual increase in six years.

The Times, Page: 36 The Guardian City AM BBC News

ECONOMY NEWS – TUESDAY 5TH JANUARY 2021

£1.5bn repaid in November

Bank of England figures reveal households repaid just over £1.5bn of credit card debt, personal loans and car finance in November, with weaker consumer spending amid the second national lockdown believed to be a contributing factor. With net consumer lending dropping by £1.54bn, it marks a 6.7% decline on the amount recorded November 2019, with this the biggest drop since monthly records began in 1994. Since the start of the coronavirus pandemic in March, households have repaid £17.3bn of consumer credit. Bank of England analysis also shows that total household deposits increased by almost £5bn month-on-month to reach £17.6bn.

The Guardian City AM

Factories hold record stockpiles

Factories accumulated record supplies of materials last month as manufacturers boosted purchases of supplies at the fastest pace in over 25 years, the IHS Markit/CIPS manufacturing purchasing managers’ index reveals. The index rose to 57.5, up from 55.6 the previous month to its highest level since November 2017. Manufacturers built up their stocks at the fastest rate since March 2019 ahead of the end of the Brexit transition period, while new orders rose at the quickest pace since August. Howard Archer, chief economic adviser to the EY Item Club, notes that manufacturers saw a stronger performance amid nationwide restrictions in November than during the initial shutdown, saying “lessons have been learnt in keeping activity going from the previous lockdown”.

The Daily Telegraph The Times City AM

OTHER NEWS – TUESDAY 5TH JANUARY 2021

Accountant has £50k to count

Accountant Kat Glennie-Soares has won £50,000 on game show Beat The Chasers, defeating five quiz experts from ITV’s The Chase.

The Sun, Page: 33 Daily Star, Page: 27

Contact Paul Southward

Paul Southward

NEWS – THURSDAY 17TH DECEMBER 2020

NEWS – THURSDAY 17TH DECEMBER 2020

NEWS ROUNDUP

TAX NEWS – THURSDAY 17TH DECEMBER 2020

Sunak plays down wealth tax talk

Chancellor Rishi Sunak has suggested that a one-off wealth tax may not be his preferred option as the UK looks to rebalance the books in the wake of the coronavirus crisis. With the Wealth Tax Commission having proposed a 1% tax on those with personal wealth of more than £500,000 – which would be spread over five years, Mr Sunak has addressed the matter in an interview with the Spectator. Responding to the suggestion that a one-time wealth tax did not sound like a Conservative policy, the Chancellor said: “I think that’s right, in the sense that we’re a party that believes in aspiration. Actually, we should be celebrating aspiration.” Mr Sunak did note, however, that he is yet to read the Wealth Tax Commission report. While the commission says such a levy would raise £260bn, the Telegraph highlights that critics have warned it would punish asset-rich, cash poor families and could force some people to sell their homes.

The Daily Telegraph, Business, Page: 1

Chancellor urged to extend tax return deadline

The Chancellor has been urged to extend the self-assessment tax return deadline beyond January 31, with concern that people will need more time to analyse their finances in greater detail due to the impact of the coronavirus outbreak. Moore has asked the Chancellor and HMRC to give taxpayers at least an extra month to deal with their tax return. The firm’s Tim Woodgates said pushing the deadline back is “essential to avoid causing more anxiety and stress” to those who are shielding, adding that a “blanket extension is the best option”. Noting that late-payment can result in fines, Mr Woodgates said HMRC is “snowed-under” and will not have enough time to deal with appeals against penalties “without falling behind elsewhere.” “Compared to overall tax take, the penalties for late filing are immaterial,” he added.

Daily Express

INSOLVENCY NEWS – THURSDAY 17TH DECEMBER 2020

Loan schemes hold off insolvencies

The Independent’s Ben Chu says that while large numbers of firms have been hit financially by the coronavirus crisis, the number of business insolvencies has fallen this year, with this in large part thanks to state-backed bank loans. Colin Haig of restructuring trade body R3 says the reason the impact of the pandemic “hasn’t shown up in the insolvency statistics yet is because of the extensive support the government has provided”. He adds: “Without it, we’d be in a very different situation – and a very grave one at that.” Mr Chu highlights that across a number of Government loan schemes, 1.5m firms have tapped £65bn of credit, while Bank of England figures show that net bank lending to SMEs in the year to October was more than 40 times higher than the average of previous years. With the Bank saying further support will be needed, the Treasury is working on a successor to the loan schemes. Mr Chu warns that if officials make the new scheme considerably more rigorous, many firms could find themselves facing insolvency.

