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Category: Industry Updates (page 16 of 18)

Government expands aid for start-ups and innovators

June 28, 2020

The government has expanded its COVID-19 support for start-ups and innovative companies with the launch of a new fund.

On 27 June the government announced the Sustainable Innovation Fund (SIF), which is aimed at helping businesses to keep ‘cutting edge’ projects and ideas alive during the pandemic.

The SIF will make almost £200 million available to UK companies that are developing new technologies in certain areas. These include making homes and offices more energy efficient, creating ground-breaking medical technologies, and reducing the carbon footprint of public transport.

The government is asking research and development-intensive businesses to apply for the funding.

Bank of England increases stimulus package for UK economy

June 19, 2020

On 18 June, the Bank of England increased the stock of purchases of UK government bonds by an additional £100 billion to help boost the UK economy following the coronavirus (COVID-19) pandemic. The £100 billion in additional quantitative easing funds takes the total to £745 billion.

The MPC also voted to cut the cost of borrowing to a record low of 0.1%. The Committee admitted it is ‘hard to draw conclusions about the UK’s recovery prospects’ and stated that extra stimulus is needed to help boost the UK economy and push inflation.

The MPC said:

“The unprecedented situation means that the outlook for the UK and global economies is unusually uncertain.

It will depend critically on the evolution of the pandemic, measures taken to protect public health, and how governments, households and businesses respond to these factors.

Inflation is well below the 2% target and is expected to fall further below it in coming quarters, largely reflecting the weakness of demand.”

MPs open inquiry into £155 billion of tax reliefs

June 17, 2020

The Public Accounts Committee (PAC) has opened an inquiry into the UK’s management of £155 billion of tax relief.

The inquiry follows the February publication of a National Audit Office (NAO) report that identified over 300 such tax interventions, totalling £155 billion per year.

The NAO raised concerns about the effectiveness of management of tax expenditures by the Treasury and HMRC.

It found that there is no formal framework governing the administration or oversight of tax expenditures.

The NAO said that although the Treasury and HMRC have begun steps to increase their oversight of tax expenditures and more actively consider their value for money, these will not be enough on their own to address concerns.

Commenting on the inquiry, John Cullinane, Tax Policy Director at the Chartered Institute of Taxation, said:

“We greatly welcome the PAC taking up this important issue.

Governance of tax reliefs in the UK is not systematic or proportionate to their value or the risks they carry. There is a mismatch between the significant effort in government and to an extent Parliament that rightly goes into new tax measures, and the relative lack of attention to how effective those measures prove over time. This is particularly the case with tax expenditures.

Unless HMRC and the Treasury actively monitor the use and impact of tax reliefs, and act promptly to analyse increases in their costs, we cannot assume that these reliefs will be value for money.” Continue reading...

UK sets out post-Brexit tariff regime

June 17, 2020

The UK government published its plans for a new import tariff regime following the end of the Brexit transition period.

Following its departure from the EU, the UK has the ability to set its own rules and charges.

The scheme includes the abolition of tariffs on imports worth over £30 billion, although economists say the impact on the cost of living will be small.

Some tariffs will be maintained on imported items such as beef and cars to protect British producers. Other items will have tariffs simplified, and expressed in pounds instead of euros.

Josh Hardie, Deputy Director General at the Confederation of British Industry (CBI), said:

‘The new tariff scheme will provide businesses with much-needed clarity on post-Brexit trade. Simplifying the system, scrapping tariffs under 2%, reducing duties on sustainable products are all things firms can work with.

‘Sticking closely to many existing tariff levels will give other countries incentive to agree trade deals with the UK.

‘However, businesses will need time to assess the detail, and ensuring there’s a system in place to address issues as they arise will be critical. Crucially, firms’ number one priority is for the government to strike a deal with the EU and ensuring continuity of existing trade deals.’ Continue reading...

Changes to insolvency and company law going through Parliament

June 17, 2020

The government is making changes to insolvency and company law as a result of the COVID-19 pandemic.

The Corporate Insolvency and Governance Bill outlines that struggling companies will be given extra time to consider rescue plans presented to them. As part of the changes, companies will have 20 business days to consider a rescue plan, which can be extended to 40 days at the discretion of creditors or the Court.

The Bill stipulates that a company will remain under the control of directors; however, the insolvency process must be overseen by a licensed insolvency practitioner.

Additionally, restructuring plans have been introduced in the Bill, which will bind creditors and allow the insolvency process to adjust as the COVID-19 pandemic changes.

Colin Haig, President of insolvency trade body R3 said:

‘This Bill represents the biggest change to the UK’s insolvency and restructuring framework for almost 20 years.

‘The measures contained in this Bill will support the profession’s efforts to help businesses navigate the enormous economic damage caused by the pandemic.’

COVID-19: delay to VAT reverse charge on construction services

June 10, 2020

On 5 June 2020, HMRC announced a five-month delay to the introduction of the domestic VAT reverse charge for construction services, due to the impact of the COVID-19 pandemic on the sector.

