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Legal Briefs

Businesses face bigger penalties on data leaks (more...)

(January 2018) Businesses are on final countdown to the introduction of the General Data Protection Regulation in May 2018, bringing with it tighter rules and greater penalties for data processing, and the outcome of a landmark High Court case has made the preparation even more pressing.

The case involved an online leak of payroll data by Andrew Skelton, a disgruntled ex-employee of supermarket chain Morrisons. Skelton received an eight year conviction for offences under the Computer Misuse Act 1990 and the Data Protection Act 1998 (DPA). However, over 5,000 current and ex-employees later joined together to bring a claim against the company itself, with the court finding Morrisons liable for the actions of its former member of staff.

The data included salary and bank details of some 100,000 staff and the ruling, which is the first data leak class action in the UK, allows those affected to claim compensation for the "upset and distress" caused.

Although Morrisons has said it will appeal, experts are predicting that the judgement of vicarious liability will make General Data Protection Regulation (GDPR) compliance even more pressing for both employers and suppliers of contract labour where data processing is involved.

This judgement is of huge importance, because Morrisons was held liable for the criminal misuse of third party data by an employee. The impact extends beyond the claims for compensation from employees, it’s also the impact on reputation and the financial and physical resources involved in dealing with the data breach. Reportedly, Morrisons spent more than £2m in responding to the misuse. Data breach is a growing worry for a business, whether relating to employees or customers, and it is set to be even higher on the agenda in the new environment of GDPR post-May 2018.

Bringing in a tough new era in EU-wide data protection law, the GDPR will replace the UK’s 1998 Data Protection Act, with new powers for data regulators and much stricter operating boundaries for businesses that process personally identifiable information about individuals.

The aim is to harmonise data protection across all EU member states by making it simpler for everyone, including non-European companies, to comply, but it brings greater responsibilities for data processors and big penalties of up to 4% of worldwide turnover for non-compliance.

The biggest change is that the Directive applies to any business processing personally identifiable information about EU citizens. This means that any UK business that is trading with EU citizens before or after Brexit will be affected, as will anyone who transfers personal data from the EU to the UK for processing or storage.

The Government has said that GDPR compliance will be the minimum standard in UK law post-Brexit, to enable UK companies to do business across Europe. And anyone who hasn’t already started on the journey towards GDPR needs to do so as a matter of urgency, as every business and organisation is affected, however small, and must be able to demonstrate they are complying, not just dealing with problems after they occur. While it’s likely that most will need some specialist expertise on the legal technicalities and IT processes, as a starting point there is some excellent preparatory guidance on the Information Commissioner’s website.

GDPR provides stronger protection for individuals in terms of consent. In place of the previous ‘opt out’ approach, organisations will have to secure positive consent from individuals for their data to be collected. The consent can be withdrawn at any time, as individuals have ‘the right to be forgotten’ and can also transfer their data elsewhere if they choose. Where data is to be processed for a purpose beyond that for which it was originally collected, there will need to be fresh consent. There are strict rules around data relating to children under 16 and requirements for parental consent.

The organisation will also have to provide more information about how data will be used and how long it will be kept for, as data must not be held for any longer than necessary. If data will be stored outside the EEA, details must be provided, including what safeguards will be in place.

There is a distinction between controllers and processors of data. The controller determines the process and means of processing personal data, where a processor acts on behalf of the controller. However, each has obligations in the event of a breach or lack of compliance. For an organisation that sub contracts its processing, there is a high duty of care imposed in selecting their data processing provider with procurement processes to be followed and regular ongoing reviews once appointed.

Under GDPR there will be a statutory obligation to notify the regulator – the ICO in the UK – of any breach, if an individual’s personally identifiable information is at risk as a result. Fines can range up to a maximum of €20m, or 4% of total worldwide turnover for businesses, for serious contraventions.

Various Claimants v Wm Morrisons Supermarket PLC [2017] EWHC3113 (QB)


Keep Christmas for the children (more...)

(December 2017) Christmas celebrations for children are too often marked by family divisions when relationships break down.

According to statistics from the ONS around 100,000 children per year see their parents divorcing, with many of those families breaking up immediately after a last Christmas together, and family lawyers seeing a surge in enquiries for divorce each New Year. Alongside, there are many more children who will be affected by family breakdown, but who are not shown in those statistics, where their parents are not married.

And while the break-up may offer hope of ending a difficult time, too often it marks the start of a new challenge, with couples engaged in a drawn-out and combative process, instead of collaborating to find common ground.

For many families, the final Christmas will be marked by arguments and behaviour that may come to be used as an example of the unreasonable behaviour that will form grounds for divorce. To secure a divorce, the marriage must be shown to have broken down irretrievably, with most being ‘fault-based’ - adultery, unreasonable behaviour and the rarely-used fact of desertion. The only alternative is a period of separation of at least two years before issuing the divorce petition, but separate living arrangements can be difficult to achieve before assets have been divided through the process of divorce. And while the break-up for unmarried couples appears to offer a simpler exit strategy, it underlines the lack of legal protection for cohabiting partners.

There have been calls for a change in the law to allow for ‘no fault’ divorce without long separation, with those advocating the change arguing this could reduce animosity and provide a better environment for children. Most recently Baroness Hale, the first female president of the Supreme Court, spoke out to say that the law should be changed to address injustices, including ‘no fault’ divorce, statutory backing for pre-nuptial contracts and greater rights for cohabiting partners, who have been shown to be at greater risk after a break-up, with few routes for financial protection.

Many people who have been living together for any length of time, sharing a home and bringing up children, think they have some special rights through a ‘common law marriage’. But there are no such protections unless something is legally owned between the two of you – for example if your name is on the title deeds for a property, as joint tenants or tenants in common, or if you have a jointly named savings account.

The lack of financial remedy for cohabiting couples is often the biggest issue. While a parent can be made to contribute to the maintenance of their children, there is no such protection for a former partner to claim maintenance if they cannot work while bringing up the children of the relationship. Similarly, they may find themselves with nowhere to live.

Whether starting out, or in a committed relationship, and whether married or cohabiting, it’s sensible to think about protecting assets through a pre or post nuptial agreement or a cohabitation agreement. For many couples, simply having the frank discussion that goes into making such an agreement can help to create a positive, open attitude in a relationship from the start. While pre or post nuptial agreements are not yet binding in the UK, they have increasing weight after being tested in the courts.

And for those couples anticipating their last Christmas together, the advice is to seek collaborative approaches to arrangements for both children and financial matters. For divorcing couples, mediation will usually involve sorting out such arrangements separately from the actual divorce proceedings, with the resulting agreement likely to be presented to the Courts for a formal consent order to be made.

Collaboration and mediation is the best way to face up to the pain of separation. Most couples find it’s a way to get things sorted out more quickly and easily, and helps to put children’s interests first. The actual process of divorce has become much simpler in recent years, and many couples are taking a DIY approach, but involving a specialist mediator, and having guidance over your rights, can make the difference between a good or bad break-up, particularly where children are involved, and that’s true for cohabiting couples too.


Cohabitant agreements – giving unmarried couples rights (more...)

(December 2017) It’s an unfair fact of life, but in the eyes of the law a married couple has far more protection than a cohabiting, unmarried partnership. Even if you’ve spent years jointly contributing to the running of a house, split paying the mortgage between you, have children together, or have been living with each other for decades, the loss of a partner could change everything. If the relationship ends either through separation or bereavement, unmarried cohabiting couples do not have the same or similar rights as married couples. They don’t have the same rights as those living in civil partnerships, either. Both heterosexual and same-sex couples are vulnerable if they don’t have that piece of paper saying that the state recognises their relationship in law.

So how can an unmarried couple protect themselves if they don’t want to get married or are ineligible for a civil partnership? The best way is to draw up a Cohabitant Agreement.

What is a Cohabitant Agreement?

A Cohabitant Agreement is very similar to a Pre-nuptial agreement. It’s a document that clearly lays down exactly who owns what, property rights and arrangements, the care of any children, and how debts are dealt with if one of the couple either passes on or leaves the relationship. It’s usually signed by both partners, and notarised by a solicitor.

This doesn’t, however, make it a legally binding document. Just like Pre-Nups, Cohabitant Agreements are exactly what they say they are – agreements. It lays out the expressed wishes of the couple should the relationship break down or one of the partners dies, but if the next of kin do not agree with the terms of the agreement then it can be easily challenged in court.

In the majority of cases, and as long as the welfare of any children are not impacted, the courts will recognise a Cohabitant Agreement and are unlikely to interfere, especially if the majority of the document deals with financial or property arrangements. The courts can rule to enforce a Cohabitant Agreement, but the document itself is not technically legally binding.

Surely the fact I’m a common-law wife/husband is enough?

The term ‘common law’ when used about relationships is a bit of a misnomer. It’s certainly a well-known phrase, but it’s not recognised in law, and as far as the courts are concerned there’s no formal or recognised ‘common law’ relationship, even if you’ve been together for years.

What happens if you don’t have an agreement?

If you’re unmarried but in a long-term relationship with someone and don’t have a Cohabitant Agreement, then the death of a partner can be particularly traumatic. Without an agreement there is no provision in law for the remaining partner to inherit any of their deceased partner’s estate. A surviving partner is not exempt from Inheritance Tax, either, something a married or civil partnership couple have.

To be able to receive anything at all from the deceased person’s estate, the surviving partner would have to go to court to prove that they co-owned assets – everything from the car, the house, or even the TV. In short, without some form of legal protection, surviving co-habitant partners could be left with nothing.

What should go into a Cohabitant Agreement?

Just like any formal agreement, you should be as detailed as possible. If you’re not sure then talk to a family law solicitor, who will be able to help you draw up an agreement that could protect you both.

Your agreement should include:

• A statement of intent – explaining exactly the nature of the agreement

• Personal details and a full disclosure of your financial assets including inheritance & wills

• How any possessions/financial assets or property should be dealt with

• Income and expenses – whether finances are covered in a joint agreement or kept separate, and whether one partner will support the other should they stop working or be unable to work

• Clear arrangements concerning children, including their educational needs

Mortgage payments on any joint-owned property and who pays what if the couple separate.

Other clauses can be included as there is no formal template for a Cohabitant Agreement. This is why it’s important to get good legal advice before drawing up any agreement that could be challenged in a court of law.

Christmas gifts that keep on giving (more...)

(December 2017) Christmas shopping usually means a visit to the high street or browsing online retailers, but the season of giving can be a good time to make sure you’re maximising your opportunities for inheritance tax reliefs, whether to family, friends or charity, while spreading some seasonal cheer.

While larger gifts may be taken into account, anyone can make smaller gifts or gifts out of surplus income without it being taken into account for inheritance tax purposes, as long as some simple rules are followed.

