Business News & Recent developments
Keep yourself up to date with latest business news and recent developments in UK accountancy and taxation affairs.
Table of Contents
26/02/21: Furlough workers rose by 700,000 to 4.7 million in January
HMRC figures showed a sharp increase in the number of workers furloughed in January 2021 from 4 million at the end of December to 4.7 million workers in January. The cost of the Furlough (CJRS) scheme has risen to £54 billion so far. The highest take-up rate was for those aged 18 to 24 years. As many as 68% of firms in the accommodation and food services sector were furloughing staff, while arts, entertainment and recreation had the second highest rate at 64%.
25/02/21: Fuel duty to be frozen in Budget
Rishi Sunak has ruled out a rise in fuel duty after concluding that reliance on cars as a transport safety measure during the pandemic is still too great, Treasury sources have said.
The chancellor is understood to have seriously considered an increase before his previous budget last March, keen to send a signal about the UK government’s green agenda.
The Treasury also considered a rise of up to 5p a liter from March 2021 on the assumption that the UK would be back to somewhere near normal transport use.
24/02/21: Hotel industry could take 3 years to get back to normal
The FTSE 100 hotel company behind the Holiday Inn and Crowne Plaza brands dropped into the red last year to the tune of $153 million after “the toughest time this company has ever seen”. Intercontinental Hotels Group reported a halving of group revenues to $2.39 billion while revenue per available room (revpar) — a key industry measure — fell by 52.5 per cent, with the UK down 65 per cent, because of hotel closures and travel restrictions. Keith Barr, 50, chief executive of IHG, said Covid-19 had taken a heavy toll on demand across the sector and the return to pre-pandemic levels would be a “multi-year” process, depending on the progress of global vaccine rollouts and the lifting of restrictions.
24/02/21: Online sales tax moves closer
As online businesses mop up the remnants of some of the high street’s biggest names, the retail industry is torn over the potential introduction of an online sales tax. While virtually every shopkeeper in Britain has been a vocal critic of the archaic business rates system, there remains little accord on how to level the playing field with aggressively expanding internet retailers. The acceleration of online shopping during the pandemic combined with the huge hit to public coffers has prompted Treasury officials to host secret meetings this week with business leaders on how an online sales tax could work.
23/02/21: VAT Deferral New Payment Scheme is now open
If you are one of over half a million businesses who deferred their VAT payments last year, you can now join the VAT Deferral New Payment Scheme online to pay in smaller monthly instalments.
To benefit from VAT deferral New payment scheme, you will need to have deferred VAT payments between March and June 2020, under the VAT Payment Deferral Scheme. They will now be given the option to pay their deferred VAT in equal consecutive monthly instalments from March 2021.
Businesses will need to opt-in to the VAT Deferral New Payment Scheme. They can do this via the online service that opens on 23 February and closes on 21 June 2021.
HMRC has updated guidance on how to register for the online service to pay VAT payments deferred between 20 March and 30 June 2020 due to the covid-19 pandemic.
23/02/21: Unemployment rate has risen to its highest level in almost 5 years
The unemployment rate rose to 5.1% in December quarter, with the number of people on company payrolls down 726,000 on pre-pandemic levels. Under 25th were hit the worst as almost three-fifths of these figures were younger than 25 years. The ONS said 1.74 million people were unemployed in December quarter, up 454,000 from the same quarter in 2019.
23/02/21: You can now make February CJRS claims
You can now submit your claims for periods in February. These must be made by Monday 15 March.
You can claim before, during or after your client’s payroll is processed. If you can, it’s best to make a claim once you’re sure of the exact number of hours your client’s employees will work so you don’t have to amend the claim later.
To do list:
- If you haven’t submitted your claim for January but believe that you have a reasonable excuse for missing the deadline, check with HMRC if you can make a late claim.
- Submit any claims for February no later than Monday 15 March.
- Keep records that support the amount of CJRS grants claimed, in case HMRC needs to check them.
22/02/21: HMRC temporarily waives late payment penalties
HMRC has announced that Self-Assessment customers will not be charged the initial 5% late payment penalty if they pay their tax or make a Time to Pay arrangement by 1 April.
