UK Business Law Developments
February, 2012, the European Court of Justice was asked to
rule on the legality of the Anti-Counterfeiting Trade
Agreement (ACTA) which at the time had been signed
by 22 European member states including the UK, as well as
the Unites States, Japan and Canada.
The agreement has been shrouded in controversy and several
countries, including Germany and Poland have backed away from
the agreement following protests in several countries.
European Commission said it "decided today to ask the
European Court of Justice for a legal opinion to clarify that
the Acta agreement and its implementation must be fully compatible
with freedom of expression and freedom of the internet".
agreement is scheduled to be debated by the European Parliament
in June of 2012.
April, 2010, a draft of the Anti-Counterfeiting Trade Agreement
(ACTA) – which has been the subject of rumor, leaks
and controversy – was released after two years of behind-the-scenes
negotiation and scrutiny by the parties involved. The release
was approved by the negotiating parties at a recent negotiation
round held in Wellington, New Zealand, following pressure
from the European Union to do so.
despite the two-year negotiations between the potential signatories,
which include Australia, the EU member states, Switzerland,
the USA, Japan, New Zealand, South Korea and Canada, various
provisions were the subject of further negotiation over the
coming months. A final version of the agreement was expected
draft ACTA has been met with mixed views. Some commentators
conclude that, as the agreement stands, it is not as bad as
feared, pointing to the fact that the current British and
French “three strikes” penalties model is not
to be forced on all governments in the final ACTA. The “three
strikes” model is aimed at Internet users who repeatedly
infringe copyright law.
service providers have, though, raised concerns over the introduction
of measures that would force them to monitor Internet traffic.
In a press release, the European Internet Service Providers
Association (EuroISPA) worries that the draft text “still
goes far beyond the existing implementation of the European
regulatory framework regarding liability, introducing measures
that will damage the industry sector via the creation of undue
liability on ISPs and jeopardizing the openness of the Internet.”
to EuroISPA president Malcolm Hutty, “This is a serious
concern considering the crucial role played by the Internet
for the development of the economic recovery, not only in
the consumer space but also as an infrastructure underpinning
business and employment.”
civil liberties groups have highlighted what they believe
are the dangers of the agreement.
Leppla, spokesman for Open Rights Group based in the UK, raised
concerns that “we still don't know the positions of
individual countries. So we won't know who is pushing for
the most dangerous enforcement policies. What we need now
is an open process that allows consumer and citizens groups
to influence what is in the document.”
Zimmermann, head of La Quadrature du Net – which leaked
a previous draft of the agreement – said: “All
the leaks have shown that ACTA could dangerously hinder freedom
of expression, access to medicines and innovation in the global
knowledge society. This official release suggests that it
is still the case.”
Motion Picture Association of America, however, welcomed the
draft agreement, claiming in a press statement by Executive
Vice President and Chief Policy Officer Greg Frazier, that
“it represents a solid building block, an important
step forward in the work of like-minded governments to strengthen
protection against Internet piracy, the fastest growing threat
to filmed entertainment and other segments of the copyright
December, 2008, in a letter sent by the Secretary of State
for Innovation, Universities and Skills, John Denham to EU
Internal Market Commissioner Charlie McCreevy, it was announced
that the UK intends to maintain its existing derogation
from resale right for the works of deceased artists
for a further two years. The extension means that resale right
will continue to apply in the UK to works by living artists
resale right entitles authors of original works of art, such
as paintings, engravings, sculpture and ceramics, to receive
a royalty each time one of their works is resold in a sale
involving an art market professional, and a consultation was
held on extending the derogation with a wide range of stakeholders,
including artists and traders, according to the government.
decided, Denham revealed in his letter, that the current economic
climate could adversely affect the art market’s ability
to cope with the application of artist’s resale right
to the works of deceased artists.
explained that: "We are committed to supporting businesses,
including the UK art trade, through the current downturn.
Applying resale right to deceased artists at this time would
place a considerable burden on the art trade."
the art traders are seeing a reduction in business they will
not only sell fewer works, but will not buy them from artists
either. This will have a knock on effect for artists who will
find that there is less of a market for their work."
in July 2007 at the Annual General Meeting of the UK recording
industry group, BPI, Tory party leader David Cameron expressed
his support for the proposed extension of the copyright
term for sound recordings from 50 years to 70.
his new policy on the creative industries and social responsibility,
the Conservative leader, who was the meeting's keynote speaker,
described the extension of the term of copyright from 50 years
to 70 years for sound recordings as “good for musicians
and consumers too”.
Conservative Government will argue for this in Europe, for
this change to happen in order to protect investment in the
future of the industry, reward our creative artists and generate
more choice for consumers," stated Cameron.
highlighted the role that ISPs should play in combating copyright
theft. Describing them as "the gatekeepers of the internet",
he argued that illegal downloads were "clear and visible
internet traffic" and "could be blocked by ISPs".
the "massive fraud" carried out against the music
industry every day, Cameron emphasised that "copyright
theft has to be treated like other theft" and pledged
that the Conservatives would enforce laws more strongly so
that perpetrators are brought to book.
that the Conservatives would work with industry to "get
the message out that piracy and illegal filesharing is wrong".
March 2012, the UK Intellectual Property Office started its
fifth pilot project for a Patent Prosecution Highway (PPH)
with Germany (DPMA). The fourth PPH program had been started
just two months earlier with the Canadian Intellectual Property
and third projects with the United States Patent and Trademark
Office (USPTO) and the Korean Intellectual Property Office
(KPO) we signed in 2007 and 2009 respectively. Both of these
have now been extended indefinitely.
2007, the UK Intellectual Property Office and the Japan Patent
Office announced that a new initiative designed to speed up
the processing of patent applications in the two countries,
the Patent Prosecution Highway (PPH), had been launched.
pilot of the Patent Prosecution Highway scheme allowed patent
applicants who have received an examination report by either
the UK Intellectual Property Office (UK-IPO) or the Japan
Patent Office (JPO) to request accelerated examination of
a corresponding patent application filed in the other country.
of the pilot was to test applicant demand for this additional
option for speeding up examination of patent applications,
and to quantify the quality and efficiency gains to be expected.
Chief Executive of the UK Intellectual Property Office explained
Patent Prosecution Highway is a valuable additional resource
for those seeking to protect their intellectual property in
both the UK and Japan. I am especially pleased that the improved
efficiency and quality expected to arise from the PPH is a
direct result of the strong relations that exist between the
UK Intellectual Property Office and the Japan Patent Office."
PPH will help the offices in their goal of stimulating and
rewarding invention and innovation and is an important step
towards a global patent prosecution highway network."
Commissioner of the Japan Patent Office added:
Patent Prosecution Highway is a significant step in the cooperative
efforts of Japan and the UK to streamline patent prosecution
and support Japanese and UK industries to acquire patents
throughout the world."
initiative between the two countries is expected to further
contribute to the realisation of a global patent prosecution
with Japan was made permanent in March 2010.
on music recordings was extended from 50 years to 70 years
following ratification of a new law by the EU in September
2011. The copyright of many well known 60s songs was due to
expire in 2013 but will now continue until 2033.
important decision comes not a moment too soon," said
the chief executive of UK music industry body the BPI, Geoff
Taylor. "An exceptional period of British musical genius
was about to lose its protection. As a matter of principle,
it is right that our musicians should benefit from their creativity
during their lifetimes, and that they should not be disadvantaged
compared to musicians in other countries."
In a report
published in May 2007, the House of Commons Culture, Media
and Sport Select Committee had recommended that the current
copyright term for sound recordings of 50 years should be
extended to 70 years.
the findings of the previous year's Gowers review of the UK's
intellectual property regime, which suggested that the economic
benefit to performers of such an extension would be minimal.
the Culture, Media and Sport Committee argued that:
term for sound recordings should be extended to at least 70
years, to provide reasonable certainty that an artist will
be able to derive benefit from a recording throughout his
or her lifetime."
have not heard a convincing reason why a composer and his
or her heirs should benefit from a term of copyright which
extends for lifetime and beyond, but a performer should not”.