Broadly, these come under two headings: gifts where the allowance is automatic if the gift fits the rules, and those where the exemption must be claimed after death, such as gifts out of surplus income. The automatic allowances include gifts to charities or political parties, gifts on marriage or civil ceremony, an annual exemption of £3000, and small gifts up to £250 per person.

Any number of so-called small gifts can be made each year, of up to £250 per recipient, with no limit on the number of recipients, as long as no one person receives more than £250. If anyone receives more than £250, then the whole small gift exemption in relation to that recipient is lost for the year, not just the excess.

Alongside, the annual exemption of £3000 can be used to make gifts to one or more people. There’s an added benefit if the allowance isn’t fully used in any year, as any remaining allowance can be carried forward one year. It cannot be combined with the small gift exemption for any one individual.

In any tax year, you can also give a cash gift when a friend or family gets married or has a civil ceremony. The limit is £5000 for a child and £2500 for a grandchild, or £1000 for those outside immediate family, whether a friend, niece or cousin.

You can also make payments to help with another person’s living costs, such as an elderly relative or a child under 18.

And if giving to charity is important to you at Christmas, it’s worth knowing that gifts to charities and political parties will not count towards the total taxable value of your estate. You can also cut the Inheritance Tax rate on the rest of your estate from 40% to 36%, if you leave at least 10% of your 'net estate' to a charity.

These allowances are automatic, unlike the gifts from surplus income, but even so, it’s a good idea to track any gifts as it will help to ensure that you keep inside the rules, and makes it easier in any later dealings with HMRC.

When it comes to relief on gifts from surplus income, record-keeping is essential as the gift will only qualify for exemption if it is part of a regular pattern of giving, and if you can demonstrate that you maintained your normal standard of living after making the gifts and all other usual expenditure.

To make gifts from surplus income, it’s essential you record your intention in writing, setting out that you mean to make the gifts regularly, and then keep a record of income and outgoings to demonstrate the money you gave was indeed out of surplus income. It doesn’t need to be too complicated, just a simple log of your income received during the year and the amount spent, figures which could come from monthly and annual summaries on bank account statements.

The exemption for gifts from surplus income must be claimed after death, by the executors of a person’s will, and can be used for any regular payments, such as monthly contributions to a grandchild’s savings account or payment of school fees, or making regular gifts on special occasions such as birthdays and Christmas.

Any other gifts made, unless they go into a trust, will be potentially exempt transfers (PETs), which become exempt if you survive the making of the gift by seven years. Otherwise, the value will be brought into account for inheritance tax purposes.

Making gifting part of an annual review is a good idea as the rules do change from time to time, and it’s good practice to check back what you’ve done each year, just as it’s important to keep your will up to date as circumstances change.

And if you’ve reached the end of inspiration on gift ideas for your spouse or civil partner, it’s worth remembering that you can give them as much as you like during your lifetime, as long as they are living permanently in the UK.

Chancellor announces get-fit regime (more...)

(November 2017) An extra £3 billion to prepare for Brexit over the next two years and a vision of an economy that is ‘fit for the future’ were at the heart of the Chancellor’s Autumn statement.

And despite downgrading growth and productivity forecasts, after public sector net borrowing hit £8bn in October, Philip Hammond announced a raft of new investments. Alongside the £3bn set aside for Brexit, he plans to inject £6.3bn into the NHS and £500m to support emerging technological development, such as Artificial Intelligence.

Growth forecast for 2017 downgraded from 2% in March’s budget to 1.5%

Housing is also in the spotlight, with £15.3 billion new financial support for house building over the next five years, with the Government setting aside £1.2 billion to buy land and £2.7 billion for related infrastructure. The Government also announced plans to create five new so-called ‘garden’ towns, and a headline-grabbing cut in stamp duty for first time buyers.

Stamp duty is currently paid on property purchases over £125,000, with a ‘slice’ tax where buyers pay at the relevant rate for each band, rather than a flat rate across the whole amount. With immediate effect, stamp duty is abolished for first-time buyers on properties worth up to £300,000, or on the first £300,000 of a property worth up to £500,000.

The change in stamp duty has caught most of the attention. It’s certainly a move that will be welcomed by first time buyers, but does add yet more complexity to the application of this particular tax, where we already have different rates for second home owners and landlords.

Buyers need to read the small print before rushing out to make an offer, as there are clear distinctions on who is eligible. It will not apply if any property has been owned at any previous time, whether here or anywhere else in the world, and it must be the only or main home for the buyer. In a joint purchase, everyone would need to qualify as a first-time buyer. Buyers will need to check out the detail with their solicitor, and the benefit must be claimed when the Stamp Duty Land Tax return is made to HMRC during the purchase process.

For the NHS, £3.5 billion of new funding has been made available for upgrading NHS buildings and improving care and a further £2.8 billion has been set aside to support improvements in A&E performance and to reducing waiting times for patients.

For individuals, the basic-rate income tax threshold will rise to £11,850 in April 2018, up from £11,501, and the higher rate threshold will rise from £45,001 to £46,350. Alongside, the National Living Wage, paid to those aged 25 and over, will increase from £7.50 per hour to £7.83 per hour from April 2018, while the National Minimum Wage will also increase:

21 to 24 year olds   -  £7.38 per hour
18 to 20 year olds   -  £5.90 per hour
16 and 17 year olds   -  £4.20 per hour
Apprentices   -  £3.70 per hour

In areas focused on supporting small business, the switch to link business rates to the Consumer Price Index, instead of the Retail Price Index, has been brought forward by two years, with the Government saying businesses will save £2.3bn as a result. There will be retrospective legislation to tackle the so-called ‘staircase’ tax, which had affected the business rates bill for many small businesses in communal offices, with those having more than one office linked by a communal lift, corridor or staircase being charged more.

Also, the VAT threshold at which registration is required will remain at £85,000, but alongside there will be a crack-down on VAT evasion online, with greater powers to make online marketplaces responsible for the unpaid VAT of their sellers.

Other initiatives to tackle avoidance and evasion risks will see new technology for HMRC; new global rules to force the disclosure of certain offshore structures to tax authorities; and a change to international corporate tax rules to ensure globally-operating digital companies pay a fair amount of tax.

As with the Chancellor’s previous statements, his eye is very much on managing the economy through the coming Brexit negotiations and the country’s exit from the European Union.

Chancellor scraps stamp duty land tax for most first time buyers (more...)

(November 2017) The Chancellor has announced in the Budget on Wedesday 22nd November that first-time buyers will pay zero stamp duty on the first £300,000 on any home that costs up to £500,000 with immediate effect. On properties costing between £300,000 andf £500,000 there is a reduced rate of 5% on the sum over £300,000. Only when the purchase price exceeds £500,000 will a first time buyer pay the full standard rate.

Lessons for business from the #metoo headlines (more...)

(November 2017) Following the allegations of sexual misconduct against Harvey Weinstein and other leading figures, businesses need to make sure they have clear policies to inspire the right culture in their workplace.

The initial revelations about the Hollywood mogul inspired many to open up about their experiences of sexual abuse and harassment, flooding social media with millions of posts and tweets using the hashtag #metoo.

That response was reflected, also, in figures from a ComRes poll on behalf of the BBC, which showed that more than half of all British women and a fifth of all men had experienced some form of sexual harassment in their place of work or study.

Such harassment may come in many forms, but includes any unwelcome sexual advances, whether by touching, standing too close, asking for sexual favours, or displaying offensive materials. Employees are protected in the workplace by the Equality Act 2010, which makes it unlawful for an employer to allow any job applicant or employee to be subject to any harassment related to sex or of a sexual nature.

The research commissioned by the BBC showed that many who had suffered sexual harassment at work could not face the process of reporting an incident. Of those who said they had been harassed, 63% of women and 79% of men said they didn't report it to anyone.

Many employees will not report incidents because they’re embarrassed or ashamed, or may feel they will not be believed, as it is usually one person’s word against another. Any complaint must be brought within three months and the individual must be prepared to prove the conduct was ‘unwanted’.

This makes it difficult, as there are often circumstances where those being harassed may feel a passive position is the safest way to handle the situation, so the other party may argue it was mutual. Similarly, different people may have different ideas of what is acceptable; someone might think it’s ok to make racy jokes or engage in ‘banter’ or flirting, where the other may find it offensive or humiliating.

Resources published by the Equality and Human Rights Commission and conciliation service ACAS recommend that every business has a written policy, setting out how harassment at work is unlawful and making sure all staff understand that such behaviour will not be tolerated and may be treated as a disciplinary offence. Examples of what constitutes unacceptable behaviour may help people understand the boundaries, particularly if they are relying on what may have seemed acceptable in previous years, together with guidance to staff on how to respond and deal with such behaviour. Then, most importantly, a clear process for what steps the organisation will take if anyone feels they have been subject to any form of harassment, including a safe environment for reporting and handling any complaints.

However large or small the company, top of the agenda should be a focus on the best possible attitude towards equality and diversity in the workplace. With research such as the BBC’s showing that it is usually a junior member of staff experiencing the harassment, management should lead the way in demonstrating that everyone, from the top down, has zero tolerance to inappropriate behaviour. Staff should be confident they can report any concerns, knowing they will be heard in a supportive, positive way.

Family finances make divorce negotiations increasingly complex (more...)

(November 2017) Divorce rates are on the rise, according to the latest statistics, and with the increase in the value of family assets, couples should do more to face up to financial affairs during the good times according to professionals.

According to the latest figures from the Office for National Statistics (ONS), the overall rate of divorce for opposite-sex couples has increased for the first time since 2009, at 5.8% in 2016, with men and women aged 45 to 49 recording the highest number of divorces.

Women continue to be more likely to petition for divorce in opposite-sex marriages, at 61% in 2016, and this trend was reflected among same-sex couples, with female couples accounting for 78% of such divorces.

The most common ground for divorce continues to be unreasonable behaviour, with 36% of all husbands and 51% of all wives petitioning for divorce on this ground.

And although the overall number of divorces remains well below its 2003 peak, experts say that the process of divorce, negotiating over finances and family arrangements, is becoming ever more complex, and suggest couples should be more open to making agreements and understanding finances from the outset.

The increased value of family assets means more is at stake, particularly for middle-aged couples, when couples come to hammer out a fair division after a marriage breakdown. Wealth statistics from ONS show that by 2014 half of all households had total wealth of £225,100 or more.

And although family property tends to be thought of as the biggest asset, the figures show private pension wealth was the largest component of aggregate total wealth. Values have surged thanks to stock market increases, and changes in legislation have opened the door to greater flexibility in accessing pension pots, making them increasingly important in divorce negotiations.

As a result, many more partners are seeking a share of pension arrangements on divorce. Ministry of Justice figures show a 43% increase in pension sharing orders, at 11,503 in the 2016-17 tax year, compared to 8,027 in 2015-16. Pension sharing orders are issued by the court, setting out the share of a pension an ex-wife or husband will receive from their former spouse.

