Breaking News
Companies - Are your directors all natural?
From 1st October 2010, all companies must have at least one ‘natural’ or real person as a director.
From this date it will no longer be possible for the board of directors of a company to consist only of Corporate Directors.
A corporate director is a director that is not a natural person but a legal entity. In other words, a director that is not a human being. For example, a company called ‘X Group Ltd’ may own a subsidiary called ‘X Hire Ltd’ and may have appointed ‘X Group Ltd’ as director of ‘X Hire Ltd’ instead of a natural person.
Why the change?
The main reason behind this change is to ensure that there is at least one person who can be held accountable for the company’s actions rather than one company hiding behind another. In essence, at least one person must be held responsible for the company’s actions.
I have a company, what does this mean for me?
It all depends on the date your company was first registered.
If your company was registered after 8th November 2006, you had a period of grace until the 1st October 2008 to appoint at least one natural person as a director. If you have not done this, then you should take urgent action.
If your company was registered before 8th November 2006, you must appoint at least one natural director before the deadline date on the 30th September 2010. Failure to appoint a natural person by this date may lead to a fine up to £5,000 for both the company and the directors in default with the possibility of additional daily default fines being issued.
A company without a natural director after the deadline may also encounter difficulty as the company may be viewed as not being in good standing. You may also encounter difficulties filing accounts with Companies House as directors’ approval is required. Failure to file accounts on time may lead to further penalties and fines.
What should I do now?
If your company only has corporate directors and you think you are in danger of missing this deadline, please contact our Corporate team and we’ll help you comply with the new legislation.
Contact us through: .(JavaScript must be enabled to view this email address)
Download a printable version of this article here
Graham Murray promoted to Associate
WJM is delighted to announce that Graham Murray has been promoted to Associate.
Graham is a key member of the Private Client and Family Office Groups.
His promotion is both reward and recognition for Graham’s contribution to the Private Client and Family Office Groups. Since he first joined WJM as a trainee, he has developed a range and depth of specialist knowledge in the areas of both private client and wealth management practice.
More information on Graham here
Workplace Mediation - New from WJM
Liam Entwistle of Wright. Johnston & Mackenzie (WJM) is now a fully trained workplace mediator.
On speaking about the new WJM Workplace Mediation Service, Liam said “this is an important addition to our suite of Employment Services. Workplace mediation is the stand out way of resolving conflict at work. Not only is it quicker and less time consuming (read expensive!) than more formal methods, it is the one that has the best chance of repairing and enhancing working relationships after conflict. We know that this is something our clients need and feel other professional advisers will see this as something that will benefit their clients’ business interests, without affecting their relationships.
Liam is Head of WJM’s Commercial Dispute Resolution Group and has been an employment lawyer for over 20 years. He is an Associate of the Chartered Institute of Arbitrators, Affiliate CIPD and member of Employment Law Group.
Contact Liam through .(JavaScript must be enabled to view this email address)
English wind farm case could have implications in Scotland
An English case highlighted potential areas of challenge to planning permission for wind farms.
The English High Court recently rejected an appeal by campaigners against a wind farm development near Kendal in Cumbria. Although an English case, it is interesting from a Scottish perspective as it highlights potential areas of challenge to planning permissions for wind farms and the importance of well-drafted noise conditions. It also illustrates that noise conditions vary between appeal decisions and that any scope for inconsistency is undesirable.
More details of the case can be found in this Briefing Note prepared by Fraser Gillies and Donna Kelly-Gilmour of our Energy team.
New Partner joins WJM
David Boyce has joined Wright, Johnston & Mackenzie LLP’s Commercial Property team from his own practice, Boyd & Co, in Airdrie.
Formerly Senior Partner at Boyds Solicitors (Glasgow and Edinburgh), David has immense experience in commercial property work and his appointment will bring additional strength to the busy WJM team.
Head of Commercial Property, Colin Brass, said “David will be an excellent addition to the firm and we are looking forward to working with him. He is joining the Commercial Property Group to help us with our increased workload as well working with the firm’s specialist teams to assist clients in other areas of law.”
