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European Edition
15th September 2021
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Chancellor warned over tax year reform
Chancellor Rishi Sunak has been urged not to rejig the tax year until at least 2023 due to costs involved and potential issues with IT systems. The Office of Tax Simplification (OTS) has argued that the last day of the tax year on April 5th should be moved either to March 31st or to December 31st, saying the present tax year dates confuse workers, with some deadlines — income tax, national insurance and capital gains tax —calculated on an April 5th tax year end date, while others use March 31st. The OTS says any reform should be delayed because of the technical upheaval it would cause, arguing that the Treasury should hold fire on changes until after the deadline for the digitisation of income tax in April 2023. The OTS has also noted that moving the end date from April 5th to March 31st could cost up to £2.2bn in lost tax revenue from the tax year directly beforehand as that tax year would be five days shorter. Reflecting on calls for change, Nimesh Shah of Blick Rothenberg said the move would make the tax system more efficient but warned that state departments had a huge task trying to avoid a "Millennium bug" situation when the "switch is flipped."
Bailey questions EU over clearing raid
The Governor of the Bank of England has warned that the financial system could be damaged if the European Union succeeds in a raid on London's currency clearing operations, saying it could undermine efforts to deliver greater stability in the wake of the financial crisis. Andrew Bailey said that if EU officials want to break up the clearing system and take some of the market from the City to the continent, “it is important to consider the risks to financial stability that come with fragmentation,” adding: “This is not an idle, ‘you would say that, wouldn’t you’ from the UK’s central bank: that is a real threat.” Mr Bailey also said that the UK will stick within global financial agreements on regulation, although some rules may differ from those in the EU as both sides need to evolve over time. Mr Bailey said: “Neither of us has got any interest … in diverging from international standards. What we do have is different markets." He also spoke out over suggestions that European politicians are considering imposing more restrictions on London than other major financial centres.

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UK delays customs checks on EU imports
The Government is to delay a number of customs checks on EU imports due to come into force in October and January, pushing the new red tape back until July 2022. These include new export health certificates, which were originally due to be required from October, and physical checks on food and other animal-related products that were set to start in January. Other security-focused checks will now also be delayed until July 2022. While the EU has imposed full checks since January 1st, 2021, yesterday’s announcement marks the third time the UK has nudged back some of the post-Brexit checks. Sean McGuire, Europe director at business lobbying group the Confederation of British Industry, said the delay would ease some pressure on supply chains ahead of Christmas, although he warned the overall impact of the delays could be “fleeting.” He has urged both sides to consider a bespoke agreement “which could avoid the majority of checks and reflect the unique nature of trade between the UK and the EU.” The British Chambers of Commerce said the delays are "sensible given the ongoing issues with ensuring trader readiness, the need to build more border control posts and the skills shortages crisis."
Fire at Ocado’s biggest warehouse costs £35m in lost revenues
Ocado’s joint venture with Marks and Spencer lost about £35m in sales due to a fire at its Erith warehouse in south-east London over the summer, the online supermarket said on Tuesday. The company added it faces a bill of up to £5m this year because of the rising cost of large goods vehicle and delivery drivers. A surge in online shopping during the pandemic coupled with a national driver shortage caused by Brexit has forced Ocado, and other supermarket groups, to raise hourly rates and offer signing-on bonuses. The company said revenues fell 1.8% in the first six weeks of its third quarter; however, in the remaining seven weeks, ending August 29th, they dropped 10.6%. Overall quarterly revenue dropped 10.6% to £517.5m, while average orders a week increased 1.4% to 338,000.
FSCS uncovers adviser phoenixes at CMC firms
The Financial Services Compensation Scheme (FSCS) has alerted the Financial Conduct Authority (FCA) to 412 cases where advisers who worked at firms that defaulted had joined a claims management company (CMC) to bring claims against their previous firm, a practice known as phoenixing. The FSCS has identified 145 such advisers so far in 2021, having previously flagged 267 others to the financial watchdog. In 2020, the FSCS also identified 150 individuals who worked at defaulted advice firms and re-emerged within active regulated IFAs. Earlier this year, the FCA announced proposals that would see CMCs banned from managing FSCS claims to which they have a relevant connection.
JD Sports chief defends £4.3m bonus
JD Sports boss Peter Cowgill has defended his £4.3m bonus as profits surged. Data show he received £5m last year, including £4.3m in bonuses, even after a voluntary salary cut of 75%. Critics have suggested that the executive chairman should not have received the pay-out after JD received £100m worth of Government support during the pandemic. However, Mr Cowgill said “numbers speak for themselves,” with half-year profits up £300m to a record £364.6m. He added that his bonus payment “was exaggerated” because it had been for 2017 to 2019 and he had deferred it to “show leadership from the front, even though it was overdue.”
