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.
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%.
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.
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.
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.
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”.
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.
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.
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.
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”.
White House says capital gains tax rise will hit only richest 0.3%
Following heavy criticism of new tax plans coming out of the White House, a Biden administration official has said only the richest 0.3% of Americans would have to pay the new levy on capital gains. The Mail reports that wealth advisers in the US are seeing a flood of inquiries as clients rush to sell assets, shift gains into retirement accounts or tax-deferred opportunity zone funds.
New research from Aldermore Bank indicates signs of recovery for small and medium-sized enterprises (SMEs), as they reveal plans to invest in their businesses in the next year, coinciding with the easing of lockdown restrictions. SMEs plan to spend an average of £97,000 to grow their business in 2021 and help kickstart their recovery from the COVID-19 pandemic. Over the next 12 months, one in four (25%) SMEs will invest in their online presence, with one in five (21%) advancing their digital marketing. A further one in four (21%) will spend on new equipment and 20% will invest in their staff through training. “It’s encouraging to see that SMEs are investing in their recovery from the COVID-19 pandemic”, said Tim Boag, group managing director, business finance at Aldermore. “Recent data reveals a vastly improved near term outlook for businesses, with the easing of restrictions. Confidence from SMEs is growing, and this is reflected in plans to invest in the growth of their businesses in order to recover effectively from the pandemic”.
Research by angel network Cornerstone Partners shows that entrepreneurs from black and ethnic minority backgrounds are being excluded from venture capital funding. Just 1% of founders who receive seed funding identify as black, according to the study. Only 3% of VC-funded founders identified as black and only 2.9% were Asian. The report also says that three quarters of founders come from advantaged socio-economic backgrounds and hardly any founders come from families living on welfare entitlements. Cornerstone Partners has made a number of recommendations, including the establishment of schemes that support angel groups and accelerators which invest in businesses led by minority founders. It also called for the introduction of early career development.
Figures from NAEA Propertymark show one in six homes sold in March went for more than the asking price – a seven year high – with just a third selling for below the original price. Mark Hayward, chief policy adviser at Propertymark, said: “The imbalance of supply and demand means it’s an extremely strong sellers’ market; properties are selling quickly and for over the asking price, and this is something we expect will continue in the coming months.” Homeowners reconsidering their lifestyle and the stamp duty holiday are seen as the main drivers of the increased demand.
A new report from LCP warns that it will take too long to save into defined contribution (DC) pensions to keep retirement savings steady and offset the loss of defined benefit (DB) income. The report, titled ‘The ski slope of doom – is this the most worrying chart in pensions?’, claims that the incomes of newly retired workers are set to fall at a much more dramatic rate in the coming decades than had previously been thought. The report found that for those working in the private sector, the decline of traditional “final salary” type pensions is more rapid than expected and that the rise of new-style workplace pensions will take longer to make a real impact than previously assumed.
Research from the Institute for Fiscal Studies shows that inheritances are likely to be larger compared with lifetime incomes for younger generations than was the case for their predecessors. For those born in the 1980s, average inheritances compared to lifetime income are projected to be almost twice as large as those born in the 1960s.
ECONOMY NEWS – TUESDAY 27TH APRIL 2021
UK growth forecasts boosted by vaccines rollout and extended state support
Analysis by Consensus Economics puts UK growth at 5.4% this year, up from 4.2% predicted in February. Others believe this remains pessimistic, however, with Oxford Economics going as high as 7.2%. The EY ITEM Club has predicted growth of 6.8% while Goldman Sachs goes as high as 7.8%. A bounce-back is not unexpected considering the UK suffered a 9.8% slump in 2020 – the worst performance among the G7 group of major advanced nations but forecasters are upgrading predictions following the “innovative and flexible” response of UK businesses and consumers to the pandemic.
Investors may have to wait until 2025 for dividend recovery
According to Link Group’s Dividend Monitor, British companies paid out £12.7bn in dividends in the first quarter of 2021, down 27% on the same period last year. Reduced payouts from oil giants Shell and BP were responsible for most of the drop. Link said dividends were down 42% over the last 12 months and its “best-case” forecast for this year was a rise of just 5.6% on last year’s total. Ian Stokes of Link Group said there were signs of recovery but “2025 still looks like the most realistic moment for dividends to match their 2019 high point.”
City bosses want payback after being left on Brexit sidelines
The Telegraph’s Lucy Barton looks ahead to what’s in store for the City post-Brexit as organisations including the Investment Association submit ideas to the Treasury for reform. The lobby group told ministers to consider a fully exempt tax regime for UK funds to keep them competitive with EU rivals. One banking executive who is in regular talks with ministers told the paper: “There will definitely be changes. Banking is completely exposed to politics and political changes – that’s always a huge risk – but I’ve never seen such commitment to change.” But although Rishi Sunak has told the City to brace itself for a “Big Bang 2.0” post-Brexit, TheCityUK’s CEO Miles Celic argues the sector is not chasing a “deregulatory agenda”. He says: “Competitiveness is about much more than regulation – it’s got to look at issues such as access to talent and a stable, predictable, simplified tax regime.” Finally, Barnabas Reynolds at Shearman and Sterling believes big changes are on the way, but it could take three to five years for the rule book to look significantly different.
The Daily Telegraph, Business, Page: 2
OTHER NEWS – TUESDAY 27TH APRIL 2021
Johnson hopeful restrictions will lift on 21st June
Boris Johnson has said Britain had built “some pretty robust fortifications” against another wave of Covid and there is now a “very good chance” of completely ending coronavirus restrictions in England on June 21st, as planned. The prime minister said lockdown had helped get the number of cases down considerably but that did not mean Covid was over.
Time for citizens to take back control, scientists say
In an open letter published today, leading scientists say ministers and Government advisers are exaggerating the threat from COVID-19 and that all restrictions must be lifted on June 21 – the final date in Boris Johnson’s roadmap out of lockdown. They argue that with data showing vaccines reduce the risk of death by 98% and hospitalisations by more than 80%, COVID-19 is being turned into a mild disease in Britain. The letter’s 22 signatories include Professors Carl Heneghan and Sunetra Gupta from Oxford University, Emeritus Professor Hugh Pennington from the University of Aberdeen and Professor Robert Dingwall from Nottingham Trent University. “We are being told, simultaneously, that we have successful vaccines and that major restrictions on everyday life must continue indefinitely. Both propositions cannot be true,” the scientists write. They add: “Mandatory face coverings, physical distancing and mass community testing should cease no later than 21 June along with other controls and impositions. All consideration of immunity documentation should cease.”
“It is time to free up businesses and people to start really building back our economy and the nations health.”
TAX NEWS – WEEKEND TO 25TH APRIL 2021
Investors in uproar over Biden’s proposed capital gains tax rise
Investors have lashed out at Joe Biden’s plans to double capital gains tax with Scott Minerd at Guggenheim Partners declaring the plans “insanity” while Anthony Scaramucci, founder of SkyBridge Capital, believes the proposals would “have deleterious effects on job creation and wage growth for middle-class workers.” Stocks fell following the announcement and cryptos such as Bitcoin and Ether fell sharply. Although the plans will face stiff opposition in Congress, fund managers warn that investors could dump “momentum” stocks as they seek to crystallise gains ahead of a tax hike. Alasdair McKinnon, manager of the Scottish Investment Trust, said the impact of Biden’s proposals would be felt across America’s stock market. “New capital gains taxes are unhelpful to all asset prices,” he said.
The Express reports on plans touted by the European Commission to harmonise tax rates across the bloc for tobacco products. Pieter Cleppe, a research fellow with the Brussels-based Property Rights Alliance, said in a paper that the Commission is exploring ways to do this without EU Treaty change, “using health concerns as a pretext to obtain more power.”
HMRC deadline extension creates state pension headache
HMRC has warned that small business owners and those with ‘side hustles’ could miss out on state pension benefits if they filed their tax return after January this year.
