Archive for the ‘General’ Category

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Ombudsman Orders Compensation Following Planning Approval

Friday, May 27th, 2011
A Council that took account of the personal circumstances of an applicant for planning permission, when granting an application to construct a bungalow outside the designated development area and in green belt land, has been criticised by the Local Government Ombudsman.
 
The person who applied for permission to build the bungalow was elderly, disabled and owned a home which was susceptible to flooding. Melton Borough Council granted planning permission despite the objections of the owners of adjoining land and even though the application was contrary to the Council’s stated planning policies and went against the recommendation of the planning officer who had reviewed the application.
 
The Ombudsman ruled that the owners of the adjoining land should be compensated for the diminution in value of their property as a result of planning permission being granted and awarded an additional £500 for their time and trouble in raising the complaint.
 

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Charity Trustees Given Financial Crime Awareness Warning

Tuesday, May 24th, 2011
Charity Trustees have been reminded of the need to be aware of the possibility that their charity may be used for financial crime, with the National Fraud Authority estimating that annual losses to charities due to financial crime amount to more than 2 per cent of total income.
 
As the Charity Commission points out, ‘trustees have a legal duty and responsibility under charity law to protect the funds and other property of their charity so that it can be applied for its intended beneficiaries. They must also comply with the general law (and overseas law where applicable) including in relation to the prevention of fraud, money laundering and terrorist financing.’
 
The Charity Commission has therefore prepared a list of ‘ten top tips’ for charity trustees to ensure they are aware of the possibility and take appropriate steps to reduce the risk of financial crime.
 
These are as follows.
 
  1. Review your financial controls at appropriate intervals and do so critically, keeping them up to date. Just because you have not been a victim of fraud, do not assume that it will never happen;
  2. Segregate duties – do not allow one or two people to be in charge of all aspects of your charity’s financial controls without any checks being made;
  3. Make sure all of the separate parts of the financial records agree with each other. Always ask for and keep receipts. Reconciling bank statements with invoices, receipts, purchase and payment authorisations will often help to identify fraud at an early stage, and may discourage potential fraudsters;
  4. Never weaken your financial security for the sake of short cutting or time saving. For example, do not pre-sign blank cheques, even if a second signature is required. Doing so reduces your cheque security by 50 per cent –or, to put it another way, doubles the risk;
  5. Keep lists or registers of valuable fixed assets and key charity property, and periodically inspect them;
  6. Ensure that electronic or online banking arrangements are secure and are protected with dual-level authorisation;
  7. When recruiting staff – especially those who handle the charity’s finances – make appropriate background checks and take up references;
  8. If your charity makes grants to beneficiaries or other organisations, carry out appropriate due diligence checks on applicants. Guidance on this can be found at  ‘know your beneficiaries’;
  9. Ensure that as trustees you receive and consider regular reporting information about the charity’s finances. If you are a trustee or manager, make sure that you understand the financial summaries and reports that are presented to you, and if you do not, ASK for an explanation that you CAN understand; and
  10. If you suspect or become aware of fraud, make sure that you know what to do and who to inform. Make sure it is part of the culture of your charity. Prompt and appropriate action will help to protect your charity and limit any financial damage.
 
If you have concerns about how a charity of which you are the trustee is being run, contact us for advice.

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No-Shows – ECJ Rules No Vat Due

Tuesday, May 24th, 2011

A recent decision of the European Court of Justice will come as good news for hard-pressed hoteliers and has led to HM Revenue and Customs issuing new guidance on deposits.

hotel 1
The decision confirms that there is no relationship between a deposit taken and the supply of a standard-rated service. Accordingly, therefore, where a deposit has been taken for a hotel booking and retained because the person making the booking is a ‘no-show’, there is no need to account for VAT on the deposit.
 
However, if the deposit is made for a specific room which is therefore kept vacant, the supply remains one on which VAT is due.
 
Hotel owners can reclaim VAT overpaid as a result for the past four years only. In addition, hoteliers will want to consider their terms and conditions to ensure they are VAT efficient.

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If it is in the Sky, It is Weather!

Friday, May 20th, 2011

Plane on runway

The Financial Services Ombudsman has refused to refer a test case involving a travel insurance claim to the court in order to determine whether the volcanic ash cloud which caused so much disruption to European aviation in 2010 was not covered by the phrase ‘poor weather conditions’.
 
Most travel insurance policies contain limitations in cover which exclude or limit claims resulting from ‘acts of God and those relating to areas where there is civil unrest or war or to which travel is undertaken when the Foreign Office has advised against it. Normally, they allow a claim to be made where it results from adverse weather conditions.
 
The case involved a woman whose claim was refused by the insurer, which argued that it was not covered by the clause that allowed a claim to be made when the travel disruption resulted from adverse weather conditions. She appealed to the Ombudsman.
 
The ombudsman concluded that it was not a suitable case to refer to the court as a test case and made an award to the claimant.

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Who is a Member of a Company?

Tuesday, May 17th, 2011

Keeping company records up to date is not always a top priority for the directors of smaller companies. However, failing to keep the shareholders’ register up to date can have a downside if a share transfer has occurred but the new owner’s name is not entered into the register of members.

 
The problem is that under the Companies Act 2006, except in very limited circumstances, the person shown as a member in the register of members is a member and a person not shown isn’t – until the register is rectified.
 