Committee went on to suggest that the rejection of an extension
to copyright term by Andrew Gowers in his Review of Intellectual
Property, published in December 2006, failed to take account
of the moral right of creators to choose to retain ownership
and control of their own intellectual property, and instead
examined the matter from a purely economic standpoint.
additionally called for new measures to help tackle piracy,
setting out in statute deterrent levels of damages available
in cases where copyright has been infringed, and making it
illegal to camcord a film being shown in a cinema.
also concluded that the present statutory exemptions from
infringement of copyright are not providing clarity or confidence
for users or for the creative industries, particularly in
relation to home copying, and it recommended that the Government
should draw up a new exemption permitting copying within domestic
premises for domestic use (including portable devices such
as MP3 players, and vehicles owned or used regularly by the
household) but not onward transmission of copied material.
the role of the internet and of social networking websites
in distributing unlicensed creative material, the Committee
called upon internet service providers and internet search-based
businesses to do more to discourage piracy, and to take more
responsibility for dealing with unlicensed material, for instance
by establishing a proactive body to examine claims that unlicensed
material is being made available.
UK Intellectual Property Office (formerly the UK Patent
Office) on December 8, 2011, published on its website
new measures announced by the Government under the banner
'Innovation and Research Strategy for Growth'. The
measures contain key actions by the IPO, namely:
- A new online
business advisor training tool that will give advisors the
skills and information they need to help businesses protect
the value of their intellectual property;
- An online register
of advisors to help businesses find the right advisor for
them quickly and easily;
businesses, business advisors and IP specialists about how
lower cost IP legal and commercial advice can be provided;
- Offering free
intellectual property audits to businesses through the Technology
- Enhancing existing
schemes such as mediation to provide a more efficient dispute
resolution service that can prevent potentially costly legal
property of small and medium sized businesses is vital to
their future economic growth and success. Their innovative
ideas and creations can be worth billions of pounds so it
is essential that we provide them with the support they need
to protect and enforce their rights.
of measures outlined today will allow the Intellectual Property
Office to build even stronger links with businesses, giving
them the confidence to trade both in the UK and abroad."
February 2007, the UK's Trade and Industry Minister, Malcolm
Wicks confirmed that, from 6 April, new powers under
the Copyright, Designs and Patents Act, backed up with GBP5m
new funding, would be at the disposal of Trading
Standards Officers and other UK enforcement agencies.
UK film, music and game industries are among the most creative
and innovative in the world, but peddlers of counterfeits
are costing those industries up to GBP9 billion a year. The
taxpayer is also losing out to the tune of GBP300 million.
It's a serious offence, whether committed by small-scale hawkers
or international crime organisations."
6 April, there’ll be an additional 4,500 pairs of Trading
Standards eyes watching counterfeiters and pirates. This will
mean more surprise raids at markets and boot sales, more intelligence,
more prosecutions and more criminals locked up. IP criminals
should know that the UK is not a safe place. Their risk of
10 years' imprisonment and unlimited fines is very real and
from this date forward a markedly higher risk."
UK Patent Office (now the UK Intellectial Property Office)
announced in December, 2006, that it was seeking the views
of businesses on rules which will bring into effect the new
regime for examination of trade marks on relative
that year the Patent Office consulted on how, in the future,
the relative grounds for refusal contained in the Trade Marks
Act 1994 should be dealt with. After taking into account the
views expressed in response to the consultation it then published
a decision on how it should proceed.
the proposed new regime, the Registrar of Trade Marks will
no longer refuse to register a new trade mark application
in the face of an earlier conflicting trade mark unless the
owner of the earlier mark successfully opposes the new application.
Registrar’s examiners would, nevertheless, still conduct a
search as part of the examination process and would inform
both the applicant for registration of the results of the
search and also the owners of earlier conflicting trade marks
identified in it if, and when, the application proceeds to
Patent Office explained that: "Having decided what the policy
should be, consideration has now been given to the legislative
changes that are required to bring this policy into practice.
This consultation document therefore sets out draft legislation
to show how the new regime will operate."
were invited until March 12.
to the publication in December, 2006, of the Gowers
Review of Intellectual Property, Ron Marchant, Chief
Executive and Comptroller General at the UK Patent Office
praised the job done by the former Financial Times editor.
Marchant stated that: "The Patent Office joins others in welcoming
the Report and I look forward to the Patent Office playing
a full role in implementing the recommendations for which
it is responsible. Andrew Gowers and his team have done a
comprehensive and thorough job in a very open-minded way.
We congratulate them."
Report has confirmed the crucial importance of IP to the success
of the UK in the global knowledge economy and we are pleased
that the report sees the system as operating broadly satisfactorily.
We are very pleased that the report recognises the important
role played by the Patent Office and supports our own programme
"Patent Office for the 21st Century", identifying the programme
as an appropriate vehicle for some of the recommendations."
particular, he announced that the Patent Office will be revising
its role in the following areas:
for UK Businesses as they seek to obtain and protect their
rights both domestically and in other countries;
track rights processing;
to make progress on European and Community Patent proposals;
to improve patent quality;
with other Patent Offices, particularly the US and Japan,
to make multinational patent processing simpler;
a better match between fees and the costs of the services
covered by them; and
public awareness of the wider impact of IP crime
Patent Office chief concluded: "Thanks to the work we began
with our Patent Office for the 21st Century programme we are
ready to rise to the challenge. That challenge is highlighted
by the proposed change of name to the UK Intellectual Property
Office as this will signal to all customers and stakeholders
the true range of our activities and contribution. I am delighted
that the Patent Office for the 21st Century will be "The UK
Intellectual Property Office"."
December, 2009, Meltwater
Group, a leading "software-as-a-service" company,
announced that it had taken the UK Newspaper Licensing Agency
(NLA) to court over what it is considering a “link tax.”
a statement, Meltwater said that it is pursuing this legal
action after the NLA threatened to sue online media monitoring
companies who fail to sign up to its new content licensing
agreement by January 1, 2010.
has decided to challenge the legal basis of the NLA’s
licensing scheme, and in particular the NLA's claim to be
able to license hyperlinking, which Meltwater believes has
no basis in English law," the company's statement explained.
NLA, originally formed in 1996, was created to license and
collect revenue from the copying and clipping of print media.
But, according to Meltwater, the agency is attempting to enforce
licensing agreements on sending and receiving Internet links
and is targeting both companies providing media monitoring
services and the customers subscribing to such services.
monitoring services create value for Internet users similar
to search engines like Google, Yahoo, and Bing,” said
Jorn Lyseggen, CEO of Meltwater Group. “We use sophisticated
search algorithms to help our clients find content they otherwise
would have difficulties locating. The NLA’s attempt
to license our clients is essentially a tax on receiving these
Internet links. This fee is not only unjust and unreasonable,
it is contrary to the very spirit of the Internet.”
Meltwater says that it "respects the copyright of the
NLA's members," it is of the opinion that the licensing
scheme seeks to "control the receipt of links to freely
published content on the Internet, even though such rights
are not legally granted to copyright owners."
announced that it is referring the matter to the UK Copyright
Tribunal because the company believes that the NLA's licensing
scheme has no basis in English copyright law.
a brief statement posted on its website, the NLA confirmed
that its web licensing scheme had been referred to the Copyright
Tribunal, but insisted that its approach was "reasonable."
we respect their right to take this action, we are confident
that the Copyright Tribunal will recognize that our approach
has been measured and reasonable. Licensing will proceed as
planned from January 1, 2010," the NLA stated.
May 2007, accounting firm, KMPG suggested that the failure
of direct and indirect tax regimes to proactively address
the seismic shifts taking place in the media sector
may be discouraging development in this critically important
arm of the EU economy.