Conservatives should fight an international tax stitch-up
Hamish McRae asserts in the Mail on Sunday that if Joe Biden gets his tax hikes though Congress other countries would have cover for introducing similar measures too. The new administration wants to tax capital gains as income, raise corporation tax and introduce a global minimum tax rate. McRae says following the extreme pandemic spending by governments, raising taxes on the wealthy is logical and fair and hard to argue against. The Observer’s business leader lauds Biden’s move believing the tax hikes and trillions in stimulus are intended to tackle “deep-rooted inequalities” and that the UK Government should use Washington’s move to inspire its own plans to build back better. But Daniel Hannon contends in the Sunday Telegraph that plans for international tax harmonisation, with legal threats against those who resist, “would mark the birth of a high-tax cartel, and the rate would surely rise”. Socialists have long resented the fact that exorbitant taxes redistribute people rather than wealth, but without international competition this inconvenience would end, he says, as would the right of poor nation states to try and improve their lot through tax cuts. Ultimately, Hannan adds, low taxes improve revenue, employment and economic activity – all things needed to repair shattered post-pandemic public finances, but this seems to have been forgotten by Conservatives in the UK.
The Observer, Page: 56 The Mail on Sunday, Page: 122 The Sunday Telegraph, Page: 20
HMRC sends 18,500 fines to wrong address
HMRC has sent 18,500 fines to the wrong address with a software error said to be to blame for the fiasco, the Sunday Times reports. Accountants have reported finding demands for multiple taxpayers when opening envelops addressed to another taxpayer, with private codes and other reference numbers included in the correspondence. “This is an absolutely astonishing blunder,” said George Bull from RSM. “HMRC makes much of relying on self-employed workers getting their tax bills right, but appears incapable of managing its own data.” In a letter to the Association of Taxation Technicians (ATT), HMRC said: “We sincerely apologise and recognise that this is not in line with our Charter standards. We take all aspects of protecting data very seriously so there has been a lot of activity to understand this incident and mitigate future risks.” HMRC said it had taken urgent action to ensure the data breach did not happen again: “If any agents receive any correspondence for incorrect clients, we would ask that they return them to HMRC.”
The Sunday Times, Business, Page: 12
CORPORATE NEWS – WEEKEND TO 25TH APRIL 2021
Stanlow refinery reaches with HMRC
Essar Oil, which controls the Stanlow oil refinery in north west England, has struck a deal with HMRC on its tax liability. The refinery produces a sixth of the country’s petrol and diesel and has now been thrown a £400m lifeline by the taxman amid fears it could collapse. Industry sources confirmed the “time to pay” deal reached with HMRC has removed the risk of insolvency. International travel restrictions have reduced demand while poor margins for refining alongside market volatility caused operating losses for the company.
Fundraising experts warn that charities will inevitably have to ration their services after the pandemic left them struggling for cash. Some small operations are suspending services leaving others to pick up the slack. The Sunday Telegraph notes that between April 2020 and February, the Charity Commission saw a 25% increase in concerns being raised by auditors over reports and accounts. The main issue reported was insolvency or financial difficulties.
Tate & Lyle auctions off primary products division
Tate & Lyle has been working with Deloitte for some time to figure out the best way to spin off its primary products division, with Apollo Global Management and Cerberus among the interested parties. City sources say a £1.2bn auction for the division is now underway.
Small firms suffer cashflow woes just as support is withdrawn
The Sunday Times talks to small business owners who, after being devastated by the pandemic, face paying back Covid loans before their cashflow has been repaired. One businessman said: “The speed at which the Government thinks you’re able to start hurling money back at them is crazy.” Craig Beaumont, chief of external affairs at the Federation of Small Businesses said the issue was common, adding: “The Government should be throwing everything it’s got at getting businesses across this ‘unlock’ phase and into the recovery, to avoid businesses falling at the final hurdle because of lack of cashflow.” But Steve Russell, head of restructuring services at PwC, says VAT deferrals, the furlough scheme and emergency loans are “not gifts. They are support schemes that need to be unwound.”
PERSONAL FINANCE NEWS – WEEKEND TO 25TH APRIL 2021
Families increasingly using deed of variation
Irwin Mitchell solicitor Sarah Paton says there has been an uplift of families changing the wills of elderly parents after they pass to help younger generations hit hard by the pandemic. “A deed of variation can be used to give a fixed sum or a proportion of the estate directly to the grandchildren of the deceased instead of the children,” she explains. Mike Hodges, partner at Saffery Champness, points out that families often decide it is better to wait until after the death to work together to rejig the will, to save the loved one distress. Using a deed of variation can also reduce inheritance tax liabilities by shifting assets directly to a younger person’s estate.
The Mail on Sunday
PENSIONS NEWS – WEEKEND TO 25TH APRIL 2021
Drop in pension income more startling than expected
With the closure of final salary pension schemes looming, Lane, Clark & Peacock believes the drop in pension income is going to be more startling than first thought. Its research suggests that the average man retiring this year will have an annual income of £14,634 and a woman £10,042, including state pensions. But by 2045, a man retiring would have an income of £12,460, and a woman £10,797, in today’s money. Female income improves because more are expected to be able to claim full state pensions. Public sector workers will suffer less because many will still have defined benefit pensions. Steve Webb, a former pensions minister and partner at LCP, commented: “For years, salary-related pensions from private sector jobs have supported the incomes of the newly retired, and men in particular. But these pensions are disappearing much more rapidly than we thought. And new-style workplace pensions are not being built up quickly enough to take up the slack.”
The Sunday Times warns that more needs to be done to close the pensions gender gap and promote equal pay in retirement. The paper reports that research from the Prospect union has found that the gap for pensions stands at 40.3%, more than double the gender salary gap of 15.5% reported by the ONS. The SNP MP Patricia Gibson said it was unacceptable that all types of pension inherently discriminate against women. It is noted that last week, Guy Opperman, the Pensions Minister, said there was a “clear passion” for making women better off in older age.
The Sunday Times
PROPERTY NEWS – WEEKEND TO 25TH APRIL 2021
Tax deadline leads to frenzied market
House prices have rocketed over the course of the stamp duty holiday and there is a buying frenzy as the deadline looms, reports the Sunday Times. Figures from HMRC show almost 191,000 homes were sold in March – the highest number in a single month since July 2004. But the savings from the Chancellor’s tax cut have long since been cancelled out by property price rises, the paper’s Carol Lewis claims.
Former subpostmasters cleared over accounting scandal
Almost 40 former subpostmasters who were convicted of theft, fraud and false accounting because of the Post Office’s defective Horizon accounting system have finally had their names cleared by the Court of Appeal. The Horizon system, developed by Fujitsu, was first rolled out in 1999 but from an early stage it appeared to have significant bugs that could cause the system to misreport. Horizon-based evidence was used by the Post Office to successfully prosecute 736 people. Lord Justice Holroyde said the Post Office “knew there were serious issues about the reliability of Horizon” and had a “clear duty to investigate” the system’s defects. But the Post Office “consistently asserted that Horizon was robust and reliable”, and “effectively steamrolled over any subpostmaster who sought to challenge its accuracy”, the judge added. In all, 39 of the 42 appeals were allowed on the grounds that the prosecutions were “an affront to the public conscience.” Lawyers for the group said they would be seeking compensation and an urgent criminal investigation into the actions of those at the Post Office.
Talent hunt kicks off as London firms launch hiring sprees
Financial services, legal, PR and construction companies across London are ramping up hiring with recruiters reporting a 349% jump in banking jobs advertised. But tech is driving job creation with KPMG’s quarterly tech monitor revealing that in the three months to March, UK tech sector firms hired staff at the fastest pace seen since the second quarter of 2019. Robert Walters’ UK managing director, Chris Poole, said: “March was incredibly busy for us. It almost felt like a line in the sand – it was incredibly busy across all sectors. Technology has been busy all the way through, but there has been a lot of pent-up demand within legal, within accountancy, within financial services. Even manufacturing, procurement, supply chain – it has been across the board.”
FINANCIAL SERVICES NEWS – WEEKEND TO 25TH APRIL 2021
Equivalence or no equivalence, London will stay financial services leader
KPMG ’s head of Financial Services Karim Haji has said if the UK and the EU fail to agree a deal on equivalence it won’t be the end of the world. Although it would “make life easier”, it was not mandatory for a successful financial services sector. “If you take a step back, the UK has been one of the leaders in financial services regulation and infrastructure, it’s one of the key innovators in the space as well, and one of the leaders in the world, and that’s why the UK has been successful in exporting financial services – that isn’t changing as a result of Brexit,” he continued. Mr Haji’s comments come after EU commissioner Mairead McGuinness said there was no pressure to reach agreement with the UK on financial services.
