23rdJul
News article

FRC urges companies to provide high-quality disclosures on impact of coronavirus

The Financial Reporting Council (FRC) has urged companies to provide more detailed disclosures on the impact the coronavirus (COVID-19) has had on their firm.

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The Financial Reporting Council (FRC) has urged companies to provide more detailed disclosures on the impact the coronavirus (COVID-19) has had on their firm.

In a new review, the FRC stated that although companies provided sufficient information to enable individuals to understand the impact COVID-19 has had on their performance, position and future prospects, some companies would have benefitted from 'more extensive disclosure'.

The Council has reminded companies that they should apply existing accounting policies for exceptional and other similar items to COVID-19-related income and expenditure consistently, and should not arbitrarily split income and expenses between COVID-19 and non-COVID-19 financial statement captions. Companies should also prepare interim reports that provide sufficient information to explain the impact that COVID-19 has had on their performance, position and future prospects, the FRC stated.

Commenting on the matter, David Rule, Executive Director of Supervision at the FRC, said: 'The impact of the COVID-19 pandemic on businesses is pervasive but also differs across sectors, geographies and individual companies.

'This review highlights how important it is for company reporting to explain not only how COVID-19 has affected company performance but also how it might affect a company's future prospects.'

22ndJul
News article

Treasury outlines agenda for modernised digital tax system

The Treasury has outlined the next steps in its plan to create a 'modernised digital tax system fit for the 21st century'.

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The Treasury has outlined the next steps in its plan to create a 'modernised digital tax system fit for the 21st century'.

The Treasury said that HMRC's Making Tax Digital (MTD) initiative will be gradually extended. Currently, businesses above the VAT threshold of £85,000 are required to comply with Making Tax Digital for VAT (MTD for VAT).

From April 2022, the initiative will be extended to all VAT-registered businesses with turnover below the VAT threshold. From April 2023 MTD will apply to taxpayers who file income tax self-assessment tax returns for business or property income over £10,000 annually.

The MTD changes will affect the way that taxes are reported, not the level of tax that is collected. They will help to minimise avoidable mistakes, which cost the exchequer £8.5 billion in 2018/19.

Commenting on the issue, Jesse Norman, Financial Secretary to the Treasury, said: 'We are setting out our next steps on MTD . . . as we bring the UK's tax system into the 21st century.

'MTD will make it easier for businesses to keep on top of their tax affairs. But it also has huge potential to improve the productivity of our economy, and its resilience in times of crisis.'

22ndJul
News article

Claims deadline approaching for first phase of furlough scheme

Coronavirus Job Retention Scheme (CJRS) claims for periods ending on or before 30 June 2020 must be made by 31 July 2020, HMRC has reminded employers.

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Coronavirus Job Retention Scheme (CJRS) claims for periods ending on or before 30 June 2020 must be made by 31 July 2020, HMRC has reminded employers.

Employers and agents must submit all CJRS claims for periods ending on or before 30 June 2020 by 31 July 2020. After this date it will not be possible to make claims for these periods. Employers need to have made a claim on or before 31 July to be able to make a claim for July or future months.

HMRC's calculator can now calculate claims for pay periods in July and August, but the calculation of usual and actual hours for flexibly furloughed employees must be done manually and entered into the calculator.

From 1 August 2020 the scheme will no longer fund employers' national insurance and pension contributions for furloughed employees.

For August, the government will continue to pay 80% of wages, up to a maximum of £2,500 proportional to the hours the employee is furloughed. For September, the government will pay 70% of wages up to £2,187.50, and for October, the government will pay 60% of wages up to a maximum of £1,875. During these months employers will have to top up employees' wages to ensure they receive 80% of their wages up to the £2,500 cap.

In addition, HMRC said that more information on the Job Retention Bonus will be available on 31 July.

The Job Retention Bonus is a one-off payment of £1,000 to employers who have claimed under the CJRS for each furloughed employee who remains continuously employed until at least 31 January 2021.

21stJul
News article

PAC urges government to assess tax reliefs for effectiveness

The Public Accounts Committee (PAC) has called on the government to assess how effective tax reliefs are and whether they achieve their intended objectives.

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The Public Accounts Committee (PAC) has called on the government to assess how effective tax reliefs are and whether they achieve their intended objectives.