The payment deadline for Self-Assessment is 31 January and interest will be charged from 1 February on any amounts outstanding. The deadline has not changed, but this year, because of the impact of COVID 19, HMRC is giving taxpayers more time to pay or set up a payment plan.
Payment plans or payments in full must be in place by midnight on 1 April to avoid a late payment penalty.
HMRC recognizes the pressure affecting customers due to the pandemic, and anyone worried about paying their tax should contact HMRC for help and support on 0300 200 3822.
The self-serve Time to Pay facility allows customers to spread the cost of their tax liabilities into monthly instalments until January 2022. Customers can set up a payment plan online, on GOV.UK.
Self-Assessment customers who have yet to file their tax return should do so by 28 February to avoid a late filing penalty.
22/02/21: VAT deferral new payment scheme – join from 23 February
If businesses deferred paying VAT due in the period from 20 March to 30 June 2020 and cannot afford to pay by 31 March 2021, they can join the VAT deferral new payment scheme and pay their deferred VAT over a longer period. The online service will open on 23 February 2021 and close on 21 June 2021. Businesses can make up to 11 monthly instalments, interest free. The earlier you join, the more months they can spread their payments across.
You can join the scheme online without the need to call. You can go to GOV.UK for more information and to join quickly and simply when the scheme opens. Be advised that HMRC is unable to provide an agent (Accountants) service for this scheme.
Businesses that need more time to pay their deferred VAT should contact HMRC.
19/02/21: Uber drivers to be classified as workers, not independent contractors
Uber must now classify its drivers on its platform as workers, Supreme Court ruled in landmark case today. The ruling could mean thousands of Uber drivers are set to be entitled to minimum wage and holiday pay. Mr Aslam, the president of the App Drivers & Couriers Union (ADCU) said,
“I think it’s a massive achievement in a way that we were able to stand up against a giant. It took us six years to establish what we should have got in 2015. Someone somewhere, in the government or the regulator, massively let down these workers, many of whom are in a precarious position.”
19/02/21: British Pound hits 34 month high against US Dollar at 1.40
The Pound-to-Dollar exchange rate hit the 34 month high psychologically significant round number of 1.40 in the early trading session this morning in London. It last traded at these levels back in April 2018. The Pound has been resilient in the face of weaker than expected retail sales data for January. Overall Sterling sentiment has remained remarkably strong amid expectations that the vaccination program will allow the UK economy to stage a strong recovery from the second quarter of 2021.
17/02/21: Bitcoin hits $50,000 mark for the first time
Bitcoin rallied yesterday to $50k mark smashing all its previous records on the back of tentative acceptance on Wall Street and enthusiasm in Silicon Valley. Having hit an all-time high of $50,487.78, it closed on $48,741.68 in New York last night. The world’s largest cryptocurrency continues to grow as signs of its shift from the fringes of finance to the mainstream finance/payment mode.
16/02/21: London & Leeds to get Green Finance Research Centres
The Government will launch “UK Centre for Greening Finance and Investment” in London and Leeds during April this year. The £10m hubs will “provide world-class data and analytics to financial institutions and services such as banks, lenders, investors and insurers” to “better support their investment and business decisions by considering the impact on the environment and climate change”, according to the Department for Business, Energy and Industrial Strategy.
15/02/21: Government’s Help to Buy scheme extended till May
The deadline for Government’s Help to Buy scheme has been extended till end of May this year. 278,000 households have received advance from government to help pay the deposit to buy a newly built home during last 7 years of Help to Buy Equity Loan Scheme. Data shows that 16,691 sales were still to be completed under the current scheme as of the end of last month.
15/02/21: Chancellor Sunak plotting £6billion ‘stealth’ tax by freezing personal income tax allowances
Chancellor may abandon annual increases to the tax-free personal allowance (presently £12,500) and basic rate band (presently £50,000) in his next month’s budget, as reported by Telegraph. These thresholds determine as to how much can you earn without paying any tax and at what threshold you start paying higher rate tax of 40%. Both these thresholds typically increase in line with inflation every year. Since there will no increase in the income tax rates, these announcements will be dubbed as Stealth Tax.