In recent years, spouses divorcing after a long marriage have come to expect an equal share of all assets, irrespective of any decision on needs, and whether or not one was the home maker.

But a recent Court of Appeal ruling in Hart v Hart, saw a wife awarded £3.5m, out of total resources of just under £9.4m, in a decision which some have interpreted as a shift in attitude. The judgment gave greater weight to the pre-marriage wealth of the husband, despite a 23-year marriage, with the wife’s settlement based on a calculation of needs, rather than equal sharing of assets.

This case was a complicated one, and it is unusual to see pre-marital wealth being given such consideration after a relatively long marriage, during which finances may have mingled.

But, together with the increasingly complex finances of those embarking on second or subsequent marriages, it’s an outcome that may encourage more new couples to seek pre-nuptial agreements, or sometimes post-nuptial. While such agreements are not automatically legally binding in England and Wales, they are likely to be upheld, if done properly, following the 2010 landmark case of Radmacher v Granatino. It’s a way of clearly setting out what each person has brought into the relationship, in case of any later division of assets and final payout.

What is important is open communication and understanding of financial affairs, and making such an agreement can help couples to have a more frank discussion at the outset. Often, one partner may take the lead on finances, or some couples may just avoid it, as they think it’s a tricky topic. But understanding what you have today, in a positive, settled relationship, may mean you can better cope if the worst happens and things become difficult in future.

Hart v Hart [2017] EWCA Civ 1306 (31 August 2017)
Radmacher (formerly Granatino) v Granatino [2010] UKSC 42

Avoiding septic tanks blockages when it comes to selling (more...)

(October 2017) This year’s housing market has been characterised by slumping prices and sluggish sales in many areas, posing a challenge to would-be sellers looking to move on.

And for those who are not connected to mains drainage, generally in rural areas, there’s an added challenge, with many unaware of stricter rules regarding septic tank systems and soak-aways, which must be dealt with as part of the conveyancing process.

Property owners with a septic tank or small sewage treatment plant could find themselves with a headache if they aren’t up to date on their responsibilities and meeting the latest legal requirements.

Those are set out in the Environmental Permitting (England and Wales) Regulations 2016 and the Small sewage discharges in England: general binding rules. For homeowners, the important points relate to the amount of waste being discharged, and where it is being discharged.

If it’s domestic waste, you can discharge up to 2 cubic metre per day to the ground via a septic tank or small sewage treatment plant. If it’s discharging to a river, stream or other surface water, then up to 5 cubic metres per day is permitted, but only if a small sewage treatment plant is being used.

Any septic tank discharging to surface water will have to be replaced or upgraded by the end of 2019, or when the property is sold, if that happens earlier.

The Environment Agency has provided a simple calculator to enable homeowners to work out their estimated daily discharge, which is based on the size of the property.

If a system is being installed or upgraded, then it must be to British Standard BS EN 12566 and both planning permission and building regulations approval will be needed. Approval will not be given if public sewers are accessible within 30 metres.

These approvals apply to any installations from 2015 onwards, so any system that has been upgraded in that time without planning permission and building regulations approval would have to apply for permission retrospectively, and that’s going to cause delays and problems if it is only discovered during the sale process.

When selling, the home owner is legally obliged to tell the purchaser if sewage is being handled by a private drainage system, with a written notice that sets out details of the waste water system, its location and the maintenance requirements. There’s a legal responsibility to ensure the system is in good working order and does not cause pollution, so it makes sense to check everything is OK on a regular basis, and certainly before putting the property on the market. It is also important to be sure that all rights and obligations are in place if any part of the system is located on someone else’s property, as any gaps would be thrown up as part of the conveyancing process.

The discharge limits do not apply to cesspits, as they are self-contained tanks, but cesspits must be maintained and emptied regularly by a registered waste carrier.

Wills and Probate
Dementia and the power of attorney (more...)

(September 2017) One of the fastest growing health issues in UK society is the seemingly relentless rise in dementia. This terrifying category of diseases combined with an older population means that it’s never been more important to get your affairs in order as early as possible. But if dementia does take hold, at what point do you hand over responsibility to a nominated person and grant them Power of Attorney over your financial affairs? And what alternatives do you have?

LPAs – there to look after your affairs

Wills are, without doubt, an essential part of the process of later life. It’s not something that people want to think about at any age, but unless you want to leave a financial tangle behind for your bereaved relatives to sort out after you’re gone, it’s crucial to make sure your will is taken care of earlier rather than later. A key part of that could be creating an LPA.

An LPA (or Lasting Power of Attorney) is a document that allows you to appoint one or more people to look after your affairs and make decisions on your behalf when you are no longer able to. These nominees are referred to as attorneys, although they do not necessarily have to have legal experience to qualify, and are usually close relatives or trusted friends. There are two types of LPA:

• A Health and Welfare LPA can specify what kind of treatment and palliative care you want if you have a degenerative disease like dementia, whether you should be moved into a care home, and specifics concerning your daily routine.

• A Property and Financial Affairs LPA often gives your attorney access to your finances to manage your affairs when you are unable to. They will be able to access your bank accounts, pay bills, and arrange the sale of your property if you go into a care home.

– LPAs must be registered with the Office of the Public Guardian, which can take up to ten weeks to complete.

LPAs are appointed by a person while they are still capable of making rational decisions concerning their future care, financial matters, and how their estate is to be managed once they are no longer capable of doing it for themselves. There has to be a degree of trust between the sufferer and the person appointed to take responsibility for the instructions laid out in the LPA, whether that’s a Financial or a Health and Welfare agreement.

Court of Protection appointed deputy

There is an alternative to an LPA in the form of a Court of Protection appointed deputy. These are usually appointed by a third party on behalf of a dementia sufferer once they have lost the ability to appoint their own representative.

However, this is rarely offered as an option to an LPA, primarily because in the majority of cases an LPA has been arranged long before a dementia sufferer loses the ability to make considered decisions about their future care. As long as the person nominated to look after the stipulations laid out in the LPA has the trust of the donor, and the donor is mentally capable of making the decision to nominate a person as their LPA executor, there shouldn’t be any problems.

A court-appointed deputy is only really appropriate after a dementia sufferer has lost the ability to make rational decisions for themselves, or there is no one to act as an LPA nominee. They have to provide a full list of assets and annual accounts, as well as a security bond.

Sorting things out sooner rather than later

As power of attorney is often agreed upon before the condition really starts to affect the cognitive ability of the sufferer, it can be months or even years later when the power of attorney status really comes into play. By then, the family dynamic may have dramatically altered, as may the financial situation of the sufferer, especially if they have been forced to go into a care home.

This is why it is so important to sort out not only your will, but any LPAs as early as possible, especially after the diagnosis of a degenerative disease. LPAs can, in fact, bring families closer together, as they ensure the sufferer is cared for properly, and that those granted the Power of Attorney are fully aware of their responsibilities from the outset.

Giving rookie renters a helping hand (more...)

(September 2017) Following the recent A level results, many first-time students will be looking for last-minute accommodation, if they aren’t heading to their first choice of university with an assured place in the halls of residence.

Parents can help guide the rookie tenants through the process, but may themselves not be aware of how things have changed since their uni days or first-time flat rental.

All too often both parents and students get focused on the emotional upheaval or logistics, rather than the important details of checking out the property and making sure the landlord is a safe bet.

Privately-owned student accommodation is likely to be an HMO - or house of multiple occupation – if it accommodates three or more students, which places extra obligations on the landlord. For example, an HMO will need to satisfy special requirements regarding fire and general safety, utility supplies and management of communal areas, which could include fire alarms, extinguishers and fire blankets on every floor. You can also ask to see landlord's HMO licence. If a landlord doesn't have a licence when they should, they can be prosecuted and you may be able to reclaim up to 12 months’ worth of rent paid during the time that the HMO was unlicensed.

Whether the property is classed as an HMO or not, all landlords should ensure that gas appliances are covered by an annual check, that all electrical installations are checked every five years by a qualified electrician and that any appliances like washing machines, kettles or toasters have a PAT certificate.

In privately-owned student accommodation, any agreement is likely to be based on an assured short hold tenancy. This can be for a fixed term such as the academic year, for 12 months, or periodic, which may run from month-to-month. Most lets include the summer holiday period these days, with either full or reduced rent due.

A written agreement should be provided by the landlord, and as a minimum this should be a statement of the main terms, including the date it will begin, the rent due, when and how it must be paid, if the rent can be changed and how long the agreement is for. Under some agreements the tenants may be jointly and severally liable for the rent. This means that, if one of the tenants does not pay their share, the landlord can sue any of the other tenants for the unpaid rent and may pursue the easiest option. For example, in a house share with a mix of home and overseas students, the landlord may choose to pursue one UK resident for the whole sum, rather than any of the overseas students. Also, it’s likely that every student will have to be backed up by a guarantor such as a parent.

By law, any deposit must be held by the landlord in a registered deposit protection scheme and you should ask to see evidence of this being done within 30 days. The deposits may be held in the name of one or more designated tenants.

The property should be checked carefully against the inventory, and whether this is a comprehensive record of all contents and the general condition of each aspect of the accommodation or a simple list, it's worth taking photographs of the condition of everything, including any damage or poor condition that you pick up as you go round the property, to ensure that you have a strong case for the full return of your deposit at the end of the tenancy.

Recently, a group of student tenants in Bristol took a letting agent to court and managed to overturn a deduction of £780 worth of charges which was being taken from their deposit to cover redecoration and cleaning. The students had photographic proof of the state of the accommodation when they took it on and could show it was cleaner when they left, as well as having evidence to demonstrate that works claimed for by the letting agent had not subsequently been done. Their attention to detail helped them secure a County Court judgement, and the return of the deposit.

Thanks to the huge rise in demand for university places over recent years, many different types of investors and private landlords have entered the student accommodation sector. There’s been a big shift away from the scruffy digs that people used to experience at university, but there are still many older properties that may be more likely to pose problems in terms of repairs and general condition, and no sector is immune from difficult landlords.

The important thing is to make sure young people have some guidance, and if necessary get the contract and terms checked out professionally. It's likely to be the parent who is on the line as guarantor, so it’s worth taking time to be sure, and not just jumping to secure a last-minute property.

Some tips include:

• If you’re using a letting agent be sure of their procedures and where a holding or advance rental deposit is required, find out if it will be refunded if the application fails to complete, for example if you don’t pass a credit check

• Ask to see the relevant licences, such as for a House in Multiple Occupation, and for any gas or electrical installations and appliances

• If the letting agent or landlord says that any work will be undertaken as a condition of you taking on the tenancy, get it in writing before signing any agreement

• Read the small print on the tenancy agreement and if anything doesn’t sound right then get it checked out, as once you’ve signed, you’re committed

• Check the inventory – dispute anything that’s not accurate and take photographs when you move in

• Make sure the deposit is being held in a Government-backed scheme.