Nickson, Media Tax Partner for KPMG in the UK suggested that:
“For companies on the cutting edge of developing and
delivering digitised products and services, particularly those
fuelling the growth in internet businesses, it is becoming
increasingly difficult to align these new ways of doing business
with international tax principles."
challenges presented to national tax laws are principally
those of intangible borders. The immediate reaction from fiscal
authorities to the changing environment has been to try to
counter the potential for tax leakage, however, it would be
wrong to focus solely on the potential for tax loss, as taxpayers
simply seeking to meet their obligations will find it increasingly
difficult to do so when tax systems fail to proactively address
the way profits are generated in the online world.”
addition, by shoehorning new forms of economic activity into
existing tax frameworks, there is a serious risk that governments’
underlying objectives, such as stimulating business activity
and consumer spending in certain sectors could be inhibited.”
Tickel, Indirect Tax Partner with KPMG in the UK added: “The
2003 changes for VAT in Europe are a good example –
at the same time a tax leakage for electronic services sold
in to the EU was addressed, EU tax authorities limited the
extent of zero or reduced VAT rates, and instead taxed all
media published electronically. Now there is a stark difference
between VAT payable on printed books and books sold in any
other form – audio, digital and downloadable. For the
publishing industry, these changes amount to real tax increases
and are not simply measures to counter the threat of potential
levied on digital media throughout Europe average four times
those on traditional media such as books and newspapers. In
the UK, the difference is between zero percent for traditional
media, and 17.5% for digital.
continued: “Because the focus of the 2003 VAT law changes
was on internet based services, there was little public debate,
or lobbying activity across the publishing industry in Europe.
In retrospect, some governments, notably the French, are now
questioning this decision. For the publishers, four years
on, the technological capability to read books digitally is
only just becoming reality – and choices for new product
development mean realisation of the VAT impact."
can now reach a wider audience – notably generation
Y who prefer digital to printed media. But to reach these
consumers the publishers need to invest in technology platforms
and build new distribution models. For many countries the
addition of VAT completely wipes out the standard profit margin
– typically 16% - and there can be little doubt this
tax cost presents a further barrier for electronic media."
question is, whether the success of European business in the
digital space is suffering as a result and whether the original
socioeconomic reasons for reducing VAT rates, namely to encourage
reading and learning, are being ignored."
appears the tax authorities anticipated the future of publishing
in the years preceding 2003. Now it is time to readdress this
decision with the full attention of those affected, to make
an informed choice of how VAT law should apply to the written
word in Europe, and to positively encourage digital reading
in November, 2006, ahead of an international conference to
discuss online gaming, the UK's Culture Secretary,
Tessa Jowell argued that the recent US move to ban such activity
was not the way forward, and suggested that the UK's proposed
regulatory code could become the gold standard for gaming
firms throughout the world.
a radio interview, Ms Jowell explained that: "In relation
to gambling, you have three choices; you allow the market
to rule, which some jurisdictions do, you prohibit, which
some jurisdictions do, or you regulate. If Internet gambling
were to be prohibited, it would drive it underground."
Culture Secretary additionally indicated on Tuesday that the
government is considering putting in place a regime which
would allow online gambling sites to be registered in the
UK, which would allow them to present a "hallmark of quality"
to their customers.
being licensed, we have signed up to the very tough regulatory
codes to protect the public and that that in time will be
very good for their reputation," she stated.
conference, held at Ascot, was attended by delegates from
around 30 countries. However, representatives from the United
States were conspicuous by their absence, having reportedly
declined an invitation to the meeting.
newspapers and media organisations were angered by a temporary
injunction granted to the Law Society in October, 2006, which
they viewed as 'gagging' the UK courts.
new rule would have allowed people not involved in cases,
such as journalists, to gain access to information involving
details of claims and defences without first seeking permission
from a judge.
was further decided that the right to inspect court documents
in civil cases should apply retrospectively, and it was this
provision which especially concerned the Law Society.
injunction obtained by the Law Society prevented the rule
from taking effect pending a full High Court hearing on the
Desmond Hudson, Law Society Chief Executive, announced that:
Law Society was granted an urgent injunction on Friday evening
to prevent the Court Service from permitting public access
to statements of cases filed at court before today. New court
rules come into force today permitting public access. The
injunction is a temporary one only that will preserve the
status quo until Thursday when the High Court will consider
the issue fully. The injunction does not apply to statements
filed from today."
the Law Society supports public access to statements, several
of our members became concerned last week that the change
would apply not only to new cases but also retrospectively
to old cases, many of which have long been closed. The Court
Service reversed its position on the interpretation of the
rule, putting many clients in the unreasonable position of
having to apply to court at very short notice if they wanted
statements to remain confidential."
rules must strike a balance between the right to privacy and
the public interest in open and transparent justice. Clients
who were involved in litigation prior to the new rules had
a legitimate expectation that the balance would not suddenly
shift around them. At the next hearing, we will be asking
the court to consider whether this retrospectivity is fair.”
February, 2010, the UK Parliament passed measures to support
Islamic finance and the issuance of corporate sukuk.
Financial Services and Markets Act 2000 Order 2010 is designed
to help provide a level playing field for corporate sukuk
within the UK. The Order provides clarity on the regulatory
treatment of corporate sukuk, reducing the legal costs for
these types of investments and removing unnecessary obstacles
to their issuance.
are a broad class of financial instruments designed to replicate
the economic function of bonds, but with a structure which
complies with Islamic principles. Although there is an obvious
appeal to the Muslim community, sukuk can be issued and bought
Secretary to the Treasury Sarah McCarthy-Fry said: “The
government’s objectives on Islamic finance are to enhance
the UK’s competitiveness in financial services by maintaining
the UK’s position as a Western leader for international
Islamic finance; and to ensure that everybody, irrespective
of their religious beliefs, has access to competitively priced
measure is another important step in the development of the
Islamic finance sector in the UK and will help to provide
a level playing field for Islamic financial products in this
country. It is good news for the UK economy and for our Islamic
joint Treasury–Financial Services Authority (FSA) consultation
on proposals for the legislative framework for the regulation
of alternative finance investment bonds, which include
sukuk, was launched in December, 2008, by Ian Pearson, Economic
Secretary to the Treasury.
on the launch of the consultation, Pearson said: “This
consultation is an important part of the work government is
doing to support the growth of Islamic finance in the UK and
to increase our position as a leading global centre in this
government wants to ensure no one in the UK is denied access
to good financial services on account of their religious beliefs.
We value the contribution Islamic finance makes to London’s
position as an international financial centre and we want
to see this sector continue to grow and prosper in this country.”
consultation paper states: "This document sets out the
proposed legislative framework for the regulatory treatment
of ‘Alternative Finance Investment Bonds’. AFIBs
refer to a type of financial instrument commonly known as
sukuk or Islamic bond, but can also refer to any financial
instrument with similar characteristics. This consultation
paper considers the regulatory policy options for these instruments."
are one of the most prominent instruments used in Islamic
finance. Since 2003, there have been several initiatives by
the authorities to create a ‘level playing field’
for Islamic finance. For example, the government has introduced,
and has proposals to further introduce, various tax changes
with respect to AFIBs."
Islamic financial instruments, including sukuk, under existing
regulatory frameworks has posed challenges in the UK and other
jurisdictions. Although many instruments are designed to replicate
the economic functions of certain conventional financial products,
their legal structure and risk characteristics may be different.
It may therefore be difficult to map these products into the
existing legal framework. Some of these instruments currently
appear to fall within the definition of a Collective Investment
Scheme (CIS) as set out in the Financial Services and Markets
Act (FSMA 2000). However, alternative interpretations exist,
and assessment is currently conducted on a case-by-case basis."
Treasury is seeking to introduce legislative changes to align
the regulatory treatment of AFIBs with conventional debt securities.
Four policy options have been identified:
1: introduce legislative amendments to explicitly exempt
these instruments from CIS regulations and create a new
specified investment under the Regulated Activities Order
(RAO). Introduce a unique regulatory definition for AFIBs
for this purpose;
Option 2: same as option 1 but AFIBs will be defined by
the existing tax definition;
Option 3: same as option 1 but include AFIBs under the existing
specified investment of creating or acknowledging indebtedness;
Option 4: is to do nothing."