This can have practical effects such as making notices of meetings invalid, invalidating votes of shareholders and so on and can affect, as it did in a recent case in the Supreme Court, whether or not one retains the rights attaching to shares transferred for financial purposes into the names of nominees.
 
Contact us for advice on company secretarial and company law matters.
 

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More Businesses ‘Critical’

Monday, May 16th, 2011
SaleThe number of businesses in the UK which are suffering from ‘significant’ or ‘critical’ financial problems on the first quarter of 2011 has risen to 186,000, according to a report by insolvency specialists Begbies Traynor. This is an increase of 26 per cent over the figure for the third quarter of 2010 and is 15 per cent more than the same quarter in 2010.
 
Another report shows a 4 per cent jump in the number of retail businesses at ‘high risk’ of insolvency and there has also been a 15 per cent increase in the number of retails using company voluntary arrangements compared with 2010.A report by accountants PwC also revealed an increase of more than 12 per cent in corporate insolvencies with retailing the worst-hit sector.
 
Things are tough in retailing and the building industry was recently identified as having had a particularly bad winter.
 

For advice on managing your trade risk, contact us.

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New Guidance on Transferable Nil-Rate Bands

Friday, May 13th, 2011
Cruise Ship 1There has, since its inception, been a great deal of confusion regarding the ‘double Inheritance Tax (IHT) nil rate band’ legislation – whereby the unused proportion of the IHT nil rate band of the first of a couple to die is passed to the second: this is termed the ‘transferable nil rate band’ (TRNB).
One of the problems stems from those cases in which the estate of the first deceased merely passed across to their spouse and the formal documentation relating to the estate was either not prepared or not retained.
HM Revenue and Customs have attempted to make the use of the TRNB simpler by issuing a new code of practice which allows an estate making use of a transferred TRNB to be an ‘excepted estate’ provided certain conditions are met.
In practice, this will simplify the administration of many estates. However, there are still conditions which may cause difficulties for many people, such as the conditions that the first deceased must have:
  • been domiciled for IHT purposes in the UK at the date of death; and
  • not have owned foreign assets (i.e. a holiday home) worth more than £100,000 at the date of death.
The guidance can be found at
http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm06024.htm
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Unfair Trading Legislation Stops Bogus Prize Draws

Thursday, May 12th, 2011

Not many prosecutions are brought under the Consumer Protection From Unfair Trading Regulations 2008, which are designed to protect consumers form the activities of unscrupulous traders.

 
Recently several companies were taken to court by the Office of Fair Trading for breaches of the regulations.
 
One of the companies offered invitations to claim ‘prizes’ by sending unsolicited letters to people. The ‘prizes’ which were the subject of the prosecution were either an LCD TV (allocated to less than 1 per cent of the applicants) or a ‘Zurich watch’ which was allocated to more than 99 per cent of the respondents. The Zurich watch actually contained a movement made in Japan.
 
To obtain the prize, it was necessary to obtain a ‘prize code’. This was done by the ‘prize’ recipient telephoning a premium-rate number – which cost £8.95. They then had to send a further £8.50 because the watch was an ‘electrical item’. The total cost to the consumer was therefore £17.45 and the supplier made a profit of approximately £7 on each ‘prize’.
 
The court concluded that there was in reality, no prize: the claimant had bought the watch.
 
In each case, the OFT found that the Regulations had been breached and that the ‘prize’ element of the promotion was a sham.
 
There are many unscrupulous traders in the market and promotions that offer ‘free prizes’ are seldom genuine. There are also examples of companies that target vulnerable people (i.e. the recently bereaved).
 
If something looks too good to be true, it is almost certainly because it is. Do not commit yourself without thinking through your options.

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Bribery Leads to $150 Million Settlement

Thursday, May 12th, 2011
The laws against corrupt practice in the USA are both strong and pervasive, as a recent case illustrates.
It involved a London solicitor who is a US citizen and who was charged in the USA in connection with corrupt practices with regard to contracts worth more than £4 billion that had been awarded in Nigeria to a consortium represented by the solicitor. He paid bribes to high-ranking Nigerian officials between 1996 and 2004.
Dollars
He fought extradition to the USA on the grounds that the time-lag between the offences and the case coming to trial prevented a fair trial and that the offences were too distant from the US for the courts there to have authority.
Despite that fact that only one of the member firms of the consortium was American, he was extradited to the USA and negotiated a plea bargain with the US authorities. This involved him agreeing to forfeit nearly $150 million.
He is scheduled for sentencing in June and could face a maximum prison sentence of five years for each of to two offences.
Why not visit our business law faqs page.

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Squatters’ Rights

Monday, May 9th, 2011
terraced housingUnder UK law, anyone who is allowed unopposed occupation of a piece of land for more than twelve years (10 years for registered land if appropriate procedures are followed) can acquire legal title to the land. Although numerous safeguards were introduced in the Land Registration Act 2002, which introduced a system of notices before the title could be transferred, this continues to be the case.
 
The UK's approach to 'squatters' rights' (known in legal circles as adverse possession) has been ruled to be lawful according to a ruling by the European Court.
 
If you allow people to make use of land you own without taking measures to protect your rights you run the danger of giving them permanent legal rights over your land or even losing legal title to it. Contact us for advice.

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