Where there’s a will, there’s a way (more...)

(August 2017) When thinking of making a will, the idea of a Victorian lawyer taking down the last instructions at the bedside still springs to mind for many people.

And the 19th century lawyer would find things pretty much as they were if they time travelled to 2017, but a major change to how people can say what should happen after their death is likely to happen soon. If the proposals from the Law Commission get the go ahead, the law is likely to catch up with technology, and in future we could see emails and other simple expressions of intention being acceptable.

But in the meantime, the only way to be sure of what happens after you die is to make your will following the formalities that have been in place for hundreds of years. That is particularly important for those who may be living with partners, for whom the current law offers no protection, or where there are young children, for whom the choice of guardians may be important. Yet it’s estimated that around 40% of the adult population don’t have a will.

To be valid, a will must be in writing and be signed by the person making the will in the presence of two or more witnesses, who must also sign at the same time.

Without a valid will, the division of assets is decided by the Intestacy Rules under which, typically, the whole of the state of someone who dies leaving no surviving spouse or civil partner will go to children, or if they have none, to parents or other family members. If there is a surviving cohabitee they could apply for “reasonable financial provision” under the Inheritance (Provision for Family and Dependants) Act 1975, but this is a very slow and potentially expensive option, and in the meantime, they may be blocked from living in the couple’s home if it was not held in shared ownership.

The main proposal from the Law Commission would see the Courts able to recognise wills that have not followed the existing strict rules, so long as the deceased's testamentary intentions are clear. That will include provisions to recognise electronic wills, if fraud and undue influence can be ruled out. It is also intended that new rules would take better account of conditions such as dementia, which affect decision-making.

If these proposals go ahead, it will bring the law relating to will writing into the modern world, which is good news as long as there is sufficient protection, particularly for the elderly and vulnerable. But nothing is going to change right away, and even if the rules do change there is likely to be a period of uncertainty during which any ambiguities in the new rules are tested in the courts, so for the time being it’s important that wills comply with the long-standing rules. Not having a valid will in place can create a lot of stress for surviving family, at what is already a very difficult time.

Making a will is something that people often put off, perhaps because they find it hard to think about it, but it’s the only way you can be sure of what happens when you die, and there are issues that will be important at different life stages. If you have children under 18, it’s likely you would want to have named guardians to care for them, or to make special provision if a child of any age has limiting physical or mental health issues. Older people may want to make plans to mitigate inheritance tax, and cohabiting couples may want to ensure property or assets pass to each other, as they do not have the protection that comes with marriage or civil partnership.

The consultation period will run until 10 November 2017.

Gender pay likely to stay in the spotlight (more...)

(August 2017) The BBC found itself in a media storm last month, following the publication of salaries paid to its highest-earning stars, which revealed that only one-third of its 96 top earners were women, and the top seven were all men. Since then, staff at the Financial Times have threatened to strike over the paper’s reported 13 per cent gender pay gap.

It’s an issue that is likely to keep on drawing attention, now that larger employers are obliged to publish their gender pay gap information. The Equality Act 2010 (Gender Pay Gap Information) Regulations came into force on 6 April and some organisations are already publishing their results.

The Regulations apply to all private, public and voluntary sector organisations with 250 or more employees, who must publish details annually of their gender pay gap, for both basic pay and any bonus payments, with first reporting due no later than 4 April 2018. The information must be published electronically on their own website and on a dedicated government space .

The aim is to measure differences between the average pay of men and women in an organisation, not just whether men and women are receiving equal pay for equal work. The figures will show the distribution of men and women at different levels across the organisation, highlighting whether an organisation is promoting or appointing women into more senior roles, or whether men are dominating the higher-paid jobs. If so, then the organisation will have a gender pay gap, even if men and women are paid equal pay for equal jobs.

Although this will provide greater transparency, it will not provide the sort of detail published by the BBC, which was required to publish the names and salaries of its high earners under its new Royal Charter, to demonstrate its stewardship of public money.

However, implementing the new Regulations is likely to be resource-hungry, with internal systems needing to be configured to generate the figures, and organisations may find themselves wanting to provide a more detailed analysis if they feel the headline information does not give the full picture – for example by breaking down the overall pay gap figure by part-time working or geographical location.

There’s a legal requirement for organisations to publish this information, but it’s their corporate reputation that is likely to take a hit if their pay gap proves to be on the wrong side of the national average of 18.1 per cent1. It’s worth getting the information together now, rather than waiting for the deadline, as that will allow time to review the current position, look at underlying causes and put steps in place to address any issues. Future strategy can be addressed in the written statement that must accompany the statistics.

Figures must be calculated using the ‘snapshot date’ which is 31 March for public sector organisations and 5 April for businesses and charities, and the data published within a year of the snapshot date, meaning the deadline for companies to publish the first year’s data is 5 April 2018.

If a significant pay gap is revealed by a company, the other concern is that they could find female employees challenging why their pay is different from that of male colleagues. If the difference cannot be justified, there could be grounds to claim gender-based discrimination.

The data to be published is:

• mean gender pay gap in hourly pay

• median gender pay gap in hourly pay

• mean bonus gender pay gap

• median bonus gender pay gap

• proportion of males and females receiving a bonus payment

• proportion of males and females in each pay quartile

The accuracy of the data must be confirmed in a written statement signed by an ‘appropriate person’ in a senior position, such as a director or partner.

1Per Government Equalities Office

Getting it right to grow the spirit of enterprise (more...)

(August 2017) Enthusiasm for small enterprise is seeing increasing numbers trying to make it as entrepreneurs and inventors, whether alongside the day job, bringing up children, or even school work.

Recently that’s included a five-year-old girl who was selling cups of homemade lemonade to passers-by heading to a festival, but she was stopped by enforcement officers who hit her with a fine for running an unlicensed stall. The fine was later dropped after attracting negative media coverage, but the incident highlights one of the ways that lack of knowledge is affecting would-be entrepreneurs.

Trading on the street requires a licence, granted usually by a local authority or the Metropolitan Police in Greater London, and the application must specify the proposed days and time of trading and the location. Trading areas are often restricted and there’s no guarantee of getting exactly what you’ve asked for; the number of days may be restricted for example. Operating without a street trading licence, or outside the conditions of a licence, can attract fines of up to £1,000.

Another way for small business to trade without the commitment of permanent premises is by using pop-up premises to trial their new idea. This can be an ideal way to get a quick and immediate customer response, but both temporary tenant and landlord need to make sure the terms are properly stated, to avoid later difficulties which could include planning permissions, safety requirements or insurance. In the first flush of enthusiasm in today’s gig economy, many people don’t realise they need to get to grips with many of the things that bigger business has to take on. With pop-ups, even when it’s a temporary agreement, it creates an interest in property and so you should take advice and make sure it’s documented with a licence or short-term lease.

Telling HMRC that you’re
self employed and then declaring any self-employed income each year is another important step in going into business. But for smaller traders there is a now a tax-free allowance that came in from April 2017 which means there is no need to declare or pay tax on the first £1,000 earned each year, with another £1,000 allowance for any property-related income. If your income is more than £1,000 before deducting expenses, you will have to declare it, but can still take advantage of the allowance. However, the allowance for property-related income cannot be claimed in addition to the £7,500 a year tax-free income allowance for landlords who rent out a spare room in their house.

There are some great ways to earn extra income these days, whether it’s letting out your drive for parking, trading on e-Bay or coming up with the apps of the future. Going into business has become much less daunting, but getting advice before you start may help avoid difficulties later.

Parents need to be aware too. With a smartphone in one hand and schoolbook in the other, increasing numbers of teens are looking to get a foothold in business before leaving school, but there are rules and restrictions on the hours that can be worked by those under 16, whether in or out of term time. They may seem irrelevant when a teenager has a micro-business that is wholly online and operated from their bedroom, but one important aspect of the rules is to protect performance at school, so parents need to be sure time spent is not excessive and undermining classroom ability.

Stripping it back to understand dress codes (more...)

(July 2017) This summer has seen dress codes being re-written by Royalty, MPs and now the Anglican church, leaving many wondering where they stand in the workplace.

First, the Queen conducted the State Opening of Parliament in a hat and coat, in place of the traditional gown and crown. Then the Speaker of the House declared jackets and ties an unnecessary convention for male MPs. And now the Synod, the Church of England’s ruling body, has agreed to a change in canon law that will see clergy able to ditch their traditional robes when taking communion or conducting weddings, funerals or baptisms.

But there are still situations where rigorous dress codes are maintained, notably the ‘almost entirely white’ clothing rule that is imposed strictly by the All England Club during the annual Wimbledon Grand Slam tennis tournament. Players have been forced by umpires to change and resort to borrowing kit when told to remove offending colours or flashes that have broken the rule. And while many big names have tried to resist the ruling, it remains carefully guarded by the club, despite dating from the 1800s.

When it comes to dress codes in a workplace setting, there are three main areas where employers have obligations: they must comply with equality legislation on gender, religion and disability, any requirements must take account of health & safety issues, and where employees are required to purchase specific clothing, this must be reflected in National Minimum Wage calculations.

Here are the main issues employers need to consider when drawing up and implementing dress code policies.

The design considerations for dress codes

Gender discrimination:

The treatment of temporary receptionist Nicola Thorp, who was sent home without pay for failing to comply with a requirement to wear heeled shoes, won much coverage and led to the matter being debated in Parliament, where MPs highlighted the requirements of employers under the Equality Act 2010.

The Act makes it illegal to discriminate against someone with a protected characteristic whether directly, indirectly or by harassing them. In the context of dress codes, the protected characteristics of gender, religion and disability are likely to be relevant. So, if a man would not be required to wear high heels, a requirement for women to do so may be discriminatory on the grounds of sexual equality.

This does not mean that detailed dress codes may not be different for men and women, but they must be broadly similar in their intended effect and sanctions for breach should be the same.

In one case, a trainee police constable alleged that he was discriminated against because of his shoulder length hair, which he was told to cut or face disciplinary action. He argued that a woman with hair neatly tied in a bun, as his was, would not have received the same order. The argument was rejected by the Employment Appeal Tribunal, saying that such differences in treatment do not necessarily amount to more favourable treatment of one sex compared with the other.

Religious discrimination:

The topic of religious discrimination is complex and two recent cases have added to the confusion among employers.

Nadia Eweida, a practising Coptic Christian, lost her job with British Airways after refusing to keep her crucifix necklace out of sight when wearing her uniform. In a landmark judgment, the European Court of Human Rights (ECHR) said that Ms Eweida’s right to manifest her religion under article 9 of the European Convention of Human Rights had been breached. The ECHR said that a fair balance had not been struck between her desire to manifest and communicate her religious belief, and on the other side, her employer’s wish to project a certain corporate image without religious connotations.