"The preferred option is option 1. As with options 2
and 3, its main benefit is that it treats AFIBs as conventional
bonds. This provides clarity about the regulatory treatment
and compliance costs for AFIBs and thus facilitates UK issuance
of these instruments. It also creates a level playing field
between AFIBs and the conventional bonds that they mirror
in economic substance. Option 1 produces this benefit in a
flexible and simple manner that creates legal certainty. It
does not distinguish between private and public issuance of
July 2007, the UK's new Chancellor of the Exchequer Alistair
Darling, ruled out any immediate changes to the tax
system aimed at making the private equity industry pay more
tax, saying that to do so would send out all the
wrong signals to the City.
first interview with the press since being appointed Chancellor
in Prime Minister Gordon Brown's new-look cabinet, Darling
told the Financial Times that the government should not bow
to pressure from unions, the public and from within the ruling
Labour Party to end the tax privileges currently enjoyed by
private equity firms operating in the UK, even though such
a move would be a popular one.
think we should be very, very wary indeed of a knee-jerk reaction
or a reaction to a day’s headlines into making a tax
change that could result in unintended consequences and undesirable
consequences,” he told the paper, adding: "If any
tax changes need to be made in this or any other area, they
ought to be made in the proper context of considering what
is best for the economy overall. Once you get yourself into
a situation where you make economic policy up on the trot,
then you get into huge difficulties."
of private equity groups have come increasingly under the
microscope, as some of Britain's biggest firms have become
targets for buy-outs. This has prompted fierce criticism from
labour unions, which charge that private equity groups are
effectively rewarded for sacking staff and stripping a company's
assets with a tax system which lets them take advantage of
taper relief rules on capital gains at rates as low as 10%.
equity firms have also come under fire for loading up on debt
to finance their take-overs and using interest payments to
offset corporate tax in the companies they buy.
October 2011, HMRC announced that it would be writing to UK
residents and organisations who it believed had not reported
all their income and capital gains and were holding Swiss
bank accounts with HSBC in Geneva.
employee of HSBC had provided HMRC with information which
indicated that there were around 6,000 account holders with
'UK links'. Account holders who had not yet disclosed any
tax irregularities would be given the opportunity to settle
their tax affairs.
holder may be able to take advantage of the Liechtenstein
Disclosure Facility (LDF) whereby HMRC will recover liabilities
for a fixed penalty of 10%.
further stressed that the newly signed tax agreement between
the UK and Swiss governments and due to come into effect in
2013, did not mean that this was the deadline by which non-disclosures
had to be reported.
2007, HM Revenue and Customs on announced arrangements enabling
investors with offshore accounts to disclose to HMRC
any income and gains not previously included in their tax
tax authority explained that:
has recently obtained information about holders of offshore
accounts from a number of banks and has obtained similar details
through the European Savings Directive."
in question were thought to include Barclays, HSBC, HBOS,
Royal Bank of Scotland and Lloyds TSB, according to reports.
is nothing wrong with holding an offshore account as long
as you pay any tax due on the money deposited in it, and on
the interest from it. If you have done this you do not need
to use the Offshore Disclosure Facility."
want to encourage those with unpaid tax and duties to pay
what they owe. Therefore, we are introducing the Offshore
Disclosure Facility to help them get their tax affairs up
is open to those who hold or have held an offshore account,
either directly or indirectly, that is in any way connected
to a loss of UK tax and/or duty.
limited period, taxpayers can come forward and make a full
disclosure of all undeclared liabilities, not just those connected
with an offshore account. Personal disclosures or those made
on behalf of others will be accepted under the terms of the
Offshore Disclosure Facility.
are two stages to the process, namely notifying HMRC of an
intention to disclose, and making the disclosure and payment.
these arrangements, investors needed to notify HMRC by 22
June 2007 of their intention to make a disclosure and then
make their disclosure by 26 November 2007.
disclosure and payment, HMRC will acknowledge the disclosure
and payment, and will inform taxpayers by 30 April 2008 if
their disclosure has been accepted.
the end of the notification period, HMRC will target those
with offshore bank accounts and undeclared tax liabilities
who have chosen not to come forward to make a disclosure."
in April 2007, the FSA published an update on the investment
entities listing review which is to lead to a further consultation
on a proposed single listing regime for all UK and
overseas closed-ended investment funds.
was announced in response to feedback received from the Investment
Entities Listing Review. The consultation proposals, published
in December 2006, included clarifying the importance of a
company's investment policy; explaining the FSA's decision
to withdraw its proposal to abolish the directive minimum
regime for overseas investment companies, and introducing
new listing categories to make it clear to investors what
obligations a listed company is subject to.
our consultation on this aspect of the listing rules, we have
been conscious of our responsibility to protect investors
while having regard to the competitiveness of the UK market,"
said Hector Sants, FSA Wholesale Managing Director. "We
are persuaded by the responses that have indicated a preference
for a single regime. This will form the basis of our proposals
when we consult in June."
consultation has also sparked an important debate about the
nature of the wider listed market and the segments of the
listing regime that carry differing levels of regulatory requirements
particularly with regard to overseas companies," Sants
added. "We will explore those issues in a separate paper
later this year."
March 2007, the Government's strategy to combat money
laundering and the financing of terrorism was launched.
which has been drawn up with law enforcement agencies, policy
departments and the private sector, sets out a series of new
measures and key priorities for the future, designed to increase
the use of the financial system as a weapon against international
crime and terrorism.
Secretary to the Treasury, Ed Balls explained that:
Government's over-riding goal is to protect its citizens and
reduce the harm caused by crime and terrorism. The strategy
published today sets out a comprehensive programme of financial
measures, supported by UK-sponsored international standards
that deter crime and terrorism; detect it when it happens,
and disrupt those responsible and hold them to account".
set out new measures including:
with the charitable sector on measures to keep it safe from
terrorist exploitation, with additional funding of GBP1
million to ensure the Charity Commission has the resources
it needs to identify and disrupt terrorist exploitation
of charities and protect donor confidence;
steps to promote the proactive use of asset freezing powers,
including the creation of a dedicated Treasury Asset Freezing
Unit that will increase the expertise and operational focus
that the Government is able to bring to bear on asset freezing
in response to advice from law enforcement and security
steps to make financial tools a 'mainstream' part of the
UK's approach to tackling crime and terrorism, including
through new powers to increase their impact, a radical increase
in targets for criminal asset recovery, and steps to ensure
that Companies House data is fully utilised by law enforcement
further data-sharing between the public and private sectors,
and better pooling of intelligence between different public
measures to tackle the abuse of money service businesses,
including by replacing the current registration system with
a licensing system, underpinned by a new action plan for
the supervisor, HMRC;
steps to extend a risk-based approach to regulation - a
key principle of the Government's better regulation agenda
- including through the creation of a new money laundering
supervisors' forum and a commitment to ensure authoritative
guidance is available to all regulated industries;
to reduce red-tape, including measures to simplify identification
and due diligence checks within revised Money Laundering
Regulations and a consultation on changes to the consent
and tipping-off rules; and
action at the international level, including through the
UK's Presidency of the Financial Action Task Force from
July 2007, to identify and tackle the most serious financial
threats to international security and ensure an effective
report published in December, 2006, by the Financial Services
Authority (FSA), shows that consumers are getting
better outcomes in the way their mortgage endowment complaints
are handled, but that there is no room for complacency.
July 2005, the FSA has been examining how 52 firms, covering
90% of the mortgage endowment market, handle complaints. The
report revealed that the regulator had concerns with regard
to 22 firms, 14 of which have taken or are taking remedial
action to improve the quality of their complaints handling.
a result of this work:
than 100,000 complaints previously rejected have been or
are being reviewed. Around 75% of those reviewed so far
have been decided in the consumers' favour and over GBP120
million in compensation has been paid in these cases;
are getting decisions made more quickly. The number of complaints
taking more than eight weeks to resolve has fallen from
33,000 in September 2005 to 7,000 in September 2006;
quality of firms' decisions is improving and so the Financial
Ombudsman Service is having to uphold fewer complaints in
FSA is also urging firms to plan ahead. This includes proactively
helping consumers who cannot avoid shortfalls set up sensible
repayment plans when their policies mature.
