Business news 24 November 2022

James Salmon, Operations Director.

EU Court of Justice reverses anti-money laundering rules. Positive outlook for UK SMEs. Made.com went bust owing £187m. More rate hikes needed to control inflation. Tax take rises 30% in five years.  And more business news.

EU Court of Justice reverses anti-money laundering rules

Several EU countries have started closing their public beneficial ownership registers after the Court of Justice of the European Union (CJEU) ruled that providing the general public with access to information on beneficial ownership constitutes a serious interference with fundamental rights. The case was sent to the CJEU from a Luxembourg court after challenges to the Luxembourg Business Registers, which disputed the compatibility of this provision with the right to privacy.

Maíra Martini, corrupt money flows expert at Transparency International, said: “Access to beneficial ownership data is vital to identifying – and stopping – corruption and dirty money… At a time when the need to track down dirty money is so plainly apparent, the court’s decision takes us back years.”

Others, including the Tax Justice Network, also denounced the ruling. “By requiring corporations and offshore entities to publicly disclose who truly owns them, public beneficial ownership laws are designed to prevent their owners from escaping the rule of law, which can mean preventing billionaires from evading tax as well as preventing sanctioned oligarchs, organized crime and human traffickers from laundering money and financing illegal activity,” the London-based advocacy group said.

However, Mishcon de Reya lawyer Filippo Noseda, who represented one of the appellants, said the ruling was a “victory for data protection and the rule of law in an extremely politicised context.”

Positive outlook for UK SMEs

The SME Outlook Report 2022 from digital business lender Fleximize has found that most the majority of SME owners in the UK consider themselves financially resilient but say they will be seeking ways to reduce costs and considering lending options. Peter Tuvey, Chief Executive Officer at Fleximize, stated: “Given that the UK is currently in a recession and a cost-of-living crisis, it’s positive to see that SME outlook remains optimistic. However, despite their optimism, SMEs are acutely aware that they will have to take steps to continue to thrive within the current economic climate, and more support will be needed from private and public organisations across the country.”

Made.com went bust owing £187m

Documents from Made.com administrators PwC show the furniture retailer collapsed into administration owing a total of £186.6m to unsecured creditors, including about 12,000 customers and suppliers. Customers were owed £17.1m, PwC said, advising those affected to check their debit and credit card purchase protection agreements. PwC has said it only expects to pay out 1.6p in the pound to those creditors after satisfying Made.com’s main lender, Silicon Valley Bank, and its preferred creditors, which include employees and HMRC, which is owed £3.6m.

Pill: More rate hikes needed to control inflation

The Bank of England’s chief economist Huw Pill said on Wednesday that further increases to the Bank of England’s base rate will be needed to tame inflation. Mr Pill said that the shrinking workforce represented one of two severe inflationary shocks to hit the economy, alongside a shortage of natural gas. However, the increases are unlikely to take the rate up to the 5.25% predicted by some economists. Pill told an audience at the Institute of Directors: “I do not anticipate the levels of bank rate priced in financial markets when the forecast’s conditioning assumptions were frozen will be required.”

Tax take rises 30% in five years

HMRC collected £757bn in taxes in the year to 31 October 2022, up from £584bn in 2015/16, official figures show. After rising by 30% over the five year period, taxes are set to soar further following Chancellor Jeremy Hunt’s Autumn Statement last week. The Office for Budget Responsibility (OBR) estimates the tax burden is on course to hit its heaviest level since WWII with total government national account tax revenues expected to top £1tn in three years. The tax hikes risk harming investment levels further, analysts say. “Maintaining UK tax competitiveness will now be more important than ever… If the UK were able to stimulate business investment back to pre-pandemic levels, it would generate an estimated £11bn to the economy,” Jon Richardson, head of tax policy, PwC, said. Elsewhere, Paul Falvey, tax partner at BDO, believes simplification of the tax system would help: “The sad reality is that the tax system lacks coherence. New taxes and reliefs are overlaid on existing measures, with complex rules bolted on to prevent avoidance. The result is a system of such dizzying complexity it’s hardly surprising that so many businesses and individuals get it wrong.”

