Business news 29 July 2022

James Salmon, Operations Director.

One in 12 firms default on Covid loans. FSB urges PM candidates to develop a ‘pro-small business agenda’. Recession fears as US economy shrinks again.  And more business news.

One in 12 firms default on Covid loans

Taxpayers have been left to foot a £421m bill to cover Covid debts, after one in 12 businesses defaulted on state-backed emergency loans.

Data from the Department for Business, Energy and Industrial Strategy show that around 8% of 1.6m borrowers – roughly 130,000 – failed to repay their debts as of March this year. Around £352m were made for bounce back loans, the scheme which accounted for £47bn of the £77bn total lent to businesses through the pandemic support programme.

High street banks and online lenders, which distributed the loans on behalf of the Government, have claimed a combined £421m of taxpayer cash to cover the defaults. About 18,000 of the 1.5m bounce back loans claimed were flagged for suspected fraud by lenders, according to the British Business Bank. While it was previously estimated that fraud losses could exceed £4.9bn, more recent estimates from PwC place the total at about £3.5bn.

FSB urges PM candidates to develop a ‘pro-small business agenda’

The Federation of Small Businesses (FSB) says Conservative leadership hopeful Liz Truss’ support for a cut in National Insurance means she has the best policies for small firms. It also highlighted her plans to reform business rates as a policy that would boost SMEs.

Tina McKenzie, policy and advocacy chair at the FSB, said politicians needed to realise “you cannot tax your way to growth,” adding: “We have been pushing ministers for a package of immediate help in the current crisis; the cost of living crisis is embedded within a cost of doing business crisis.” She went on to insist: “Changes are needed on four fronts – inflation, energy bills, fuel costs, and pre-profit taxes.”

Ms McKenzie said Ms Truss “has arguably backed these more than her opponent” – former Chancellor Rishi Sunak – but noted that there is “still time for both candidates to develop a strong pro-small business agenda to grow the economy.” In response to the FSB’s comments, Ms Truss said: “We can’t have business as usual on the economy. As Prime Minister I’ll be on the side of small businesses.” She added: “I’ll make it my mission to deliver the changes they need, slashing taxes and red tape to get the economy growing.”

Recession fears as US economy shrinks again

The US economy has shrunk for the second quarter in a row, declining at an annual rate of 0.9% in the three months to July.

While in many countries two quarters of negative growth would be considered an economic recession, the US has an official arbiter of recessions – the National Bureau of Economic Research (NBER). The NBER defines a recession as a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.”

President Biden said: “It’s no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation,” adding: “But even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure.” In the first three months of the year, the US economy shrank at an annual rate of 1.6%.

Overnight, the DOW rose 1.03%. S&P 500 rose 1.21%. NASDAQ rose 1.08% as the dollar continued to weaken (currently cable is $1.217).


Diageo reported a jump in full-year profit and lifted its dividend, due to 21% sales growth across all regions. In the financial year that ended 30 June, the London-based brewer and distiller’s pretax profit rose 18% to £4.39 billion from £3.71 billion in 2021. This was on net sales growth of 21% to £15.45 billion from £12.73 billion.


NatWest said it delivered a strong performance in the first half of 2022 against a beneficial backdrop of rising UK interest rates. For the six months to June 30, total income was £6.22 billion, up from £5.14 billion last year. Operating pretax profit was £2.62 billion, up from £2.32 billion.


AstraZeneca said it delivered a strong first-half boosted by demand for its cancer treatments. For the six months to June 30, revenue jumped to $22.16 billion from $15.54 billion last year with growth coming from all disease areas, including Covid-19 medicines, and from the addition of Alexion Pharmaceuticals.


Amazon  reported last night consensus-topping second-quarter revenue growth, though the e-commerce company swung to a loss and forecast its third-quarter bottom line figure to weaken year-on-year. Amazon said net sales in the second quarter of 2022 climbed 7.2% to $121.23 billion from $113.08 billion a year earlier.


Apple after the US market close on Thursday said it had successfully navigated a “challenging operating environment” during its third-quarter, posting record revenue (up 2% year on year to $83 billion) on bumper iPhone sales. They had been predicted to fall.

Number of UK non-doms down by 11%
The number of super-rich people who live in the UK but pay no tax on their offshore income has fallen by 11%, according to HMRC data. UK-based people holding nondomicile tax status in the 2020/21 financial year totalled 68,300, a fall of 8,200 on the previous year. HMRC pointed to travel restrictions caused by lock-downs as a reason for the fall in non-doms, saying: “We see that the primary driver of this is fewer new non-domiciled taxpayers coming to the UK to replace those who normally leave.” HMRC said the fall in numbers was also driven by residents choosing to change their status to be UK-domiciled after the Government introduced an annual “non-dom levy” of between £30,000 and £60,000.

Arun Advani, associate professor at the University of Warwick, said that with almost 70,000 people using non-domicile status to trim their tax bills: “This is a reminder that, while the non-dom regime is alien to most people, use of this tax break is common among the wealthiest. The latest figures show the use of this tax perk has continued to remain high, continuing to cost the Treasury money during a cost of living crisis.”

HMRC fines businessman for paying tax ‘too early’

A tribunal has ruled against HMRC after it fined company director John Howard for paying his tax “too early.” He was charged £300 for three supposedly late filings – which were made months before the tax return deadline through HMRC’s real time information (RTI) system. He had opted to make three months’ payments in advance after previously being charged by HMRC for filing his RTI returns late, according to First-Tier Tribunal documents. HMRC decided that the payments were too early and fined him £100 for each return. Matt Taylor, tax partner at RSM, said HMRC’s decision was “particularly harsh.” He added: “Not only did HMRC’s software enable the company to file returns that were not in accordance with the law, its guidance doesn’t warn taxpayers that they cannot file early.”

Former Greensill staff can seek millions in employment suit
A group of former Greensill Capital employees has won the right to seek millions of pounds in damages  after judges ruled that executives at the defunct supply chain financing company took a “deliberate decision to do nothing” and hide the true picture of financial difficulty at the firm. The former employees accused the firm’s management of unfairly keeping them in the dark about the company’s “imminent danger of collapse.” The group of 277 workers – less than half of Greensill’s UK headcount – could be awarded as much as £4.5m ($5.5m) after they were not properly informed about potential redundancies, employment judges said. Greensill collapsed in March 2021 after Credit Suisse froze the $10bn group of funds that the London-based company effectively ran. The claimants will now seek the maximum amount from Greensill administrator Grant Thornton. If the company doesn’t have the funds, UK taxpayers may be on the hook for the money, notes Bloomberg.

House prices almost nine times the average income
Property prices have risen to nearly nine times the average household disposable income, according to Office for National Statistics (ONS) data. In the year to the end of March, the average property in England sold for £275,000, with this 8.7 times the average annual disposable household income of £31,800. In Wales, the median house price was £176,000 – six times the average income of £29,400, while the ratio in Scotland was 5.5 as house prices averaged £166,000 compared to a £30,300 salary. London is the least affordable region, with those in the lowest 10% of earners having to work 40 years to buy an average house. At the other end of the scale, an average-priced home in the North East cost the equivalent of almost 12 years of income. The ONS data shows that UK house prices rose by 12.8% in May, up from 11.9% the month before, hitting an average of £283,000. This is £32,000 higher than the typical price a year earlier.

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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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.