The Independent, Page: 49

EMPLOYMENT NEWS – THURSDAY 17TH DECEMBER 2020

Pandemic hits self-employed numbers and earnings

The Telegraph’s Jon Yeomans looks at the impact the coronavirus crisis has had on Britain’s self-employed workers, noting that while the number of freelancers peaked at 5m in March, the pandemic has seen the total fall 9% to 4.56m in October. Figures from IPSE, the professional body for self-employed workers, show earnings for self-employed workers fell 25% in Q2, with the nationwide lockdown hitting incomes. While HMRC analysis says 2m freelancers had utilised Government support to the tune of £5.1bn by August 31, campaign group Excluded UK calculates that 1.6m self-employed people have missed out as they did not meet the eligibility criteria.

The Daily Telegraph, Business, Page: 4

Migrants led jobs boom

Analysis shows that migrants have driven a jobs boom in economic hotspots in the last 20 years, with analysis by the Resolution Foundation think-tank showing that migrant workers accounted for 67% of net employment growth in the South East, 74% in the West Midlands and 107% in Outer London. Policy analyst Kathleen Henehan said: “Migrant workers played a big role in growth of the UK labour force over the last 25 years.” She highlighted that the UK has been attracting fewer migrant workers since the Brexit referendum, adding that the new immigration regime “will reinforce this major change for the UK labour market.”

Daily Mirror, Page: 2

PROPERTY NEWS – THURSDAY 17TH DECEMBER 2020

House prices climb 5.4%

Data from the Office for National Statistics shows that property prices rose by 5.4% year-on-year in October, up from a 4.3% increase recorded in September. The increase, which was driven by a surge in buyers looking to complete deals before the stamp duty holiday comes to an end on March 31, pushed prices to a record average of £245,000. Scotland led the way on price rises, with the average climbing 6% to £163,000. Prices in England, Wales and Northern Ireland grew 5.4%, 5.8% and 2.4% respectively. EY Item Club believes house prices could fall by 5% over the first half of 2021, “before activity gradually improves” over the second half of the year. It said this will “allow prices to stabilise and then start to firm” as the economy “establishes a firmer footing”, noting that very low borrowing costs should help, with the Bank of England unlikely to lift interest rates from 0.10% during 2021. PwC economist Jamie Durham warned that there is a risk activity “could drop off sharply” once the stamp duty holiday comes to an end.

Daily Mail The Guardian Financial Times

CORPORATE NEWS – THURSDAY 17TH DECEMBER 2020

Soap star’s firm wound up

Thatcher Promotions Limited, a company owned by EastEnders actress Jessie Wallace has been wound up owing the taxman £40,000. The firm was placed into voluntary liquidation in 2015, owing almost £70,000 in unpaid corporation tax and VAT. Ms Wallace, the only director of the firm, paid £60,000 but with some of this going on legal fees and to pay the liquidator, there was only £27,000 left to pay what was owed in tax.

Daily Mirror, Page: 9

ECONOMY NEWS – THURSDAY 17TH DECEMBER 2020

Inflation falls to 0.3% in November

Inflation fell to 0.3% in November from 0.7% in October, Office for National Statistics (ONS) figures show. Discounting by clothing retailers helped pushed the consumer prices index down, with bigger discounts than usual offered on Black Friday. ONS deputy national statistician for economic statistics Jonathan Athow noted the impact of the “significant restrictions” in place across the UK. PwC economist Hannah Audino commented: “The acceleration of consumer price growth over the past two months has been cut short”, noting that “most of the main groups of goods and services experienced a fall in prices between October and November”. Yael Selfin, chief economist at KPMG, believes that prices could rise in the coming months, with “border frictions” as a result of Brexit driving up prices. She added that if a Brexit deal is agreed, inflation could rise to an average of 1.3% next year from 0.9% in 2020. Howard Archer, chief economic adviser to EY Item Club, believes consumer price inflation is likely to “edge back up” through December and in 2021.

The Guardian The Independent Financial Times Daily Mail City AM BBC News

Businesses return to growth

UK businesses have returned to growth this month following a downturn driven by the England-wide lockdown in November, with the IHS Markit purchasing managers’ index (PMI) climbing to 50.7 in December from 49 in November on an index where a figure above 50 indicates expansion. Manufacturing led the way, with the sector’s PMI reading hitting a three-year high of 57.3, while the services sector, which makes up about 80% of the economy, saw a reading of 49.9. Chris Williamson, chief business economist at IHS Markit, said the PMI data suggests the blow dealt to the economy by the second wave of coronavirus infections “has so far been far less harsh than the first wave.” However, he added that the recovery “lacked vigour”.

