With the ramifications of the coronavirus pandemic impacting the UK economy in a number of ways, the UK government has introduced several extraordinary measures designed to support UK businesses and to keep the economy as far away from recession as possible during these unprecedented times. Whether this has been from the introduction of the furlough scheme to the more recent ‘Eat Out to Help Out’ initiative, it is evident that the impact of Covid-19 has meant that the government’s reaction and budgetary strategy to the pandemic is unsurprisingly under the microscopic eye more so than ever before.

One of the more conspicuous schemes which attracted headlines was related to the deferral of VAT payments which would have normally been due between March and June this year. Those payments can now be deferred until the end of the 2020/21 tax year and this will have certainly aided businesses to manage their cash flow by providing them with, what is effectively an interest-free loan facility. Despite the government's best efforts to ease the burden on businesses affected by the pandemic, and despite praise from several business figures, there remains criticism from businesses up and down the country of the government’s overall strategy in helping businesses stay afloat.

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Following PCR’s most recent article which looked at the devastating impact the coronavirus pandemic has had on the UK hospitality sector, it is evident that one of those segments within the industry - the hotel sector, is on the verge of facing one of its biggest shake-ups in recent years.

An example of this is the ongoing dispute between budget hotel chain Travelodge and its landlords which have a history of disagreements ever since Travelodge was saved from administration back in 2012. However, it appears that with all the apparent strides Travelodge has made since those troubled times eight years ago, the coronavirus pandemic has almost sent the company back to square one, with its debt burden swiftly pushing the business to the brink. Landlords in the meantime have always felt that they have had the short end of the stick and this time it is no different as affected landlords were asked to take an 80 percent reduction in 2020 rent and a 50 percent reduction in 2021, later reduced to 38 percent rent cut across 2020 and 2021. This certainly appears to have been a case of “the straw which broke the camel’s back”, with the complex rules of a Company Voluntary Arrangement (CVA) meaning that in effect – landlords can be forced into accepting a deal that they do not want. At the same time, other creditors can also outvote them because the banks are owed more than the total of unpaid rent.

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After months of economic uncertainty, there is little doubt that the coronavirus outbreak has had a crippling effect on businesses up and down the country. The impact of the pandemic has affected organisations from a variety of sectors such as retail, transport, education, manufacturing, health and beauty and the tourism industry to name a few. However, it is also evident that certain industries have been affected more than others. One of those business sectors severely impacted by the lockdown and which has felt the full impact of Covid-19 is the hospitality industry.

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Entrepreneurs’ Relief, a valuable tax relief for retiring business owners, is potentially at threat from the upcoming Budget 2020 following Prime Minister Boris Johnson’s admission that the treasury opposes the “giveaway” tax break. The initiative which was originally introduced by Alistair Darling of the Labour Party in 2008 under then Prime Minister Gordon Brown’s regime, was brought in to deliver significant advantages for anyone looking to sell a company. Although it is fair to say that Mr Brown was not the most popular of Prime Ministers’ amongst business owners, Entrepreneurs’ Relief was welcomed by businesses enabling some business assets, including the disposal of certain shares, with qualifying gains being taxed at a rate of 10%.

The qualification threshold was initially capped at £1 million per person but has since been raised to £10 million and was seen to make a huge difference to your Capital Gains Tax when you sell all or part of a company.

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Following the Conservative’s victory at the general election, one would like to think that the uncertainty surrounding Brexit for UK businesses has at least eased slightly, especially as organisations will be aware of the government’s stance on Brexit and their commitment to the 31 January deadline. Additionally, there are a few reasons which should appease even the most pessimistic of businesses in relation to what the future may hold for them post Brexit.

Firstly, Sterling had hit an 18-month high against the US dollar and a three-year high against the euro after the Conservative party won the general election with a majority. Investors certainly welcomed the results as the Prime Minister’s majority sheds some clarity and certainty on the Brexit topic. UK growth should undoubtedly receive a lift from both the easing in Brexit uncertainty, which should boost business investment, and significantly higher government spending, although growth is still expected to remain quite sluggish. This is due to there being little spare capacity in the economy and an upturn in growth can only encourage the Bank of England to raise rates in a bid to prevent a build-up of inflationary pressure. Nonetheless, the certainty that comes with a five-year administration should create confidence and bring back the aspirational buyers and sellers that have been lacking since the EU referendum result.

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