But in a recent joint case over the wearing of Islamic headscarves, the European Court of Justice (ECJ) decided that employers could have a policy of religious neutrality in their dress codes, ruling that prohibiting the wearing of a headscarf was not direct discrimination, although it could amount to indirect discrimination. The employer would need to be able to show that if there was a greater negative effect on one group of employees, there must be a fair reason for doing so, and that it was appropriate and necessary in all the circumstances. In this case, the ECJ highlighted the difference between employees who interact with customers and those who do not.

When handling religious views in the workplace, employers need to strike a balance between the requirements and duties required by the company, and the employee’s right to practice and express their religion.

Health and safety:

Health and safety law requires employers to conduct a workplace health and safety risk assessment for all workers, with a continuing obligation to provide a safe system of work, and no one is surprised that they are required to wear a hard hat and hi-vis vest when visiting a construction site.

But the risks associated with many aspects of dress code may be overlooked in such assessments, despite well-documented outcomes. For example, high heels are known to lead to joint pain, back problems, bunions and may potentially contribute to sprains and falls, so as well as being unlawful under the Equality Act, requirements on female employees to wear high heels may breach health and safety law.

Such risk assessments are also essential if an employer is looking to impose specific requirements such as a ban on jewellery, that may otherwise be taken as indirect discrimination, for example, where someone was banned from wearing a religious symbol, such as a crucifix. If there is a health and safety risk, for example where employees are operating potentially dangerous machinery where jewellery could be caught, this may be the justification for such a ban.

Uniforms and the National Minimum Wage:

Where employees are required to wear a specific form of dress or uniform at their own expense, employers need to ensure the cost does not impact on National Minimum Wage compliance.

The retailer Monsoon found itself unintentionally breaching the regulations because it required staff to buy and wear items from the retail chain’s clothing range. HMRC investigated and said that as the wearing of Monsoon clothes was compulsory, the amounts spent by the employees on clothes for work in any pay reference period should have been deducted from their pay for that period before calculating whether they have received the National Minimum Wage. For Monsoon, this resulted in back-pay of more than £100,000 to reimburse employees, and a fine of £28,147.81.

This applies equally where a loose policy is in place, for example requiring a certain colour to be worn. HMRC gave as an example the requirement for hairdressing staff to wear white t-shirts and black trousers for work, saying this should be treated in the same way. (close...)

Carter Bells involved in making new law (more...)

(July 2017) Abdulla v Whelan et al [2017] EWHC 605 (Ch)

Carter Bells has recently been involved in making new law in the fields of landlord and tenant and insolvency. Carter Bells acted for the successful party in an appeal to the High Court on an important question that relates to the disclaimer provisions in s.315 to 321 of the Insolvency Act 1986 and the position of the landlord where one of two or more joint tenants is declared bankrupt.

The appellant (a potential third party creditor) argued that the purpose and function of the insolvency regime, as explained in dicta by the House of Lords in Hindcastle Ltd v Barbara Attenborough Associates Ltd [1997] AC 70, would be frustrated if the bankrupt tenant was not allowed to escape all of her obligations under a jointly held lease. His position was that a disclaimer by the trustee in bankruptcy had the effect of terminating the lease such that no rent was payable by the bankrupt’s estate thereafter.

For the trustee in bankruptcy and the landlord it was argued that as a joint legal estate is by definition held on trust by the tenants for each other the tenancy does not fall into the bankrupt’s estate. S.283(3)(a) of the Insolvency Act 1986 applied. It therefore followed that a purported disclaimer of a jointly held lease by the trustee in bankruptcy was void insofar as the legal estate was concerned.

It was held by the Judge that all that could be disclaimed was the bankrupt’s beneficial interest in the lease, if any, and the bankrupt tenant remained personally liable for the rent as he or she was before the bankruptcy and until the expiry of the term. Accordingly, the landlord was entitled to prove in the bankruptcy as a creditor of the bankrupt.

If you have any queries regarding Landlord and Tenant matters or property concerns, please contact Roland Pingree. (close...)

New deadlines for changes in company ownership (more...)

(July 2017) Businesses have new deadlines to comply with regulations around transparency of ownership from this month, under the so-called PSC regime. The move is happening as part of the implementation of the EU Fourth Money Laundering Directive (4MLD) which must be implemented across the EU by 26 June 2017.

Introduced last year as part of the Small Business, Enterprise and Employment Act 2015, the regime requires unlisted UK companies and LLPs to identify “People with Significant Control” over them, and to record their details in a statutory register. Until now, any changes to the PSC register could be notified annually using the company’s annual CS01 confirmation statement, but in future there’s a new process to notify any change, with 14 days to update the firm’s PSC register and a further 14 days to send the information to Companies House.

Listed companies were exempt from the PSC regime as they already report under Chapter 5 of the FCA’s Disclosure Rules and Transparency Rules (DTR5) but the changes introduced by 4MLD may mean that AIM-listed companies lose their exemption. That’s because 4MLD does not expressly allow for companies listed on prescribed markets to be exempt, only for those on regulated markets such as the main market of the London Stock Exchange. But although Companies House has announced that the DTR5 exemptions are changing, it’s still not clear what the impact will be on AIM companies.

Any AIM-listed companies need to keep watching to see what is decided. It may be that AIM retains the exemption, for example by being included as a Schedule 1 market, but if not, AIM companies will have to get procedures in place to comply with PSC as well as DTR5.

For all companies within the PSC regime, the changes on reporting mean that companies must be more responsive in future. Previously the updates to Companies House needed to be done just once a year, as part of the standard annual confirmation procedure, but now companies must make sure they’re hitting that 14 day deadline and using the new forms PSC1 to PSC9.

The PSC regime was designed to combat corporate crime, by making it easier to find out who is controlling a company as part of a global initiative to tackle misuse of company structures. The EU’s Fourth Money Laundering Directive requirements requires member states to hold a central register showing current corporate beneficial ownership. The PSC register provides the central register, but this change on notification procedures is required to comply with the requirement that the register be ‘current’. (close...)

Good intentions not enough in wage calculations (more...)

(June 2017) Accurate calculations of the National Minimum Wage continue to cause headaches for employers, with an employment tribunal acknowledging the complexity, saying there is no single key to unlock every case.

Recently, unintentional underpayments in staff pay packets have affected major retailers like John Lewis and Tesco, while others have been waiting for an employment tribunal decision on when sleeping night shift staff are eligible for the National Minimum Wage (NMW).

For John Lewis, a staff-friendly policy of aggregated wages to provide regular monthly income has resulted in the company having to provision £36m for underpayments over a six-year period, despite most under-payments being technical, rather than actual. Staff wages were smoothed out over the year so they received the same amount each month, rather than being paid for the exact hours worked. The problem arose when individuals worked extra hours in a month and the aggregate monthly payment was less than the payment due for the hours worked under the NMW Regulations.

Argos and Tesco have made similar payroll mistakes. Tesco is having to compensate 14,000 staff at a cost of £10m for employees who had made salary contributions to pensions, childcare and other schemes which resulted in their pay falling below the National Living Wage level. Tesco has blamed its payroll software for the error, but for many employers the difficulty lies in correctly interpreting the NMW Regulations.

One such thorny area is payment for employees who sleep overnight in the workplace or are on call. Previously, such workers were often paid a flat rate for when they were sleeping and their normal hourly rate when they were required to attend to their duties. This approach was challenged on the basis that it did not comply with the NMW Regulations, and three such cases were recently heard together by the Employment Appeal Tribunal: Focus Care Agency Ltd v Roberts, Frudd v The Partington Group Ltd and Royal Mencap Society v Tomlinson-Blake.

But for employers hoping for certainty on the issue there has been frustration, with the Tribunal saying that there is no ‘bright line’ and that businesses must conduct a ‘multifactorial evaluation’. Their findings highlighted four key factors.

1. The reason for engaging the worker – if an employee is on site to comply with a regulatory or contractual obligation, then the individual is more likely to be classed as working throughout their whole shift, even if they are asleep or with nothing to do.

2. Restrictions on the worker’s activities – if a worker would be disciplined for failing to remain on stand-by, for example by leaving the premises, then the NMW is more likely to apply than in situations where someone is able to come and go as they please.

3. The degree of responsibility – if a worker is required to keep a listening ear and respond, such as a care worker, they are more likely to be treated as ‘working’ than someone who is at home on-call.

4. The immediacy of the requirement to provide services – this includes both the speed and the level of responsibility of a worker. If they are the one who will decide whether to intervene and then take the action, they are more likely to be categorised as working than someone who is woken and instructed by the responsible member of staff.

The Tribunal’s decision highlights just how tricky this area of the law can be, but compliance is a serious business. It’s sometimes difficult to understand what’s right and what’s wrong, and borderline cases will be difficult to decide, but if there’s any doubt it pays to investigate further as getting it wrong may mean a company faces claims for back-pay, which can go back six years. As well as the financial costs, there may be enforcement action by HMRC, and reputational damage.

The National Living Wage is a premium tier of the National Minimum Wage for eligible workers aged over 25. For those eligible workers aged under 25, there are further categories of age-related rates.

Year     25-over  21-24  18-20  Under 18  Apprentice
Apr 2017  £7.50    £7.05   £5.60     £4.05    £3.50  

Although given as hourly rates, the NMW Regulations apply to any eligible worker, whether or not they are paid by the hour and calculations must be made according to the payment basis. For example, someone paid annually or by piece-work can use a formula to work out the equivalent hourly rate and check if they’re being paid the right amount. (close...)

Workforce wellbeing must include mental health awareness (more...)

(May 2017) Understanding of mental health issues is high on the agenda, thanks to the involvement of the younger members of the Royal family in the Heads Together awareness campaign which has seen the #oktosay hashtag trending.

Their activity gave an extra boost to this month’s Mental Health Awareness Week, but now the annual campaign is over, employers have an important role to play in making sure the message isn’t forgotten. By having strategies that focus on mental health as part of employee wellbeing, businesses can help drive individual support, as well as improving the bottom line. They may also avoid potential complaints or even litigation from staff.

Estimates by ACAS suggest that around £30bn is lost each year through lost production, recruitment and absence arising through mental health issues and it’s estimated1 that employers should be able to cut these costs by around a third, if they implement better management practices to support ‘mental-healthiness’ in the workplace.

Recent research2 by the Mental Health Foundation, the charity behind Mental Health Awareness Week, found that nearly two-thirds of people in Britain have experienced a mental health problem. The figure is higher for women than for men, and for young adults between 18 and 34 and people living alone. It’s a big issue, but often isn’t discussed and campaigners are keen to get everyone talking more, to understand that mental health problems can have a serious impact on an individual, even though they may not be visible in the same way as a physical condition. A recent workplace study3 found that those suffering from mental health issues were 37% more likely to get into conflict with colleagues, 80% found it difficult to concentrate and 50% are potentially less patient with customers/clients.