The change will now apply from 1 March 2021 and will overhaul the way VAT is payable on building and construction invoices as part of moves to reduce fraud in the sector. Under the domestic reverse charge, the customer receiving the service must account for the VAT due on these supplies on their VAT return, instead of paying the VAT to the supplier..

The change was originally scheduled to come into effect from 1 October 2019, but was then deferred for 12 months, after industry bodies highlighted concerns about lack of preparation and the impact on businesses.

Now the start date has been put back from 1 October 2020 to 1 March 2021.

There will also be an amendment to the original legislation. Businesses are excluded from the reverse charge on relevant supplies where they are end users, or intermediary suppliers. If so they must inform their subcontractors, in writing, that they are end users or intermediary suppliers.

HMRC says the additional amendment is designed to make sure both parties are clear whether the supply is excluded from the reverse charge. It reflects recommended advice published in HMRC guidance and brings certainty for subcontractors as to the correct treatment for their supplies. Continue reading...

Chancellor announces changes to Job Retention Scheme

June 5, 2020

Chancellor Rishi Sunak has announced changes to the government’s Coronavirus Job Retention Scheme (JRS), which will be slowly wound down between July and October.

The changes mean businesses will be able to bring furloughed employees back on a part-time basis from 1 July.

Furloughed staff will continue to get 80% of their salary until the scheme finishes at the end of October. However, employers will be expected to gradually contribute more towards furloughed employees’ salaries.

The taxpayer contribution will remain at 80% during August but employers will have to pay national insurance and employer pension contributions.

In September, employers will be asked to start paying 10% towards people’s wages, which will rise to 20% in October.

JRS closes to new entrants from 30 June, but more critically, 10 June is the last date by which an employee can be put on furlough for the first time.

Dame Carolyn Fairbairn, Director-General at the Confederation of British Industry, said:

‘Introducing part-time furloughing as more stores and factories start to open will help employees to return to work gradually and safely. Many more businesses will feel supported during this vital restart phase.

‘Firms understand the scheme must close to new entrants at some point and that those using it in future will need to make a contribution to help manage the costs. Continue reading...

Coronavirus Statutory Sick Pay Rebate Scheme goes live

June 1, 2020

On 26 May 2020, HMRC opened up its Statutory Sick Pay (SSP) rebate claim service.

Eligible employers are able to recoup up to two weeks’ worth of SSP payments made to employees off work for COVID-19-related reasons since 13 March 2020 (16 March 2020 if the employee was shielding). This is an ongoing scheme for which an end date has not yet been announced.

The scheme is potentially worth up to £191.70 per employee that an employer has made SSP payments to for COVID-19-related reasons.

For the purposes of making a claim, it does not matter whether the employee was displaying symptoms themselves or was living with someone who was displaying symptoms. It also does not matter whether the employer topped up their earnings (although only the SSP element is eligible for the rebate).

A rebate cannot, however, be claimed in relation to employees who were furloughed at the time of illness or absence, and for whom the separate Coronavirus Job Retention Scheme grant was claimed.

Employers will be eligible for an SSP rebate if they had a Pay as You Earn (PAYE) scheme as of 28 February 2020, and (along with any connected employer) employed fewer than 250 employees as at that date. Employers must also be within their State Aid limits under the EU Commission temporary framework.

FCA confirms further support for consumer credit customers

May 30, 2020

The Financial Conduct Authority (FCA) has confirmed further support for users of certain consumer credit products if they are experiencing temporary payment difficulties due to the coronavirus pandemic.

The measures outline the options firms will provide for credit card, revolving credit and personal loan customers who are coming to the end of a payment freeze. They also outline options for customers who have agreed an arranged interest-free overdraft of up to £500.

In addition, customers yet to request a payment freeze or an arranged interest-free overdraft of up to £500 will have until 31 October 2020 to apply for one.

According to UK Finance, its members have offered over 27 million interest-free overdrafts, provided 992,400 payment deferrals on credit cards and 686,500 payment deferrals on personal loans during the pandemic.

Christopher Woolard, Interim Chief Executive at the FCA, said:

“Since the coronavirus crisis began, we have made support available for those borrowers financially affected by the pandemic.

For those who are now in a position to restart payments, it will be in their best interests to do so. But for those who still need it, the package we are confirming today ensures there is help and further support.”

Loan size increased to £200 million under large business interruption scheme

May 28, 2020

Several changes to the CLBILS scheme have taken effect from 26 May. The government has extended the maximum loan size available through the Coronavirus Large Business Interruption Loan Scheme (CLBILS) from £50 million to £200 million.

However, companies borrowing more than £50 million through the CLBILS will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. This will include a ban on dividend payments and cash bonuses, except where they were previously agreed.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

‘It is good to see the government continue to listen to business concerns and make improvements to existing schemes.

‘These important changes could make a real difference to larger firms in particular, and alongside the other lending support schemes will help ensure that more businesses of all sizes get access to the finance they need to help weather this unprecedented economic storm.’

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