Our experts react below to Chancellor Rishi Sunak’s first Budget, which was dominated by the Coronavirus.
Dorset chamber chief executive Ian Girling said: “The Budget was dominated by Coronavirus and clearly the government is taking the threat of COVID-19 very seriously.
“Small and medium sized businesses will be reassured that the Chancellor committed to reimburse them for employees’ sick pay for up to 14 days.
“He also launched a disruption loan scheme with the government covering 80% of loans of up to £1.2m from banks. This will assist SMEs.
“There was an extremely welcome announcement of the abolition for this year of business rates for certain sectors.
“Shops, cinemas, restaurants and music venues with a rateable value of less than £51,000 will pay no business rates in the coming year.
“And this will also be extended to museums, art galleries, theatres, caravan parks, gyms, small hotels, B&Bs, sports clubs, nightclubs, clubhouses and guest houses.
“Furthermore, the Chancellor announced a review later this year into business rates, which is something that we and the British Chambers of Commerce have been campaigning for.
“We also welcome extra money for research and development because we have some fantastic businesses in Dorset who will benefit from it.
“Many of our rural businesses will be pleased that relief on red diesel will continue in the agriculture, fishing and rail industries.
“Another encouraging thing was the reiteration of the government’s plan to invest £5bn to help spread ‘gigabit-capable’ broadband ISP networks across the UK by the end of 2025, as well as to push it into new build homes.
“Improved connectivity is vital for our region. The Chancellor spoke of changing the ‘mindset’ of government to consider regions more prominently.
“We hope the South and South West is included in this because there was little for our region specifically in the Budget, especially when it came to infrastructure projects that we very much need.
“For four years businesses have had the uncertainty of Brexit hanging over them, and now they have the uncertainty of Coronavirus.
“The Budget necessarily concentrated on COVID-19 but the situation is changing all the time and more assistance might well be needed in due course.”
Responding to the Budget, Ross McNally, Hampshire Chamber Chief Executive and Executive Chairman, said: “Given the exceptional circumstances we face because of the immediate threat of coronavirus, it was not surprising that the focus of the Budget was on short term measures.
“The Chancellor talked about building a ‘bridge for business’ to help offset the medical crisis.
“Should staff have to be off work, the pledge to underwrite sick pay for companies with fewer than 250 employees will significantly ease the burden on their cashflow.
“The same goes for his move to defer tax payments in agreement with HM Revenue & Customs.
“The suspension of business rates for a year for companies involved in retail, leisure and hospitality is also welcome, as is his announcement that a fundamental review of business rates will take place, to be concluded in the autumn.
“Announced earlier in the day, the emergency cut in interest rates from 0.75% to 0.25% is a sensible, measured step to mitigate any lasting economic impact.
“And with cashflow set to be a continuing challenge for some companies, we welcome the lowering of capital requirements on banks to enable them to lend more to businesses.
“It remains to be seen whether or not these measures will be enough to sustain business confidence and keep the economy on track but they represent a prudent package at this stage.”
Phil Hoyle, landlord of the multi award-winning London Tavern in Poulner, Ringwood, gave a cautious welcome to the Chancellor’s business rate discount for pubs.
He said: “The business rate discount from £1,000 to £5,000 is welcome – and hopefully it won’t be too little too late.
“Business rates are one of the overheads that make it extremely difficult to run a pub as a healthy, profitable business.
“The Chancellor did acknowledge that pubs are the centres of community life and as such ought to given additional assistance.
“Our customers will be delighted, however, that there will be no rise in beer, cider and wine duty.
“And I commend our full range of drinks to everyone!”
David Squire, managing director of Yellow Buses, said: “Any help to improve the roads is welcome.
“The Chancellor announced fresh investment in local roads and a new £2.5bn pothole fund.
“He claimed that will mean 50 million potholes being filled in the next five years – which is some going.
“Poor roads wreak havoc with our buses causing costly damage and mean that the ride quality for our customers is poor
“We will wait and see what there is in the detail of this Budget and how the pledged money will improve the roads.”
Nigel Smith, Managing Partner, Ellis Jones’ solicitors, said: “It is reassuring that the government has made Coronavirus a priority in such challenging times both for the population generally and for businesses. It is good that they have reacted so quickly.
“However, it is very disappointing that the much talked about changes to Stamp Duty Land Tax (SDLT) didn’t happen – SDLT is a noose around the neck of the housing market.
“When will a government learn that by changing SDLT not only will they bolster the housing market but that they will also increase trade for small businesses who supply to that market?
“A change would have raised increased income through VAT (which is charged at 20 per cent as opposed to the much lesser SDLT rate) when house movers buy new kitchens, bathrooms, carpets and furniture.
“I believe that it was an opportunity lost.”
Julian Smith, Tax Partner at PKF Francis Clark in Poole, said the Chancellor had provided a very comprehensive set of measures targeting many sectors in an effort to kick-start the economy.
He said: “It is a grand gesture with big numbers, very much making up for lost time, but we will wait to see just how damaged the economy is and whether the proposed spending has the desired effect and gets it done.
“His ‘blank cheque’ for Coronavirus relief is reassuring and the fact he didn’t fully abolish entrepreneurs’ relief is welcome, as is more green transport funding – but, as ever, the devil will be in the detail.”
Commenting on the changes, Duncan Swift, President of R3, the trade body for insolvency practioners, said: “The return of HMRC’s preferential status in insolvencies is a badly-timed and ill-considered blow to the UK’s enterprise culture. It will damage business lending and business rescue, and will affect jobs, livelihoods and the economy.
“It’s perverse that on the day that the Bank of England has taken steps to boost business lending, the Government has taken a step in the opposite direction.
“It is beyond frustrating that the Budget has confirmed the policy will be introduced without meaningful changes from what was first proposed. The plans were first announced in 2018 with no consultation and, since then, there has been near unanimous opposition to them. Business groups and lenders have been clear that the policy will be a short-term gain for HMRC at the expense of a long-term cost for the economy.
“A slight delay in the implementation date from April to December changes nothing. A bad policy in April is still a bad policy in December.
“It is scarcely believable that the Government has turned a deaf ear to these concerns and has ignored sensible suggestions for how the negative consequences of the policy could be mitigated. This has been a policymaking failure from start to finish.
“At a time when businesses are facing economic headwinds, they need the Government to help them, not elbow them out of the way. Priority repayment for HMRC in insolvencies will reduce what can get repaid to other businesses, pension schemes, and lenders. Reduced returns to lenders will increase the costs of borrowing and availability of finance, especially in rescue situations.”
“Ultimately, dropping the policy entirely would be the only way to avoid its harmful side effects. The Government would see much better results if HMRC were to engage proactively and commercially in insolvencies rather than trying to skip the repayment queue.”
‘Tax abuse and insolvency’
“Missing from the Red Book is a reference to something announced in the last Budget: a challenge to the fundamental principle of limited liability. We’ll be likely to see more when the Finance Bill is published next week.
“We understand what the Government is trying to do: a clampdown on tax avoidance schemes is one thing, but our concern is with how the legislation will be drafted and interpreted. The draft legislation seen to date is not fit for purpose.
“Making individuals personally liable for corporate debts is a big step, and the draft legislation seeks to make directors liable for tax debts incurred when they were not even directors of the company. As a result, there is scope for the power to be used in circumstances beyond those for which it was originally intended, and it could make the risk of becoming a director prohibitive in many instances.
“HMRC argues the power will be used where it assesses there is a ‘risk’ of tax loss. How this risk is going to be assessed is unknown, and clearer parameters and checks on the power are necessary if this is to be implemented.”