Uber loses court fight in Netherlands over drivers' rights
A court in the Netherlands has ruled that Uber drivers are employees and not contractors, and are thus entitled to greater workers' rights under local labour laws. The Amsterdam District Court sided with the Federation of Dutch Trade Unions (FNV), which had argued that the ride-hailing company's roughly 4,000 drivers in the Dutch capital should enjoy benefits in line with the taxi sector. The court’s decision comes months after a similar UK court ruling led to the San Francisco-headquartered firm agreeing a groundbreaking union deal in Britain. "The legal relationship between Uber and these drivers meets all the characteristics of an employment contract," and drivers are covered by a collective labour agreement for taxi drivers, the court said, adding "This means that Uber is obligated to institute a labour contract with drivers . . . and therefore means these drivers are entitled to backpay in certain circumstances."  The judges also ordered Uber to pay €50,000 ($59,000) in damages to the FNV for not adhering to a collective labour agreement. Uber said it would appeal the ruling. "We are disappointed with this decision because we know that the overwhelming majority of drivers wish to remain independent," Maurits Schoenfeld, Uber’s Northern Europe general manager, said, adding "Drivers don’t want to give up their freedom to choose if, when and where to work." The FNV welcomed the ruling. "Due to the judge's ruling, the Uber drivers are now automatically employed by Uber," said Zakaria Boufangacha, FNV's deputy chairman. "As a result, they will receive more wages and more rights in the event of dismissal or illness, for example."
Job vacancies in UK hit a record high
Figures from the Office for National Statistics (ONS) show that job vacancies in the UK have hit a record high, with the number of available posts rising above 1m in the three months to August. The ONS report also shows that employee numbers were back at pre-Covid levels in August, while monthly payrolls increased by 241,000 to 29.1m. The UK unemployment rate fell 0.3% in the quarter and now stands at 4.6%. ONS deputy statistician Jonathan Athow said: "Early estimates from payroll data suggest that in August the total number of employees is around the same level as before the pandemic, though our surveys show well over a million are still on furlough." Commenting on the ONS data, Suren Thiru, head of economics at the British Chambers of Commerce, said firms are facing an "acute hiring crisis," and warned that with Brexit and COVID-19 “driving a more deep-seated decline in labour supply, the end of furlough is unlikely to be a silver bullet to the ongoing shortages.” He added that recruitment difficulties “are likely to dampen the recovery by limiting firms' ability to fulfil orders and meet customer demand."
Sunak: Private equity M&A boom highlights confidence in UK economy
Chancellor Rishi Sunak says private equity firms’ interest in British listed companies points to “a sign of confidence in the UK economy.” Speaking at a conference promoting tech companies, the Chancellor was asked about potential long-term dangers to businesses being taken private. He offered that if international investors are keen to invest their capital in the UK, “that is something that is good news for our economy,” adding: “And that’s what you’re seeing.” Data from the Office for National Statistics show that the value of deals in which a foreign buyer acquired a UK company hit £19.4bn in Q1 and surged to £27.7bn in the second quarter. However, the volume of M&A deals involving UK firms fell 31% over the quarter, dipping to 381 in Q2 from 556 in Q1.
Activist investor demands SSE break-up
SSE has come under pressure to break up its business from Elliott Management, with the activist investor urging the energy supplier’s management to split its renewable energy arm from its electricity business. It is noted that fund manager Elliott is also campaigning for change at GlaxoSmithKline and was previously successful in pushing for the spin-off of Costa Coffee from Whitbread.
Scam victims ‘abandoned’ by banks
Consumer group Which? warns that victims of bank transfer scams are being “abandoned” by lenders when trying to reclaim stolen money. Which? argues that measures like the voluntary reimbursement code have failed to adequately protect consumers and provide reimbursement, and says there is a need for stronger action to support victims. Losses linked to authorised push payment (APP) fraud hit £479m in 2020 but reimbursement rates remain low, with banks finding victims at least partly responsible for their losses in 77% of cases assessed since the code came into force. While banks are often not siding with savers, Financial Ombudsman Service figures show that 73% of complaints about APP fraud were upheld in favour of consumers in 2020/21. Which? Money editor Jenny Ross said: “Fraud can have a devastating impact on victims, and it is unacceptable for so many to be abandoned when they turn to their bank to try and get their money back.”
Grenfell survivors demand urgent ban on combustible building materials
Survivors of the Grenfell disaster have called for an urgent ban on the use of combustible materials in buildings after they said evidence at the public inquiry had revealed “fraud”, “cover-up” and “incompetence” in the construction industry. Their lawyer told the inquiry chairman, Sir Martin Moore-Bick, that methods of checking safety of materials had been revealed as “positively dangerous” and that a key independent testing centre for construction products had been “complicit in manufacturers’ frauds.” Ministers have so far banned combustible materials only on high-rise blocks, and have yet to decide whether to widen the ban on combustible materials after launching a consultation 21 months ago.

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