The Sunday Times - UK (2022-05-01)

12 The Sunday Times May 1, 2022

MONEY

but didn’t get anywhere. Even the intern-

ships she had lined up were cancelled.

She joined two Kickstart Schemes last

year, which are for 16 to 24-year-olds who

are on the Universal Credit benefit, but

neither resulted in a full-time job.

She did get through to the final stage

of one interview where she was asked

why she hadn’t done any work experi-

ence. “It was almost like asking for things

that weren’t tangible. Some employers

were really unfair in their expectations,”

she said.

The burden of debt

Hursit left university with £60,000 of

debt, despite being taught online for two

years during lockdowns.

Like anyone else who has taken out a

student loan since 2012, she will be pay-

ing an interest rate of 12 per cent on her

loan from September to February 2023,

up from 4.5 per cent for the highest earn-

ers. The interest rate, which applies from

the minute you take out the loan, is set

Want to catch a tax cheat?

Order six Thai curries

A tax-dodging restaurant

owner was caught out after

undercover tax inspectors

ate curries at his restaurant

six times.

They popped in for dinner

after becoming suspicious

that the West Midlands

restaurant was failing to

disclose takings from

customers who paid in cash.

In one case they ordered a

£23.90 meal and left a £1.10

tip, on a second visit the

meals cost £45.20.

The HM Revenue &

Customs (HMRC) inspectors

discovered that some orders

were not recorded in the

restaurant’s sales figures

when they paid in cash on

one visit, while the restaurant

records for that day showed

only three card

transactions.

They then examined

the owners’ bank records

and found that the money

in his account did not match

what was being declared.

David Byers deliberate. I see no reason to

disturb HMRC’s reduction

percentages and so find that

the penalty has been

correctly raised and is

upheld,” she said.

Scrutiny of the

restaurateur’s accounts

found that he had made a

£10,000 payment to a VW

dealership for a car and was

withdrawing £250 a week.

He initially denied the

account existed. He also said

that the restaurant never

opened at lunchtime, even

though the officers had eaten

lunch there.

An HMRC source said that

test meals were a routine part

of a secret restaurant

inspector’s job, but that they

would “never dine out

expensively. They’d always

order something cheap, like

Thai green curry and tap

water”.

Sian King, a tax manager

at the accountancy firm

RSM, said: “These types of

visits to hospitality

businesses are conducted by

HMRC officers relatively

regularly, and it is likely that if

HMRC asks questions about

reported turnover, there is

already evidence that

suggests the numbers may

not add up.

“These enquiries can run

on for a long time and be

costly in terms of tax,

penalties, time and, in this

example, court costs. A free

meal for an HMRC inspector

can be anything but for

restaurant owners.”

In September a tax

tribunal found that HMRC

had unfairly calculated the

revenue of a Chinese

restaurant in Abergavenny

after visiting on Chinese

New Year — one of its busiest

days. The restaurant owner

was sent a demand for

almost £200,000 of VAT,

corporation tax and fines

for “deliberate

concealment” of the

restaurant’s true turnover.

A judge said that HMRC’s

assumptions had been

“entirely unreasonable”.

The restaurant owner was

landed with a £70,000 tax bill

covering four years. He

appealed to a first-tier tax

tribunal but a judge ruled in

the taxman’s favour in a

verdict published on April 1.

Judge Fairpo said: “I have

found that he had a second

bank account into which

takings were paid that were

not disclosed to HMRC and

further that he understated

his cash takings in his tax

returns.

“I consider that, as he was

a sole trader and stated that

only he ran the business, the

behaviour which led to the

understatement of tax cannot

be anything other than

£60k debt, no jobs and

back home with mum:

what the lockdown

graduates did next

With rising inflation and a shortage of

well-paid jobs, it may take the class of

2020 five years to offset the effects of the

pandemic, reports Yasmin Choudhury

unemployment can affect young people

for the rest of their careers and are associ-

ated with regular unemployment, lower

job security and lower pay in later life.”

Of the 2020 graduates that had jobs 9

to 12 months after leaving education, 36

per cent were in full-time, skilled jobs,

down from 40 per cent in 2018, according

to the Institute for Fiscal Studies (IFS).

It said that the jobs they found were on

average of lower quality than those of

previous graduates and more similar to

the work found by those who graduated

during and shortly after the global finan-

cial crisis in 2008.

Leaving education when the economy

is weak has a direct impact on employ-

ment and pay for at least five years, the

IFS found.