City AM Financial Times

Chancellor: Borrowing not sustainable

With Government borrowing hitting more than £22bn in October, Chancellor Rishi Sunak says current levels are unsustainable. Office for National Statistics data shows that between the start of the financial year in April and October, the state borrowed £215bn, with this driven by the coronavirus crisis and the cost of the Government’s response. Mr Sunak has told the Spectator: “It is clearly not sustainable to borrow at these levels. I don’t think morally, economically or politically it would be right.”

The Daily Telegraph, Business, Page: 1

OTHER NEWS – THURSDAY 17TH DECEMBER 2020

Ministers urged to ease in new border rules

Blick Rothenberg has urged the Government to introduce an implementation period for post-Brexit border rules, arguing that businesses still know very little about what the new procedures will be as a deal is yet to be agreed with the EU. The firm’s Alex Altmann said: “With the end of the customs union being two weeks away the Government need to show flexibility now”.

The I, Page: 15

INDUSTRY NEWS – THURSDAY 17TH DECEMBER 2020

Accountant reprimanded

Accountant James Phipps has been given a “severe reprimand” and ordered to pay £5,060 after a tribunal heard he groped a sleeping woman on a flight then threw a hardback book at her when she rejected his advances. He was arrested over the incident and given a ten-day jail sentence in 2019. While he lost his job with PwC, he was not struck off as the Institute of Chartered Accountants accepted his argument that it was an “isolated incident”.

The Daily Telegraph, Page: 13 The Times, Page: 19

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Paul Southward

NEWS – WEDNESDAY 16TH DECEMBER 2020

NEWS – WEDNESDAY 16TH DECEMBER 2020

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 16TH DECEMBER 2020

Ministers urged to extend or adapt stamp duty holiday

Banks have urged the Treasury to extend the stamp duty holiday rolled out to support the property sector amid the coronavirus pandemic beyond the March 31 cut-off, arguing that pushing the deadline back could prevent close to a quarter of a million sales from collapsing. Yorkshire Building Society estimates that 240,000 sales worth £58bn could miss the deadline. While some banks and those within the property sector are calling for the stamp duty holiday to be extended, others have mooted a technical change that would mean contracts had to be exchanged by the end of March, with current rules saying deals must be completed by the end of Q1 2021. Nitesh Patel from Yorkshire Building Society has called on ministers to give buyers three months to complete purchases if their mortgage offer has been accepted by the current cut-off.

The Daily Telegraph, Page: 3

Treasury plans UK tax shake-up for asset holding companies

The Treasury has detailed proposed reforms to taxation of specialist vehicles used by private equity and infrastructure funds, a move that could “remove barriers” to establishing such companies in the UK.

Financial Times, Page: 2

Wealth tax debate

With former MP Michael Meadowcroft having suggested that land could offer a viable route to taxing wealth, Robert Rhodes, QC, writes to the Times to argue this may be “unduly optimistic”. He says most land outside towns and cities is used as working farmland, with few farms sufficiently profitable to bear a wealth tax. He adds that a wealth tax is “not a realistic option to raise a huge amount of money quickly”.

The Times, Page: 30

EMPLOYMENT NEWS – WEDNESDAY 16TH DECEMBER 2020

Record spike in redundancies

Office for National Statistics (ONS) figures show that redundancies rose by an all-time high as 370,000 jobs were lost in the three months to October. The losses mean the jobless rate has hit 4.9%, up from 4.8% in September to the highest level since 2016. The number of UK workers on payrolls has fallen by 819,000 between February and November due to the impact of the coronavirus pandemic. On top of this, the ONS estimates that around 4.5m workers are currently on furlough. Experts have suggested that the Chancellor may be forced to extend the furlough scheme beyond March, with Investec’s chief economist Philip Shaw warning that a no-deal Brexit may have an impact, saying: “That is a non-C OVID-19 event but one that could disrupt the economy in such a way to persuade the Chancellor to extend.” Paul Dales, chief UK economist at Capital Economics, said that if the pandemic means the Government is forced to continue tiers or lockdowns beyond March, “I think they are obliged to continue the furlough.”

The Daily Telegraph The Guardian, Page: 37 The I, Page: 8 Daily Mirror, Page: 2

CORPORATE NEWS – WEDNESDAY 16TH DECEMBER 2020

UK firms see highest impairment charges since 2012

UK companies have recorded the highest goodwill impairments since 2012, with Duff & Phelps analysis showing that FTSE 100 companies recorded an aggregate impairment of €16bn in 2019, a 248% increase on the year before. UK companies within the pan-European Stoxx 600 recorded a 172% increase in impairment charges, with an aggregate of €19.3bn. Michael Weaver, Duff & Phelps’ managing director and head of valuation advisory, said: “The data is already showing that aggregate goodwill impairments will likely exceed 2019 levels as the effect of C OVID-19 as well as Brexit negotiation uncertainty continue to weigh on companies’ outlook”. He added that while the full impact of the pandemic remains uncertain, “the outlook for European companies has deteriorated significantly from the beginning of the year”, with analysts dramatically cutting earnings growth forecasts for 2020.