In a new report, the PAC said that the government 'knows too little about the tax reliefs it provides', including whether they work or offer value for money. The PAC found that the ten most expensive tax reliefs cost the public purse £117 billion per year, which is equivalent to giving up around 5% of GDP in foregone tax revenues.

The most expensive reliefs, pension reliefs, cost an estimated £38 billion in 2018/19. In the 2020 Budget Chancellor Rishi Sunak announced that he was reforming Entrepreneurs' Relief on the basis that the relief was expensive, ineffective and unfair. The relief cost over £2 billion a year and nearly three quarters of the cost benefited just 5,000 individuals.

The Committee has called for the government to outline clearly the range of UK tax reliefs with their intended objectives so that proper assessment can begin on whether the reliefs achieve what they're meant to achieve.

Commenting on the issue, Meg Hillier, Chair of the PAC, said: 'Every Budget we get tax breaks announced like baubles hung on a tree and they generate great headlines, but the truth is the government has little clue about the value of an enormous cost to the public purse.

'Tax breaks are not freebies – they cost the public purse hundreds of billions of pounds in lost income. The government must know who they benefit and to what end.'

21stJul
News article

Lockdown has 'negatively impacted young people's labour market outcomes'

The coronavirus (COVID-19) lockdown has negatively affected young people's labour market outcomes, according to a report published by the Institute for Fiscal Studies (IFS).

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The coronavirus (COVID-19) lockdown has negatively affected young people's labour market outcomes, according to a report published by the Institute for Fiscal Studies (IFS).

The report, which was funded by the Turing Institute, found that the COVID-19 pandemic threatens to 'severely disrupt' young workers' career progression. It also suggested that the economic impacts of the pandemic on young workers may last well beyond the easing of the lockdown.

The report revealed that over the last decade, young people starting out in the labour market have increasingly been working in low paid occupations, including sectors hardest hit by COVID-19.

The IFS has called for the government to focus on the challenges facing the young in regard to finding work following the lockdown.

'Even a normal recession can be especially damaging for young workers as, for example, hiring freezes disproportionately affect those coming into the labour market and those who would otherwise be climbing the jobs ladder,' said Agnes Norris Keller, Research Economist at the IFS.

'The recession associated with the COVID-19 pandemic threatens to be doubly bad for early-career workers because the particular sectors being hardest hit are very disproportionately likely to employ them.'

20thJul
News article

Business groups cautious on easing of lockdown restrictions

Businesses groups have given a cautious response to the easing of lockdown restrictions in England announced by Prime Minister Boris Johnson last week.

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Businesses groups have given a cautious response to the easing of lockdown restrictions in England announced by Prime Minister Boris Johnson last week.

Josh Hardie, Deputy Director General at the Confederation of British Industry (CBI), said: 'Businesses know the return to offices must not risk an infection spike. Firms can be knocked down once, not twice. This announcement marks a welcome change in tone, but changing behaviour and confidence will take time.

'Close collaboration between government, employers and unions – alongside excellent employee engagement and continued improvements in childcare, transport and testing – will be the building blocks for success.'

Edwin Morgan, Director of Policy at the Institute of Directors (IoD), said: 'Businesses need to balance the risks and won't want to increase the possibility of closures down the line by rushing back.

'On top of this, not everything is in a company's control. Childcare is an issue for many employees, and even if the guidance is changed, some staff who use public transport will still be concerned.'

Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said: 'Small firms are being tasked with consulting employees and putting the right measures in place to ensure a safe return to work. After weeks of little or no income, they will need help – both funding and advice – to make that happen. Small businesses want to do the right thing and need support to do so.

'The Prime Minister should also recognise that, while most small businesses have been helped by emergency measures, many have not. We need to know how company directors and the newly self-employed, left stranded for more than 100 days, will be supported in future.'

20thJul
News article

Credit card spending fell significantly at start of coronavirus lockdown, data reveals

Data published by UK Finance has revealed that spending via credit cards fell by 50% in the first month of the coronavirus (COVID-19) lockdown.

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Data published by UK Finance has revealed that spending via credit cards fell by 50% in the first month of the coronavirus (COVID-19) lockdown.

The value of credit card transactions fell to £8.7 billion in April 2020, half the value when compared to April 2019.