If you graduated when the unemploy-

ment rate was 10 per cent you were more

likely to be unemployed five years later

than if you graduated when unemploy-

ment was at 6 per cent.

Unemployment has risen 4 percentage

points on average during the past three

recessions.

Graduates who leave university when

the economy is stable earn an average of

£1,100 a year more after five years than

those who graduate in tough times.

These effects have faded away almost

completely after a further five years.

The Office for National Statistics found

that 67 per cent of undergraduates in

their third year of study or higher said

that the pandemic had a major or signifi-

cant impact on their academic perform-

ance and 59 per cent said Covid made

them feel less prepared for the next step

after graduation.

It’s not just Covid, either

House prices have soared since the pan-

demic, and the average deposit for a first-

time buyer is now more than £53,000.

Rents are also starting to rise in many

regions. Energy bills are up 50 per cent

and are set to rise again in October, petrol

is up 40p per litre compared with a year

ago, and food prices are increasing. The

Consumer Price Index measure of infla-

tion put the rate at 7 per cent in the 12

months to March — a 30-year high.

It is a toxic environment for those on

limited budgets.

Hanife Hursit, who graduated from

Exeter University last year with a history

degree, likes to keep busy. Despite study-

ing during the lockdown years, she

co-hosted a podcast, The Minority Effect,

about the experience of minorities in uni-

versities and at work, and founded Create

the Switch, a network for young people in

creative industries.

Hursit said she felt extra pressure from

her family, who are Turkish Cypriot, to

do well at school and to save for financial

security. “Even at 22 my main concern is

saving for my future. House prices are so

high and I don’t see myself getting on the

property ladder anytime soon,” she said.

“Unemployment put a lot of pressure on

me even while living at home, that’s why I

took several part-time jobs I hated.”

After graduating, she applied for 80 or

90 jobs in marketing over nine months,

PAYBACK TIME

THE SCRAMBLE FOR JOBS

199596 202021

0

50bn

100bn

£150bn

2017 2018 2019 2020

0

2

4

6

8

10

12%

Total student loan debt

England only from 2005 onwards. Source: House of Commons Library

Source: ONS

UK unemployment

Tot al Graduated within ive years

£53k

The average

deposit for first-

time buyers

11%

Unemployment

rate for 16 to

24-year-olds

M

arcus McCabe graduated

from Cambridge Univer-

sity with a double first in

English literature in 2020.

Today he lives in his

childhood bedroom at his

parents’ house in rural

Sussex. He has found it

impossible to get a job

and worries constantly

about having no money or assets.

McCabe was one of the thousands of

Covid graduates whose final months at

university were ruined by lockdowns.

“I had a Zoom graduation where they

got my name wrong and it glitched out,”

said McCabe, 23.

“After graduating I searched for a job

in journalism, PR, marketing and copy-

writing during the height of the pan-

demic, but no companies were recruit-

ing. I know people who had job offers but

were then told they couldn’t be guaran-

teed. Trying to find a job was stressful. I

had insomnia and it was pretty horrible.”

After six months of getting nowhere,

he decided to make use of his dual Brit-

ish-New Zealand citizenship and take an

impromptu gap year. He took the last of

his student loan (money he should have

needed for rent but didn’t because Covid

cut back his academic year) and flew to

Auckland in October 2020.

For 17 months he did part-time jobs in

bars and bookshops and volunteered

on farms in return for a meal and a bed.

The usual difficulties of entering the

workforce have been magnified for the

Covid-hit classes of 2020 and 2021. Their

studies were interrupted, students had to

isolate in their halls of residence paying

full fees and graduated with large loans

into a job market that still has not recov-

ered.

Although the overall unemployment

rate is 3.8 per cent, it is 11.3 per cent for

those between 16 and 24.

Students often find a way into the

workplace through the recruitment

drives that large employers hold at uni-

versities, but many were cancelled in the

pandemic while jobs that were offered

were retracted as companies worried

about spiralling costs.

Many of the class of 2020 are unem-

ployed and, like everyone else, facing

sharp rises in the cost of living. Their

average student debt is £45,000. Total

student debt stood at £160 billion in April

last year.

Bouncing back from crisis

After the 2008 financial crisis it took ten

years for employment rates among 21 to

30-year-olds to reach pre-crisis levels,

according to Freddie Martin from the

accountancy firm PricewaterhouseCoop-

ers. Banks and financial companies fired

thousands of staff and stopped recruiting

graduates. Martin said: “Long periods of