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ARTICLES P.P.I. Claims Lasting Powers of Attorney Energy Performance Certificates Trusts and Settlements Joint Ventures Distribution & Agency Offshore Financial Centres Useful tips when Letting your property Health & Safety: More onus on you Access to Neighbouring Land Act 1992

Energy Performance Certificates Seller's responsibility for EPC For existing buildings that are to be sold, the building's owner is responsible for ensuring a certificate is made available to all prospective purchasers at the earliest opportunity. For the marketed sales of homes, including homes marketed before they are physically complete, Home Information Pack (HIP) regulations will apply. Where a HIP is required an Energy Performance Certificate will follow and must be contained within the HIP. Homes sold without marketing for sale e.g. by private treaty between family members or Local Authority housing will require an EPC on sale from 1 October 2008. Commercial Buildings The sale of Commercial buildings which extend beyond an area of 500m will require an EPC from 6 April 2008. All remaining commercial buildings will require an EPC on sale from 1 October 2008. When should the EPC be provided? The EPC and recommendation report must be made available free of charge by the seller or landlord to a prospective buyer or tenant at the earliest opportunity and no later than: when any written information about the building is provided in response to a request for information received from the prospective buyer; or when a viewing is conducted; or if neither of those occur, before entering into a contract to sell or let. When Is an EPC not required? An energy performance certificate does not have to be made available if: the seller believes that the prospective buyer or tenant is unlikely to have sufficient funds to purchase or rent the property or is not genuinely interested in buying or renting that type of property; or the seller or landlord is unlikely to be prepared to sell or rent out the property to the prospective buyer or tenant (although this does not authorise unlawful discrimination) Where a Home Information Pack is required, any written property particulars prepared for prospective home purchasers must either be accompanied by the whole EPC (but not the recommendation report) or include the graphs which show the energy rating of the building. © Alexander Lawyers LLP 08/07 Back to Top

Trusts and Settlements The Finance Act 2004 and recently decided cases in the House of Lords and the Privy Council have far reaching consequences for clients who are trustees, beneficiaries or settlors of both onshore (those created under the laws of the UK and/or controlled and managed in the UK) and off-shore trusts (those created under the laws of a jurisdiction other than the UK and/or controlled and managed in a jurisdiction other than the UK). It is not just inheritance schemes entered into after 1984 that are now under scrutiny. These rules apply whether the trust is used in conjunction with a company or not. THE PREVIOUS SITUATION Previously, onshore and off-shore trust and corporate structures were thought, as a consequence of court decisions and the statements of professional advisers, to mitigate inheritance and capital gains tax. The changes in legislation and case law summarised below show that in many cases this might no longer be the case. SO HOW HAS THIS CHANGED? In general terms, under the Finance Act 2004, if the settlor retains any benefit from the trust it remains part of his or her estate. These provisions are retrospective and apply to any trust created after1984. This Act must be read subject to the two major cases mentioned below . The House of Lords decision in R v Dimsey and R v Allen (11/10/2001 UKHL 45 and 46) has unequivocally stated that anyone who is perceived by the revenue to have a 'benefit in kind' or to be taking part in the 'control and management' of a trust or offshore company can be held to be a 'shadow director' or a 'shadow trustee'. The effect of this is that the legality and any protection offered by the structure may be lost. Any act of concealment of any beneficial interest or benefit in kind has been held to be an act of control and management and, of course, may constitute a criminal offence. So called 'excluded property' or 'excluded asset trusts' may no longer be effective whether set up onshore or off-shore. Discretionary trusts both onshore and off-shore may be scrutinised since the Privy Council decision in Schmidt v Rosewood Trust Ltd. (27/03/03 UKPC 26). The court can question the exercise of the discretion of the trustee including the vesting of the assets as to whether they are reasonable or not thereby reducing the effectiveness of the trustee's discretion. These decisions go further than the Finance Act 2004 itself. Anyone who is associated with assets falling within the above types of structure may need to reconsider their position and take fresh legal advice. One solution may be the use of the private international law vehicle known as the 'private foundation'. This is an internationally recognised lawful structure that may, if properly constituted, exclude the revenue's jurisdiction to tax assets. It may therefore provide a lawful solution where the trust can no longer do so and prove a cost effective way of restructuring any type of property holding and provide effective lawful estate planning. © A© Andrew Sharpe 03/06 Back to Top

Joint Ventures & Distribution Agency A few recent Court of Appeal decisions have highlighted the scope of Commercial Agents. These decisions have given guidance to the extent to which regulations can be used by self-employed, intermediaries or consultants to successfully obtain remuneration from defaulting companies. Other recent developments illustrate the fact that the rate of commission which the parties may not have included in an agreement can be assessed or determined by the Court. The most recent decision was that of Lonsdale v Howard & Hallam Limited. The Claimant in that case, Mr. Graham Lonsdale, was a commercial agent for the Defendant Howard & Hallam Limited. As a result of the termination of the Agency by the Company Howard & Hallam Limited, the Commercial Agent Mr. Lonsdale made a claim for compensation. Howard & