Welcome to the June 2020 'Need to Know' update. You'll find the latest key information on the Coronavirus crisis, support form Government, FSB advice that is available, and the latest developments
Vital infrastructure must be ready for the future, finds Commission
Proactive steps are needed to ensure the UK’s infrastructure can remain resilient, according to a new report by the National Infrastructure Commission.
The Commission has set out a new framework to help support change across infrastructure sectors and is calling for transparent standards of appropriate service levels, stress testing for major incidents and clearer direction for utilities providers to invest in long term resilience. Together, the report finds, these steps will ensure the country’s infrastructure can better resist, absorb and recover from shocks.
The evidence base used in the study was undertaken before the current Covid-19 pandemic, and the report notes that it is too early to fully assess and learn lessons from the ongoing crisis.
Anticipate, React, Recover: Resilient infrastructure systems instead focuses on previous disruptions and failures and the response of the UK’s energy, water, digital, road and rail infrastructure over a longer timeframe – drawing on examples including the widescale power outage of August 2019 and the various incidents of flooding experienced in the UK over recent years. It also highlights the impact on New Orleans when Hurricane Katrina hit in 2005: a failure to adapt infrastructure to respond to a changing climate and population growth led to a catastrophic impact on the city and its people.
Read more here; https://bit.ly/2yGmNfA
The UK in a Changing Europe - New report explains what trading on WTO terms means
If the UK Government fails to conclude a deal with the EU by the end of the year, the country will be trading with the bloc on WTO terms from 1 January 2021.
Academic think tank The UK in a Changing Europe has updated its report, What would ‘trading on WTO terms’ mean? and have found:
WTO terms means the UK and EU would have to apply their ‘most favoured nation’ tariffs to trade. The EU could apply its common external tariff and the UK would apply the new tariff schedule it announced last week. That means, for instance, a 10% tariff on cars, in both directions, and much higher tariffs on some agricultural goods
The direct economic impact of leaving on WTO terms, compared to trading on current terms, would be a 3.3% reduction in GDP after 10 years; adding in indirect effects, our estimate is that GDP would be 8.1% lower than it would otherwise have been
WTO terms are relatively comprehensive on goods but far less so on services. Barriers to trade in services, in particular, will increase substantially under WTO terms.
It is often said the UK trades with the USA on WTO terms. In reality, through the UK’s EU membership, the country is party to several agreements that facilitate EU–US trade
The EU would be within its rights to insist on extensive border checks on goods coming in from the UK. This would not be ruled out by the WTO's Trade Facilitation Agreement nor be ‘illegal under WTO rules’ as many have claimed (the exception to some of this is goods trade between Northern Ireland and the EU which is covered by the Ireland/Northern Ireland Protocol).
You can read more here; https://bit.ly/2yJwRVb
The UK has access to a number of free trade agreements through its EU membership. Nineteen have been rolled over. Where an agreement is not rolled over, the UK’s trade with that country or bloc will be governed by WTO terms.
New Guidance for Directors of SME Businesses
The coronavirus pandemic has changed dramatically the circumstances in which many businesses operate, and some are under threat.
FSB supports the work of ICAEW (Institute of Chartered Accountants in England and Wales) and ICAS (Institute of Chartered Accountants of Scotland) in producing a new guide for company directors. It stresses the importance of assessing the future prospects of your business after the pandemic and the impact this can have on your company accounts.
In this short guide it is explained why it’s important to assess the viability of your business for the purposes of your accounts and outline some factors to consider when making this assessment.
This guide is aimed primarily at the owners and directors of small and medium-sized businesses.
Read the guide here; https://bit.ly/2yHPNUf
Supermarkets secure business rates windfall
UK supermarkets are set for £500m in tax refunds, after the Supreme Court ruled in their favour in a dispute with the Valuation Office Agency (VOA) over business rates payments on ATMs.
In 2013 the VOA decided that supermarket cash machines located inside and outside of stores should be assessed for business rates on top of normal store rates, and issued bills backdated to 2010.
Retailers strongly opposed the decision, and the Supreme Court judges said the appeal turned on two main issues. The first was whether the sites of the ATMs should be identified as separate hereditaments from the stores or shops, and if so, secondly, who was in rateable occupation of these hereditaments.
Previously, the VOA had decided that in each case the sites of the ATMs were in separate rateable occupation.
The Supreme Court stated: “External ATMs are to be treated the same as internal ones. That an external ATMs is available to a wider market at all times, and is physically separated from the other facilities in the stores, does not detract from the Upper Tribunal’s finding that the retailers remained in occupation of the ATMs, nor that they were any less a part of the retailers’ businesses. The difference is no greater than the difference between an internal or external ATM in a bank building.
“Thus, the external ATMs remained in the rateable occupation of the retailers.”
You can read more here; https://bit.ly/2TPonmF
Rules that have been relaxed to help businesses during the coronavirus pandemic
The Government have published a weblist of the rules that have been temporarily relaxed to make it easier for businesses to continue working through the disruption caused by coronavirus.
The page lists regulations regarding employees, accounts, intellectual property, IR35, tax cuts as it affects small business.
The list can be read here; https://bit.ly/3cdX7Vl