City AM

WPP gets its numbers wrong by £300m

Advertising agency WPP has admitted to understating its losses by £301m, with the accounting error meaning a record half-year loss of £2.6bn reported in August has been corrected to a loss of £2.9bn. WPP said its finance team spotted the error after the results were issued, adding that it plans to restate accounts for 2017 to 2020 to correct them. Lord Sikka, a professor of accounting at Sheffield University, said the disclosure raised questions about why no one at WPP or Deloitte – which signed off accounts in 2017, 2018 and 2019 – spotted the mistake sooner. He commented: “What on earth were the auditors doing and where are the regulators?”

Daily Mail, Page: 65 The Times, Page: 46

INSOLVENCY NEWS – WEDNESDAY 16TH DECEMBER 2020

Pandemic prompts insolvency warning

Patrick Collinson in the Guardian reflects that while UK Insolvency Service figures show that individual bankruptcies and debt relief orders have fallen over the last year to the lowest level in a decade, the Citizens Advice Bureau has warned that the coronavirus crisis has driven up energy bill debt, unemployment and rental arrears. He highlights that the number of applications forcing someone into bankruptcy has fallen as various initiatives reduced proceedings, while noting that a “broad system of support” for those in debt has emerged. However, Mr Collinson says the “great reckoning is to come”, with history pointing to an 18 month to two-year lag after a crisis “before the proverbial rug gets pulled”. He notes that the peak period for individual insolvencies was in Q4 2009 – two years after financial crisis first hit. “Expect that record crash; and many people’s lives – to be shattered some time in 2022”, he warns.

The Guardian, Page: 39

INDUSTRY NEWS – WEDNESDAY 16TH DECEMBER 2020

Big Four employ CCP members

Documents seen by the Telegraph show that the Big Four have employed more than 2,000 members of the Chinese Communist Party (CCP), including at least one partner in every firm. At least 400 KPMG staff had CCP membership in 2016, while EY and Deloitte each employ more than 800 party members, including Deloitte’s deputy director in China. The report also shows that some senior staff at PwC are members, including at least one partner. MP Bob Seely, a member of the Foreign Affairs Select Committee, said the issue “is a bizarre and scandalous state of affairs,” arguing that alongside an “espionage risk, which is clearly highly serious in itself”, the matter raises “significant questions” about client confidentially. The Telegraph notes that there is no evidence to suggest that any of the CPP members have prejudiced the interests of clients.

The Daily Telegraph, Page: 1

BUSINESS RATES NEWS – WEDNESDAY 16TH DECEMBER 2020

To save the high street, first fix business rates

An FT editorial calls for reform of the business rates system, saying it needs to be fit for purpose so as to help address the challenges facing the retail sector.

Financial Times, Page: 24

ECONOMY NEWS – WEDNESDAY 16TH DECEMBER 2020

Capital Economics issues optimistic prediction

Economists at consultancy Capital Economics have predicted that the coronavirus vaccine will see the UK economy recover more quickly than most analysts expect. While the Government’s official forecaster has predicted growth of 5.5% in 2021 and 6.6% in 2022 following a decline of 11.3% this year, Capital Economics believes that following a record decline of 11.5% this year, the economy will grow by 7.5% next year and by the same rate the year after. Paul Dales, chief UK economist at Capital Economics commented: “We think the C OVID-19 crisis will lead to minimal long-term scarring. Later this decade GDP will return to the path it would have been on if C OVID-19 never existed.” The firm also suggested that chancellor Rishi Sunak will not raise taxes or reduce spending in 2021 or 2022.

City AM

Retail sales fall north of the Border

The latest monitor from the Scottish Retail Consortium and KPMG shows that retail sales in Scotland fell by 10.2% last month compared with November 2019. On a like-for-like basis, sales decreased by 9.6%. Paul Martin, UK head of retail at KPMG, said ongoing localised lockdowns have “hit the sector at a time when it usually reaps the rewards from a pre-Christmas sales surge.” He added: “November’s data reflects the near-daily fight for survival facing many of Scotland’s retailers.”