It’s the cloak of invisibility that may mean things are ignored or potentially mishandled. There’s often an unwillingness to raise the issue, as people find it hard to talk about mental health. They may feel there is a stigma, or that it could have an impact on their longer-term prospects, if they feel they may be judged as not strong enough. Employers can help by putting support structures in place, with an open attitude to communication, which can drive better understanding as well as helping to address their legal obligations.

In some cases, mental health issues may be classed as a disability under the Equality Act 2010, which makes it unlawful for an employer to treat a disabled person less favourably because of their disability, without a justifiable reason. Mental health issues may be considered a disability if they have ‘a substantial and long-term adverse effect on a person's ability to carry out normal day-to-day activities.’

Where someone suffers from severe depression, for example, that’s not enough on its own to meet the definition of ‘disability’ under the Equality Act; the situation would need to meet the requirement of having a substantial, long-term impact on the individual’s abilities. But, whatever the extent of an individual’s mental health issues, all are equally in need of responsible support and protection from unfair or discriminatory treatment. There is a responsibility on the employer to tackle mental, as well as physical health in the workplace and hard-wire it into all aspects of their recruitment and employment policies.

Tips for employers include:

• Have a policy that specifically addresses mental health issues and encourages everyone to feel able to talk about the subject, with a clear route to raise any problems. This should be well published across the business, as well as being included in the staff handbook.

• Encourage everyone to understand the issue, through disability and equality training, and equip line managers to identify potential mental health issues.

• Establish support networks for employees to access, whether HR-led internal support, or through external employee assistance programmes providing access to counselling, medical insurance or occupational health.

Whether recruiting, or with an existing employee, it’s important to focus on the ability of an individual to do the job and, if they have any physical or mental impairments, to consider whether reasonable adjustments could be made to enable them to fulfil the role.

Useful links : Acas : the NHS's Mindful Employer initiative : Mental Health Foundation

1 Centre for Mental Health
2 Mental Health Foundation : research March 2017
3 Chartered Institute of Personnel and Development

House sellers are facing testing questions (more...)

(May 2017) Springtime is traditionally the busiest time for the property market, but with a knotty problem affecting more homes than ever, it’s worth doing some horticultural homework before you start, whether you’re buying or selling.

Japanese knotweed is a highly invasive, aggressive and destructive plant, able to grow as high as four metres in just a few months and with roots that can spread seven metres. It’s non-native with no natural predators, and is able to cause significant structural damage, growing through asphalt and other hard surfaces, often compromising building structures. Getting rid of it is a costly and time-consuming business, involving specialist waste disposal, because simply digging up the roots is not enough to kill it.

You can be fined up to £5,000 or sent to prison for two years if you allow contaminated soil or plant material from Japanese knotweed to spread into the wild, and now a landmark court ruling has found that a landowner is responsible if they do not prevent the plant from spreading from their land to adjoining properties.

The case involved a group of homeowners in South Wales, who took action against Network Rail after Japanese knotweed grew into their garden from adjoining railway sidings. The knotweed had been there for at least 50 years and had been actively treated since 2008, to ensure visibility for trains on the line. In weighing up the claims of the homeowners, the judgement considered the extent of nuisance suffered, and found in their favour, saying that the presence of Japanese knotweed was enough, without any physical damage, as it had the potential to seriously affect the market value of a property.

Many mortgage lenders restrict their lending on properties that are affected and homeowners may have difficulty in selling, or find the value of property reduced by as much as 50%.

There have been few previous rulings involving Japanese knotweed infestations, and the outcome is likely to put extra pressure on property owners to control the plant, and have a significant impact on larger land owners and those responsible for tracts of public land.

If you’re not a skilled gardener, it’s worth getting to grips with the Japanese knotweed identification sheet. If you can see it growing on your property, then take steps to eradicate it. If it’s growing on neighbouring properties, speak with your neighbours, and if they don’t tackle the problem then it’s worth considering action.

If you are successful with a nuisance claim, you can push for neighbours to undertake a five-year eradication programme and ask for a guarantee from the specialist company involved, as well as seeking compensation, if there is evidence it has travelled through your boundaries.

Taking action to protect what is probably your biggest asset is a simple but sensible option, whether you’re buying, selling or staying put. These days, when you sell a property, you will be asked whether Japanese knotweed has been found on the property and the reply will be included in the comprehensive pack of buyer’s information that lawyers compile during the conveyancing process.

Small suppliers set to get intel on big company payment performance (more...)

(April 2017) New regulations designed to help small businesses get paid on time came into force this month, with a requirement for larger companies to publish information about how long they take to pay suppliers.

The requirement affects companies and LLPs who exceed two or more of the qualifying thresholds at the date of their last two balance sheets. The thresholds are based on the definition of ‘medium-sized’ under the Companies Act 2006 and are an annual turnover of £36 million, a balance sheet total of £18 million and an average of 250 employees during the year.

From 6 April 2017, those qualifying will be required to publish information on a Government website about their payment practices and policies and how they have performed against them, including the average time taken to pay suppliers, and to update the information every six months.

Late payment is recognised as causing serious financial and administrative problems for businesses and the aim of the new regulations is to tackle concerns about adverse treatment of smaller suppliers by larger, more powerful customers, through increased transparency and scrutiny. The Reporting on Payment Practices and Performance Regulations 2017 came about as part of the Small Business Enterprise and Employment Act 2015, and applies to public, private and listed companies and to limited liability partnerships through a separate set of regulations.

Businesses will not be required to report in their first financial year and those in their second year will be expected to check the requirements against their single, first financial year. For parent companies and LLPs, reporting will be required if the aggregate group figures exceed the thresholds. Any company or LLP within a group that satisfies the test individually, will need to report separately on its own payment practices and performance.

It’s important that larger businesses check whether they are required to report under the regulations, and must then keep an eye on the thresholds as these will be updated over time. Smaller businesses can ask new customers whether they are required to report and, if they are, check out payment performance as part of their pre-contract checks.

It’s worth remembering that there are other existing measures already available to tackle late payment, including the option of claiming interest and recovery charges, and it’s worth checking that existing contract terms don’t undermine those rights with something less advantageous.

Under the Late Payment of Commercial Debts (Interest) Act 1998 commercial businesses are expected to pay their supplier invoices within 30 days, unless they have both agreed a longer time limit of no more than 60 days. Alongside, all public bodies are required to pay suppliers within 30 days, except for some specific or devolved activities.

Statutory interest can be applied, together with a fixed sum of between £40 and £100, depending on the sum owed, for the cost of recovering the late commercial payment. The interest is currently set at 8% plus the Bank of England base rate, and starts to run automatically at 30 days from the latest date of either receiving the supplier's invoice, or of receiving or accepting the goods or services. You can agree a longer period for payment, but if it’s more than 60 days it must be fair to both businesses. And unless a ‘reasonable’ longer period has been agreed, any purchaser must confirm that goods or services conform with the contract within 30 days.

Late payment legislation does not have to be referenced in trading terms, as it will apply automatically in any commercial relationship, unless an alternative process has been set out in the contract.

When tweets become twibels… (more...)

(April 2017) Facing up to the social media challenge for business

Every business using social media should get to grips with publishing law and advertising regulations if they are to avoid reputation-damaging incidents.

The reminder follows the news that opinion columnist Katie Hopkins has been refused leave to appeal against a recent High Court libel verdict, where she was found to have published defamatory tweets, or what’s been coined ‘twibel’.

Anyone using social media is a publisher, putting information out into the public domain, but unlike newspapers and book publishers, most businesses don’t have a good understanding of publishing law and how to avoid breaching it. Similarly, many businesses are not considering how their social media posts may breach advertising regulations, as the boundaries between paid-for advertising and other forms of communication become more blurred.

It’s the sort of confusion that led to a complaint being made that a tweet sent from the account of England football captain Wayne Rooney, as part of his sponsorship by Nike (UK), was not clearly marked as a marketing communication. The tweet read: "The pitches change. The killer instinct doesn't. Own the turf, anywhere. @NikeFootball #myground". Although in that case the Advertising Standards Authority found that Nike (UK) had not breached the code of conduct, saying the tweet was obviously identifiable as a Nike marketing communication, it may not always be clear to businesses where the line is drawn.

For Katie Hopkins, the tweets she posted that were found to be defamatory implied that prominent poverty campaigner and writer Jack Monroe had defaced a war memorial, in a case of mistaken identity. Monroe offered her the chance to publicly apologise or face legal action, but Hopkins refused. When the case reached the High Court, the tweets were found to have caused ‘serious’ harm to Monroe’s reputation. Hopkins must pay damages of £24000 to Monroe, together with Monroe’s legal costs.

In making the judgement, the court had to determine whether the tweets met the requirement for harm that is set out in the Defamation Act 2013 and experts say the ruling is the most important case to date involving libel on social media.

Controlling social media content is a huge issue for business. It’s a fast-moving arena and often posts, tweets, retweets and comments are the subject of instant decision-making. When careful reflection isn’t part of the equation, it’s not surprising that it can lead to problems. It is important that social media policies are kept under constant review and that everyone understands the boundaries they are operating within, through both the company’s marketing strategy and their terms of employment.

Staff could also learn from the 26-point guide on how to use Twitter, published by the High Court as part of its official ruling in the Hopkins case, which provides a summary of how the platform works. It makes for useful reading, even for those who think themselves experts, as a reminder of who will receive postings when tweeting, re-tweeting or replying.

It’s important to have a good crisis management plan in place as well, so that if the worst happens and a mistake is made, then everyone knows what to do if something inappropriate has been posted. Taking swift action with a public retraction is a good start and will demonstrate a willingness to tackle the problem. In the case of Katie Hopkins and her mistaken tweet about Jack Monroe, if she had been quick to correct herself and made a public apology that reached the original audience of her tweets, it’s quite likely the case would not have passed the necessary ‘serious harm’ test for defamation and the case may never have gone to court.

Families who leave court the losers after inheritance claims (more...)

(March 2017) Record numbers of inheritance disputes are going through the courts as modern family structures and rising house prices push more families to contest unfavourable outcomes.

Two recent cases which have seen families losing out after legal action include two brothers who have run up fees of more than their entire inheritance by disputing a stepmothers’ share of their father’s estate, and estranged daughter Heather Ilott who challenged her mother’s will after discovering she had been excluded.