He added ‘David has been working in tandem with WJM for some time. As his views and ours were complementary, his assumption into the practice as a partner was a logical step towards meeting our goal of providing a comprehensive client centric service.”
David will be working from WJM’s Glasgow office.
Capital Gains Tax Rebates For UK Expats In Spain
Did you sell property in Spain between July 2004 and December 2006?
If you did, you may qualify for a substantial capital gains tax rebate.
Claims must be started before 31st July 2010 to meet the deadline.
Read on for more details:
People who were not fiscal residents in Spain and sold Spanish property between July 2004 and December 2006 were obliged to pay capital gains tax on the property just as Spaniards must. However although Spanish nationals paid just 15%, non-Spaniards such as UK nationals had to pay 35% on any gains made on Spanish properties.
The European Commission challenged those rules on the grounds they were discriminatory and since 2007, both Spanish and overseas property owners have paid the same tax rate of 15%.
But what about the period between July 2004 and January 2007?
In a recent case the High Court of Valencia ruled in favour of UK nationals Mr and Mrs Roy. The judge told the Spanish tax authorities to repay them the difference in the capital gains tax they had paid compared to that which Spanish nationals paid.
As a result of this ruling, UK expats who were not fiscal residents and who sold Spanish property between July 2004 and 31 December 2006, are eligible to claim a rebate from the Spanish tax authorities on capital gains tax paid. A claim is only valid if the capital gains tax bill was paid within the last 4 years.
A currency broker has suggested that the average claim value is £14,100. Taxpayers are entitled to claim missing interest at a rate of 6% from the date the claim is presented. It has been estimated that around 10,000 UK expats may be eligible to reclaim their capital gains tax.
The reclaim process is not without difficulties though. Firstly, claimants will need to obtain a copy tax form called Modelo 212 or 210 to proceed. A claim must be lodged at a Spanish tax office and assuming it is rejected, an appeal must be made to an economic tribunal. If the appeal is unsuccessful then the claimant only has two months to start pursuing a claim through the Spanish Courts.
The claim process takes 3 months and the deadline to have claims completed by is 31 October 2010. That means sellers only have to the end of July left to start the claim process or lose their Spanish tax rebate forever.
Anyone who believes they have been affected should take immediate steps now to make their claim before it’s too late.
For more information: contact Neil Morrison, .(JavaScript must be enabled to view this email address)
The Road to Nowhere - landowners cannot hold developers to ransom
Developers who encounter landowners trying to hold them to ransom over access, will be pleased about a recent Court decision. In Hamilton v Nairn, the Judge reinforced the status quo that where a verge is part of a public road, the consent of the verge’s owner is not required for improvement works to permit development.
Background
Mr & Mrs Hamilton ran a cattery and livery stable and, due to a proposed compulsory purchase order for the new Aberdeen ring road, needed to find new premises.
Finding new premises, they obtained planning permission from Aberdeen City Council to build a cattery, livery stables, house and car parking facilities on their land. The Council’s road’s authority also granted them consent to improve the junction from their land at Tillyoch onto the nearest public road, Culter House Road. The current access is by a well-trodden country track.
Mr Nairn, the Hamilton’s next-door neighbour, who was objecting to the proposed development, refused permission for vehicular access across the verge of the road. He also refused permission for work to widen and improve the junction.
Mr Nairn had, in May 2009, purchased the entire strip of land from the edge of Culter House Road to the edge of Tillyoch. The proposed access from Tillyoch to the main road crosses that land. Mr Nairn’s case was very simple - he owns the verge at that point and, therefore, has an exclusive right to use the property as he pleases, including the right to prevent anyone else from using it.
After a series of aggressive acts towards them, the Hamiltons sought confirmation from the Court that they were legally entitled to carry out improvement works to the junction and to obtain access to their own land over the area owned by Mr Nairn.
The crux of their argument was that Culter House Road, a public road within the meaning of the Roads (Scotland) Act 1984, includes the verge either side of the road. The definition of “public road”, they put to the court, included the “road’s verge”.