City AM Daily Express
ECONOMY NEWS – WEEKEND TO 25TH APRIL 2021
UK economy rebounds with demand surging
Private sector activity grew at the fastest rate since November 2013 in April, hitting a reading of 60, according to IHS Markit’s purchasing managers’ index (PMI). This is up from 56.4 in the previous month and above the 58.2 forecast by economists. Service sector business activity rose from 56.3 to 60.1, while manufacturing output was up from 56.6 to 59.1. Chris Williamson, chief business economist at IHS Markit, said: “Companies are reporting a surge in demand for both goods and services as the economy opens up from lockdowns and the encouraging vaccine rollout adds to a brighter outlook.” Looking forward, Williamson added: “Business activity should continue to grow strongly in May and June as virus restrictions are eased further, setting the scene for a bumper second quarter for the economy.”
Data from the ONS show retail sales in Great Britain rose 5.4% in March compared with the previous month – a much stronger reading than the 1.5% forecast by economists. Sales of clothes was particularly strong rising by more than 17% while the easing of travel restrictions towards the end of the month led to an 11% increase in fuel sales. Howard Archer, chief economic advisor to the EY ITEM Club, said: “It does appear that many people were intent on having an enjoyable Easter break and this likely lifted retail sales later in the month.” Also commenting, Lisa Hooker, consumer markets leader at PwC, said: “Much though these figures will give cheer to the whole sector, retailers will be hoping that these positive signs translate into a sustained return to the physical stores as they reopen across the UK over the course of April. The real test of whether pent-up demand can be turned into actual sales w ill come with next month’s figures.”
Covid response pushes UK borrowing to highest since second world war
Figures from the ONS show UK government borrowing hit £303.1bn in the year ending in March, a jump of £246.1bn on the previous year when the figure was only £57.1bn. The coronavirus pandemic has driven the UK’s total accumulated public debt to £2.14trn, or 97.7% of GDP, the highest level since the early 1960s. As a percentage of national output, borrowing in the year between April 2020 and March 2021 stood at 14.5% – the highest since the financial year ending in March 1946. KPMG senior economist Michal Stelmach said rising debt was a consequence of shielding the economy from COVID-19.
The deputy governor of the Bank of England predicts “very rapid growth at least over the next couple of quarters” as Britons spend cash accumulated during the pandemic and save less of their forthcoming income. Ben Broadbent is more bullish than most of his Monetary Policy Committee colleagues on whether people will spend their savings but he warns that the year ahead is likely to be bumpy regarding inflation with multiple shifts in demand and supply.
HM Revenue & Customs has cut payments to hundreds of thousands of Universal Credit (UC) claimants during lockdown because they were mistakenly overpaid tax credits as long as 17 years ago. As many as half a million struggling families have been affected. HMRC data shows such deductions have been occurring “at a rate of 47,000 cases per week” since January 18. Figures also reveal that between April and November last year it cut £63m from claimants’ payments. UC architect Sir Iain Duncan Smith said using the benefits system to claw back tax in this way is “a major mistake” that is “causing profound difficulties.”
Wales – Labour vows ‘no income tax rise in Covid recovery’
Mark Drakeford has promised not to increase income tax while the economy is recovering from the impact of coronavirus if his party is re-elected into government at the Senedd election. The Welsh Labour leader pledged to create a “stronger, greener, fairer Wales” if in power after the 6 May vote.
Denmark charges 3 Americans and 3 Britons in tax fraud scandal
Three British citizens and three US nationals have been charged by Danish authorities with defrauding Denmark of $175m as part of a European investigation into dividend tax fraud. The cum-ex trading scheme is also being investigated by authorities in Germany, Belgium and Britain.
Defence contractor Babcock has warned of writedowns totalling some £1.7bn, more than double analysts’ estimates, following a review of historic contracts and future income. In a trading update, the firm noted that the “vast majority” of impairments are one-off in nature and non-cash affecting, with group underlying operating profit expected to be reduced by around £30m annually. Babcock’s annual results are likely to be delayed because of the volume of work needed on the writedowns and write-offs and because the company effectively has two auditors as Deloitte prepares to take over from PwC.
The Times reviews the move by Philip Day’s right-hand man to rescue Peacocks, with the backing of Day himself. The “phoenixing” of Day’s various retail interests in new vehicles fronted by Steve Simpson, his long-term lieutenant, has led to criticism. The Peacocks move infuriated rivals who have accused FRP Advisory, the administrators to Day’s assets, of “merely going through the motions, wishing to create the appearance of a fair and equal bidding process, when in fact they have a settled intention to compete with one particular party — an insider”. FRP insists it ran a full and fair process and rejects allegations that it had frustrated other bidders, such as Frasers Group’s attempts.
Working from home can turbocharge women’s pensions
Former pensions minister Ros Altmann has welcomed the move to flexible working, adding that it will “alleviate” some of the pension discrepancies between men and women. She says: “The more women can combine their caring duties with their careers, the better. It is certainly a good thing if workplaces make it easier for women to continue working full-time hours while balancing their other responsibilities.” But, she adds: “Lots of women are still unable to commit to full-time hours even when flexible working is an option.”
Daily Mail This is Money
SMEs NEWS – WEDNESDAY 14TH APRIL 2021
HMRC gives update on SEISS payments
HMRC has issued an update on SEISS grants, stating that the service to claim the fourth grant will be available from late April 2021. HMRC said: “If you are eligible based on your tax returns, HMRC will contact you in mid-April to give you a date that you can make your claim from. It will be given to you either by email, letter or within the online service.” HMRC added that self-employed claimants will need to confirm they meet all the eligibility criteria when making their claim – which has to be made on or before June 1, 2021.
ECONOMY NEWS – WEDNESDAY 14TH APRIL 2021
Positive Covid data pressures Johnson to reopen faster
New official figures show 23% of recorded coronavirus deaths are now people whose primary cause of death was not COVID-19. Additionally, daily death figures by “date of death” reveal that Britain has had no more than 28 deaths a day since the beginning of April while Oxford University has calculated that the number of people in hospital with an active Covid infection is likely to be around half the current published daily figure. Covid deaths now make up just 4.9% of deaths registered in England and Wales, compared with 45% in mid-January, according to the ONS. MPs are now calling on Boris Johnson to take a less cautious approach to lifting restrictions to reduce the other harms caused by lockdown. Prof Carl Heneghan, the director of the Centre for Evidence Based Medicine at Oxford University, commented: “The issue is as we go about our daily lives there will be a slight increase in cases, but the key is not to panic. I think this over-cautiousness c an be overcome by using a data-driven approach.”
The Office for National Statistics has released figures showing that UK trade with the EU recovered in February, with exports increasing by £3.7bn, or 46.6%, after a £5.7bn decline a month earlier. AJ Bell financial analyst Danni Hewson commented: “There is small comfort to be had in February’s trade figures. Exports to the EU, which dropped so dramatically off a cliff in January, have bungeed back up, though they are still £2bn down on pre-Brexit levels. Notably imports from the EU were less resilient and remain more than £5bn down.”
SEC says warrants issued by blank-check companies may be liabilities
The Securities and Exchange Commission has issued guidance indicating that the warrants issued to early investors in SPAC deals should not be classified as an equity, but rather “a liability measured at fair value, with changes in fair value each period reported in earnings.” In a statement late Monday, SEC officials said: “The evaluation of the accounting for contracts in an entity’s own equity, such as warrants issued by a SPAC, requires careful consideration of the specific facts and circumstances for each entity and each contract.” Forbes reports that uncertainty over how the SEC will treat warrants has stopped all new SPAC offerings as accounting firms will not sign-off on any financial statements or company audits until they receive clarity from the government.
US should require crypto-trading to be reported to help close tax gap
Internal Revenue Service Commissioner Charles Rettig estimates that the US now has a $1trn tax gap – up from the last official estimate of a $441bn annual average from 2011 to 2013. Rettig reckoned trading in cryptocurrencies was escaping taxation, as was rising foreign-sourced income and abuses of business income passed through as personal income. Among his recommendations Rettig suggested new legislation requiring transactions in cryptocurrencies such as Bitcoin be reported.