The Scotsman, Page: 40 The Press and Journal, Page: 31

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Paul Southward

NEWS – MONDAY 14TH DECEMBER 2020

NEWS – MONDAY 14TH DECEMBER 2020

NEWS ROUNDUP

TAX NEWS – MONDAY 14TH DECEMBER 2020

Chancellor urged not to raise taxes to cover no-deal support

Rishi Sunak has been urged to avoid tax rises to meet the cost of a no-deal Brexit. While Conservative MPs have expressed support for plans for financial measures targeted at the sectors that would be hardest hit, they have urged the Chancellor not to increase taxes to pay for any rise in state spending. Commenting on how to cover the cost of a bailout package for farmers and fishermen, MP John Redwood said: “Of course not tax rises, that would actually probably reduce revenue. I think tax cuts would increase revenue, which would be a good idea.” MP Marcus Fysh, deputy president of the Board of Trade, commented: “We need to have tax settings and other regulatory settings to make Britain the best place to invest. I don’t think higher taxes are a sensible part of such a setting.” “Things like capital gains tax is just the wrong area to be looking at, because it will directly penalise investment and innovation,” he added.

The Daily Telegraph, Page: 5

Wealth taxes: rich pickings

The FT considers the viability of a wealth tax, noting that a 5% tax on net assets above £500,000 would raise more than £260bn and hit 16% of adults. Elsewhere in the FT, Martin Wolf argues against a Wealth Tax Commission suggestion that a one-off wealth tax would reduce the UK’s public debt, saying today’s fiscal risks are being assessed using out-of-date metrics. Meanwhile, the Independent’s John Rentoul also looks at whether a wealth on tax will help foot the nation’s coronavirus bill, suggesting that if the Chancellor needs to raise taxes, “the logic of manifesto promises and practical economics” will drive him towards higher taxes on more valuable homes.

Financial Times, Page: 30 Financial Times, Page: 29 The Independent, Page: 12

Bootle calls for post-Brexit tax cuts

Roger Bootle, chairman of Capital Economics, says that the UK needs to be “ultra-competitive” outside the EU, offering that rather than “contemplating a raft of tax rises and new taxes”, the Chancellor should embark on a programme of corporate and individual tax cuts. If, he adds, Rishi Sunak feels Britain cannot afford this now, “he should frame his plans for current spending accordingly and at least announce a programme for future tax cuts.”

The Daily Telegraph, Business, Page: 2

INDUSTRY NEWS – MONDAY 14TH DECEMBER 2020

Challengers ‘strategic’ over pitches

BDO ’s audit boss Scott Knight says mid-tier accountancy firms are, in some cases, not pitching to win work from some large companies, with challengers such as BDO, Grant Thornton and Mazars said to be becoming disillusioned with lengthy bidding processes with a low chance of success. Mr Knight said: “Everyone’s become a bit more strategic about what they’re going to go for and not go for.” Detailing the “big involved process” of pitching, he goes on to say: “You want to know that you’ve got a good chance of winning it before you go into it.” The Telegraph says there is concern among mid-tier firms that they are being invited to tenders to make up the numbers, while the Big Four continue to audit the entire FTSE 100.

The Daily Telegraph, Business, Page: 3

CORPORATE NEWS – MONDAY 14TH DECEMBER 2020

Potential bidders line up for retailers

The Times reports that 40 parties have registered an interest in the auction of retailer Arcadia’s brands being handled by administrators at Deloitte. American fashion and investment group Authentic Brands is said to be interested, with Marks & Spencer, Next and Boohoo also named among potential bidders while Associated British Foods, the owner of Primark, is also understood to have received the information memorandum. The Times notes Frasers Group and Authentic Brands are believed to be interested in both Arcadia and Debenhams.

The Times, Page: 42

Firms flag post-Brexit growth fears

Research for the Business Growth Fund shows that the majority of mid-sized private companies expect Brexit to add “significant barriers” to their growth. The study, conducted by Delineate, found that seven in ten businesses with turnover between £2.5m and £100m said the coronavirus crisis had created a barrier to their expansion, while six in ten expect Brexit to do the same. Meanwhile, separate research by PwC shows there are over 21,000 companies in the UK with annual sales of between £2.5m and £100m – and before the crisis the majority were fast-growing and profitable, with total turnover rising 4% a year on average between 2013 and 2018.

The Times, Page: 49

Manufacturers fear no-deal impact

Research by BDO and manufacturing industry body Make shows that a no-deal Brexit will cause “significant damage” to the manufacturing sector. The trade body is predicting that the manufacturing sector will grow by just 2.7% next year, down from an earlier forecast of 5.5%. This means manufacturing – which has seen output fall 12% this year – would underperform the wider economy this year and next, with the Office for Budget Responsibility forecasting a fall in GDP of 11.3% this year before a bounceback of 5.4% in 2021.

