Business news 29 February 2024
UK at risk from a further rise in business insolvencies. S&P warns of permanently higher taxes. HMRC customer service plummets to ‘all-time low’. UK property sales forecast to rise by 10%. And more business news that we thought would interest our members.
James Salmon, Operations Director.
Happy Leap Day!
UK at risk from a further rise in business insolvencies
Corporate insolvencies in the UK could increase by 10% this year, according to Allianz. The insurer’s global insolvency outlook revealed that 15% of small and medium-sized businesses in the UK are at risk of going bust, the highest proportion in Europe. This is compared to 14% in France, 9% in Italy, and 7% in Germany. Sectors such as retail, manufacturing, construction, and real estate are particularly vulnerable due to weaker demand and higher borrowing costs. Allianz predicts that as many as 31,000 firms could go bankrupt this year, with a slight decrease to 29,000 in 2025. Global business insolvencies increased by 29% in 2023, the fastest rise since the financial crisis.
S&P warns of permanently higher taxes
A report from credit ratings agency Standard and Poor’s warns that countries worldwide are facing a debt crisis as borrowing reaches unprecedented levels, posing a risk of permanently higher taxes. Governments are struggling to control their finances due to factors such as war, energy subsidies, welfare spending, and high interest rates. Standard and Poor’s forecasts that nations will borrow $11.5trn in long-term debt this year, almost matching the borrowing during the height of the pandemic. The US, China, and the UK are among the major borrowers.
Jeremy Hunt considers scrapping ‘non-dom’ tax status
The Chancellor is considering scrapping the non-domiciled tax regime to fund tax cuts in his Budget next week. Treasury insiders reveal that the move is on a list of revenue-raising options drawn up for Jeremy Hunt and Rishi Sunak, after economic estimates left them with less money than expected for tax cuts or spending pledges. Non-dom tax status allows foreign nationals who live in the UK, but are officially domiciled overseas, to avoid paying UK tax on their overseas income or capital gains. Labour has previously said it would scrap the status and bring in a tighter tax relief for foreigners temporarily in the UK. Observers say if the Conservatives scrapped the regime first it would leave the opposition in a bind when it comes to identifying additional revenue sources. Meanwhile, the FT reports that the Government has been accused of a “shameful” attempt to delay payments to victims of the infected blood scandal to give itself “fiscal wriggle room” for tax cuts in the Budget.
US economy
The US Economy grew by 3.2% in the fourth quarter of 2023, slightly below forecasts of 3.3%, following a 4.9% rate in the third quarter. Private inventories weighed on the GDP figures, although consumer spending and government spending were revised higher.
HMRC customer service plummets to ‘all-time low’
Customer service at HMRC has reached an all-time low, according to MPs, with nearly two thirds of callers waiting over 10 minutes for tax advice. The Public Accounts Committee received an “unprecedented” number of submissions regarding the deteriorating customer services at HMRC with MPs attributing the decline to conscious choices made by HMRC and HM Treasury, including the closure of vital customer support channels and reduced capacity on the helpline. The tax office is pushing taxpayers towards digital services, but accountancy bodies including the Chartered Institute of Taxation have raised concerns about their quality. The PAC also criticised HMRC for pursuing trivial amounts of money from small businesses while failing to target serious criminals. Concerns were raised about the tax office’s approach to IR35 rules, and there has been a significant drop in criminal prosecutions by HMRC. The PAC also noted that MPs, some civil servants and other high-profile figures are having their calls to HMRC answered up to 12 times faster than the general public because they are able to access a “VIP” hotline. HMRC explained that the helpline was for those who need a greater level of protection due to their identity or job.
UK property sales forecast to rise by 10%
UK House Sales were 15% higher in recent weeks than the same period a year ago as mortgage rates started to fall, a new survey has suggested. Zoopla found that agreed sales jumped as demand from buyers was up by 11% and the number of homes for sale 21% higher than a year ago.
Buyers and sellers are returning to the property market, with a predicted 10% increase in home sales this year, according to Zoopla. Agreed sales and buyer demand have both risen, indicating a positive trend. While prices across Britain have fallen by 0.5% year-on-year, regional variations exist, with increases in Scotland, Northern Ireland, Wales, the Midlands, and the north of England, and decreases in the south of England. Affordability issues caused by rising mortgage rates and living costs have impacted buyers in high-priced areas. The Bank of England’s pause in rate increases and faster growth in household incomes have supported market activity. However, lenders are now pulling the cheapest mortgages, and Zoopla predicts mortgage rates of 4-5% for 2024.
British Airways
British Airways owner IAG on Thursday more than doubled annual profit as demand continued to rebound from the effects of the pandemic. Operating profit before exceptional items for the year to December 31 came in at €3.5bn compared with 2022’s €1.24bn and the pre-pandemic figure of €3.25bn.
Firms providing health services at work should get tax breaks
Firms that provide staff with access to counselling, physiotherapy, and flu jabs at work should receive tax breaks, according to a report. The report, produced by the Policy Exchange think tank, suggests that this relief would reward companies for helping to keep Britons healthy and employed. Other recommendations include offering NHS Health Checks in workplaces and lowering the qualifying age for certain areas with high unemployment rates. The report, which has received cross-party backing, aims to reduce the number of people on long-term sick leave, save the NHS money, and decrease the benefits bill. Sickness absence and ill-health among working-age people cost the country an estimated £150bn per year. Last year, 186m working days were lost due to sickness or injury.
Bitcoin
The cyrpto currency had a crazy day yesterday, jumping as much as 13% to take it to its highest since November 2021 at almost $64,000 before coming back down to around $61,000
Latest Insolvencies
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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.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!
Just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
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!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.