Chancellor argues the case for digital services tax
The UK will continue to push for a solution for taxing international tech companies, despite the US abandoning negotiations for a global digital tax. In a letter to US Treasury Secretary Steven Mnuchin, Chancellor Rishi Sunak and finance ministers in France, Italy and Spain have stressed the importance of tech giants such as Google, Amazon and Facebook paying a “fair share” of tax. The letter says that the coronavirus crisis “has confirmed the need to deliver a fair and consistent allocation of profit made by multinationals operating without – or with little – physical taxable presence.” Arguing that such firms will emerge from the crisis “more powerful and more profitable”, the letter says it is “fair and legitimate” to expect those benefitting from free access to the European market to “pay their fair share of tax within countries where they create value and profit.” A Treasury spokesperson commented: “We have always been clear that our preference is for a global solution to the tax challenges posed by digitalisation, and we’ll continue to work with our international partners to achieve that objective.” In France, finance minister Bruno Le Maire labelled the US decision to suspend the OECD-led talks a “provocation”, and said Paris would apply a tax on big technology companies “whatever happens”. Editorials in the FT and Times both detail the importance of an agreement on taxation for digital firms.
Source: The Times (19/06/2020) The Guardian (19/06/2020) Financial Times (18/06/2020) Financial Times (18/06/2020) The Times (19/06/2020) The Sun (19/06/2020) City AM (19/09/2020) BBC News (18/06/2020)
Sunak plans emergency cut in VAT
Treasury officials along with HMRC have been told to prepare to cut VAT for a fixed period to help the economy rebound from the coronavirus pandemic. The Chancellor, Rishi Sunak, also discussed slashing business rates in private briefings last week, the Sunday Times reports. The cut to VAT would include zero rating more products as well as a cut to the headline rate. Other proposals being worked up include extending a scheme under which businesses can defer VAT for three months, cutting employer’s national insurance to encourage bosses to hold on to staff and introducing an employer’s national insurance holiday for new staff to encourage recruitment. Former chancellor Sajid Javid says in an interview with the same paper that VAT should be cut from 20% to 17% for a year, arguing that it would “turbocharge growth”.
Source: The Sunday Times (21/06/2020) The Sunday Times (21/06/2020)
Business lobby calls for cut to National Insurance bill
The FSB, the IoD and the BCC have all called on the Treasury to make cuts to NI bills in the mini-Budget next month. Jon Geldart, director general of the IoD, said: “While the Government may want to hold off pulling some economic levers until later in the year, directors have to make hiring and investment plans in advance. The Treasury should act now to ease the cost of employment and help firms keep people on board.” Mike Cherry, FSB’s national chairman, said: “Protecting jobs has to be a top priority.”
Source: The Mail on Sunday (21/06/2020)
PMI uptick points to optimism
NatWest’s Small Business PMI suggests optimism is increasing, with the index, which monitors output at small private sector firms in the services, construction and manufacturing industries, rising from 14.6 in April to 26.3 in May. NatWest’s principal economist Stephen Blackman said the uptick shows that “at least, the worst should be behind us.” He notes that while over a third of firms in services expect a further reduction in activity this year, fewer firms now anticipate a reduced workforce than they did in April. Mike Cherry, national chair of the Federation of Small Businesses, has urged the Government to deliver fresh support for small firms “as they evolve and adjust to the new norm.”
Source: City AM (18/06/2020)
Small firms need help with reopening, says FSB
The Federation of Small Businesses has written to Chancellor Rishi Sunak calling for financial help for small firms with reopening as the coronavirus lockdown gradually lifts. Chairman Mike Cherry says: “The majority will face additional costs as they adjust. The government should step in with back to work vouchers so firms doing the right thing can recover this expenditure.” The group also warns that current social distancing rules make it impossible for 400,000 of Britain’s small businesses to reopen. Writing in the Telegraph, Mr Cherry explains how, with the right support, “small businesses can lead us out of this crisis.”
Source: The Daily Telegraph (22/06/2020)
Small businesses raid savings to stay afloat
A survey by Redwood Bank has found nearly half of small businesses have had to raid their savings to stay afloat during the coronavirus pandemic. It estimates as much as £22.4bn has been withdrawn from corporate deposit savings accounts to pay bills. Gary Wilkinson, chief executive and co-founder of Redwood, said: “With no or little income, many are desperately trying to stay afloat and have had to tap into their savings to pay costs and keep going.”
Source: Sunday Express (21/06/2020)
FRC mulls plans to require reporting on ethnicity
The Financial Reporting Council will discuss with government ministers its plans to introduce new reporting requirements around ethnicity after the regulator’s CEO Sir Jon Thompson described efforts by large companies to hit diversity targets as “poor”. The Sunday Telegraph reports that any new measures will be introduced as part of the FRC’s Corporate Governance Code. Changes being considered include new requirements to disclose the ethnic balance of those in senior management roles, in line with recommendations made in the government-backed Parker Review. David Styles, director of corporate governance at the FRC, said: “We are carrying out an in-depth analysis of the new code. We are specifically going to focus on diversity. We expect to see high-quality reporting on all aspects of diversity. If this does not happen, then we are going to have to look at what we do in the future in terms of getting better- quality reporting.”
Source: The Sunday Telegraph (26/06/2020)
IHS Markit survey reveals that UK economy likely to see return to growth
IHS Markit’s flash purchasing managers’ index (PMI) has shown that the UK’s economic output reached a measure of 47.6 in June. The firm’s chief business economist, Chris Williamson, remarked: “June’s PMI data add to signs that the economy looks likely return to growth in the third quarter, especially given the further planned easing of the lockdown from 4 July.” He went on: “June saw a record rise in the PMI for a second successive month, confirming that the economy is moving closer to stabilising after the worst of the immediate economic impact from the COVID-19 pandemic was felt back in April.”
Source: The Daily Telegraph (24/06/2020) Daily Mail (24/06/2020) Daily Mirror (24/06/2020)