Everitt, FSA Retail Themes Director, announced that:
is encouraging that firms have improved the speed and quality
of how they handle complaints. News of a potential shortfall
is a major worry for consumers and firms owe it to them to
deal with their complaints quickly and fairly. We are keeping
a close eye on this to make sure that firms continue to do
just that. Firms must also look ahead and not focus solely
on the here and now. They need to pay particular attention
to helping people deal with shortfalls when policies mature."
2000, the FSA has fined 10 firms more than GBP14 million for
mishandling mortgage endowment complaints. To date, firms
have looked at more than 1.8 million consumer complaints and
paid over GBP2.7 billion in compensation.
November, 2006, the UK's Financial Services Authority on Friday
published a paper setting out its assessment of the overall
costs and benefits for the financial services industry of
implementing the Markets in Financial Instruments
The paper indicated that, under certain assumptions, MiFID
could generate some GBP200 million per year in quantifiable
ongoing benefits, which will be attributable mainly to reductions
in compliance and transaction costs.
the quantified one-off cost of implementing MiFID could be
between GBP870 million and GBP1 billion, with ongoing costs
of around an extra GBP100 million a year.
Sants, FSA Managing Director Wholesale and Institutional Markets,
is in the nature of regulation that costs are relatively easier
to define and quantify for firms while benefits can be harder
to pin down. As we have already foreshadowed, it is clear
that implementation of MiFID represents a substantial cost
to industry particularly in the upfront years, but it does
create the potential for revenue opportunities over the longer
term. We would encourage firms to focus on these opportunities."
cost estimates are based on a survey of firms in which they
were asked to set out their actual and/or expected budget
for MiFID implementation. The results from this survey were
then aggregated using estimates of the total number of firms
directly affected by MiFID.
benefits were calculated against a number of scenarios relating
to the impact of MiFID on business practices and dynamics
in the UK’s financial services industry and the extent to
which MiFID contributes to the aim of the Financial Services
Action Plan in helping to foster a single integrated market
in EU financial services.
Law For Lawyers
March, 2010, new trust legislation entered into force.
The Perpetuities and Accumulation Act 2009 lifts the restriction
on the accumulation of trust income, which is currently restricted
to just twenty-one years in most cases. From April 6, new
trusts were permitted to roll up trust income throughout the
lifetime of the trust, with no requirement for the trustees
to distribute income to the beneficiaries.
Haley, a solicitor in the Private Client and Tax Department
at Boodle Hatfield, said: “This piece of legislation
brings English trust law up-to-date and more in line with
trusts available in other jurisdictions. As well as allowing
trusts to accumulate income, the lifetime of a trust has been
expanded from 80 to 125 years. This means that new trusts
can be run on a more flexible basis to benefit successive
generations for longer.”
new legislation does not however apply to existing trusts
she warned, effectively creating two different systems, which
will undoubtedly cause some confusion, according to the firm.
Haley explained: “It
is quite common for people to leave property in trust in their
will, yet the new legislation will only apply to wills executed
on or after the April 6 and not to wills already made, even
if they come into effect after April 6 on the date of death.”
this reason] people who have wills that contain a trust may
wish to consider making a new will that takes advantages of
the unrestricted power of accumulation and the longer perpetuity
2007, the UK's Bar Council published a statement outlining
the industry body's thoughts on the government's Legal
as the Legal Services Bill received its Second Reading in
the House of Commons, the Bar Council emphasised the need
to put consumers first in any changes to the current legal
Bar Council is in favour of the modernisation of legal services
and believes that the Bill as presently formulated by the
House of Lords benefits the consumer interest while also maintaining
a strong and independent legal profession."
the heart of the Bar's position is that proper regulation
of the legal profession is needed to ensure that consumers
and the wider public can be confident in the quality of the
services they receive. In light of the Bill's consideration
by the Commons this week the Bar Council is keen to make clear
to MPs and users of legal services its position on a number
of key issues."
addressed by the Bar Council in its statement were broken
down into the following key areas:
Services Board (Independence): The Bar Council believes that,
to reinforce consumer confidence in the profession, it is
vital that the proposed Legal Services Board (LSB), as the
oversight regulator of legal services, is fully independent.
It supports provisions in the Bill for appointments to the
Board to be non-governmental and made by the Lord Chancellor
with the concurrence of the Lord Chief Justice. Safeguarding
the independence of the profession, through an independent
Legal Services Board is essential in safeguarding the international
reputation of the English legal profession."
Services Board (Powers): The Legal Services Board (LSB) needs
to have an effective range of powers over providers of legal
services and front line regulators. But the Legal Services
Board (LSB) should only intervene where there is some significant
challenge to the regulatory objectives. Otherwise, the LSB
would amount to a costly and unnecessary second tier of regulation."
Handling: By January 2006 the Bar Council had already responded
to the recommendations of the report of Sir David Clementi
into Legal Regulatory Frameworks through the establishment
of the Bar Standards Board (BSB) which split the representational
and regulatory aspects of the Bar Council's work. The Bar
has been repeatedly commended by the Government and Legal
Services Ombudsman for its strong performance in complaints’
handling, at no expense to the public. The Bar Council therefore
believes it would be against the consumer interest not to
provide the Office for Legal Complaints (OLC) with a discretion
to delegate the investigation of complaints to approved regulators."
Business Structures: The Bar, in principle, has no objection
to the development of Alternative Business Structures (ABSs).
To protect the public and consumer interest, ABSs must be
regulated by approved regulators, who should ensure that they
do not diminish access to justice."
The Bar Council is concerned that, under the Bill, all costs
of the new structure will fall on legal service providers.
The Bar Council believes that the costs should be shared between
the legal profession and the Government to avoid excessive
costs being passed back to the users of legal services."
April 2007, the UK's Legal Services Complaints Commissioner,
Zahida Manzoor declared the Law Society's complaints
handling plan for the period 1 April 2007 to 31 March 2008
to be adequate.
is likely to have come as something of a shock for the legal
profession's representative body, which over the past few
years has been more used to defending itself against accusations
of inadequate complaints handling levelled at it by the LSCC.
agreed complaints handling plan followed a period of detailed
discussions between the Office of the Legal Services Complaints
Commissioner and the Law Society.
believe the greater collaborative approach adopted by the
Law Society this year has been fundamental to producing a
complaints handling Plan for 2007/08, which not only focuses
on improving the processes and procedures of the Law Society
but more importantly its wider business improvements."
asked the Law Society to include in its Plan the key deliverables
from the Legal Complaints Service and Solicitors Regulation
Authority Improvement Agendas.
with regard to the plan, the Commissioner stated:
is the first year I can recall where the Law Society has committed
to delivering wider business improvements which better serve
the needs of all its users and I look forward during the Plan
year to seeing the potential benefits being realised for the
consumer, profession and the Law Society."
she also sounded a note of caution in agreeing the plan by
pointing out the importance of the Law Society being more
proactive in managing performance against the targets and
delivery of its plan earlier in the year.