12/02/21: UK Economy shrank by 9.9% in 2020, the biggest crash in more than 300 years!
The UK GDP fell by 9.9% in year 2020, the largest decline since the Great Frost of 1709, according to the Office for National Statistics (ONS).
Breakdown of 2020:
1st quarter: 2.9% down
2nd quarter: 19% down
3rd quarter: 16.1% up
4th quarter: 1% up
The economy grew 1.2% in December 2020 alone, following a fall of 2.3% in November 2020.
10/02/21: Restaurant boss banned for hiding takings to avoid £266k tax
A Warwickshire restaurateur and the director of Simla Restaurant Ltd (Trading as Simla Tandoori )has been banned for five years after he hid true takings of his business to avoid paying the correct amount of taxes. The company traded as a restaurant bases in Blandford Forum, Dorset. It was established that Mr Chowdhury owed £48,000 in VAT and around £113,000 in corporation tax to HMRC from the period from 2009 to 2017. It was found that Chowdhury had underdeclared sales to avoid paying the correct taxes and, at liquidation, owed the tax authorities more than £266,000. An additional penalty of over £104,000 was levied by the tax authorities for the under declaration of corporation tax.
09/02/21: HMRC’s ‘most wanted’ tax cheat jailed
The ringleader of a plot to smuggle millions of illegal cigarettes has been jailed – three years after he flew to Lithuania to avoid an HMRC investigation. Svajunas Navagruckas, 51, who was one of HMRC’s most wanted tax fugitives, led an organised crime network that was caught with 8.5 million illegal cigarettes in June 2017. He was arrested when HMRC investigators seized the cigarettes, worth £2.8m in evaded duty, at a farm in Lincoln. Navagruckas left the UK while investigations were ongoing. He was charged in March 2019, with conspiracy to evade excise duty and a European Arrest Warrant (EAW) was issued by HMRC. He was returned to the UK on 10 July 2020 after being arrested by Lithuanian authorities.
08/02/21: Top 100 UK companies don’t have any black senior board executives
FTSE100 companies do not have a single black executive with no chairs, CEOs or CFOs according to research compiled by executive recruitment and diversity consultancy agency Green Park. Although, the number of top positions in other minority ethnic groups have increased slightly in past few years. Arnold Donald is a black chief executive of Carnival cruise operator, but the company dropped out of FTSE100 last summer. Another South African businessman Fred Phaswana has retired as the joint chair of the packaging and paper group Mondi.
This compares unfavorably with increased percentages for other minority ethnic board members (Muslim, Hindu and Sikh, and Chinese and East Asian) across the same period.
08/02/21: Garment manufacturer Company director jailed for 6 months
The boss of a Leicester clothing manufacturer has been jailed for six months after failing to provide adequate company accounting records, or to pay £300,000 in tax. He has also been banned from being a company director for a period of five years.
The sole director of Miss Pebbles Clothing Ltd, a Leicester clothing manufacturer, has been jailed for 6 months after failing to provide adequate company accounting records, or to pay £300,000 in tax. The company went into liquidation back in March 2016 when it employed around 50 people, owed tax liabilities of £300,000 to HMRC and a further £44,000 to creditors. Following Insolvency investigations, it was discovered that adequate accounting records were not kept and liquidator could not get the information about unidentified cheques and card withdrawals amounting to £983,000
According to the latest EY ITEM Club for Financial Services Forecast, the UK businesses borrowed £35.5bn (in net terms) last year, with a further £26bn forecast by the end of 2021. Last year, net Bank lending to the business was £35.5bn and £34.7bn of this was lent since beginning of pandemic in March 2020.
05/02/21: Are we heading towards negative interest rates?
The Bank of England (BoE) has indicated that banks, building societies and lenders have 6 months to prepare for negative interest rates, however BoE stressed that “Nobody should take any signal from this” as this does not mean that negative interest rates are “imminent, or indeed in prospect at any time”.