The Times, Page: 41 Daily Express, Page: 53 The I, Page: 42

INSOLVENCY NEWS – MONDAY 14TH DECEMBER 2020

Insolvency firms told to report loan fraud

Insolvency practitioners have been instructed to report fraudulent coronavirus loan applications to the Government, with the Insolvency Service writing to firms advising that if claims related to the business interruption loan scheme and bounceback loans appear fraudulent, “it is the duty of the insolvency practitioner to consider their reporting obligations”. Christina Fitzgerald, vice-president of insolvency trade body R3, notes that HMRC has created a task force that “will identify insolvency cases where it has queries about the use of these funds, notify the insolvency practitioners working on these cases about its concerns and ask them to investigate further”.

The Times, Page: 44

PROPERTY NEWS – MONDAY 14TH DECEMBER 2020

Rightmove expects prices to climb 4% in 2021

Rightmove has forecast that house prices will climb 4% next year. The property platform said that while asking prices between November 8 and December 5 were 6.6% higher than a year earlier, it believes the rate of growth is unsustainable. Looking ahead to the end of the stamp duty holiday in March, Rightmove’s director of property data, Tim Bannister, said: “There’s likely to be a lull in quarter two unless the stamp duty holiday is extended, but for many buyers its removal will not be make or break, though may lead them to reduce their offers to a degree.” Rightmove estimates that there is a “logjam” of 650,000 properties still trying to get through the system as buyers look to complete deals before the stamp duty holiday ends on March 31.

The Times, Page: 41 The I, Page: 45 Daily Mail, Page: 71

Landlords take advantage of stamp duty holiday

A report by property services company Hamptons shows that one in six property sales are to landlords, with 51% of the purchases by investors made in cash. The analysis, which is based on data from letting agent the Countrywide Group, suggests landlords are entering the market as they look to take advantage of the stamp duty holiday. The average landlord who fails to complete their purchase by the stamp duty holiday deadline will see their bill rise from £5,400 to £6,500.

The Daily Telegraph, Page: 8 The Guardian, Page: 34 The I, Page: 45

SMEs NEWS – MONDAY 14TH DECEMBER 2020

Loan scheme to help businesses navigate No-Deal

Treasury officials are planning state-backed guarantees to support lending to SMEs, with the FT saying access to the initiative is expected to be much more stringent than to the bounce back loan scheme. The Mail reports that companies hit by disruption in the event of a No Deal Brexit will be invited to take advantage of Government-backed loans and the furlough scheme. It adds that ministers are also looking at the possibility of bailouts for industries hardest hit in the longer term by a No Deal Brexit.

Financial Times, Page: 1 Daily Mail, Page: 8

OTHER NEWS – MONDAY 14TH DECEMBER 2020

Nuclear and net zero

The Telegraph considers the future of nuclear power, looking at plans for the Sizewell C facility in Suffolk and saying the Government is “deciding what sort of public support it wants to give new large nuclear plants”. Steve Jennings, a partner at PwC, comments: “To maintain a pathway to net zero, the Government will want to retain options and encourage investment in a portfolio of different technologies including nuclear.”

The Daily Telegraph, Business, Page: 5

Contact Paul Southward

Paul Southward

NEWS – WEDNESDAY 2ND DECEMBER 2020

NEWS – WEDNESDAY 2ND DECEMBER 2020

NEWS ROUNDUP

TAX NEWS – WEDNESDAY 2ND DECEMBER 2020

Don’t delay submitting your submitting your 2019/2020 self-assessment tax return talk us

With reference to the article below which suggests that 1.3m people may delay submitting their 2019/20 tax returns beyond the 31st January 2021 deadline, Paul Southward urges people to talk to KSK first.  Submitting your tax returns within the time limits not only avoids automatic penalties, it also gives you a “clean-slate” with the taxman.  Late tax returns is one reason why the taxman may launch an enquiry and if you are a director or a business partner those enquiries could extend to your business interests.  We can help you avoid penalties and unwanted attention from the taxman.  Contact Paul Southward or your usual KSK contact.