OTHER NEWS – WEDNESDAY 14TH APRIL 2021
Katie Price owes £3.2m to creditors
Former glamour model Katie Price reportedly owes more than £3.2m to her creditors after accountants submitted a report raising concerns about her financial conduct. Price allegedly owes the cash from her company Jordan Trading Ltd, despite being declared bankrupt in 2019 and vowing to pay back £12,000 a month through an individual voluntary arrangement. The reality star was once worth more than £45m.
Daily Mail The Sun Daily Mirror
Bank of England’s chief economist to run Royal Society of Arts
Andy Haldane is leaving the Bank of England after a 30-year career to join the Royal Society for Arts, Manufactures and Commerce (RSA) as chief executive in September. The Bank of England’s chief economist has been among the most optimistic forecasters throughout the pandemic. “Haldane’s departure means the Bank of England is losing its major – and maybe only – current hawk,” said James Smith, economist at ING. “In theory, at the margin this tilts the committee towards a more favourable view on negative interest rates if more stimulus were needed, though we still think this is unlikely.”
American CEOs say Biden’s tax hikes will slash wages, hiring and profits
A majority of CEOs in the US have said the Biden administration’s plans to hike corporation tax from 21% to 28% would have a “moderately” to “very” significant adverse effect on their company’s competitiveness. A Business Roundtable Survey found 98% of American CEOs believe the rate increase will stunt wage growth, weaken expansion, innovation and hiring. Raytheon Technologies CEO Gregory Hayes said: “The tax system needs to support innovation, R&D, capital investment and economic growth.” He continued: “As we look toward recovering from the COVID-19 pandemic, keeping competitive tax policies in place is needed to help reinvigorate the U.S. economy and lead to more opportunity for Americans.” Meanwhile, writing in the FT, Richard Murphy says Biden’s plan for international tax reform would need robust country-by-country reporting if it’s to stop international tax arbitrage. Finally, Conservative MP Sir John Redwood has warned that a new global minimum corporation tax rate of 21% would seriously harm investment flows into Ireland, which has used a 12.5% tax rate to build its economy.
UN chief calls for wealth tax on rich boosted by pandemic
United Nations secretary-general Antonio Guterres has urged governments to impose a “solidarity or wealth tax” on rich people who profited during the coronavirus pandemic. “We must make sure funds go where they are needed most. Latest reports indicate that there has been a $5trn surge in the wealth of the world’s richest in the past year,” Guterres told a UN meeting on financing for development. “I urge governments to consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities,” he added. The call from Guterres follows a similar plea from the International Monetary Fund which has advocated a “temporary COVID-19 recovery contribution” to be levied on those companies and individuals that have benefited financially during the pandemic.
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SMEs NEWS – TUESDAY 13TH APRIL 2021
City to boost Square Mile’s recovery with fund for SMEs
Catherine McGuinness, Policy Chair of the City of London Corporation, details in a piece for City AM a new Covid Business Recovery Fund to help underpin the Square Mile’s economic recovery. “The scheme is designed to support SME businesses which contribute to the Square Mile’s vibrancy at street level and directly provide services to returning City workers, visitors and residents.” McGuinness adds that most workers are keen to return to the Square Mile while City leaders have stressed their commitment to central London office space. She concludes: “The vibrancy of our unique ecosystem relies on each part of the City community – multinational businesses to domestic SMEs, international workers to local residents – working in partnership. Together we can bring back the buzz of life in the Square Mile.”
SMEs should use delays to customs changes to implement new systems
Experts are warning Britain’s small businesses to get systems in place so they can export smoothly to the EU whilst the rollout of new border procedures are delayed. Management consultant Neil McEvoy said: “Businesses need systems in place that provide scheduling and planning tools, in order to ensure every shipment is compliant when sent to the EU.” He added: “If SMEs get their selling systems ready for May they will survive, because Europe offers ‘low-hanging fruit’, with lots of people looking to spend. There will be many businesses that don’t and they will go to the wall. For those that get it right, the market is huge.”
Research from Hargreaves Lansdown shows the gap in peoples’ retirement plans has widened as a result of the COVID-19 pandemic. The investment platform found the number of people who wanted to give up work between the age of 50 and state pension age had more than doubled from 4% before the pandemic to 10% after. Conversely, for those that wanted to carry on working full time, the figure increased from 38% to 42%. Hargreaves’ Sarah Coles said the pandemic had forced people to make decisions about their retirement. “While a fifth of people still plan to gradually ease out of the workplace, it has fuelled a rise in all-or-nothing retirement plans,” she said. Meanwhile, Darren Dicks, head of wealth management at Age Partnership, said: “Since February we have seen a marked increase in the volume of clients getting their retirement plans back on track.”
A study of more than 7,000 women aged 55 to 65 out of King’s College London warns that raising the retirement age as a means to reduce pension costs would mean a reduction in in-family care resulting in more pressure on the NHS. Research fellow Ludovico Carrino said longer working hours cut the probability of women providing “intensive” or “meaningful” care and urged officials not to consider policies in institutional silos. Sir Steve Webb, former pensions minister and partner at consultants LCP, said: “If governments are going to raise pension ages, much more needs to be done to support people who will be working longer as a result.” The Telegraph notes that the state pension age for men and women will rise to 67 by 2028 with recent increases saving the Government billions of pounds every year.
Liberty Steel has failed to file accounts for some of its biggest British businesses in time. Sanjeev Gupta is urgently seeking finance to shore up his industrial empire after its main backer, Greensill Capital went bust. Credit Suisse, a lender to Greensill, is trying to recover money lent to Gupta’s companies via court action in the UK and Australia. An insider said most of the companies had not filed audited accounts for the year ending on 31 March 2020 because they would no longer represent an up-to-date view of the businesses.
The Guardian, Page: 26
Taxpayers on the hook for Monarch airlift
papers released by KPMG show Greybull, the owner of collapsed budget airline Monarch, lost £25m from the administration process, which was completed last month. The Civil Aviation Authority was forced to charter planes to fly customers back to the UK after Monarch went bust in 2017 and it was hoped some of the costs of the airlift could have been recouped, but tax payers will have to foot the entire £60m bill.
Daily Mail, Page: 79
ECONOMY NEWS – TUESDAY 13TH APRIL 2021
North West business leaders optimistic
With coronavirus restrictions lifting across the country allowing hospitality and non-essential retail to open up again, leaders from across the North West are looking ahead with optimism. Neil Sturmey, a senior partner at Grant Thornton in the North West, noted that it had been “the longest winter” for high street retailers and the hospitality sector, with both “overdue some good news”. “That is coming,” he said. “Most of us are desperate to go out again and many businesses are hoping that we are heading for a golden summer.”
Jon Holt has been voted in as KPMG UK’s new chief executive with partners overwhelmingly backing the appointment, although he was the only candidate put forward by the board. The vacancy was created by the resignation by Bill Michael as chair and chief executive after a staff backlash in February over comments he made at a virtual town hall meeting. Mary O’Connor, who took over the day-to-day running of KPMG on an interim basis after Michael left, will now step aside. The firm’s chair Bina Mehta commented: “I’m delighted that Jon received the overwhelming backing of the partnership. Jon’s extensive experience and inclusive leadership style means he is well placed to deliver the next stage of our growth strategy and support our clients as the country emerges from the pandemic.”
An associate director at investment management company Smith & Williamson Corporate Services was sacked fairly, a tribunal has heard, after he gave a colleague a “seven out of ten” rating on a night out. Tom Skinner asked his junior colleague Jessica Lennox what would happen if they were the last people left alive and had to “repopulate the Earth.” During the same evening, he also made inappropriate comments to a woman named as ‘Ms J’ and twice followed her into the toilet and refused to leave. After he was sacked for gross misconduct, he launched an unfair dismissal claim, saying he had been discriminated against because he suffered from anxiety. His case was dismissed by a central London tribunal that ruled his “inappropriate behaviour” meant his sacking was justified.