Mr Bailey added: “My message to the markets is you really should not try to read the future behaviour of the MPC from these decisions and these actions we’re taking on the toolbox”
Click here for better understanding on and examples of negative interest rates.
05/02/21: Company director? Get ready for personal responsibility!
Kwasi Kwarteng, the Business Secretary, is due to publish long-awaited major audit reforms in a white paper next week, where Directors will be held personally responsible for the accuracy of company’s financial statements. As part of far-reaching proposals to overhaul UK corporate governance and audit oversight, it is expected that fines and bans will be imposed for major failures.
The reforms will include major amendments in the audit industry in the wake of several accounting scandals and failings at companies such as Carillion and Patisserie Valerie. The UK Busines department is set to issue a 200 plus pages documents containing recommendations, which include regulations similar to strict US Sarbanes-Oxley regulations which came into effect following the fall of Enron.
Presently, the “board of directors” is responsible for the accuracy of the financial statements. However, the recommendations will make it directors’ responsibility in their personal capacity through the sign off of internal controls and risk management.
05/02/21: Additional house hold savings during lockdown: £125 billion
With the economy shut down, medium and high earners have saved considerably more during the lockdown while working from home. The Bank of England said £125bn additional savings were recorded last year. This is 5 times more than any 9 month period prior to lockdown. The savings figure is expected to rise further during first half of 2021, BoE suggests.
04/02/21: UK economy to rebound strongly following vaccine rollout
Bank of England predicts the economy will bounce back in the spring, following an expected 4.2% shrink in the first quarter of 2021. The rapid recovery in 2021 is expected due to successful vaccination program in the country. With Furlough scheme approaching its end, the unemployment rate is still expected to be 7.8% later this year. The BoE said most people are expecting life to return to normal within a year.
04/02/21: Amazon under pressure to pay more tax as sales about to hit £20bn
Amazon is being demanded to contribute more in taxes and business rates as UK sales rose by 51% to $26.48bn (£19.12bn) in 2020. Their sales are now double than M&S and 5 times more than Next. £1 of every £20 spent in Britain’s retail sector is now going to Amazon. Normal bricks and mortar retailers pay around 2.3% of their turnover in business rates, whereas Amazon pays roughly 0.37% only!
03/02/21: Buy Now Pay Later (BNPL) agreements to be regulated by FCA
Coronavirus pandemic has caused a boom in online shopping quadrupling the Buy now pay later agreements in 2020 to £2.7bn with 5 millions people using such products. This un-regulated sector will be brought under strict FCA regulation, following a 4 month review by Chris Woolard, the former FCA Chief Executive. Firms will now to run proper affordability checks prior to approving any agreement.
03/02/21: House prices fall as Stamp Duty holiday end approaches
Nationwide, Britain’s biggest building society, said the average house prices in the UK fell in January (by 0.3% to £229,748) for the first time since June 2020, as the rush in property market following stamp duty announcement begins to settle down. This was also confirmed by annual growth rate ease since June to 6.4% from 7.3%. During an online parliamentary debate on Monday, MPs called for an extension of stamp duty holiday to avoid a collapse in property market.
03/02/21: Chancellor warned to extend furlough or risk mass unemployment
Britain’s most influential business groups and trade unions have warned Chancellor that there is genuine risk of mass unemployment in Britain unless he extends the furlough scheme. Chancellor was updated by industry experts that economy was too fragile to end the furlough scheme as scheduled.
02/02/21: Chancellor set to maintain triple tax lock
Chancellor Rishi Sunak is said to have agreed to maintain the triple tax lock at next month’s Budget, preventing him from raising income, national insurance or VAT. It’s a move that could force him to seek increases in other taxes, including corporation tax and possibly capital gains tax when the budget is delivered on March 3, 2021.
02/02/21: No plan to reduce workers rights
Business Secretary Kwasi Kwarteng has confirmed that the review is no longer happening and there is no plan to reduce workers rights. This has put an end to the fear related to job protection rights like 48-hour week, holiday entitlements and overtime pay. The news of review was reported by FT.
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