Amazon’s membership of CBI tax team raises questions about influence
The policy positions of the Confederation of British Industry are being influenced by big businesses that sit on its committees, the Times suggests. American tech giant Amazon is a member of the tax committee of the lobby group, which has criticised the UK’s new digital services tax, arguing that it was “high risk”. The paper points out that Unilever and Barclays, which are in dispute with HMRC over tax bills, are also on the committee. The Times cites a former chief executive of a FTSE 100 company who says Amazon’s membership “seems astonishing.” They add: “Whatever they’re thinking, it will reinforce society’s view that businesses have an agenda not to pay their way. That’s pretty stupid in these times.” Elsewhere in the paper further details of multinational influence on the CBI are detailed, leading John Longworth, former director-general of the British Chambers of Commerce, to comment: “The [CBI] is rammed with foreign multinationals who are obviously not going to have the national interest at heart.”
Source: The Times (07/11/2020) The Times (07/11/2020)
HMRC urges traders to prepare for end of Brexit transition period
HMRC is urging traders to act now to avoid Brexit-related disruption when the transition period comes to an end. Some 250,000 letters and emails have been sent to businesses warning that new border controls will come into force on 1 January 2021. HMRC’s Katherine Green and Sophie Dean said: “We understand that these are challenging times, but time is running out for businesses to get ready. “New customs and tax rules will not change or go away if a Free Trade Agreement is negotiated, so businesses should act now to ensure they are ready for the end of the transition period.” Meanwhile, the National Audit Office has warned that preparations for new border controls have been further delayed by coronavirus, likely leading to “widespread” disruption at ports.
Source: The Times (06/11/2020) City AM (06/11/2020)
HMRC reduces tax gap to lowest ever level
Annual accounts from HMRC show the tax gap fell to 4.7% in 2018-19, the lowest rate ever recorded. However, £31bn is still lost to fraud and error. HMRC says £4.6bn is lost to tax evasion; £4.5bn to criminal attacks; £3.1bn to error and some £5.5bn the result of people and companies failing to take reasonable care when paying.
Source: The Times (06/11/2020)
Luxury brands in tax-free shopping warning
Bosses of nearly a dozen luxury fashion firms including Gucci and Hugo Boss have written to Rishi Sunak warning that plans to abolish the VAT rebate for tourists risks their future investment in Britain. “As global brands operating in the UK, we greatly value Britain’s status as a world-leading shopping and tourism destination, attracting visitors from around the world, and have invested in the UK accordingly,” the letter said. “But the Treasury’s plan would give the UK the least competitive [tax-free shopping] regime in Europe and put this status at risk.”
Source: The Times (11/11/2020 The Daily Telegraph (11/11/2020) Daily Mail (11/11/2020)
Unsustainable debt may stifle recovery
The Business Growth Fund is set to take stakes in growing SMEs to boost their survival chances during the pandemic, with the first investments of the £15bn National Renewal Fund expected to be made in the first quarter of 2021. But Stephen Welton, head of the BGF, warned the legacy of Covid could “materially affect the economy for generations”. He said: “We’re going to face the perfect storm of company failures, so increasing insolvencies and unemployment, combined with zombie companies that can survive but are just surviving to pay interest. Those two together will completely handicap the economy in terms of its ability to recover.” Separately, Sir Adrian Montague, head of the TheCityUK Recapitalisation Group, estimates that unsustainable corporate debt in the UK will hit £70bn by the end of March 2021 placing a “heavy drag” on the recovery.
Source: The Sunday Telegraph (07/11/2020)
Banks prepare for new bounce back loans boom
Following the decision by the Chancellor to extend the deadline for applications for bounce back loans and permit top-up loans from November to January banks are bracing for a flood of small business customers seeking access to the cash. NatWest estimated that about 100,000 businesses, or a third of its existing bounce back loan scheme (BBLS) customers, could be eligible for a top-up. Meanwhile, concerns have been raised over the high interest rates charged on debt accrued through the coronavirus business interruption loan scheme (CBILS), which can be as high as 14.99%, and big businesses are calling for the corporate financing facility (CCFF) to be extended for five years.
Source: The Sunday Times (08/11/2020)
Small businesses may struggle to access fresh funding
The Guardian reports on concerns that, if the number of bounce back loans scheme accredited lenders shrinks, there will be a sharp rise in small businesses unable to access funds this winter. The worries stem from Tide being unable to offer any more loans because it is reliant on private investment to fund lending and the company ran out of funds in the summer. Tide is now reviewing formal documents linked to the scheme, and trying to figure out how it might finance the top-ups promised by the UK Government last week. Tide has so far failed to gain access to Bank of England loans to fund further bounce back loans. Mike Cherry, chair of the Federation of Small Businesses, said it was important that struggling businesses are given access to much-needed funds. “Given that many firms applied for bounce back facilities at a time when the extent of disruption was so unclear, it’s vital that the roll-out of the top-up initiative is a su ccess.”
Source: The Guardian (09/11/2020)
Outlook for small manufacturers stabilises
A survey of small manufacturing firms by the CBI has found that investment plans still remain weak for the year ahead despite improving in recent months. However, output fell at a considerably slower pace in the three months to October and the survey also indicated a decline in the number of firms worried about staff shortages, cash flow and demand for goods and services. Job cuts among SME manufacturers were significant in the latest quarter, but employment is now expected to rise modestly in the months ahead.
Source: Daily Express (09/11/2020)
Surge in redundancies pushes UK unemployment to 4.8%
Redundancies rose to a record high of 314,000 in the three months to September driving up unemployment from 4.5% to 4.8%, according to figures from the Office for National Statistics (ONS). The number of people out of work rose by 243,000 in the three-month period, the largest increase since May 2009. The redundancy figure was higher because it included people who may have lost their jobs and then retired or decided to stop looking for work. Young people and men fared the worst and there was also a dramatic drop in the foreign-born workforce. Tony Wilson, director of the Institute for Employment Studies, said the changes in unemployment and employment were “worrying but not catastrophic”, although the continued lack of hiring was troubling.
Source: Financial Times (11/11/2020) The Daily Telegraph (11/11/2020 The Independent (11/11/2020) The Guardian (11/11/2020)
Investors shrug off UK jobs gloom
The FTSE 100 index of major companies climbed another 1.8% to 6296.85 yesterday – a level not seen since June – as investors brushed off figures showing a record 314,000 workers were made redundant over the summer. The stock market rose for a second day as analysts said a vaccine could help the economy bounce back to pre-pandemic levels next year.
Source: Daily Mail (11/11/2020)