Tesco resigns from Prompt Payment Code – business news 11 August 2021
James Salmon, Operations Director.
Tesco resigns from Prompt Payment Code. Over 350k SMEs cannot repay Covid loans. Almost 300,000 sole traders face increased tax bills and more business news.
Tesco resigns from Prompt Payment Code
Tesco has resigned from the Prompt Payment Code after it decided it could not adhere to a tightening of the code’s terms designed to speed up payment to small businesses. Signatories to the Government-backed were told in January that they would need to pay 95% of invoices from companies with fewer than 50 employees within 30 days if they were to remain on the programme, down from 60 days. According to The Times, Tesco left the voluntary code on June 22, days before the new regime began in July. Tesco had claimed it was not practical for it to meet the new terms since it categorised suppliers on the volume of business it does with them, not how many staff they have. However, Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said: “Tesco’s shock decision is bad news for good corporate governance and for leadership.” Beaumont said the Groceries Code Adjudicator, which regulates supermarkets’ treatment of suppliers, must “keep a close eye on Tesco’s payment practices with all small businesses under 50 employees. We can’t go back to the bad old days”.
Over 350k SMEs cannot repay Covid loans
A survey of small businesses has found that 59% used government loans or furlough schemes during the pandemic – around 3.5m businesses. The YouGov poll commissioned by Lawbite also reveals that at least 10%, which could represent as much as 354,000 SMEs, could not now repay the loan due to the impact of cash flow and supply chains. About 18% of participants intend to make redundancies, and 16% cannot afford to pay existing staff due to the impact of loan repayments. Founder of LawBite Clive Rich said: “The end of furlough and repayment of Covid loans is placing a significant strain on the cash flow of thousands of our SMEs. This is without even considering other challenges like Brexit, which also harms supply chains, cash flow and employment.”
Almost 300,000 sole traders face increased tax bills
The Government’s proposal to change the date small businesses report profits will result in nearly 300,000 sole traders facing bigger tax bills than expected next year. The move, which also affects partners in accountancy and law firms, would generate billions of pounds for the Treasury years before it would otherwise have received the money. The changes to tax bills will also eat into the amount of working capital sole traders have for five years as they now have to pay more tax earlier.
UK fintech investment hits new record
There were $24.5bn (£17.7bn) worth of deals in Britain’s financial technology industry in the first half of this year, according to the Pulse of Fintech report by KPMG, placing the UK second in the world behind the US. UK fintechs attracted significantly more funding than their counterparts in the rest of EMEA combined, and came second only to the US in the first half, whose fintech industry attracted $42.1bn. In Europe, the Nordic region was closest behind the UK, raking in $4.8bn investments in the first half. KPMG said the total for the UK was given a one-off lift by the $14.8bn purchase by the London Stock Exchange of the financial data provider Refinitiv, but the UK’s new record of 283 deals completed was well ahead of anywhere outside the US. Venture capital firms were especially active with fintech-focused investments in the UK, reaching $6.2bn, more than double the level in the second half of 2020. “Covid-19 has spurred a race to digital in UK financial services and many of the major banks have dipped into their investment pots for digitalisation – a major reason we are seeing so much corporate investment,” Karim Haji, EMA and UK head of financial services at KPMG, said.
Google staff working from home permanently face pay cut
US staff at tech giant Google could have their salaries cut if they choose to work from home permanently. The company has launched a work location tool so that staff can calculate the impact on their pay if they opt against returning to the office. Google said that “compensation packages have always been determined by location and we always pay at the top of the local market based on where an employee works from”. Lawyers said it would require consultation with staff before Google could make such dramatic changes to conditions in for UK workers.
Average IHT bill for Londoners is over £270k
The latest data from HMRC show Londoners pay the highest inheritance tax bill in the UK. Residents in the capital paid an average of £271,820 in inheritance tax on their estates in 2018/19 upon death. Over the UK as a whole, residents paid an average of £209,502 in inheritance tax in the same year. Residents in the north west paid the lowest average IHT bill in the UK, at £152,898 on average. Sean McCann, chartered financial planner at NFU Mutual, said: “Inheritance tax is feared by many but paid by relatively few. But with the average bill in excess of £200,000, it can make a significant dent in a family’s wealth for those that do get caught in the net.” A total of £5.69bn in inheritance tax was paid in 2020/21. “With the tax-free allowances frozen for the next five years, rising asset prices and a heated housing market, a growing number of families will be impacted,” McCann added. “It’s critical that families concerned about being caught by inheritance tax seek advice as early as possible. The earlier you plan the more options you have to mitigate any potential bill.”
Amazon accused of shifting £8.2bn of UK sales to Luxembourg
Analysis of Amazon’s US accounts alleges that the e-commerce giant had declared £13.7bn of UK sales in 2019. However, in filings for its UK-based companies, Amazon had only reported £5.5bn in sales. Now, the Unite union is calling for a probe into the why Amazon is being allowed to report £8.2bn of its UK sales in Luxembourg. Amazon strongly rejected the findings and said the discrepancy was because most of its sales to UK shoppers were booked by UK branches of one of its Luxembourg companies, and that the figures were reported to HMRC. Unite argues that the advantage Amazon gains through legally shifting profits to tax havens is a key factor in the company’s growing dominance. Labour MP and Treasury Committee member Emma Hardy described the findings as “very worrying” and backed Unite’s call for a public inquiry into Amazon’s “missing money”. “I don’t want a tax system that takes money from ordinary people to subsidise the growth of the world’s biggest anti-union company,” Ms Hardy said
US Infrastructure
The USA’s Senate yesterday passed a bipartisan infrastructure package worth $1trn designed to fix the country’s road and rail networks, improve broadband provision and fund the fight against climate-change. The bill will trickle down through the US economy boosting global output.
Crypto robbery
Over $600m in cryptocurrency has been stolen by hackers from Poly Network , which lets people swap digital tokens built on different blockchains. That would make the theft among the biggest digital robberies ever
Deliveroo
Deliveroo revenue jumped 82 per cent to £922m in the first half of the year, according to its results announced this morning. The number of orders increased by 100 per cent to shy of 150m in the first half of 2021 compared with 75m during the same period last year when the first national lockdown was introduced.
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