Washington has suggested multinational companies to pay levies to national governments based on their sales in each country as part of proposals for a global minimum tax. The Biden administration’s plans would subject about 100 of the world’s biggest multinationals, including the tech giants like Google, Apple, Facebook, Microsoft and Amazon, to a regional tax settlement while a global minimum tax rate would mean reduced tax competition between states. Pascal Saint-Amans, head of tax administration at the OECD, welcomed the US proposals. “This reboots the negotiations and is very positive,” he said. The Telegraph reports that Ireland, the Netherlands, Luxembourg, Switzerland, Singapore and the Caribbean will be the biggest losers from the plan. Goldman Sachs economist Jan Hatzius says the move illustrates how much Biden plans to rely on taxing foreign profits for new tax revenue while Chris Sanger, head of tax policy at EY asserts that any policy that ends profit shifting is likely to be good for the UK as it “benefits those countries with a large consumer base”.
IHS Markit’s construction Purchasing Managers Index for March registered 61.7, as construction output increased at the fastest rate in six and a half years. Steve Plaskitt, partner at MHA, commented: “The spring budget was a boon for both house buyers, who stand to benefit from the extension and phased ending of the Stamp Duty holiday, and house builders, who will hope that the government’s guaranteed support for 95% mortgages until the end of 2022 will drive demand.” Elsewhere, Howard Archer from EY ITEM Club noted that civil engineering’s return to growth was particularly impressive following three consecutive months of contractions.
Car dealer Lookers said it would smash profit forecasts following a lockdown sales boom. The Mail notes that the Financial Conduct Authority has closed an investigation into the group – but the Financial Reporting Council is looking into Deloitte’s audits of the company. Mark Raban, chief executive of Lookers, said: “The events of the last year have highlighted the inherent strength of our franchised dealership model and the importance of an integrated customer experience which fully embraces both digital and physical channels.”
The Times, Page: 40 Daily Mail
SMEs NEWS – FRIDAY 9TH APRIL 2021
Small businesses supported by venture capital fundraising
Ian Sayers, chief executive of the Association of Investment Companies has spoken out on how the coronavirus crisis has affected fundraising for smaller companies, noting that “It’s really positive that during the pandemic 11% more was raised to support the UK’s most innovative and fast-growing businesses than the year before.” With venture capital trusts raising £685m last year to support such firms, he remarked: “This investment will support healthcare, science and technology businesses which have helped in the battle against coronavirus and supported us to adapt to life in lockdown. It demonstrates that demand for VCTs and the benefits they bring investors remains high at an extremely difficult time.”
City offers support for SMEs
The City of London Corporation will on Monday launch a £50m Covid Business Recovery Fund designed to support SMEs which directly provide services to returning City workers, visitors and residents. Grants will be based on individual requirements after a financial evaluation but will not exceed £100,000 per business. Policy Chair at the City of London Corporation, Catherine McGuinness, said: “Many City businesses are preparing to reopen their doors next week and start welcoming back customers. This will be a welcome return to a semblance of normality but inevitably some SMEs that have struggled during the pandemic will need support to get back on their feet.”
The Times, Page: 40 City AM
PROPERTY NEWS – FRIDAY 9TH APRIL 2021
House sales surge after stamp duty extension
House sales picked up in March after signs that the extension of a stamp duty holiday had an immediate impact, the strongest surge since last August. Half of property professionals reported an increase rather than a decrease in agreed sales, the Royal Institution of Chartered Surveyors (Rics) said. Simon Rubinsohn, of Rics, said: “All key activity indictors rebounded in March. Demand is outstripping supply so prices go upwards.” The pick-up also boosted expectations that sales activity will increase over the next three months, with 35% of surveyors predicting an uptick – the most upbeat reading on this measure since January 2020.
The I follows up on the news that thousands of married women could be owed by millions by the DWP because of underpayment. Former pensions minister Sir Steve Webb, who has been investigating this issue, said that the “scale of these underpayments is shocking” and urged the Government to repay women as a “matter of urgency”.
ECONOMY NEWS – FRIDAY 9TH APRIL 2021
Fashion retail sales soared in March
Total like-for-like fashion sales jumped 57.5% in March – from a base of minus 25.9% in the same month last year. Sophie Michael, head of retail and wholesale at BDO, said: “Sales have improved, without a doubt, as retailers have found ways to adapt to lockdown. From virtual assistants to live video sales appointments, retailers have found technological solutions to drive sales, instead of simply shutting down like they did last year. However, as last March’s result was so disastrous, these results simply look better on paper as they’re set against such a poor base.” Separately, according to a survey by Deloitte, 56% of shoppers will feel safe about coronavirus risks when heading out to the high street next week, a 16 percentage point increase compared to last month.
City AM The Sun, Page: 47
FTSE rebounds to new post-pandemic high
Growing optimism as the economy reopens pushed the FTSE 100 to its highest level since the beginning of the pandemic on Thursday, rising 56.9 points to 6,942.22. The FTSE 250 rose to another all-time high following a top performance on Wednesday. Michael Hewson, chief market analyst at CMC Markets commented: “While other major indices have led the way in posting record highs in recent weeks, UK stocks appear to be finally finding favour with investors as an economic reopening beckons.”
An end to ECB bond buying poses risk to weaker eurozone economies
Experts warn that heavily indebted eurozone countries such as Italy and Greece face mounting debt costs after the pandemic – a situation that could unnerve investors and drive up interest rates. M&G fund manager Eric Lonergan said: “Europe is ironically vulnerable to recovery because it seems you only get temporary elimination of credit risk in European sovereigns when you are in an emergency, in which case the ECB underwrites your bond market. The problem is that when you come out of an emergency, you are back to market forces in the bond market, and some of these numbers look really, really bad.” Italy was particularly exposed, Mr Lonergan added, because the interest rate on its debt was higher than its rate of GDP growth.
UK businesses consulted on prolonged social distancing in offices
The Government has been consulting with professional services firms and other businesses over the long-term use of masks in offices and six months more social distancing as they make arrangements for the economy to reopen.
Accounting bodies in Scotland have called on the country’s political parties to improve public understanding of the devolved tax system. The plea comes as a new poll reveals that a third of Scots don’t know the Parliament has changed their taxes. The Chartered Institute of Taxation (CIOT) and the Institute of Chartered Accountants of Scotland (ICAS) have also called for increased scrutiny of tax by MSPs with the introduction of an equivalent to the Westminster Finance Bill, which would make changes to the tax system easier and more visible. The organisations make the call in a new paper, Building a Better Tax System, after a recent poll found that 33% of Scots said they were unaware that the Scottish Parliament had made changes to the tax system since 2015 and 26% said they were “not aware” the Scottish Parliament even had the power to make changes to income tax rates.
IMF proposes ‘solidarity’ tax on pandemic winners and wealthy
Companies that prospered during the coronavirus crisis and wealthy people should pay a temporary additional tax to show solidarity with those who were hit hardest by the pandemic, according to the International Monetary Fund (IMF). The idea of a wealth tax has been revived by growing intergenerational inequality and the blow dealt to public finances by the pandemic, with the IMF warning that average government debt will hit 99% of GDP in 2021. But Helen Miller, deputy director at the Institute for Fiscal Studies, warned that although there was a case for a one-off wealth tax but cautioned it would not help tackle a higher structural deficit caused by Covid.
A global minimum tax on corporate profits is being considered by G20 finance ministers after the Biden administration made the case for an international base rate this week. According to Reuters, France and Germany have signalled support for the US approach, which could pave the way for a landmark agreement on global tax changes this summer. Sky News points out that may countries will not be keen on the idea, with the Republic of Ireland likely one of them. Ireland currently has a corporate tax rate of 12.5% and has attracted more than 700 companies from the US alone as a result of the policy.
Women could be owed ‘lottery-winning’ pension sums
The BBC has learned that women on £1-a-week state pensions could be owed tens of thousands of pounds. A case study highlights the case of Carole Davies. Ms Davies is among 5,000 women entitled to potentially huge refunds, many of whom will not be captured by the DWP’s search, due to a rule change in 2008. Steve Webb, a former pensions minister said under a little-known rule, the women who qualify for this concession are those who are getting a tiny amount of what is known as “graduated retirement benefit” (GRB) under the old state pension system, which ran until 1975. The average amount they are receiving is around £1.24 per week, but this is enough to qualify for a married woman’s pension. They can backdate their claims to their husband’s 65th birthday and could be in line for tens of thousands of pounds. “It is incredible that there are thousands of women getting such tiny pensions, but even more incredible that many could potentially be entitled to tens of thousands in back payments,” said Mr Webb.