That challenge set her on a ten-year battle which ended this month, when the Supreme Court gave its ruling on Ilott v The Blue Cross and others. Heather Ilott was excluded from her mother’s will following a long estrangement after she left home as a teenager. After her mother’s death, finding that the entire estate had been left to three animal charities, she claimed provision under the Inheritance (Provision for Family and Dependants) Act 1975 (the I(PFD)A 1975), which is designed to protect a surviving spouse or civil partner and dependents who are in need of maintenance but are not left adequate financial provision under the will of a deceased person or under the rules that apply when there is no will.

Heather Ilott’s case rested on her claim that she would be in a position of poverty, reliant upon state benefits. That claim was successful, with the Court of Appeal making an award of £143,000 plus an option on a £20,000 fund. Now, that has been overturned by the Supreme Court, who have reduced it to £50,000. In making their decision, the Law Lords resolved many concerns around the general principle of testamentary freedom which had arisen following the Court of Appeal judgement, and clarified a number of issues under the I(PFD) Act.

The reduction in the award to Heather Ilott by the Supreme Court is a good sign for anyone wishing to make a potentially difficult decision over where they leave their estate, as it reinforces the right of individuals to make their own choices when writing their will. It pushes back against the earlier ruling, a landmark judgement which had caused concern that it might prove harder for parents to disinherit children in future, unless they had very strong grounds for doing so.

The trend towards increased inheritance disputes has been attributed to a number of factors. Increasing numbers of so-called ‘blended’ families where divorced parents re-marry is one such factor, with original family members not wishing to share with newer members, such as step-parents or step-siblings.

That was the reason behind the recent legal action by two farmer’s sons, who attempted to block their stepmother getting an extra £25,000 in their father’s will. Their action has cost them their entire inheritance of £62,500 each, as Richard and Jonathan Powell have been ordered to pay £200,000 in legal fees, after claiming that their disabled father was unfit to make the final will which left £125,000 to his second wife. The sons had maintained that an earlier will should stand, which would have seen their stepmother receive £100,000.

Another factor behind many inheritance challenges is property values. Where family are excluded, or receive less than expected, a large property price tag is believed to be fuelling many more claims, as more people are inclined to take the costly step of litigation to get the matters before the courts. To make a claim under the Inheritance (Provision for Family and Dependants) Act 1975, a claim must be made within six months from the date of the grant of probate. For cohabitees, they need to show they were living as husband and wife or as civil partners with their partner throughout the two-year period before they died.

It all comes down to careful planning and, wherever possible, communicating your decision to family, to try and avoid later rifts. And if you are excluding children, a spouse or civil partner from your will, you should certainly get specialist advice, to be sure that your plans will not cause problems down the line. Doing so also means there is clear evidence of what you intended to do if a will is challenged at a later date.

Most disputed wills are settled at County Court, but figures released in September last year showed that a record 116 such cases reached the High Court in 2015, eight times the number heard in 2005.

No rabbits, just selfies come out of Hammond’s hat in pre-Brexit budget (more...)

(March 2017) The first steps towards preparing the UK for a post-Brexit future were announced by Chancellor Philip Hammond in his Spring Budget, which avoided headline-grabbing shake-ups and tax breaks in favour of economic stability.

In the run-up to the announcement, sterling slipped to a seven-week low, reflecting the uncertainty surrounding the move towards exiting the European Union, but the Chancellor pointed to robust economic growth, record levels of employment and a falling deficit, saying real GDP had grown by 0.7% in the final quarter of 2016 and by 1.8% over the year as a whole.

The biggest headline grabber proved to be the announcement that the main rate of Class 4 National Insurance contributions for the self-employed are to be increased to reduce the gap between the rates paid by the self-employed and PAYE employees. Contributions will increase from 9% to 10% in April 2018 and to 11% in April 2019. Business owners were also targeted, as the Chancellor announced that the dividend allowance would be reduced to £2,000 from next year, so as to reduce the tax differential between those working through a company and the self-employed or employed.

He also confirmed the previously trailed announcement of a crack-down on companies who use subscription-based charging. This will form part of a wider consumer-protection strategy, designed to tackle companies that mislead or mistreat consumers, which will include looking at how to make terms and conditions clearer, simpler and shorter.

Also confirmed was a set of measures to cushion the impact of business rate rises which have caused an outcry from many businesses facing significant increases.

As is increasingly the case, much of the Budget was no surprise, with a number of measures shared in advance of the formal announcement by Mr Hammond, and many of the imminent tax changes having been announced in previous Budget statements. Those include the increased personal allowance, which will rise by £500 to £11,500 for the 2017-18 tax year, and the increased 40% tax band threshold, which will rise to £45,000.

Other major previously scheduled changes are those affecting landlords with buy-to-let mortgages. From next month, landlords who own rental properties in their own names will no longer be able to deduct all mortgage interest and other finance-related costs from their rental income before calculating their tax liability. It’s a system which has benefitted higher rate tax payers and in future tax relief will be limited, in a phased restructuring which will see mortgage interest relief move from 100% to zero over the next four years, as it is replaced by a 20% tax credit.

This Budget was relatively low profile by comparison with recent years, and there were no shock announcements. Instead, we saw the Chancellor focused on safeguarding the economy as we head towards the uncertainty of Brexit.

Not part of the Budget statement, but a significant announcement just released, is the change to court fees payable to obtain a grant of probate after someone dies. Wholesale changes are due to be introduced by the Ministry of Justice in May, which will see fees increase to as much as £20,000, and many are describing it as a stealth tax.

It’s something else to bear in mind for those engaged in tax planning for the future, although it’s unlikely they can do much to mitigate against the fees, but for executors who are already in the process of administering larger estates, it’s worth reviewing the position to see whether they can take action to apply for probate before May.

From May, instead of paying a flat fee of £215 for a personal application, or £155 through a solicitor, there will be a tiered set of fees. Estates with a value of less than £50,000 will be exempt. Above that, the fees will be:

Estate value Fee
£50,000-£300,000 £300
£300,001-£500,000 £1,000
£500,001-£1m £4,000
£1,000,001 - £1.6m £8,000
£1,600,001 - £2m £12,000
Over £2m £20,000

Taking time to take stock pays off in inheritance tax planning (more...)

(March 2017) As the end of the tax year approaches, it’s a good time to make sure you’re maximising your opportunities for inheritance tax reliefs. This year, as well as taking advantage of exempt lifetime gifts and transfers, property owners should also look at how the new transferable residence nil rate band fits their profile.

The Residential Property Nil Rate Band

Under the new rules, when a person leaves a residential property to direct descendants there will be an additional nil-rate band for inheritance tax purposes – the transferable Residence Nil-Rate Band allowance (RNRB).

To qualify, the property must have been a residence of the taxpayer and be left to direct descendants, so that excludes brothers and sisters, nieces and nephews. It will include natural, adopted, step and foster children, grandchildren and remoter descendants. The spouse or civil partner of a living or dead direct descendant may also be the beneficiary, unless they have remarried.

The RNRB will be available from April 2017, in a phased introduction over the next four years, starting at £100,000 per person. This additional IHT nil-rate band for residential property will be on top of the £325,000 per person nil-rate band, which continues to apply to all assets in your estate, regardless of their nature and without restriction on who inherits the assets.

Like the existing nil-rate band, the RNRB will be transferable to a surviving spouse or civil partner, if unused on the death of the first to die, as long as the first to die owned the property or a share in it. A transferable RNRB will be available even where a spouse has died before April 2017 and in this case, the property does not have to have been held in joint names. By 2020, the RNRB will be £175,000 per person, giving a potential total IHT nil-rate allowance of £500,000 for a single person or £1m for a couple who satisfy the criteria. These RNRB figures are maximum figures: if the value of your house, or your share in a house, is less, then that lesser value will be your RNRB.

The potential savings are significant – by 2020, the estate of a couple could see a saving of £140,000 in inheritance tax where all criteria are satisfied and the maximum RNRB allowance is utilised. So, in tax planning terms it’s high priority and it is worth making sure your estate doesn’t miss out on the allowance if you are a potential match on the criteria.

What may not qualify for the allowance

The additional residential property relief will taper away once an estate is valued at £2m, and estates worth over £2.35m will not benefit, and neither will certain types of trusts. The treatment of trusts has been subject to review since the original announcement of RNRB, as it was not clear initially how they would be treated. Trusts are frequently used to protect assets, for example when children are young or otherwise not fully capable of handling their affairs, or to provide for a new spouse after re-marriage while still making sure assets pass to children of an earlier relationship. It’s now been clarified that the RNRB will be available where beneficiaries of a trust are direct descendants and the trusts provide an absolute right to benefit, or where a disabled person is the main beneficiary, but will not be available for so-called discretionary trusts. As the position is complex, anyone who has any form of trust in their will should make sure that it is still the best arrangement.

People will be allowed to sell a larger house and still retain the relief from inheritance tax, as the Government are keen to encourage older owners to down-size to free up larger properties. Only one downsizing move may be taken into account, so if there are several downsizing moves between 8 July 2015 and the date of death the executors can choose which is to be used for the purpose of the RNRB. Downsizing can include disposing of part of a property, for example part of your garden.

However, to hold on to the relief after downsizing, the proceeds of the downsizing cannot be passed to a direct descendant during a person’s lifetime, as the relief will not apply to reduce the tax payable on lifetime transfers that are chargeable on death within seven years of the gift. Again, this is rather complicated and requires specialist advice.

Gifts and exemptions

More straightforward is the opportunity to mitigate inheritance tax by making smaller gifts or out of surplus income.

Everyone can make use of the £3000 per annum annual exemption which can be used to make gifts up to the total each year, and if the allowance is not used fully in any year, it can be carried forward one year.

On top of the annual exemption, the rules on small gifts allow individuals to gift up to £250 per recipient per year with no limit to the number of recipients. However, if you give more than £250 to any individual, you lose the exemption completely, even on the first £250. And you can’t use your small gifts allowance together with any other exemption when giving to the same person.

Looking at these two allowances together, if you had three children, ten grandchildren and four godchildren, you could make gifts of £1000 to each of your three children by using the annual exemption of £3,000 for all such gifts. Then you could give up to £250 per year to each of your grandchildren and godchildren using the small gift exemption. You cannot make an exempt small gift to your children as you have already used the annual exemption to make a gift to them. These allowances are automatic, but it’s a good idea to log and track the gifts as it makes it easier for your executors and simplifies dealing with HMRC.

Another opportunity is relief on gifts made out of surplus income, but the exemption for these gifts must be claimed by your executors after your death. Here, good record-keeping is vital, because to qualify as normal expenditure out of income it must:

• Be part of a regular pattern of giving
• Taking one year with another, be made out of income
• After the gifts and other usual expenditure, you must be able to maintain your normal standard of living

So, to make such payments, you need to record in writing that you intend to make the gifts regularly and then keep a record of income and outgoings so that your executors will be able to demonstrate that you had surplus income from which the payments were made. Examples of the sorts of payments range from regular monthly payments to a grandchild’s savings account or payment of school fees through to regular gifts on special occasions.