In the Act “Road” means any way…over which there is a public right of passage”. That means that if it is a road, then there is a public right of passage over the whole road, including any part of the road.
At the outset, Mr Nairn disputed that his land formed part of the verge. However, during the case he agreed that his strip of land was indeed part of the verge, and so part of the public road.
Notwithstanding this set back, Mr Nairn continued to fight the Hamilton’s action on the grounds that just because Culter House Road was listed as a public road, that did not automatically grant a public right of way over the verge. He argued that sort of right would have to be established under common law.
In his summing up, the Judge reaffirmed that a public road comes with a public right of passage over the whole of that road, including any verges and ditches owned by private landlords. On this definition, the Hamiltons won their case, allowing them to continue with the development.
Practical Implications
The Court has clarified what is included in a “public road” for the purposes of the 1984 Act and the rights of owners of land which forms part of a public road.
Any ownership rights a landowner has over those strips of land cannot be exercised in contradiction to the general public’s right of passage or the road authority’s obligation to maintain public roads granted under the Act.
Although welcomed by developers, this ruling will certainly disappoint some landowners. No longer will they be able to spoil a development and hold developers to ransom by acquiring crucial strips of land.
For further information on this or any other land issues, please contact:
Donna Kelly-Gilmour .(JavaScript must be enabled to view this email address)
Alistair Anderson .(JavaScript must be enabled to view this email address)
A printable pdf copy of this Briefing Note can be found here.
Neil Morrison to speak at Law Society Conference
Neil Morrison, one of WJM’s Commercial Dispute Resolution lawyers, has been chosen to speak at the Law Society of Scotland’s (LSS) Alternative Business Structures Conference.
Neil won his place on the podium after submitting a winning entry in the LSS’s New Lawyers Competition.
The Conference takes place on Friday 7th May and more details can be can obtained from Neil through .(JavaScript must be enabled to view this email address)
Data Protection - Half a Million Reasons to Comply
Fines up to £500,000 for serious data protection law breaches
On 6th April 2010, the Information Commissioner was given new powers to fine data users found guilty of serious contraventions of the Data Protection Principles as laid out in the Data Protection Act 1998. Now serious contraventions could result in fines of up to £500,000.
This change is in response to the number of high profile data security incidents, which made headline news across the UK. Amongst others, the MOD, the CSA and the NHS all ‘mislaid’ large amounts of sensitive personal data, leading to a public outcry and calls for heads to roll.
These high profile security breaches highlighted the Information Commissioner’s inadequate powers to punish Data Controllers* who failed to meet the standards. Previously, the Commissioner had extremely limited powers to impose fines, even for very serious breaches of Data Protection law. This was thought to be wrong and so the Data Protection Act was amended to allow fines to be levied for serious breaches of law, up to a maximum amount of £500,000. *A Data Controller is a person who decides why and how any personal data is processed.
These new powers emphasise, that for businesses and organisations, the lawful gathering, use and protection of personal data must form both an integral part of an organisation’s everyday policies and procedures as well as part of its compliance framework. Data protection can no longer to be considered an optional extra with lip service paid to the requirements of the Data Protection Act. And it doesn’t matter what size your organisation is – whether you are a sole trader, a charity or a substantial business – if you process personal data, this law applies to you!
It is expected that the Information Commission will only fine to the maximum £500,000 in the most serious situations and/or where deliberate or negligent breaches of the Principles have taken place.
However lesser fines may be levied for less serious breaches and organisations should use this change to review their own situations, even though the new fines regime is only applied to contraventions occurring after 6th April 2010.
It is vital that you ensure any personal information you hold about clients, customers, contacts and employees is collected, managed and processed in accordance with the Principles of the Data Protection Act.
The Data Protection Principles set out that a Data Controller must ensure that all personal data being held is:
- kept securely;
- processed fairly and lawfully;
- adequate, relevant and not excessive;
- processed in line with the rights of individuals;
- accurate and, where necessary, kept up to date;
- processed for one or more specified and lawful purposes;
- kept no longer than is necessary for the purpose for which it is being used;
- not transferred out side the European Economic Area unless adequately protected.