Solid rebound will attract foreign workers back to Britain
International workers could flood back to Britain if the vaccine rollout encourages a more rapid reopening of the economy, Steffan Ball, an economist at Goldman Sachs said. “If jobs open up sooner in the UK than in the home countries of migrants who have recently left, then this would act as a strong force for them to return.”
Serco practice of moving profits within group ‘legitimate’, lawyer says
A court hearing a case brought against Serco alleging fraud heard the company’s lawyer argues that transferring profits between its business units was “not very admirable” but “lawful … legitimate accounting”.
BDO ’s latest Rethinking the Economy survey reveals that some 40% of North West businesses are planning major investment and hiring activities this year. Ed Dwan, partner and head of BDO in the North West, remarked: “It’s clear that as government restrictions start to loosen and the UK’s COVID vaccine programme continues to help suppress the virus, North West businesses are gaining the confidence needed to make key strategic decisions in the months ahead. Mid-sized businesses will play an integral role in the UK’s overall economic recovery.”
Employers stepped up their recruitment plans last month as companies prepared for the national lockdown to ease. A survey on employers by the Recruitment and Employment Confederation and KPMG found hiring activity picked up at its fastest pace in almost six years in March. Permanent starting salaries increased while temporary salaries also rose at the fastest rates since December 2019. Neil Carberry, chief executive of the REC, said: “This is the first month that we have really seen things getting better for most firms. We are at the bottom of the mountain and starting to climb up again.” The survey showed that the strongest growth in vacancies was for nursing and care jobs, and in the IT sector while hospitality businesses were starting to hire again. There was, however, weaker demand in the retail sector.
Business optimism is at its strongest since late 2006 according to the latest IHS Market PMI survey, with just 8% of companies predicting a fall in activity over the next twelve months. Britain’s overall PMI rose to 56.4 in March, reflecting a resurgence in services sector activity after several months of slowdown. Separately, high street footfall was up 134% over Easter weekend compared to this time last year despite non-essential shops not being open yet. Meanwhile, figures from PwC show that consumer confidence is now at its highest level since the tracking of the data began in 2008. PwC says the figures show there are consumers with more disposable income and “a pent-up demand to spend after a year of lockdown restrictions”.
The Daily Telegraph, Business, Page: 2 BBC News Daily Express
OTHER NEWS – THURSDAY 8TH APRIL 2021
Malaysia ex-PM served with bankruptcy notice
Najib Razak, the former prime minister of Malaysia, has been served with a bankruptcy notice for failing to pay more than $400m in unpaid taxes, a move that the ex-premier described as an attempt to destroy his political career.
Contact Paul Southward
NEWS – WEDNESDAY 7TH APRIL 2021
NEWS – WEDNESDAY 7TH APRIL 2021
TAX NEWS – WEDNESDAY 7TH APRIL 2021
Global corporate tax deal edges closer after US backs minimum rate
European countries have backed US plans for a global minimum corporation tax, but UK and EU leaders have reiterated that the taxation of digital services would need to be linked for a deal to succeed. Meanwhile, the International Monetary Fund’s chief economist Gita Gopinath has stated that the organisation has long favoured adoption of a global minimum tax on corporate profits. Gopinath said on Tuesday that current disparities in national corporate tax rates had triggered “a large amount” of tax shifting and tax avoidance, reducing the tax base on which governments could collect revenues to fund needed economic and social spending. Chris Sanger, head of tax policy at EY, points out that if lots of countries to agree to a global solution then “there will be an advantage to any headquarter location that does not implement a global minimum tax.” Meanwhile, Eamonn Butler, director of the Adam Smith Institute, warned the plans would “represent the creation of a cartel designed to minimise competition and disadvantage consumers”.
New laws have come into force meaning around 170,000 self-employed workers are set to pay more tax. The change to off-payroll working rules – IR35 – hits those working in the private sector who pay less tax by setting themselves up as private companies. For now, contractors who work for small businesses will continue to determine their own employment status. However, contractors providing services to medium or large-sized private sector clients will need to get an employment status determination from the client. Ed Molyneux, co-founder of accounting software firm FreeAgent, told The Sun he is worried the change will “come too soon” for many contractors. He said: “This is the most significant tax change in the freelance and contracting economy for years. It essentially pushes many people who are contracting within the private and private sectors into quasi-employment, albeit without any of the protections that they would receive if they were actual employees. But those who will be most impacted are the same freelancers and contractors who have been worst affected by the pandemic, and who are still dealing with the ongoing economic fallout from it.”
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EMPLOYMENT NEWS – WEDNESDAY 7TH APRIL 2021
Pandemic turns finance professionals on to more flexible working
New research indicates that 54% of financial services employees want alternative working patterns offered to them, such as flexible hours or the option of remote working. The study by Deloitte of 2,000 financial services employees found half (52%) wanted their employer to let them work from wherever they liked in the UK, and a quarter (24%) wanted their employer to enable them to work outside the UK post-pandemic. However, 34% felt that remote working had made their relationships with colleagues more superficial, although 45% felt their sense of autonomy had increased during the same time. Payal Vasudeva, financial services future of work partner at Deloitte, said: “Changes to how people work need to be reinforced by meaningful employee experiences. This could be a sense of belonging, purpose or greater flexibility in the hours they work and where they work from. There is not a one-size-fits-all approach. The new world of work is not about presenteeism but empowerment. Employees should be able to make some choices in how and where they work that makes them their most productive.” Separately, Grant Thornton’s CEO David Dunckley reveals that 88% of the firm’s staff want to spend less than half of the working week in the office after the pandemic.
Peacocks bought out of administration by consortium of investors
All 1,850 store staff currently on furlough at Peacocks, as well as 150 head office and support roles are to be retained after it was announced that the chain is to be bought out of administration by a group of international investors, led by Peacocks’ former chief operating officer, Steve Simpson. Former owner Philip Day is providing the financial backing for the management buyout in the form of a deferred loan, while a group of unnamed investors are injecting cash into the business to allow it to restart trading. Tony Wright, joint administrator of the business from FRP Advisory, commented: “Jaeger and Peacocks are attractive brands that have suffered the well-known challenges that many retailers face at present. We are in advanced discussions with a number of parties and working hard to secure a future for both businesses.” Meanwhile, Mike Ashley’s Frasers Group said that it was frustrated with the unwillingness of administrators at FRP “to engage substantively” or “to provide key financial information” so it could make an informed offer for the chain. Frasers is to raise its concerns with the All Party Parliamentary Group on Fair Business Banking which is conducting an in-depth investigation into standards in the UK insolvency profession, in response to claims that some practitioners are prioritising lenders’ interests over those of business or other creditors.
The recovery loan scheme is now open to applications, with the aims of supporting smaller businesses with additional finance to manage cashflow, growth and investment as they steer a path towards a sustainable recovery. The maximum amount of a facility provided under the scheme is £10m per business and £30m per group. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. Businesses can choose from term loans, overdrafts, asset finance and invoice finance, subject to the lender being accredited for each of these finance types. Businesses that have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme, although the amount they have borrowed under a previous scheme may in certain circumstances limit the amount they may borrow under RLS. Interest and fees will be paid by the business from the outset and the annual effective rate of interest and upfront and other fees cannot be more than 14.99%.
FT Adviser reports that Pimfa has issued a warning to advisers on new regulations being introduced post Brexit, in particular the Investment Firm Prudential Regime. The warning comes as the Financial Conduct Authority, Prudential Regulation Authority and the Treasury are all bringing forward regulations which Pimfa says will have significant impacts on UK wealth managers and large advisory firms.
