News in brief
22 September 2020: Joint Insolvency exams to go ahead; new Companies House powers proposed; FRC finds KPMG breaches in Carillion audit; rail franchising scrapped and support boosted; UK firms return £215m in CJRS payments; London curfews could cost £2bn annually.
The 2020 Joint Insolvency Examinations, administered by ICAEW, will proceed in November, the Joint Insolvency Board has announced. Additionally, the period to register for the 2020 examinations has been extended until 30 September. If government lockdown restrictions change and the exams do not go ahead, all examination fees will be refunded or transferred without extra charge to the 2021 examination, the Board confirmed.
New government proposals will give Companies House extra powers in order to improve corporate transparency and tackle financial crime. Under the proposals, it will be able to require evidence of checks carried out by regulated professional service providers submitting information on behalf of clients, and will have the powers to query, investigate and remove false information. Identity verification checks for all directors, people with significant control and those filing information on behalf of a company were also proposed, according to Transparency International UK.
The Financial Reporting Council’s investigation into the 2018 collapse of Carillion has revealed several breaches made by auditor KPMG. The accountancy watchdog delivered an initial report into the construction company’s collapse, examining its audit for the period 2014 to 2017. It is waiting for KPMG’s response to the report before deciding whether to continue with the enforcement case, City A.M reported.
The government has scrapped rail franchising and revealed plans to extend support for train firms. The decisions follow a fall in passenger numbers, resulting in £3.5bn of taxpayer money being used to make up the shortfall. Following the Department for Transport’s call for more support, emergency measures to cover the losses have been extended by 18 months. Ministers are also considering adopting a concessions-based system, where train firms are paid a fixed fee to run services, effectively replacing rail franchises, according to the BBC.
UK firms have voluntarily returned more than £215m to the government in furlough scheme payments they did not need or took in error. Around 80,433 employers returned cash they were given to help cover workers' salaries. Officials believe £3.5bn of the £35.4bn claimed under the scheme could have been paid out in error or to fraudsters, the BBC reported.
Introducing 10pm curfews in London could cost the City more than £2bn annually, a new report has revealed. The Centre for Economics and Business Research think tank found that enforcing the same curfews that are being applied elsewhere in the UK in the Capital would reverse the country’s economic recovery. New lockdown restrictions will dent the British economy by more than £250m a day and cause GDP to sink 3% to 5% in the final three months of the year compared to the third quarter, City A.M reported.
21 September 2020: UK retail sales climb for fourth consecutive month; John Lewis scraps annual staff bonus; UK banks launch carbon coalition; FCA considers overseas cannabis company listings.
British retail sales have increased for the fourth consecutive month, boosted by spending on household goods and DIY. According to official figures from the Office for National Statistics, retail sales volumes rose by 0.8% between July and August, and are now 4% higher than in February, when the pandemic was declared.
John Lewis has scrapped its annual staff bonus for the first time in 67 years after issuing warnings it could record its first ever annual loss since the employee-owned business was set up in 1920. The Guardian reports that the retail group dropped £635m into the red in the first half of the year - the majority of which relates to a one-off charge, as the group wrote nearly £500m off the value of its department stores.
The Insolvency Service has confirmed it will accept requests for cheque payments with immediate effect. The service was shelved in the wake of the COVID crisis, but in a statement the Insolvency Service said it was reopening its offices and can now print cheques on a limited basis. The agency will only accept requisitions sent from an email account that has been authorised by a licensed insolvency practitioner.
A number of UK banks have launched a coalition aiming to standardise carbon accounting in the UK financial services industry. The Partnership for Carbon Accounting Financials, which includes Natwest, Lloyds Banking Group, Investec and Nationwide, claims that its open-source, free-of-charge initiative will allow banks to access the greenhouse gas emissions of their lending books and portfolios and help align their strategies with the Paris Climate Agreement.