Where a Data Controller has seriously contravened the Data Protection Principles and, where the contravention was of a kind likely to cause substantial damage or distress, the Commissioner now has enforcement powers to issue a Monetary Penalty Notice.
To attract the maximum penalty of £500,000, the contravention must have been deliberate or where the Data Controller knew, or ought to have known, that there was a risk that contravention would occur and that he or she failed to take reasonable steps to prevent it.
Guidance from the Information Commissioners office makes it clear that the intention is not to impose undue financial hardship on an otherwise responsible Data Controller, where a genuine mistake has been made.
So long as your Data Controller takes appropriate steps in line with the Principles to keep personal data secure, it is not likely that you will be subject to one of these fines. However, more minor contraventions may be subject to other enforcement provisions under the Act.
The Information Commissioner has prepared a detailed guidance note which sets out the full extent of the powers and also the Commissioner’s interpretation of what sort of actions will be liable to attract a monetary penalty. The document can be found at here on the Information Commissioner’s Website
A printable copy of this Briefing Note can be found here.
For more information in relation to the Information Commissioner’s new powers or your obligations under the Data Protection Act, or advice on how to update your compliance procedures or your everyday processes, policies and procedures, please contact Angus MacLeod at .(JavaScript must be enabled to view this email address).
More information from: Angus MacLeod: .(JavaScript must be enabled to view this email address)
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as April 2010. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action or inaction taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Services Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 30033
Changes to Furnished Holidays Lets Tax Position runs out of time
Back in January we informed holiday home owners that the tax regime for furnished holiday lettings was changing from 6th April 2010.
The rush to get legislation through before the dissolution of Parliament triggered by the calling of a General Election, meant that some announced measures went by the board.
Amongst the measures that didn’t make it, were these proposed tax changes.
For now, holiday home owners can breathe easy but a lot will depend on who’s elected on May 6 as to whether this legislation is revived in its current form.
Whatever the outcome, we’ll keep you informed.
WJM Sponsors Running4Renewables
We’re sponsoring Running4Renewables - a project set up to help the Koru Foundation bring the benefits of renewably generated power to remote communities.
Running4Renewables sees participants from across the renewable energy industry taking part in marathons, half-marathons, road races and other running events and raising money through sponsorship for the Koru Foundation. The WJM Team will be running in the “Hairy Haggis” running event attached to the Edinburgh Marathon on 23rd May 2010.
WJM’s Head of Renewables, Andy McFarlane, said “This is a great project and Wright, Johnston & Mackenzie’s Renewable Energy team are proud to be supporters. We work to bring to the benefits of renewable energy to our own remote communities in Scotland but the Koru Foundation takes this to a whole new level with their work in Africa, Asia and South America. We are delighted to be able to support them. As one of the leading legal renewables teams, I’m hoping that Team WJM’s performance in the “Hairy Haggis” run will be comparable to their work performance but I’m not holding my breath!”
For more information or to sponsor a team member, please contact Andy through .(JavaScript must be enabled to view this email address)
Enhancing Employee Benefits - Cost Neutral Ways
As part of our fully joined up service, we look at the activities we undertake for clients - and then reverse our viewpoint to make sure that we are looking at matters from a client’s point of view.
In taking this approach, we come across recurring themes. One of the most common at the moment, from our corporate clients, is how to retain and motivate good quality staff.
Most employers recognise that staff benefits are of increasing significance to their employees but the cost of providing benefits can be substantial.
When, as now, cost limitation is crucial, what can employers do to provide extra benefits without incurring costs?
There are cost neutral ways of enhancing your employee benefit packages. Our Top Five are:
Pension Scheme
If you offer a pension scheme to your staff, why not consider allowing them to salary sacrifice their pension contribution? On a cost neutral basis you can enhance the amount they pay to pension by paying the National Insurance saving to the pension provider rather than to HMRC.