Any other lifetime gifts you make, other than gifts into a trust, are known as potentially exempt transfers (PETs). A PET becomes an exempt gift if you survive the making of the gift by seven years. However, if you die within seven years of making the gift, the value must be brought into account when calculating inheritance tax due from the estate. Tapering relief may be available on the tax attributable to PETS if you die more than three years after the gift, but only if the total value of the lifetime gifts made in the seven years before your death exceeds the nil rate band in force at your death.


If you’re concerned about inheritance tax and hope to mitigate it through gifting, asset transfer or the new residential property allowances, it’s important to check the position regularly. Getting it right, and reviewing any existing will, is key to making sure reliefs are maximised.

Check list for the new inheritance tax residential nil rate band

- You have direct descendants and intend to leave your residential property to one or more of them on your death
- You have a total estate worth more than the current £325,000 IHT nil rate band per person threshold, but less than £2.35m overall
- You have downsized or sold your residential property, or intend to, where the sale took place after 8 July 2015 and you have retained the proceeds

Unmarried couples need to protect themselves (more...)

(February 2017) A landmark victory in the Supreme Court has seen a Northern Ireland woman win a share of her former partner’s pension, with commentators saying it’s likely to add impetus to the drive for greater rights for unmarried couples. But, in the meantime, cohabitees should face up and formalise arrangements, rather than keeping their fingers crossed.

The victory of Denise Brewster involved her claim for a survivor’s pension after her long-term, live-in partner Lenny McMullan died suddenly, shortly after they had become engaged. He had paid into Northern Ireland’s local government pension scheme but had not completed the necessary form to nominate a cohabiting partner for a survivor’s pension. Denise Brewster took legal action to claim the pension and when her case reached the Supreme Court, the judges ruled that the refusal to pay her was unlawful.

Such difficulties play out all too often for cohabiting couples, whether in relation to shared property or what happens to their assets when they divorce or die. Many still believe in the idea of so-called ‘common law marriage’, assuming they have legal rights like married couples or civil partners on death, only to discover the harsh truth when problems arise.

Currently, securing protection requires action to be taken by the couple, if they wish to ensure that the interests of both parties are protected in case of death, separation or other life changes.

It may seem unfair, but cohabiting couples do not have the protection that comes with marriage or civil partnership. There are three main areas where couples should look to protect themselves, and each other, and that’s with a cohabitation agreement, formalising how property is owned and each making a will. These all help to avoid uncertainty and come into their own if the worst happens.

Making a Will: Without a valid Will, the division of assets belonging to a cohabitee will be decided by the Intestacy Rules and under these a cohabiting partner will not be included. Typically, the whole of their estate would go to children, or if they have none, to parents or other family members. Although the surviving cohabitee could apply for “reasonable financial provision” under the Inheritance (Provision for Family and Dependants) Act 1975, this would be a very slow and potentially expensive option, and in the meantime they may be blocked from living in the couple’s home if it was not held in shared ownership.

Inheritance Tax: Writing a Will is also a good time for couples to consider inheritance tax implications, as they will not benefit from the exemption given to gifts between spouses and civil partners. Also, unlike a married couple or civil partners, the first-to-die’s nil rate band cannot be transferred to the survivor.

Property ownership: If a couple buy a property together, or agree that one has become entitled to a share, then it is important that ownership is structured to reflect this and the intentions of each upon death. Such ownership needs to be recorded and formally documented, and ideally recorded with the Land Registry. If property is owned as ‘joint tenants’, there are two consequences. First the couple are electing not to own separate defined shares in the property and if anything is done to bring the joint ownership to an end, the couple will own the property in equal shares. Secondly, upon the death of one, the whole property will pass automatically to the other regardless of the intestacy rules or any Will. If, however, property is owned as tenants in common, then each will own a specific share - which can be in any proportions, by any agreed calculation – and each is free to choose what will happen to their share of the property on death. This aspect should be considered when a Will is written as well, as someone may wish to leave their share to children, but with the survivor having the right to continue living in the house until their death or relocation.

Cohabitation agreements: A formal agreement setting out what will happen if a couple separate, this can also set out day-to-day matters, such as who is responsible for household expenditure and in what proportions. As well as helping to settle disputes when a relationship ends, by referring to the original intention, it can be a useful process to clarify matters before a couple move in together, by encouraging discussion and agreement over the detail. It should be drawn as a deed, independently witnessed and with both parties able to demonstrate there was no duress and each was able to seek independent advice, if required. A co-habitation agreement may be set aside or varied by the courts if the circumstances change, for example if the couple have children, so it is important to regularly review what has been put in place.

Courts hit high and hard with new health and safety fines (more...)

(January 2017) One year after the introduction of tough new health and safety sentencing guidelines, a series of high profile cases show that courts are not holding back when it comes to imposing the higher fines, which can be directly linked to a corporate defendant’s turnover.

In the latest case, involving £1bn household retailer Wilko, an incident left an employee permanently paralysed after a roll cage containing 230kg of paint fell on to her as she manoeuvred it out of a lift. The company was charged with four offences under the Health and Safety at Work Act and Wilko accepted their risk processes had failed, pleading guilty to the charges. The combination of a high turnover company, high culpability, and a serious level of harm for the employee, resulted in a £2.2m fine.

Similarly, a fine of £5 million was imposed on Merlin Entertainments in September last year, following the major incident on the Smiler ride at their Alton Towers theme park in 2015. The incident left sixteen people injured, some with catastrophic, life-changing injuries, including two teenage girls who had to have leg amputations.

Such cases generally involve real human tragedy, as in these two examples, and the new tariffs are intended to recognise the seriousness of that, with fines related to turnover, although the courts have discretion to push fines up or down according to profitability. But the one thing that is clear from the sentencing guidelines is that any fine must be sufficiently substantial to have a real economic impact, to bring home the importance of health and safety.

It’s vital to have excellent health and safety systems and policies, and to keep them regularly reviewed and updated, with everyone – workers and management – keeping best practice at the forefront of their daily work.

As well as helping to avoid accidents in the first place, such processes will help to mitigate or support any defence against criminal liability or negligence.

Complex challenges for employers in the year ahead (more...)

(January 2017) Constant changes and increasing complexity have helped make employment law a frontline challenge for business and this year looks set to continue the trend.

The first weeks of January saw Maggie Dewhurst, a bike courier with City Sprint, winning her case to be treated as a worker, rather than a self-employed contractor. The high-profile case follows hard on the heels of the similar ruling given late last year in the action brought by Uber drivers, which the company has said it will appeal.

A worker may be entitled to certain rights such as the national living wage, paid holiday and sick leave, where a contractor would not. An employee may also be a ‘worker’, but with extra employment rights and responsibilities.

The decision in the case of Maggie Dewhurst vs City Sprint will apply only to her personally, but it puts such working practices under the spotlight, especially in the so-called ‘gig economy’, where people are employed by companies on a job-by-job basis. But the issues involved can equally apply in many other sectors where companies may be trying to optimise their staffing, if they do not realise the distinctions between an employee, a worker and a self-employed contractor. A number of cases are now working their way through the courts and I expect we’ll see this topic in the headlines throughout 2017.

Alongside, the Government is moving to crack down on unscrupulous employers to stamp out exploitation in the workplace, after several companies hit the headlines for poor practices in recent months, including reports that workers at Sports Direct were receiving less than the national minimum wage and being subjected to humiliating working practices. The new Labour Market Enforcement body will take the lead in this, headed by Prof Sir David Metcalf, a founder of the Low Pay Commission.

Together with other employment legislation already announced for introduction this year, bringing further significant changes and new requirements, businesses need to make sure they are up to date with their practices and terms of employment. The up and coming legislation includes:

Gender pay gap reporting: The Equality Act 2010 (Gender Pay Gap Information) Regulations are set to come into force on 6 April 2017 meaning all private sector organisations with at least 250 employees must publish details of their gender pay gap, for both basic pay and any bonus payments. The first reporting will be due no later than 4 April 2018, and annually after that. This could be a raw topic for supermarket employer Asda who face an equal pay claim brought by retail workers, mainly female, who argue their work is of equal value to the predominantly male warehouse workers. The preliminary judgement agreed that a comparison could be made between retail and depot work, and now the Employment Tribunal will look to see if there are jobs of equal value and, if so, any pay differences. Asda has been granted leave to appeal the preliminary judgement.

Apprentice levy: Also due on 6 April is the annual apprenticeship levy, under the Finance Act 2016 (part 6). In a Robin Hood style approach, the levy must be paid by all private and public sector employers in the UK with a pay bill of £3m and above. It will be charged at the rate of 0.5% on their total pay bill, with an annual allowance of £15,000 to offset against the levy payment. The income will be used to fund a new system of post-16 apprenticeships, which will be available also to those employers falling below the £3m threshold.

Salary sacrifice schemes: As announced in the Autumn Statement, the Finance Bill 2017 will set out changes to the tax status of salary sacrifice benefits with effect from April 2017. The changes will see an end to the tax saving benefits of most salary sacrifice schemes, which will become subject to the same taxation as cash income. Any arrangements in place before 6 April 2017 will be protected for one year, or four years in the case of cars, accommodation or school fees. The extension will apply until the arrangement ends, is renewed or otherwise modified. Remaining exempt from tax will be pensions and related advice, cycle-to-work and ultra-low emission cars.

Tax-free childcare: Also retaining its taxation benefits will be existing employer-supported childcare voucher schemes. These can remain open to new entrants until April 2018 with childcare vouchers and all associated tax savings available for the life of the scheme. However, the Government is expected to launch a new, alternative tax-free childcare scheme, which will allow working families satisfying a minimum/maximum income requirement to claim 20% of childcare costs for children under 12, or under 17 where children have a disability, capped at £2,000 per year. The two schemes can run in tandem, but once a new scheme has been established no new employees will be allowed to join an old-style childcare voucher scheme and still receive the tax benefits.

Holiday pay: An appeal by British Gas to the Supreme Court will challenge last year’s ruling by the Court of Appeal that holiday pay should be ‘normal pay’ and include contractual results-based commission. The appeal is expected to be heard in March 2017 but in the meantime the ruling stands and employers need to look at irregular payments made to employees and establish which are to be included within ‘normal’ pay and so be included in any calculation for holiday pay.

The complexity around holiday pay calculations means employers are likely to need advice to get it right. It’s just one example of how employment law continues to pose challenges for business, and the year ahead is certainly no exception. It’s important to get ahead of the deadlines and make sure you’re addressing the changes across all aspects of the business.

And while European law is behind some of the upcoming legislation or court rulings, it cannot be ignored on the basis that we are starting the process of withdrawing from the European Union, whatever style of Brexit is adopted by the Government. For now, everything stands.


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