Business news 29 June 2023
James Salmon, Operations Director.
HMRC accused of profiteering from late payments. Rising interest rates. Over 1.4m UK households face mortgage repayment rises. Chancellor tells regulators to increase scrutiny of suppliers. And more business news that we thought would interest our members.
HMRC accused of profiteering from late payments
HMRC has been accused of profiteering from self-employed workers over the rate it charges on late payments. Analysis shows that while taxpayers have been charged 7% on late payments, those who are owed a refund from HMRC receive interest of just 3.5%.
Julia Kermode, founder of IWORK, said: “HMRC is profiteering from self-employed workers at the worst possible time. Hundreds of thousands of people are being hit with needlessly high interest on late payments. All the while, HMRC gives itself an easy ride, paying half of the amount of interest that it charges. It’s unbelievably unfair.”
Emma Rawson, technical officer for the Association of Taxation Technicians, said: “HMRC’s justification for the difference in rates is that it is in line with the policy of other tax authorities worldwide.” She added that “at a time when taxpayers are really feeling the squeeze, it feels unfair to have such a big difference in HMRC’s favour.”
Martin McTague, national chair of the Federation of Small Businesses, said: “It’s hard not to see this as an imbalance that penalises small businesses and the self-employed, who often operate on razor-thin margins.” He added: “From a principled standpoint, HMRC should maintain a common interest rate whether it’s money flowing in or out of its coffers, embracing fair play rather than double standards.”
Bailey: BoE had to make a ‘strong move’
Governor Andrew Bailey says the Bank of England had to make a “strong move” on rates after inflation fell less than expected. The Bank last week increased rates from 4.5% to 5% after the Office for National Statistics revealed that inflation had only fallen to 8.7% in May. Mr Bailey told a European Central Bank event that inflation and labour market data “showed clear signs of persistence” and caused the Bank to conclude that it “had to make really quite a strong move at that point,” adding: “It was justified.” Mr Bailey argued that half-point rate hike was preferable to two consecutive quarter-point increases. He also said: “I’m very clear that our job is to return inflation to target and we will do what is necessary,” adding: “I understand the concerns that go with that but… it is a worse outcome if we don’t get inflation back to the 2% target.” On the risk of a recession, Mr Bailey said: “We’re not currently forecasting it, but obviously we have to watch it very carefully.”
Bankers: Higher rates needed to tackle inflation
The European Central Bank’s (ECB) annual policy conference has seen central bankers say rates will stay high until inflation eases. Bank of England governor Andrew Bailey said the drag on the UK economy from high inflation would be a “worse outcome” than the hit from higher borrowing costs. ECB president Christine Lagarde said: “I think we have to be as persistent as inflation is persistent,” while US Federal Reserve chair Jerome Powell said that rates “haven’t been restrictive very long” and that “the bottom line is that policy hasn´t been restrictive enough for long enough.”
Over 1.4m UK households face mortgage repayment rises
More than 1.4m UK households face mortgage repayment rises this year. Moneyhub’s research found that 26% of homeowners surveyed with a mortgage said that a further interest rate rise would mean they would not be able to afford their mortgage payments. In addition, 35% of homeowners with a mortgage said they were concerned that they will not be able to afford their mortgage when they remortgage due to rising rates.
Bailey: Pandemic to blame for inflation, not Brexit
Andrew Bailey, governor of the Bank of England, says the pandemic is to blame for the inflation crisis, not Brexit, arguing that workers leaving the jobs market during the pandemic and not returning has left a hole in the economy. This comes after predecessor Mark Carney said Brexit was an important factor behind the high inflation. Mr Bailey said: “One of the striking things about the UK is that the size of the labour force is smaller than it was at the outbreak of Covid. We have had a shrinkage of the labour force. We are seeing some reversal of that now but we are still not back to where we were pre-Covid.”
BoE economist: Forecasting model is ‘unworkable’
Huw Pill, the Bank of England’s chief economist, says its forecasting model has become “unworkable” during the inflation crisis, saying it has produced misleading forecasts. He told a European Central Bank forum that the Bank used a model “based on last quarter century” when inflation expectations “were well anchored and there was little evidence of persistence.” He said that as inflation moves away from the target, “the everything-else-equal assumption that allows us to break down the contributions to the drivers of inflation in a linear way tends to become unworkable.”
Chancellor tells regulators to increase scrutiny of suppliers
Jeremy Hunt has told industry watchdogs to crack down on excessive prices and increase scrutiny of suppliers. The Chancellor met with Ofgem, Ofwat and Ofcom, as well as the Financial Conduct Authority (FCA) and Competition and Markets Authority. This comes amid concerns that some firms are increasing their profits by exploiting the inflationary environment, with this exacerbating the cost-of-living crisis. The Treasury said Mr Hunt “made clear his expectation that regulators work at pace to guarantee markets are working properly.” In a joint letter, chief executives from the regulatory bodies urged firms to “show restraint on pricing, and where the prices of goods and services have risen as a direct consequence of increased input costs,” adding that they want companies to “pass on any relevant reductions as soon as possible.” The Government said the regulators have agreed to provide it with regular updates on their progress. The FCA will report on how the savings market is supporting savers to benefit from higher interest rates by the end of July. With the City watchdog saying it will require banks and building societies to explain the pace and extent of how they are passing on interest rates changes, chief executive Nikhil Rathi said the FCA will take “swift action if firms aren’t doing all they should to help people dealing with tighter household budgets”.
Government uncertain over triple lock pledge
While Work and Pensions Secretary Mel Stride has said he is “confident” that the Government will maintain the pension triple lock policy into the next election, a Downing Street spokesperson has refused to commit to the pledge. Asked whether Prime Minister Rishi Sunak was committed to the triple lock, his press secretary said: “We are quite a way from a fiscal event. That would be a decision for the Chancellor at the next fiscal event and I wouldn’t comment ahead of that.” Mr Stride told LBC he thinks the policy will “almost certainly” be kept in place, saying: “I think we do have a particular duty to pensioners.” Meanwhile, Labour has pledged to maintain the triple lock, confirming that it would be taken into the next election. The triple lock guarantees that the state pension payment goes up every year by whichever is higher of earnings, inflation or 2.5%.
ChatGPT
OpenAI , the US company behind ChatGPT has announced its first international office will be based in London. Chief executive Sam Altman said the move was an “opportunity to attract world-class talent”.
Thames Water
The Chief Executive Officer of Thames Water, Sarah Bentley stepped down with immediate effect yesterday, as the water company fell into crisis over £13 billion in debt and fears the company could be forced into nationalisation. A victim of rising interest rates has hit the company with the highest debt to equity ration in the sector.
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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!
No face-to-face meeting required – 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.