I was appointed as Commissioner two years ago a reactive approach
by the Law Society has resulted in effort being made during
the latter part of the year once there has been realisation
that some targets are unlikely to be met. This approach has
been unsatisfactory and would not be acceptable in future
the proposals for the new Office for Legal Complaints, although
not envisaged to be in place until 2010, it is imperative
that a step change in the handling of complaints by the Law
Society is made to ensure improvements are delivered sooner.
in April 2007, Lord Falconer, then recently unveiled as the
UK's first Secretary of State for Justice, hailed the creation
of the new Ministry of Justice as a "huge step
forward" in the government's drive to reform courts,
prisons and the probation service.
that it made sense to bring together all the people involved
in the justice system, Lord Falconer announced that:
am honoured to have been chosen by the Prime Minister for
the task of focusing the justice system on what matters -
protecting the public and reducing re-offending."
makes sense to bring under one roof everyone looking after
the criminal and civil courts, sentencing, imprisonment, community
penalties and rehabilitation."
is a huge step forward in making sure we have a justice system
that works for the public, punishes the guilty and offers
a realistic prospect of rehabilitation for the contrite."
of Justice came into being on May 9, and comprises the National
Offender Management Service from the former Home Office, the
Office for Criminal Justice Reform and the Department for
Constitutional Affairs (DCA).
department has responsibility for the courts, sentencing,
prisons, and rehabilitation, in addition to DCA policies like
voting, crown dependencies, human rights, tribunals and freedom
December, 2006, Ms Manzoor announced the targets she had set
in relation to the handling of complaints about members
of the Law Society for the period 1 April 2007 to
31 March 2008.
determining the targets, the Commissioner stated that: "I
have been pleased with the constructive work between my Office
and the Law Society which has led up to the setting of these
targets and am grateful to the Law Society for its input."
Commissioner has set targets in three key areas, in order
to bring the performance of the Law Society to a level that
moves it closer towards effective and efficient complaints
first of these areas is improving the speed with which complaints
are handled by the Law Society. One of the targets is that
by the end of March 2008, there should be no more than 65
cases that have been open for 12 months or more.
the quality of complaints handling by the Law Society continues
to be a priority area. In order to deliver improvements in
this area the Commissioner has set a range of targets. One
is that the Law Society must share guidance on levels of financial
redress with the consumer and solicitor in at least 85% of
Commissioner has also set the Law Society a target that 88%
of consumers should receive a substantive response within
45 days of receipt of the complaint.
on this, the Commissioner added:
target does not require the complaint to be investigated,
it only requires the Law Society to accurately identify and
communicate all the issues, specific to the consumer's individual
circumstances to enable the complaint to progress. It is not
unreasonable for a consumer to expect to receive this letter
within a month and a half."
final area in which the Commissioner is driving for improvement
is in the Law Society's financial and resource management,
and its ability to implement change.
UK's Legal Services Minister, Bridget Prentice in December,
2006, asked lawyers to help open up the legal profession
to people from different backgrounds, in order to retain and
enhance public confidence.
at the Law Society's Equality and Diversity forum in London,
Ms Prentice said that the legal profession should be - and
be seen to be - representative of the people it serves.
challenged more law firms to publish their equality and diversity
figures to show their commitment and acceptance of the valuable
contribution diversity and equality made, which would increase
staff morale and public confidence.
Legal Services Minister explained that: "In
a modern and democratic society, equality and diversity should
be acknowledged, taken seriously and celebrated. It is not
enough to say we are doing it, we must show that we are".
law firms have taken up my challenge to them last year to
publish their diversity and equality data to give a visible
sign that the legal profession is at the forefront of upholding
our values. But not enough!"
everyone will use legal services at some point in their lives.
People may choose to use firms that have demonstrated their
commitment to diversity and equality. Publicly declaring their
diversity policy therefore makes business sense."
the same time, she announced the findings of a working group,
set up by the Department for Constitutional Affairs to explore
the recommendations made in the Increasing Diversity in the
Legal Professions Report.
working group identified a number of barriers that people
face in pursuing a career in the legal profession and suggests
ways of overcoming them.
obstacles identified include:
of easily accessible information about how to pursue a career
in law or alternative routes into the profession.
information to students about costs, timescales, employer
expectations, skills and experience required.
of comprehensive research about what affects career progression,
equal pay, and flexible working.
need for more recognition of work based learning and other
skills and experience as part of recruitment.
report outlines the problems people from certain groups face
when trying to pursue a career in the legal profession. Those
barriers can occur at any stage of a career."
is important that, in addition to encouraging people from
a wide range of backgrounds into the profession, there are
policies and practices in place that will make them want to
stay in the profession."
up the profession to people from diverse backgrounds and educational
establishments will bring innovation, creativity and further
skills for firms to benefit from."
emerged in December, 2006, that magic circle law firm, Clifford
Chance had converted from an US limited liability partnership
to become an UK LLP.
a statement announcing the move, quoted by The Lawyer, managing
partner David Childs explained that: “After extensive investigation,
the firm has concluded that a British LLP best suits our needs
as regards liability, tax and structure, while retaining the
culture and organisation of an international partnership.”
move follows a similar decision by Allen & Overy in 2004,
and may signal the start of a growing trend, with other international
firms such as Linklaters and Freshfields Bruckhaus Deringer
also reported to be considering conversion to UK LLP status.
to The Lawyer's report, only the firm's Amsterdam, Beijing,
Brussels, Dubai, London, and Shanghai offices will operate
within the new framework, with the remainder of its 29 international
offices being obliged to operate as sub-entities of the LLP
due to regulatory factors.
UK government's new Legal Services Bill,
designed to overhaul the way legal services in England and
Wales are regulated, was published in parliament in November.
Legal Services Bill introduces sweeping reforms in the regulation
of the legal sector, brings in an independent complaints body
and opens the way for consumers to buy legal and other services
under one roof.
new Legal Services Board will act as a single, independent
and publicly accountable regulator with power to enforce high
standards in the legal sector, replacing a number of regulators
with overlapping powers.
Bill, published last week by the Secretary of State for Constitutional
Affairs and Lord Chancellor Lord Falconer, also introduces:
new kind of Alternative Business Structure that enables
consumers to get services from one business entity that
brings together lawyers and non-lawyers, increasing competitiveness
and improving services.
single and fully independent Office for Legal Complaints
to remove complaints handling from lawyers and restore consumer
Falconer announced that:
proposals aim to increase public confidence in acquiring legal
services that are fit for purpose. The Legal Services Board
will oversee approved regulators who will be required to separate
regulation and representation, thus removing any conflict
bodies that regulate legal services provision also act as
representatives of their profession, a position that could
raise the question of impartiality."
Office of Legal Complaints will further increase public confidence
through handling consumer complaints against legal services
providers and ensuring a quick and fair response."
concluded: "These are bold steps. But they have been taken
after long and careful study, informed by a large cross-section
of people from expert bodies such as the Office of Fair Trading,
to the consumer panel to individual complaints from consumers."
May 2007, a group of foreign multinational companies based
outside the European Union were refused the right
to claim back tax from the UK government in a key
test case ruling by the House of Lords.
five-member panel of law lords ruled 5-0 against the companies'
arguments that the UK had violated anti-discrimination clauses
in double taxation treaties by making them pay advanced
corporation tax on dividends paid to foreign parents from
UK subsidiaries when similar dividends paid to UK parents
did not attract the tax, which was abolished in 1999.
group litigation, led by some 50 companies from Japan, Switzerland
and the US in the action which became known as the Boake-Allen
case, effectively reverses decisions made by the Court of
Appeal and the High Court and will be considered a major
victory for the UK government after a similar claim was
partially upheld by the European Court of Justice last year.
to the law lords' verdict, the scope of the group's claim
was much narrower than that of cases based on EU law, and
while UK advanced corporation tax may have breached the
anti-discrimination clauses set out in the relevant double
tax avoidance treaties, those provisions had not been implemented
in the UK.
on the verdict, Bill Dodwell, head of tax policy at business
services firm Deloitte, noted that the outcome would be
likely to "make it very much harder for foreign multinationals
to make claims based on EU tax cases."
Simon Whitehead of Dorsey and Whitney, which represented
the claimants in the Boake-Allen case, says that multinationals
hoping for a more favourable ruling can still take some
solace from the law lords' verdict.
could interestingly make other claims seeking to enforce
such articles beyond the context of ACT look more attractive,"
he was quoted as observing by the Financial Times.