ECONOMY NEWS – WEDNESDAY 7TH APRIL 2021
UK economy expected to outperform US and Europe next year
The UK’s economic growth will outpace that of the US and Europe next year due to the Treasury’s vast spending programme and the successful rollout of vaccines, according to the International Monetary Fund (IMF). In its World Economic Outlook, the IMF predicted UK growth of 5.3% in 2021 and 5.1% next year, after taking one of the biggest GDP hits from the pandemic. Global growth is expected to bounce back to 6% this year, followed by a 4.4% rise in GDP in 2022. This comes after a 3% contraction in 2020. Despite its vaccine struggles, the eurozone will still enjoy growth of 4.4% in 2021, the IMF predicts. However, the organisation did warn of “multispeed recoveries” with the developing world lagging behind and growing financial risks from booming markets and high-levels of business borrowing.
Optimism rises for manufacturers as sales and orders improve
The manufacturing industry lobby group Make UK has revealed that almost half of businesses in the sector had seen sales and orders improve since the start of the year. Investment is also set to rise in direct response to the Chancellor’s “super-deduction” tax cut. However, Verity Davidge, policy director at Make UK, said: “One swallow doesn’t make a summer and, with the economy at a crossroads, there is an urgent need to consider how we make a structural change to permanently increase investment in the future.” The growing confidence of manufacturers is echoed by research from BDO, which said 86% of mid-sized businesses are planning to hire more staff in the next six months.
OTHER NEWS – WEDNESDAY 7TH APRIL 2021
Billionaires buoyed by crisis while businesses languish in debt
Despite the hit taken by corporates form the pandemic the wealth of the world’s billionaires has only risen, with the 10 richest people on the planet now worth a combined $1.15trn (£830bn) having grown their fortunes by around two thirds over the past year. According to Forbes’ annual world billionaires list, there are a total of 2,755 billionaires in the world whose fortunes add up to $13.1trn, a big jump on the year before when there were 660 billionaires worth a combined $8trn. For most businesses, however, the pandemic has led to increased debt with the Telegraph pointing out that Europe is now facing €1.8trn wall of debt, maturing in the next four years.
Supermarket boss: Overhaul rates and tax online sales
Richard Walker, managing director of Iceland, has called for an online sales tax and a rethink of business rates, describing the tax as “outdated and Victorian”. Mr Walker, who urged policymakers to “completely change business rates as they are”, said there must also be “some form of rebalancing with online because otherwise we will be killing off the high street as it is.” With bricks and mortar stores paying far more in business rates than online-only rivals, a number of high street retailers have urged the Chancellor to rework the tax system to put digital retailers such as Amazon on a “level playing field”, with Tesco recently calling for a 1% online sales tax. The Chancellor rolled out relief on business rates amid the pandemic. This has been extended until the end of June and businesses will then be given a two-thirds reduction on rates until March 2022.
The Times, Page: 37 The Independent, Page: 48 Daily Mirror, Page: 8
Yellen calls for minimum global corporate tax
US Treasury Secretary Janet Yellen has urged other countries to agree a global minimum tax for companies, saying this could “make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations”. In a virtual speech to the Chicago Council on Global Affairs, Ms Yellen said there had been a “30-year race to the bottom” in which countries have slashed corporate tax rates in an effort to attract multinational businesses.” She added that it is “important to work with other countries to end the pressures of tax competition and corporate tax base erosion”.
HMRC is clamping down on a tax loophole which enables footballers and agents working for both a player and a club during transfer or contract negotiations to save on tax. In cases where there is “dual representation”, the agent must pay income tax and national insurance on the fees they receive from the player but when representing a club, the club is charged VAT which it can reclaim as a tax-deductible expense. HMRC believes agents do far more work for players than clubs, despite it often claimed the split is even. Pete Hackleton at Saffery Champness said the previous rule had been “agreed historically” with HMRC as industry best-practice, while Nimesh Shah of Blick Rothenberg said the change in guidance would mean most players pay more.
A poll from industry lobby group Make UK shows that the “super deduction” tax incentive announced in March’s Budget is set to boost investment for manufacturers this year. The survey saw 22.6% of businesses say they plan to increase investment as a direct response to the tax, with 28.1% bringing forward investment plans. Super deduction allows firms to deduct 130% of the value of plant and machinery from profits.
The Times, Page: 41 The Daily Telegraph, Business, Page: 1 Daily Express, Page: 46 Daily Mail
Tax break for veterans’ employers
As of today, companies that employ Armed Forces veterans will be exempt from paying national insurance on the first 12 months of their employment.
The Daily Telegraph, Page: 10
EMPLOYMENT NEWS – TUESDAY 6TH APRIL 2021
Slow progress on boosting female CEO numbers
Analysis shows that leading UK firms ha ve made little progress in increasing the number of female CEOs, with just 6.3% of firms run by female chief executives. This marks only a slight increase on the 6% recorded in 2019 and 6.2% seen in 2020. Despite the number of female leaders improving only marginally, the report from S&P Capital IQ shows that the UK ranks fifth among G20 nations when it comes to the proportion of large companies being led by women. Globally, the US leads the way with the highest proportion of female CEOs, at 8.4%. South Africa is next with 7.3%, followed by China’s 5.4%. Japan and Saudi Arabia have the lowest proportion of companies led by women, at 1.3%.
Redundancies among the over-50s have almost tripled in the past year, with 107,000 made redundant between last November and January 2021. The report from Rest Less says the redundancy rate for those who are over 50 is now higher than all other age groups at 12.8 per 1,000 employees. As of the end of February, over-50s made up 28% of the total furloughed workforce. Rest Less founder Stuart Lewis voiced concern over the findings, noting research showing that unemployed workers over the age of 50 are two-and-a-half times more likely to drift into long-term unemployment than younger people, pointing to age discrimination in the recruitment process and a lack of tailored retraining programmes.
The Independent The I Daily Express
Aviva: WFH may hit women’s opportunities
Insurer Aviva has warned that the shift towards flexible working could harm women’s careers, saying female staff may feel more pressure than men to work from home due to family responsibilities and so miss out on promotion opportunities. It warned of a risk that managers could promote workers they see in person, rather than making judgements based on the quality of work. Gwen Rhys, chief executive of networking group Women in the City, said: “It’s likely to be women who take the work-from-home option more than men … I think men will go back to the office before women and it will be they who get noticed, get networking and get the opportunities.”
Daily Mail, Page: 67
Jump in remote working job ads
The proportion of UK jobs advertised as “remote working” roles has surged in the past year, with coronavirus restrictions seeing more firms embrace home-based working models. As of February, 3.6% of roles were advertised as being remote, up from 0.8% a year earlier. The report from New Street Consulting Group shows that the number of remote working roles advertised more than trebled to 78,000, with it noted that many of these involved permanent remote working rather than temporary arrangements linked to coronavirus rules and social distancing guidance.
Up to 200 Peacocks stores and 2,000 jobs are set to be saved by an investment consortium which has agreed to back Steve Simpson, the chief operating officer of Peacocks’ sister company Edinburgh Woollen Mill (EWM). The transaction has been orchestrated by administrator FRP Advisory, which has also been in talks with Sports Direct owner Mike Ashley. Other parts of retail tycoon Philip Day’s empire, including EWM and Bonmarche, have already been sold to a vehicle controlled by Mr Simpson.
Bristol has been identified as the most popular location for homebuyers taking advantage of the Help to Buy initiative, with analysis of data by property agent Benham and Reeves showing the city has seen the biggest uptake of buyers utilising the discount scheme. The study gathered stats from Zoopla and gave a percentage based on how many eligible properties in the city had been taken up by buyers. Bristol came out on top with 60%, followed by Portsmouth and Swansea, which both saw 50% demand. Benham and Reeves director of Marc von Grundherr said that while the stamp duty holiday has been “a great way of boosting market health during a very tough period”, increased demand has pushed house prices “further out of reach for many first-time buyers”. “It’s clear that many are reliant on a leg up via the Help to Buy scheme as a result”, he added.