The Financial Conduct Authority is consulting in its approach to overseas cannabis-related companies interested in listing in the UK. In a statement, the regulator said the consultation had been launched in response to queries from the industry but believes there may be a risk the proceeds from overseas medicinal cannabis business may constitute ‘criminal property’ for the purpose of the Proceeds of Crime Act 2002.
18 September 2020: FRC fines Deloitte £15m over Autonomy; next Wales Audit Office chair named; New Zealand falls into recession; OECD urges government to focus on new jobs.
The Financial Reporting Council (FRC) has fined Deloitte £15m and two audit partners £500,000 and £250,000 respectively, following an investigation into the audit of Autonomy. An investigation into the audit of the published financial reporting of Autonomy Corporation Plc between January 2009 and June 2011 found evidence of misconduct on the part of the Big Four firm, Richard Knights and Nigel Mercer, the FRC announced. It also handed out severe reprimands to Deloitte and Mercer.
Lindsay Foyster has been confirmed as the new Chair of the Wales Audit Office. She was recommended for the position of Chair by the Finance Committee and her term will run from 17 October 2020 until 15 March 2023, the Wales Audit Office announced.
New Zealand has collapsed into its deepest recession since 1987, following strict COVID-19 lockdown measures and border closures. The country's GDP shrank by 12.2% between April and June, despite its pandemic response being highly praised. Government officials say they hope "going hard and early means that we can come back faster and stronger”, the BBC reported.
The OECD has urged governments to adopt more targeted measures to support their economies by helping people find new jobs now the initial wave of the pandemic has passed. It praised countries’ initial blanket response of state support and raised its economic forecasts for 2020 as economies rebounded faster than expected once lockdowns were lifted.
17 September 2020: guidance on capital gains tax 30-day reporting; inflation rate at five-year low; NAO launches procurement investigations of furlough fraud; 19% unaware of their pension conditions.
ICAEW’s Tax Faculty has published new guidance on capital gains tax 30-day reporting and the digital service for reporting disposals to HMRC. According to the Tax Faculty’s guide, a new requirement for UK residents to report and pay capital gains tax on disposals of UK residential property within 30 days was introduced in April 2020, although non-residents have had an obligation since 2015.
The UK's inflation rate fell sharply to a five-year low of 0.2% in August, according to new data from the Office for National Statistics. The drop was the effect of the Eat Out to Help Out scheme which pushed down restaurant prices, as well as the VAT cut in the hospitality sector from 20% to 5%, the BBC reported.
The National Audit Office (NAO) says auditors have launched inquiries into procurement processes amid growing reports of furlough scheme abuse. Gareth Davies, NAO comptroller and auditor general, said there had been a lack of transparency and possible conflicts of interest where handing out coronavirus contracts was concerned. He added that the government must introduce new checks for fraud if furlough scheme measures are to be extended or introduced in a second wave of the virus, the Guardian reported.
Nearly one in five (19%) workplace pension holders have ‘no idea’ what happens to their pension contributions, new research from Royal London says. The survey, which coincides with Pensions Awareness Week, also revealed 11% think their pension is saved in a bank account. In response to the troubling figures Royal London is launching a campaign aimed at lowering the engagement gap.
16 September 2020: new chair of UKEB appointed; British car industries warn of £101.5bn no-deal hit; UK unemployment rate rises; PwC sets 2030 zero carbon emissions goal.
The Government has today appointed Pauline Wallace as the inaugural chair of the UK Accounting Standards Endorsement Board (UKEB). The UKEB was set up to oversee international accounting standards for the UK when the Brexit transition period is complete, according to Gov.uk. “I am delighted to have the opportunity to lead the UKEB as it undertakes this important task and to ensure that the UK continues to play a key role in the development of these standards globally,” Wallace said.
Europe and Britain’s car industries have warned a no-deal Brexit could spark a €110bn (£101.5bn) black hole in trade over the next five years. A joint statement by 23 auto industry associations – including Britain’s Society of Motor Manufacturers and Traders and the European Automobile Manufacturers’ Association – has called on negotiations to secure a deal, or risk tariffs making vehicles more expensive. Up to 3 million vehicles could cease to enter manufacture, costing UK plants £52.8bn and EU production sites €57.7bn, City A.M reported.