UK Finance said that limited opportunity to spend in shops due to the COVID-19 lockdown was partly to blame. However, many card transactions were made online during April: 34.3% of the total value of debit and credit card transactions was made online, up from 29.6% in 2019. 

Spending on debit cards 'remained robust', UK Finance found. The total value of debit card transactions in April 2020 rose by 0.9% when compared to April 2019, despite the number of debit card transactions in April 2020 being 5.1% lower than in April 2019.

'The COVID-19 crisis has significantly changed how, where and when people spend their money,' said Eric Leenders, Managing Director of Personal Finance at UK Finance.

'The banking and finance industry has put in place a number of measures to help customers adapt to this new economic environment and pay in a way that suits them. This includes increasing the contactless limit to £45 and offering deferrals on credit card repayments.'

17thJul
News article

Chancellor asks OTS to review capital gains tax

Chancellor Rishi Sunak has asked the Office of Tax Simplification (OTS) to carry out a thorough review of capital gains tax (CGT).

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Chancellor Rishi Sunak has asked the Office of Tax Simplification (OTS) to carry out a thorough review of capital gains tax (CGT).

In a letter to the OTS, the Chancellor requested that the independent office review CGT and aspects of the taxation of chargeable gains in regard to individuals and small businesses.

Mr Sunak requested that the review identifies and offers advice on the opportunities to simplify the taxation of chargeable gains to 'ensure the system is fit for purpose'.

In the letter, the Chancellor said that he would be interested in proposals from the OTS on the regime of allowances, exemptions, reliefs and the treatment of losses within CGT, in addition to the interaction of how gains are taxed compared to other types of income.

The OTS has published a call for evidence in the form of an online survey, which seeks views on CGT. The OTS wants to hear from businesses, individuals, professional advisers and representative bodies about which aspects of CGT are complex and difficult to get right, as well as suggestions on how the tax can be improved.

More information on the survey can be found here.

17thJul
News article

Coronavirus borrowing now over £46 billion

UK businesses have now borrowed over £46 billion through the government-backed schemes that are helping firms during the coronavirus (COVID-19) crisis, according to the latest figures from the Treasury.

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UK businesses have now borrowed over £46 billion through the government-backed schemes that are helping firms during the coronavirus (COVID-19) crisis, according to the latest figures from the Treasury.

In total, £46.3 billion has now been lent to over 1.1 million businesses through either the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) or the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The BBLS remains the most widely used of the support schemes available, with over £31.7 billion lent to more than a million businesses. The BBLS allows small businesses adversely affected by the pandemic to apply for up to £50,000, with the government guaranteeing 100% of the advance.

Lenders have provided £11.9 billion to 54,500 businesses through the CBILS, while loans of £2.7 billion have been approved to over 400 mid-sized and larger UK businesses through the CLBILS.

Commenting on the figures, Stephen Pegge, Managing Director of Commercial Finance at UK Finance, said: 'This significant level of support demonstrates the clear commitment from the banking and finance industry to help businesses get through these tough times.

'This sits alongside the broad package of measures from the industry including commercial lending, capital repayment holidays, extended overdrafts and asset-based finance, ensuring that businesses can receive the right support that suits their needs.'

16thJul
News article

Three quarters of businesses not ready for end of Brexit transition period

Three quarters of UK businesses are not fully prepared for the end of the Brexit transition period, according to a survey conducted by the Institute of Directors (IoD).

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Three quarters of UK businesses are not fully prepared for the end of the Brexit transition period, according to a survey conducted by the Institute of Directors (IoD).

Nearly half of the 978 company directors polled in late June said they have not been able to prepare. One in seven said that the coronavirus (COVID-19) has negatively impacted preparations, while a third said that a lack of clarity on a deal between the UK and the EU was preventing changes.

Over two thirds of directors said that reaching a deal was important for their organisation.

Amongst those directors that favour being able to diverge from EU rules, 71% agreed that securing a deal is important for the economy.

Commenting on the survey, Jonathan Geldart, Director General of the IoD, said: 'A commitment to some form of reciprocal phasing-in of changes once clear is a long-standing ask from our members, and the benefits would be significant. At a time when government is rightly straining every sinew to help firms deal with widespread disruption, it would be counterproductive not to seek to minimise it at the end of the year.'