March 2007, then Chancellor of the Exchequer Gordon Brown
(now the UK's Prime Minister) surprised many by announcing
a 2% reduction in the rate of corporation tax
and a 2% cut in the basic rate of income tax, representing
the first major cut in these taxes in many years.
centre-stage in Brown's last budget speech was the announcement
that corporation tax would be cut by 2% to 28%. According
to the Chancellor, this would bring the UK's corporate tax
rate below both the OECD and EU15 average. However, tax
experts observe that while the Chancellor has given with
one hand, he will claw back much of this lost revenue with
the other through changes in capital allowances.
to the Treasury, the reform of the capital allowance regime
will "better reflect true economic depreciation,"
by ensuring that business investment decisions reflect commercial
rather than tax considerations. But for manufacturers and
companies with large property portfolios, the changes could
well cancel out any benefit brought by the cut in corporate
in a somewhat confusing message for the small business community,
Brown also decided to increase the rate of corporate tax
for small companies with profits up to GBP300,000 per year
by 3% to 22% over the next two years in a bid to ensure
"fairness across the tax system." This will entail
a 1% increase from April 2007, another 1% hike in April
2008 and a final 1% increase in April 2009. This move is
being seen by the Treasury as part of tackling "tax
motivated incorporation" and an initiative towards
"refocusing incentives for small businesses towards
those businesses that reinvest," but tax experts argue
that the move sends conflicting signals about government
policy in this area.
positive measures affecting business announced in the budget
include: the introduction of an Annual Investment Allowance
of GBP50,000 which will target investment support on all
businesses that are investing for growth helping to alleviate
the cash flow constraints which confront small and growing
businesses; and an increase in the headline rate of the
R&D tax credit rate for SMEs to 175% from 150%, and
increasing the R&D tax credit rate from 125% to 130%,
from April 2008.
Lambert, director-general of Confederation for British Industry
(CBI) in September, 2006, warned that proposed pension
reform legislation, which includes automatic pension
scheme enrolment and compulsory company contributions, will
be hard for small firms to adopt and could undermine existing
the burden is reduced there are real risks that employers
will react in ways which could jeopardise the objective
of increasing private pension saving, Mr Lambert told the
Secretary of State for Work and Pensions, John Hutton.
a statement, the CBI warned that this could include employers
'levelling down' existing pension contributions, or result
in employees being discouraged from remaining opted-in to
the new personal pensions accounts.
is also vital that trust in pension schemes is not jeopardised,
the Confederation urged, explaining that:
it is, people are likely to opt-out and the mission of increasing
pension saving, which business backs, will be unsuccessful."
prevent this, the CBI is urging Mr Hutton to adopt a series
of measures aimed at assisting both small firms without
pension schemes, and employers with existing arrangements,
to ensure cost increases and administrative burdens are
kept to a minimum.
include fixing the level of compulsory employer contributions
at 3%, with a reduction for the smallest firms, and a six
month waiting period before staff are automatically enrolled
should also be kept at arms' length from the administration
of the new pensions accounts, the CBI argues, and a light-touch,
risk-based compliance regime should be enforced.
CBI's submission to the Government's pensions white paper
calls for a package of proposals including:
in compulsory employer contributions over three years,
with a Government commitment to firms not to ratchet up
the level by fixing it in the bill at 3% of employees'
financial support for employers with fewer than 50 staff
through reduced compulsory contributions - 2% of employees'
salary instead of 3%.
the administrative and cost burden on employers via a
six month waiting period before employees are automatically
opted-in, with auto-enrolment starting at 25. This would
apply to both existing and new pension schemes. There
should also be a simple ‘good scheme’ test so employers
can offer their alternative without having to jump through
and simplifying occupational pension rules so firms are
encouraged to continue offering their own good quality
pension schemes. Government should also consider incentives
for employers who offer top quality schemes.
employees, not firms, responsible for choosing their pension
provider unless employers wish to do so. There should
also be a 'central clearing house' so that employers have
a single point of contact for dealing with administration.
Government commitment to a ‘light-touch, risk-based’ enforcement
regime aimed at tackling likely offenders, based on the
successful model adopted for the minimum wage.
in May, following the unveiling of the White Paper, Adair
Turner, former Chairman of the Pensions Commission, stated
White Paper commits British pension policy to the three
key policies which were at the centre of our recommendations:
first, state pension provision which increases over time
in line with the nation’s prosperity, limiting the extent
of means-testing, and made affordable by a steady rise in
the state pension age as people live longer. Second, a better
deal for women. Third, automatic enrolment into a new system
of low cost personal pension savings accounts with provision
for an employer contribution. We hope that this overall
architecture can command support from all parties, whatever
the debates about details.”
former members of the Commission, which was a temporary
body established in December 2002 and wound up earlier this
year, announced that:
welcome the government’s commitment to the three key features
of the Commission’s proposed new private pension saving
system: automatic enrolment, organisational arrangements
which ensure low cost provision, and a compulsory matching
employer contribution set at a minimum 3%. A package of
measures to mitigate the initial cost impact on small businesses
will be an important implementation detail. And the Commissioners
continue to believe, as the White Paper tentatively concludes,
that a single national scheme, rather than a multi-provider
model, will deliver lowest cost, and thus highest possible
pensions to savers."
September, 2006, the UK's Financial Services Authority announced
that it had fined Braemar Financial Planning Limited for
systemic failings in its sales process for pensions
unlocking. The failings resulted from advisers
not taking reasonable steps to ensure that recommendations
were suitable for their customers.
unlocking allows people aged 50 and over to take some or
all of the benefits of their pension in a lump sum and/or
income before they retire. This is a high risk option which
is only suitable for a limited number of people.
FSA found that between November 2002 and November 2005,
Braemar had persistently failed to collect sufficient personal
and financial information about their customers before making
recommendations that they unlock their pensions.
firm also could not demonstrate that its recommendations
were suitable, as its suitability letters were inadequate
and its communications were not clear or fair, and were
Braemar could not demonstrate that all the alternative options
available to customers had been adequately explored during
the sales process.
Briault, FSA Managing Director for Retail Markets, announced
is one of the largest players in this sector of the industry
and it should have been able to demonstrate that product
recommendations were suitable for its customers. When unlocking
a pension, the onus is on the firm to ensure that the customer
is aware of all the risks within the product as well as
any alternative options available to them."
is senior management's responsibility to ensure that all
communications, particularly those to vulnerable customers,
are clear, fair and not misleading. Other firms in this
market must take heed and ensure they have customers' interest
in mind at all times during the sales process."
determining the appropriate level of financial penalty,
the FSA took into account that Braemar had proactively cooperated
and sought to mitigate the failings once they were brought
to its attention. Braemar immediately suspended business
and instructed a pensions consultant to review both its
systems and controls and sales process. Braemar is also
reviewing its revised procedures and monitoring most of
its new business for a three month period.
it not for the co-operation afforded by the firm, the fine
imposed would have been substantially higher. Taking into
account the firm's co-operation, the appropriate level of
the financial penalty was determined to be GBP260,000. As
Braemar entered into negotiations at the earliest opportunity,
in accordance with the FSA's settlement process, it received
a 30% reduction in the level of its fine. Therefore the
final financial penalty imposed was GBP182,000.
November, 2009, the UK's Financial Services Authority (FSA)
announced proposals to simplify the structure of
the fees it levies on regulated firms, in order
to enhance fairness and transparency.
a review of its approach for determining the annual fees
that firms pay, the FSA consulted on a number of measures
to ensure that fees continue to be set in a fair way, and
to make the basis for calculating fees easier for firms
to understand, including:
a standard "minimum fee" that all firms will have
to pay to cover the basic cost of being regulated; and
that "variable" fees over and above this basic
minimum amount increase in direct relation to a firm’s
size – with the result that fees for the largest firms
reflect the greater regulatory engagement they receive.
By the end of November, the FSA said it would publish a Fees
Calculator which would enable firms to assess what these proposals
mean for them.
Norris, the FSA’s Chief Operating Officer, said: "We
are committed to delivering fair and transparent fees to all
authorized firms. This is particularly important given that
we are funded entirely by the firms we regulate, so we need
to ensure firms can clearly see how we calculate their contribution
to the running costs of the FSA."