1.3m Britons set to delay tax returns

A survey conducted by online accountants TaxScouts shows that more than one million people plan to put off tax returns and risk having to pay £130m in fines to HMRC. While tax returns must be filed by 31st January 2021, almost 30% of those polled said the coronavirus crisis had made them more likely to put off dealing with their tax return. This equates to around 1.3m of Britain’s 4.5m freelance taxpayers. It was found that three in ten would wait until January to file their tax return, with 45% of these taxpayers planning on leaving it until the final week of the month and 6% planning to file on January 31. Those who miss the deadline face a £100 fine. Mart Abramov of TaxScouts warned that a “piling up” of deferred tax payments from 2020 and the first advanced tax payments in January, coupled with the financial impact of the pandemic and a tendency to delay tax returns until the last minute, could deliver “a perfect storm”. Lucienne Parry of Moore said many taxpayers would face tax bills twice the size of normal as they had already deferred their July 31 payment.

The Daily Telegraph  Paul Southward of keens Shay Keens Ltd urges you to contact KSK.

Tax system reform call

Sam Robinson, a senior researcher at think-tank Bright Blue, argues the case for tax reform in a piece for City AM. Pointing to the nation’s economic hit from the coronavirus outbreak, Mr Robinson says fiscal consolidation, including tax rises, “will undoubtedly be needed at some point”, adding that when the time comes for higher levies, “we will need a tax system that can cope with the scale of the challenge effectively.” Calling for reform, he says there are “structural problems” in the existing “outdated, byzantine” tax system.

City AM

CORPORATE NEWS – WEDNESDAY 2ND DECEMBER 2020

Debenhams set for liquidation

Department store chain Debenhams is to be wound down after Christmas, with the loss of up to 12,000 jobs and closure of 124 stores. The first branch closures are expected in the new year, with all expected to close down by the end of March. Debenhams has been trying to find a buyer, but its administrators have not received “a deliverable proposal”. JD Sports had been in talks over acquiring the chain but withdrew after Arcadia – which operated more concessions in Debenhams than any other retailer – collapsed into administration. Geoff Rowley of FRP Advisory – which has been running Debenhams since April – said while “all reasonable steps were taken to complete a transaction that would secure the future of Debenhams … a viable deal could not be reached.” He said the firm “remains hopeful” that alternative proposals for the business may yet be received. Considering the fates of Debenhams and Arcadia, Daniel Burke of Blick Rothenberg told the I, “they are simply not in touch with their target markets.”

The Times, Page: 37 The Daily Telegraph, Business, Page: 1 The Guardian, Page: 4 Financial Times, Page: 1 Daily Mail, Page: 16 The I, Page: 43 The Independent, Page: 47 Daily Mirror, Page: 9 Daily Express, Page: 8 The I BBC News

Rivals eye Arcadia brands

With retail group Arcadia having collapsed on Monday, administrators at Deloitte are searching for buyers for its brands, which include Topshop, Miss Selfridge, Wallis and Dorothy Perkins. Experts say that due to the size of Arcadia – which has eight brands and 466 stores – finding a single buyer is unlikely, meaning it is set to be broken up. Topshop, Topman and Miss Selfridge are expected to attract the most interest. Frasers Group, which owns House of Fraser and Sports Direct, has expressed interest in some of the brands, while M&S, Next and Boohoo, which has already acquired Oasis and Warehouse, have all been touted as possible bidders. Elsewhere, KPMG has been appointed as administrator to Redcastle, a subsidiary of Arcadia that owns the Topshop and Topman store on London’s Oxford Street.

Daily Mail, Page: 73 The Times, Page: 38

Caffè Nero creditors green light CVA

Caffè Nero’s landlords have backed a rescue deal that will see it renegotiate rents and shut some branches, with more than 90% of creditors who voted backing the CVA. The vote came a day after a takeover bid from Mohsin and Zuber Issa, the owners of petrol forecourt operator EG Group – a move rejected by the café chain’s bosses. Caffè Nero modified the CVA following the bid, saying that if the chain is sold in the next six months, creditors will have any arrears paid in full. The Times notes that under insolvency law, creditors can challenge the outcome of the restructuring plan within 28 days. Lawyers for EG Group have written to Caffè Nero, highlighting the possibility of a landlord revolt.

The Times, Page: 37 Daily Mail, Page: 73 The Daily Telegraph, Business: 3 The Sun, Page: 43

OECD report warns of lingering pandemic effects

The Organisation for Economic Cooperation and Development (OECD) has warned that businesses have borrowed so heavily amid the COVID-19 crisis that their performance will be affected for years to come. The OECD report warns: “A high level of debt combined with a high risk of default could undermine recovery.”