Bike to Work Scheme
The Bike to Work scheme allows employees to purchase a new bike but by paying it from gross salary – thus saving income tax and National Insurance.
Childcare Vouchers
Childcare vouchers offer the chance for employees to pay for nursery or after school care from their pre-tax salary. The obvious benefit is the tax and National Insurance costs - these savings can amount to £1,195 per annum per parent.
The cost of these schemes are typically contained within the Employers’ National Insurance costs – so this valuable benefit can end up being cost neutral to the employer.
Private Medical Care
Corporate rates for Private Medical Insurance are typically 30% lower than individual rates so by allowing your staff an opportunity to pay for their cover via a company scheme, you will be saving them money.
Workplace Car Parking
Often, somewhere to park near the work place is a distinct advantage for staff and many already choose to pay for such a privilege. In making a salary sacrifice arrangement to cover this cost, you staff will significantly reduce their outgoings.
Employees will naturally have to consider the effects of salary sacrifice and you, as their employer, may need to review your contracts of employment. Such contract reviews are routine issues for our Employment and HR teams.
If you would like to introduce cost neutral employee benefits schemes, please contact Ian Ody.
More information from Ian Ody: .(JavaScript must be enabled to view this email address)
WJM Appoints Two New Partners
WJM has appointed 2 new partners, Andy McFarlane and Fraser Gillies. Both appointments take effect from 1st February.
Andy is taking over as Head of the WJM Energy Team in place of David Bone, who is leaving the firm for pastures new. The new team will have 4 partners, including Fraser who will also lead the firm’s growth in planning law and continue to develop a broad practice in commercial dispute resolution.
In further changes, Ken McCracken has been appointed as Chief Executive and Graham Bell as Deputy Chief Executive. The new team will be driving the firm forward with its client centric strategy of providing inter-disciplinary teams to look after the needs of the firm’s broad range of clients.
“The client-centric approach changes the way that WJM lawyers think and act”, explained Ken McCracken. “It’s an alternative business model to the conventional idea that our client’s affairs, whether they are a major corporate, a family enterprise or a private individual, can be best looked after by breaking everything down into different specialisms. This can too easily lead to fragmented advice which doesn’t always suit the client.”
Ken continued, “Obviously our lawyers will continue to provide a high level of expertise, but we want to go further and make sure that all this expertise is joined up and mobilised in service of the needs of our clients. None of our clients view their affairs as just a series of technical problems to which there are technical answers. Our client centric approach and the new profiling tools we’ve developed to make it work, challenges us to engage with the Big Picture, from the client’s point of view”.
More information on the Energy team from Andy McFarlane: .(JavaScript must be enabled to view this email address) or from their web page at Renewable Energy
Furnished Holiday Lets - Tax changes mean owners need to act now!
If you own a holiday home which you let out or you run a business letting holiday property then you need to read Susan Hoyle’s Briefing Note on changes to the tax regime for furnished holiday lets.
The article is below and you can download a PDF Version here for reference.
Furnished Holiday Lets – Tax Changes
How do they affect owners?
In the 2009 Budget, the Government announced that special rules for taxing furnished holiday lets (FHLs) were to be abolished with effect from 6 April 2010.
In the meantime, until 6 April 2010, the existing FHL rules have been extended to include qualifying properties not just in the UK, but also anywhere in the European Economic Area.
The Current Rules
Under the current rules, the letting of qualifying holiday accommodation is treated as a trade for tax purposes. This has a number of advantages such as:
- allowing losses from the FHL business to be set off against other income;
- the profits being treated as relevant income for pensions purposes;
- the ability to claim capital allowances on furniture;
- the potential to reduce the rate of capital gains tax on sale from 18% to 10%, or to defer any capital gain arising on a sale or transfer of the property.
The letting of holiday accommodation will qualify for this treatment if it meets the following conditions:
- the property is let on a commercial basis;
- it is available for letting as holiday accommodation for at least 140 days in the tax year, and is actually let as such for at least 70 of those days; and
- if the same person occupies the accommodation for a continuous period of more than 31 days, then the aggregate of all such long-term occupancy must not exceed 155 days in the tax year.