The UK unemployment rate has risen to its highest level for two years. It increased to 4.1% in the three months to July, compared with 3.9% previously, new data from the Office for National Statistics showed. Those aged 16 to 24 saw the biggest drop with 156,000 fewer young people in employment in the three months to July than the previous quarter, the BBC reported.
PwC has pledged to reach net zero carbon emissions by 2030. The Big Four firm plans to cut absolute emissions by 50% and offset the remainder in order to achieve its goal, slashing business travel and increasing its use of zero carbon energy. Emissions associated with flights alone currently represent around 85% of PwC's carbon footprint, according to BusinessGreen.
15 September 2020: HMRC letters advise VAT-registered businesses on EU trade; Russia amends double-tax agreement with Cyprus; CBI calls for green jobs to aid economy; UK borrowing forecasts may drop.
HMRC has sent guidance letters to VAT-registered businesses in Great Britain that are trading with the EU, or the EU and the rest of the world. The letters explain what businesses need to do to prepare for new processes for moving goods between Great Britain and the EU from 1 January 2021. Actions include ensuring they have a UK Economic Operator Registration and Identification number, deciding how they will make customs declarations and checking if their imported goods are eligible for staged import controls, a government press release said.
Russia's Ministry of Finance has announced that it has signed a protocol to amend its double tax agreement with Cyprus. The protocol will increase the withholding tax at source to 15% for dividends and interest income. The provisions are expected to apply from January 2021. Cyprus has agreed to maintain a zero withholding tax on royalty payments, according to Tax-News.com.
CBI director general Carolyn Fairbairn will call on the government to create more green jobs in order to help the UK economy recover from COVID-19. As part of launching the CBI’s Green Recovery Roadmap, Fairbairn is expected to promote a boost in productivity that would be brought about by focusing on sourcing cleaner ways to heat UK homes and businesses and funding sustainable aviation fuels, the Guardian reported.
Forecasts for the UK’s overall level of unserviceable borrowing are expected to drop from more than £100bn to approximately £70bn. The Recapitalisation Group is a panel headed by the former Aviva chairman Sir Adrian Montague. It is expected to reduce its forecast, attributed to the UK economy rebounding faster than expected and supported by findings from the Bank of England and Office for Budget Responsibility, according to Sky News.
14 September 2020: UK secures free trade deal with Japan; MPs call for CJRS to be extended; NASA looks for commercial provider to “mine the moon”; Fraser named first female Wall Street bank CEO.
The UK has secured its first major trade deal as an independent trading nation. The free trade deal with Japan is expected to increase trade with the country by an estimated £15.2bn. It will also increase UK job creation and economic growth. UK businesses will benefit from tariff-free trade on 99% of exports to Japan, according to a government press release.
The Treasury Select Committee has called for a targeted extension of the government’s furlough scheme. MPs have warned that several firms may go under without continued support and that there is a higher risk of long-term unemployment in the UK. However, it added that a blanket retention of the scheme would not be good value for money, the BBC reported. The Coronavirus Job Retention Scheme is due to end on 31 October.
NASA is looking to buy lunar soil from a commercial provider as part of a technology development programme. It announced it is seeking private companies to mine the moon and would pay between $15,000 and $25,000 for 50 to 500 gram samples. A NASA administrator said, “we do believe we can extract and utilize the resources of the moon, just as we can extract and utilize tuna from the ocean,” the Guardian reported.
One of America’s largest financial institutions, Citigroup, has announced that executive Jane Fraser will take over as its next CEO in February. In doing so, Fraser – who is Scottish-born and started her career at Goldman Sachs in London – will become the first woman to lead a Wall Street bank. She will replace current chief executive Michael Corbat, according to Sky News.