Chancellor urged to rethink insolvency rules update
A consortium of 11 groups including insolvency trade body R3, banking organisation UK Finance and the Institute of Chartered Accountants in England and Wales are urging Chancellor Rishi Sunak to abandon plans to give the taxman priority over other creditors when companies become insolvent, with new rules due to come into force next month seeing HMRC take priority when assets are shared out in the event of a business collapsing. The organisations stated: “The Government’s plans to grant some tax debts ‘preferential status’ in insolvencies remain a serious concern and the upcoming Budget is the Chancellor’s last opportunity to avert an avoidable error.” They went on: “Ultimately, the policy could lead to a small, short-term gain for HMRC at the expense of long-term damage to the economy.”
Source: The Daily Telegraph (09/03/2020)
Rishi Sunak set to cut “jobs tax”
The Chancellor is expected to today announce a rise in the Employment Allowance from £3,000 to £4,000 to protect small businesses from the rise in the minimum wage. From next month companies will not have to pay Employer National Insurance Contributions on the first £4,000 of their annual bill. Federation of Small Businesses chief Mike Cherry welcomed the move, adding: “Small employers will be hugely grateful for this intervention, particularly with an inflation-busting six per cent increase in the National Living Wage taking effect in April. With businesses disrupted by coronavirus, this measure should now be followed up with the immediate re-introduction of a statutory sick pay rebate for small firms. Without one, we’ll likely see businesses going to the wall over the weeks ahead.”
Source: The Sun (10/03/2020)
Plea for EIS commitment to continue
Lord Flight, the chairman of the EIS Association, writes to the Telegraph voicing his hopes that the Chancellor has not decided to reduce the Enterprise Investment Scheme (EIS) or to scrap entrepreneurs’ relief. He says: “In different ways, both are responsible for the success of SMEs, which now account for more than 90% of UK employment.” Separately, Alex Daniel examines the pros and cons of entrepreneurs’ relief in City AM, citing the FSB’s Mike Cherry who suggests perhaps the lifetime allowance should be lowered from £10m to £1m so the “benefits are felt most strongly by small business owners.”
Source: The Daily Telegraph (11/03/2020) City AM (11/03/2020)
People would accept higher taxes to boost NHS
A survey for the Independent suggests that people would accept steeper taxation if it boosted funding for the NHS and social care. The poll saw 73% of respondents say they would pay more tax to boost spending on the health service, while 61% would pay more to improve social care. On the taxes they would be willing to accept to boost funding, 63% supported a mansion tax on properties worth over £1m and 49% said they would back a wealth tax levied on the total value of an individual’s assets.
Source: The Independent (08/03/2020)
UK aims to raise £500m a year through digital services tax
Britain is to go ahead with plans for a new digital services tax despite threats of retaliatory measures from the US and warnings from UK tech firms that the move could see them taxed twice.
Source: Financial Times (09/03/2020)
FCA may demand firms reveal climate impact
The Financial Conduct Authority (FCA) could be set to demand firms reveal their effect on the environment and disclose the financial risks they face due to the climate crisis, with those opting not to comply having to explain why not. The watchdog has detailed new climate standards which listed companies would have to meet, launching a consultation as it looks to set out the final rules before the end of the year. The plans are expected to closely follow recommendations within the Task Force on Climate-related Financial Disclosures – a voluntary framework focused on climate disclosure. FCA chief executive Andrew Bailey said the proposed changes “will help to provide the transparency the market needs to be able to assess how well companies are adjusting to the risks of climate change.” The FCA’s plans come after the Financial Reporting Council launched a review into whether companies and auditors are adequately identifying the financial risks of the climate crisis in their accounts, while the Investment Association has set a three-year deadline for companies to explain how they plan to measure and manage the threat of climate change in their annual reports.
Source: The Guardian (07/03/2020) Financial Times (06/03/2020)
FSB urges Chancellor to boost small firms
Mike Cherry, national chairman at the Federation of Small Businesses, has urged the Chancellor to use his first Budget to help support SMEs, saying “he needs to recognise that, when the Government stands up for small businesses, it stands up for society as a whole.” Writing in City AM, Mr Cherry notes that small businesses provide the Treasury £145bn in corporation tax and VAT each year and have “continued to make this contribution despite rising costs and political uncertainty taking their toll.” On how Rishi Sunak can boost optimism among small firms, Mr Cherry calls for incentives that encourage start-ups to invest and hire to be maintained, saying the proposed scrapping of entrepreneurs’ relief would be “disastrous”. He also says increasing the employment allowance would be welcomed, as would action to tackle late payments and a review of business rates.
Source: City AM (06/03/2020)
NatWest pledges £5bn to support SMEs
NatWest has promised £5bn to support UK small and medium-sized businesses suffering from disruption caused by the coronavirus outbreak. The funding will be used to provide loan repayment holidays of up to six months, as well as temporary emergency loans with no fees. Mike Cherry, national chairman of the Federation of Small Business, welcomed NatWest’s package but warned banks not to make the same mistakes they made after 2008 when they abused the trust of small businesses. Elsewhere, Barclays is offering its business clients 12-month capital repayment holidays on loans worth more than £25,000, as well as bigger overdrafts and access to a £14bn fund launched last year as part of a three-year commitment to small firms to build resilience during uncertain times.
Source: City AM (10/03/2020) The Guardian (10/03/2020) The Sun (10/03/2020)
Brexit and virus brings gloom to SMEs
A small business confidence index launched today by banking platform Tide shows more than 70% of the UK’s SMEs do not expect the country’s economy to grow during the rest of 2020 while nearly 60% say they are unlikely to invest in growing their business in the next quarter. The survey found concerns over a future EU trade deal and the impact of the coronavirus have led to the decline in sentiment.
Source: City AM (09/03/2020)
Treasury and BoE plan coordinated response
City analysts believe the Bank of England is set to announce a dramatic package of support for the British economy to help it through the coronavirus outbreak, including a cut to interest rates and relaxing borrowing conditions for high street banks. The move is likely to coincide with the Chancellor’s Budget announcement as the Government seeks to give the economy a shove as the coronavirus situation worsens. The FT notes that Begbies Traynor recorded nearly half a million companies in significant financial distress in December – the highest it had ever seen – illustrating the need to protect businesses. Meanwhile, experts also expect the ECB to cut rates and announce measures to bolster bank lending across the eurozone on Thursday.
Source: The Guardian (11/03/2020) Financial Times (11/03/2020)
Nigella served £300k tax refund
TV chef Nigella Lawson has won a legal battle with the taxman and will receive a £300,000 rebate after it was ruled she was due tax relief when she closed her production company four years ago. When Ms Lawson shut down Pabulum Productions she paid 20% corporation tax amounting to £600,000. She claimed she was entitled to entrepreneurs’ tax relief of 10%, worth £300,000, with High Court judges agreeing.
Source: The Mail on Sunday (08/03/2020)