What do the changes mean for you?
If you let furnished holiday property situated outside the UK, but in the European Economic Area, and the letting meets the conditions outlined above, you should review your tax affairs to see if there are claims for tax reliefs you can now make for previous years which you could not make at the time.
After 6 April 2010, for individuals, partnerships and companies who let furnished holiday property in the UK or in the European Economic Area, the changes will generally mean that:
- the losses from the FHL business can no longer be set off against other income – the losses can only be set off against profits from that business;
- the profits from the FHL business will no longer be treated as relevant income for pensions purposes;
- you will no longer be able to claim capital allowances in respect of furniture – instead you will be able to claim as a deduction from profits a wear and tear allowance of an amount equal to 10% of the net rent from letting the property;
- you will not be able to reduce the rate of capital gains tax from 18% to 10%, or to defer any capital gain arising, on a sale or transfer of the property.
Notwithstanding the changes to the tax treatment of FHLs, where the intention is to let for short periods totalling 140 days or more you will remain liable for business rates rather than council tax.
What should you do?
It will be possible to retain the current tax advantages after 5 April 2010, if you can show HMRC that you are, in fact, carrying on a trade rather than a property business. In order to show this you would need to provide services over and above those normally provided by a landlord – such as regular cleaning of rooms when they are let, and not just between changes of tenant, the regular supply of clean linen, the regular provision of meals – similar to those provided by hotels.
In the meantime you should consider:
- the timing of expenditure, maximising expenses such as repairs (and therefore losses) in the current tax year if you have other income or gains in 2009/10 and 2008/09 that you can off set against the losses;
- reviewing existing borrowings to ensure that they will be tax efficient;
- transferring properties with large unrealised gains or development value to the next generation before 5 April 2010 and holding over the gain.
More information from Susan Hoyle: .(JavaScript must be enabled to view this email address) or Brendan Kelly: .(JavaScript must be enabled to view this email address)
WJM Spin Out Company Expands Overseas
Wright, Johnston & Mackenzie LLP’s spin out family business consulting company, Family Business Solutions Ltd, has expanded into the Mediterranean through a collaboration agreement with Maltese management consultancy 2M Management Consultancy.
The new venture, called FBS2M, will launch at the Malta Family Business Conference at the end of January. FBS2M will provide locally based consulting and training services for enterprising families, family businesses and family offices.
Ken McCracken, a partner at WJM and the Managing Director of FBS, said, “In an economically tough world, we are excited to be able to report on this growth for FBS. It shows that the importance of a strong family business sector is beginning to be more widely recognised and we are delighted to be working in an international partnership with 2M.”
“Family businesses and business families all over the world share the same challenges like succession issues, governance and managing the business of the family. Working with 2M will enable us to provide innovative services for family businesses and family offices in Malta.”
Ken added, “Malta’s location at the centre of the Mediterranean and its important historic trading links makes the new venture ideally placed to use this opportunity to develop and expand further into other countries. Family enterprises make up the majority of the businesses in those countries and we look forward to working with 2M and local family businesses across the Mediterranean region.”
“Malta is also continuing to develop into an important regional financial centre. A business friendly government, with benign tax regimes for entrepreneurs and their businesses, is leading to a substantial amount of inward investment, much of which is family owned companies.”
Mario Duca, Managing Director of 2M, said, “We are delighted to be working with FBS. After identifying the need for new family business services in Malta, we reviewed the European market and FBS stood out as offering the most comprehensive range of consulting and training services. Also Scotland, as a country, has been innovative in the development of family business knowledge and practice and we intend to import as much Scottish experience and know-how as possible to Malta”.
Ken added, “Scotland has a long tradition of international trade and innovation. Scotland is at the forefront of family business knowledge, consulting and training and it is fitting that we should export our intellectual property in this area. We believe that by licensing our innovative knowledge and practice in the field of family businesses we can help strengthen the survival rates of family businesses, which can only be good for the wider economy.”
More information from Ken McCracken: .(JavaScript must be enabled to view this email address)