Hunt says he’s ‘very concerned’ about tax burden

Jeremy Hunt told the Treasury Select Committee on Wednesday that he is “very concerned” about the UK’s soaring tax burden acknowledging that “if taxes are too high it makes it difficult to be a modern, dynamic economy”. But the Chancellor also defended his tax hikes, arguing they were necessary to pay for government spending during the pandemic. “It’s not something anyone would wish for, but I would say if you look at what the OBR are saying, if you look at what the OECD are saying, the primary cause for the economic challenges we face are the two big shocks of the pandemic and an energy crisis.”

PM backs down in battle with Bank of England over financial regulation

Rishi Sunak has bowed to pressure from the Bank of England and U-turned on his bid to introduce new powers allowing ministers to over-rule City regulators. The Treasury confirmed on Wednesday evening that it would “not proceed with the intervention power at this time”, noting that the Government was “committed” to the independence of City watchdogs, which include the Financial Conduct Authority. “Having consulted further we are of the view that the existing provisions in the bill are currently sufficient and will already allow us to seize the opportunities of Brexit by tailoring financial services regulation to UK markets to bolster our competitiveness,” the City minister, Andrew Griffith, said in a statement on Wednesday. But the climbdown sparked an immediate backlash from Tory backbencher Jacob Rees-Mogg. The former business secretary said: “This is a loss of democratic accountability. The power exists to override the Bank of England in extremis and it is a sensible emergency provision to deal with over mighty regulators, I am surprised the Government has backed down.”

Hunt wants Britain to cut energy usage by 15%

The UK Chancellor Jeremy Hunt has claimed Britain must cut its energy usage by 15% in order to reduce the country’s exposure to Vladmir Putin’s actions in Ukraine. Mr Hunt said households would save themselves around £500 in the years to come if they hit that target and that people “need people to change their behaviour.” Answering questions from MPs, Mr Hunt also said the current Energy Bills Support Scheme was projected to cost up to £120bn and that it would be removed in the spring of 2024. His comments come as new figures show the recent cold weather has increased the UK’s peak energy demand by 33% in two weeks.

Hospitality bosses say rail strikes will devastate business

Pubs and restaurants could lose £1.5bn in sales as a result of walkouts by the Rail, Maritime and Transport workers union (RMT) just days before Christmas, hospitality bosses have said. Kate Nicholls, chief executive of UK Hospitality, said the strikes will be devastating for a sector already facing soaring bills, staff shortages and a cost of living crisis.

UN agrees global tax rules resolution

Members of the United Nations agreed on Wednesday on a new resolution giving the body a mandate to kickstart intergovernmental talks on tax. The resolution was put forward by the African Group of states and will ultimately give the UN the authority “to monitor, evaluate and decide global tax rules”, according to the Tax Justice Network. Commenting on the development, Thabo Mbeki , the former president of South Africa, said: While the OECD has played an important role in these areas, it is clear after 10 years of attempts to reform international tax rules that there is no substitute for the globally inclusive and transparent forum provided by the United Nations.”

Markets & Scotland

Sterling strengthened and markets picked up after the Supreme Court ruled that Scotland’s devolved parliament cannot pass a law calling for a referendum on independence without the approval of Westminster.US markets rose overnight after the FED indicated for rate hikes to slow.

Royal Mail

Royal Mail said it has made its “best and final offer” to staff as they seek to resolve the long-running dispute over jobs, pay and conditions. Members of the Communication Workers Union have held a series of strikes in recent weeks which the company’s owner, now known as International Distributions Services, said has cost it £100 million.

Energy

The European Commission proposed a cap €275 per megawatt-hour for gas. They also proposed speeding up the rollout of renewable energy to reduce the reliance on gas.

Why should you become a CPA member!

The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.

Get compensated for previous late payments

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You put up with the PAIN – now claim the GAIN!

Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.