ECONOMY NEWS – TUESDAY 6TH APRIL 2021
Labour supply issues to hit growth
Analysts from Pantheon Macroeconomics have warned that economic growth could stall in the 2020s due to Britain’s ageing population and lower rates of immigration. The forecast suggests that the growth rate in the UK’s workforce will halve as an immigration clampdown sees fewer overseas workers, with labour supply also facing a hit as the Boomer generation enter retirement. The report predicts that workforce growth will fall to an average annual rate of 0.3% over the next five years, down from 0.8% in the second half of the 2010s. Pantheon economist Samuel Tombs said: “The days of strong workforce growth are long gone,” adding that expansion in the 2010’s had masked underlying weaknesses in the economy, such as “deficient business investment and sluggish growth in productivity”. HSBC economist James Pomeroy believes the working age population is set to shrink in the 2030s and may fall by the end of the 2020s, warning that this is “a massive fiscal problem when you’re taking on a lot of debt”.
Consultants see demand drop despite Covid contracts
Consultants saw a decline in demand for their services last year, despite the Government awarding a range of large contracts to firms advising on its response to the coronavirus crisis. Analysis by Source Global Research shows that the sector contracted by more than a tenth in 2020, with the size of the industry down by 12% to £10.65bn. The steepest drop came in the “change and people strategy” sector, with revenues falling 27% as firms tightened budgets and cut activities deemed unessential, such as leadership development courses and diversity and inclusion training. While the overall consultancy sector saw demand slip in 2020, Deloitte, EY, KPMG and PwC secured hundreds of millions of pounds worth of Government contracts linked to the pandemic, with ministers bringing in consultants to work on projects such as the test and trace system and the rollout of emergency business loan schemes.
The Daily Telegraph, Business, Page: 3
Why ranking workers by performance backfires
Sarah O’Connor looks at criticism of the forced distribution method for assessing staff performance, noting that KPMG plans to “move away” from the system to “allow much greater flexibility”.
HMRC has been urged to take a gentler position in regard to pension scam victims facing large fines, with MPs saying the tax office “lacked empathy” as it chased people hit by schemes which also broke tax laws. The report from MPs on the Work and Pensions Committee said that if the tax authority did not voluntarily review its stance, the Government should consider changing the law to allow some victims an amnesty. The report says victims lost savings in funds registered with HMRC, making them appear legitimate, but also faced tax bills often worth 55% of their lost pension pot because the schemes breached laws covering retirement savings. MPs noted that HMRC has been described as “unrelenting and uncompromising” in pursuit of unauthorised payment charges, adding that while the tax office’s position is “legally correct”, it has “often lacked empathy or understanding of the impact that its demands have on victims.” The report added that the Treasury “should recognise that, in some clearly defined circumstances … it may not be in the public interest to demand payment of tax due.”
CORPORATE NEWS – WEDNESDAY 31ST MARCH 2021
Vaccine a shot in the arm for business confidence
The latest Lloyds Business Barometer shows that the vaccine rollout has helped drive business confidence to its highest point in a year. The analysis shows that overall business confidence has increased 13 percentage points to 15% in the last month, the highest level since March 2020. Firms’ trading prospects for 2021 have jumped 10 points to 12%, with 34% of firms anticipating a pick-up in activity. On the outlook for hiring, over a quarter of companies anticipate expanding their workforce while 22% expect reductions. Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “It’s been a year since the first lockdown and the surge in confidence this month tells us firms are increasingly confident about economic recovery.” He added: “The broadly positive outlook is driven by steady vaccine deployment, the roadmap out of lockdown and the extension of government support measures.”
Investors want ESG evidence
Josephine Moulds in the Times says firms are “increasingly aware of the need to get a handle on their sprawling, global supply chains”, noting that some countries have regulations in place forcing them to act, such as the Modern Slavery Act which, as of January, introduced fines for UK businesses that fail to make their supply chains transparent. She notes that some investors are asking for independent verification that companies are living up to claims made in ESG reports, suggesting this presents a business opportunity for the big auditors and testing firms.
The FT looks at companies which have been emptied out by excessive payouts to shareholders, saying concern over such entities was “quietly acknowledged” in the Government’s overhaul of the audit and corporate governance regime.
City policy chair says most workers will return to offices
City of London policy chair Catherine McGuinness says the financial centre is likely to see most workers return to their offices after the pandemic, although there are likely to be changes to the way people work. She told the BBC: “What people are telling us is that they are expecting their central office base to remain at the core of their business with people coming in three or four days, working different hours, so we are expecting the bulk of the return … What it will mean in terms of the overall footfall, we are not yet quite clear.” A KPMG survey suggests that while most major global firms no longer plan to reduce their post-pandemic office space, few expect business to return to normal this year.
Daily Mail City AM
Hiring for bankers hits three-year high
Recruitment for bankers has hit a three-year high, according to research by Morgan McKinley and Vacancysoft. The analysis shows that Britain’s top banks posted 1163 professional banking vacancies last month, with this a 43.9% increase on the same period last year. The report also reveals that overall vacancies in the sector rose 19.4% year-on-year, their highest point since July 2019.
Khan fears job losses when furlough ends
London mayor Sadiq Khan has warned that without action to protect roles, there is likely to be a wave of job losses when the furlough scheme ends in September. Mr Khan said: “My concern as somebody who lived through the 1980s is we could have another period of mass unemployment where a generation is written off.”
SMEs NEWS – WEDNESDAY 31ST MARCH 2021
Danske Bank to refund SMEs
Danske Bank has agreed to refund around 300 small businesses that it charged to set up business accounts when they applied for bounce-back loans, with the Competition and Markets Authority saying the bank will refund around £16,450 for breaking rules.
The I, Page: 22
PROPERTY NEWS – WEDNESDAY 31ST MARCH 2021
Urban prices up as office returns near
House prices in cities and towns are increasing as people prepare for a return to the office, research from estate agent Savills suggests. Winchester, Oxford and Bath saw price rises of 4%, 3.7% and 3.2% respectively in the first three months of 2021, while Edinburgh and York saw average values climb 2.6%. The report shows that central London, where house prices have taken a hit since the start of the coronavirus pandemic, has seen house prices increase for the first time since 2019. On average, the value of prime property outside of London increased by 2.2% in Q1 – the highest quarterly increase since March 2010.
Saudi investor buys PwC office
A Saudi Arabian investor has bought the new PwC office block in Belfast for £87m. The figure is believed to represent the highest price paid for a single office investment in Northern Ireland. The development, Merchant Square, was sold by Oakland Holdings. PwC is due to start moving staff into the city centre building in the summer.
US president Joe Biden is expected to announce tax increases targeting the wealthy and middle class when he unveils a $3trn infrastructure package today. The Build Back Better programme will reportedly impose a global minimum tax on profits from foreign organisations, increase capital gains taxes for the rich, lift the corporate tax rate to 28% from 21% and see an individual rate of 39.6% for those making over $400,000.
Cash Isa savers have seen the worst tax year on record with returns averaging just 0.63% over the last 12 months. Inflation since April 2020 has averaged 0.78%, outstripping the typical Isa rate. Research from Moneyfacts shows that investors fared better, with an average return of 13.5% from stocks and shares Isas. This compares to a 13.3% loss investors suffered during the previous tax year. Despite payouts on cash falling as the Bank of England cut rates amid the pandemic, savers have deposited more money into cash Isas than ever before, with balances peaking at £302bn in May 2020.
IMF head: Growth prospects rising but dangers remain
Kristalina Georgieva, managing director of the International Monetary Fund (IMF), says that while prospects for global growth have improved since January, uneven progress in fighting the coronavirus pandemic could jeopardise the economic gains. Noting that the IMF’s updated economic forecast will next week show the global economy growing at a faster pace than the 5.5% gain projected at the start of the year, she said this has been driven by a $1.9trn US rescue package and rising confidence from increased vaccinations in many advanced economies. However, Ms Georgieva warned that economic prospects are “diverging dangerously” and called on major central banks to “carefully communicate their policy plans to prevent excess financial volatility at home and abroad.”
OTHER NEWS – WEDNESDAY 31ST MARCH 2021
Not looking forward to hearing from you
A conversation on Reddit has revealed many of the ‘facts’ and ‘attributes’ that front line HR professionals find most annoying on curriculum-vitaes. Blood type, shoe size and eye colour is not key information required and weightlifting personal bests and childhood cycling proficiency proof are among the more bizarre offerings from job seekers. One HR manager found the Goals section on résumés tiresome. “Your goal should be to get an interview, that’s it”, she commented. An emerging bugbear cited by some is “proficient on Zoom”.