The Daily Telegraph City AM

INSOLVENCY NEWS – WEDNESDAY 2ND DECEMBER 2020

Rule change risks company rescues

Experts have warned the partial return of crown preference – under which certain tax debts take higher priority for repayment in insolvency cases – will see CVAs used less often, with Damian Webb, a partner at RSM Restructuring Advisory, warning that the policy would “severely constrain restructuring options”. Tim Symes, a specialist in insolvency at law firm Stewarts, said that as HMRC can insist on being paid in full in a proposed CVA, the plan “could instantly become dead in the water.” “HMRC will have gouged out such a large share from available assets that it won’t be worth unsecured creditors supporting it,” he added. Insolvency trade body R3 has also voiced concern over crown preference and asked for it to be suspended.

The Times, Page: 38

SMEs NEWS – WEDNESDAY 2ND DECEMBER 2020

Three-quarters of SMEs plan to invest

Research from Barclaycard Payments shows that 74% of SMEs are planning to invest in their business next year. The poll reveals that 66% of smaller firms felt more prepared for November’s England-wide lockdown than they were for the initial shutdown in March. While 36% said they were more mentally prepared, 32% said they had made changes to their business that had made it more resilient – with almost half of SMEs having boosted their online presence amid the pandemic. Konrad Kelling, head of small business at Barclaycard Payments, commented: “The past year has been incredibly difficult for SMEs … It’s reassuring to see that many have been able to take advantage of the lessons learned during the first lockdown to adapt their business”.

Daily Mirror, Page: 39

PROPERTY NEWS – WEDNESDAY 2ND DECEMBER 2020

House prices up 6.5%

Figures from Nationwide show that house prices are 6.5% higher than a year ago, with this the steepest increase since January 2015. Month-on-month, prices climbed 0.9% in November, hitting an average of £229,721. Nationwide research shows properties in national parks carried a 20% premium when sold, with homes on the outskirts of these areas also selling for 6% more than equivalent property elsewhere. Looking to what the future holds, Nationwide chief economist Robert Gardner said that the outlook remained “highly uncertain” and suggested housing market activity is likely to slow in the coming quarters, especially once the stamp duty holiday expires at the end of March 2021. Andrew Wishart, a property economist at Capital Economics, expects to see a 5% drop in house prices next year – but not a house price crash. Howard Archer, chief economic advisor to the EY Item Club, said that a recent increase in activity and strengthening of prices would “prove unsustainable sooner rather than later due to challenging fundamentals for consumers”.

The Times, Page: 43 The Daily Telegraph, Business, Page: 4 The Guardian Financial Times BBC News

INTERNATIONAL NEWS – WEDNESDAY 2ND DECEMBER 2020

Berlin watchdog reports EY over Wirecard audit

Apas, Germany’s audit watchdog, suspects EY partners knew a 2017 audit for since-collapsed payments company Wirecard was “factually inaccurate”. The regulator has reported the audit firm to prosecutors.

Financial Times, Page: 12

Canada announces plans for digital tax

Canada has announced a plan to tax corporations providing digital services, with the tax to be enforced as of 2022 and run until the Organisation for Economic Co-operation and Development develops a coordinated approach that ensures digital platforms pay their share of taxes.

The Independent

ECONOMY NEWS – WEDNESDAY 2ND DECEMBER 2020

OECD: UK economy to contract by 11.2%

The latest economic outlook report from the Organisation for Economic Cooperation and Development (OECD) suggests the UK’s post-pandemic economic recovery will lag behind every other major economy, bar Argentina. The OECD report forecasts that the UK economy will contract by 11.2% this year, with this steeper than the 10.1% fall in GDP it predicted in September. The OECD also downgraded its forecasts for UK growth to 4.2% in 2021, from 7.6% three months ago. The OECD said that, alongside the coronavirus crisis, Brexit poses a threat to growth, suggesting failure to secure a trade deal with the EU would see “serious additional economic disturbances in the short term” and have a “strongly negative effect on trade, productivity and jobs in the longer term”. Overall, the OECD said the global economy is set to shrink by 4.2% this year before rising 4.5% in 2021 and a further 3.75% in 2022.

Daily Mail, Page: 75 The Independent, Page: 8 The Guardian City AM

Manufacturing sees biggest jump in three years

Stockpiling ahead of the Brexit transition deadline prompted activity in Britain’s manufacturing sector to rise at the fastest pace for nearly three years in November, the latest survey from IHS Markit/CIPS reveals. The manufacturing purchasing managers’ index reading hit 55.6 last month, up from 53.7 in October on an index where a reading above 50 indicates growth. Howard Archer, chief economic advisor to the EY Item Club, said the increase in stockpiling and increased demand from the EU delivered an “appreciable lift to manufacturing activity” last month.
Daily Mail, Page: 75 The Guardian, Page: 39 The Daily Telegraph, Business, Page: 4 Daily Express, Page: 47 The Sun, Page: 43 City AM

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Paul Southward