FSA is inviting responses to the proposals in its consultation
paper by January 11, 2010. In February 2010, depending on
the outcome of this consultation, the FSA plans to consult
on fee levels for 2010/11 using this new fee model.
2007, it emerged that less than half (41%) of the UK’s
largest companies believe that their accounting systems collect
adequate information to produce the tax calculations and disclosure
required to meet new accounting regulations, according to
a new report by Deloitte.
to the 'Mind the GAAP' report, only 20% of
company tax professionals believe that their systems adequately
meet new GAAP requirements, at a time when tax disclosures
are more closely scrutinised than ever by regulators, analysts,
investors and tax authorities. 43% of companies fear that
small errors in brought forward balances could lead to material
weaknesses in their tax reporting.
on the findings of the study, Alan MacPherson, tax partner
at Deloitte, said:
plc is getting to grips with an unprecedented raft of regulatory
changes, such as the adoption of IFRS. While many of the changes
are intended to increase transparency, companies currently
lack the necessary knowledge and systems to achieve clearer,
more accurate disclosure."
the focus of tax departments has been on planning in order
to minimise costs and underpin shareholder value. With regulators
and financial markets now demanding greater tax transparency
and certainty, we believe that tax departments should dedicate
at least one third of their time to reporting and compliance."
tax directors do not believe that tax is currently a major
driver of accountancy systems, and there is a strong consensus
that it should play a much more influential role in future.
It’s important that their tax concerns are firmly on
the boardroom agenda."
the bright side, seven out of 10 in-house tax professionals
believe that technology will positively improve tax accounting
in the future. However, their expectation of further regulatory
change means that many are adopting a 'wait and see' approach.
Only one third (31%) have plans to implement new systems or
upgrade existing ones."
nearly half (47%) of companies believing that the rate of
regulatory change will stay the same or increase, taking time
to take stock is an understandable, but high risk, response.
We’ve seen from Sarbanes Oxley in the US, that the financial
markets tend to severely punish companies with tax weaknesses."
are no longer able to rely on support from their auditors
and are dependent on accounting systems, which were not designed
with tax as a priority. Almost three quarters of the company
tax professionals we interviewed admitted to feeling exposed
as a result of the changes - they are acutely aware that they
may be held personally responsible for any inaccuracies or
is encouraging to note that companies understand that technology
has a positive role to play in the compilation and submission
of year end tax figures. The companies that cope best will
be those with formal schedules for reviewing and regularly
upgrading or updating their systems."
companies may find the current pace of change challenging,
the silver lining is that better systems will in time ensure
more accurate and reliable numbers, and so give greater confidence
in the integrity of the accounts.”
in May 2007, then Economic Secretary to the UK Treasury, Ed
Balls last week announced the next steps in the government's
agenda to increase the global competitiveness of the UK's
Financial Services industry at a City High-Level Group meeting.
meeting, the Government and industry representatives discussed
detailed plans for an International Centre for Financial
Regulation (ICFR). The Centre will carry out research
and offer training on international regulation with a view
to influencing global regulatory developments.
was drawn up by a joint Government and industry working group,
chaired by Lord Currie, who presented the findings to the
has attracted significant financial support from industry
and the City, in addition to the GBP2.5 million to be provided
by the Government over the next 3 years.
a new world class centre of financial regulatory expertise
will not only help to inform the UK's principles based regulatory
approach, but influence developments in regulation across
Centre will be the first of its kind in the world, and although
based in London it will have global reach, providing research
and training for financial services regulators around the
April 2007, The US Securities and Exchange Commission, the
United Kingdom Financial Services Authority (FSA), and the
United Kingdom Financial Reporting Council (FRC) on Wednesday
signed a protocol for implementing the Work Plan between the
SEC and the Committee of European Securities Regulators to
share information on application of International
Financial Reporting Standards (IFRS) by issuers listed in
the UK and the US.
meetings with the FSA and FRC in London, SEC Chairman Christopher
Cox executed the Protocol with FSA Chairman Callum McCarthy
and UK FRC Chief Executive Paul Boyle to facilitate implementation
of the SEC-CESR Work Plan.
to be shared concerns the application of IFRS in the financial
statements of issuers listed in the UK and registered with
to the SEC:
world's capital markets stand to benefit significantly from
widespread acceptance and use of global accounting standards
that are high-quality, comprehensive, and rigorously applied.
With issuers and investors alike increasingly looking beyond
their borders for opportunities to invest and raise capital,
they are typically seeking the accuracy, timeliness, and consistency
in the reporting of financial information that such standards
agreement provides the framework for the confidential exchange
of information between the SEC staff and the staff of the
FRC, which is charged with reviewing issuers' published financial
statements in the UK. High-quality and consistent application
of IFRS is critical to the future of global accounting standards.
Sharing information under this protocol should help to promote
its Market Watch newsletter, published in December, 2006,
the UK's Financial Services Authority (FSA) announced that
it has launched a thematic review of insider trading controls.
Following the revelation that of the 266 suspicious transaction
reports (STRs) received between between 1 July 2005 and 31
October 2006, 255 related to insider dealing, the Financial
Services regulator explained that:
have started a thematic review of the controls over the handling
of inside information on mergers and acquisitions (M&As) –
principally public takeovers. The background to this project
is our occasional paper published last March on measuring
the cleanliness of the UK financial markets."
suggested that insider trading may have taken place before
about one-third of takeover announcements in 2004. The project
is being done in consultation with the Panel on Takeovers
work, which is being led by Markets Division with inputs from
supervisory areas, involves looking at a small number of deals
where there was a leak of information. We are holding detailed
discussions with all the key parties to those deals – the
advisers, lawyers, PR firms, printers, issuers, debt and equity
providers. We will compare these deals with deals that did
not have a leak of information."
several more generic (non-deal specific) meetings are taking
place so we can get a good feel for the range of systems and
controls employed across the industry. So we are talking to
both the FSA-regulated and nonregulated community and are
working together with the industry to address the risk issues
and to enhance controls where necessary."
FSA continued: "We aim to increase our understanding of how
information is controlled and consider ways to tighten the
flow of information. We note that M&A deals are often complex
and involve a large number of ‘insiders’."
this review we will meet specific ‘deal teams’ to go through
the chronology of deals, undertaking a high level study of
IT systems and security and reviewing hard-copy filing systems
together with a sample review of documents. We are particularly
interested in understanding how conflicts are managed and
what use is made of information barriers such as Chinese walls
and, related to this, wall-crossing procedures."
review of the adequacy of insider lists is an important part
of the project, as is considering whether there are ways for
a firm to reduce the number of insiders or potential insiders.
More generally we are considering firms’ training programs
and compliance culture."
concluded: "We aim to publish our findings in the Spring of
2007. We plan to include a summary of good practice examples
of controls and procedures and to encourage firms involved
in M&A advisory work to review their controls and to benchmark
themselves and to consider what action is appropriate where
standards fall short."
UK's Financial Services Authority (FSA) in October, 2006,
obtained an interim injunction at the High Court against Treadstone
Corporation Ltd and its director, Thedfred Lemont Shepherd
for allegedly operating unlawfully by promoting and
selling shares to UK investors without authorisation
from the FSA.
action is intended to stop Treadstone and Mr Shepherd from
continuing these activities. It also freezes their assets
and other assets under their control up to GBP500,000.
FSA is continuing its investigation and is seeking further
information on the company and its principals.
to the FSA, since May 2006, Treadstone and Mr Shepherd had
arranged cold calling of UK investors to persuade them to
buy shares which may have been issued by a Finnish company
called Tramigo Limited. The Authority believes that over 150
investors have paid in excess of GBP400,000 for such shares.
neither Treadstone nor Mr Shepherd are authorised by the FSA,
investors may not claim compensation from the Financial Services
Compensation Scheme or make a complaint to the Financial Ombudsman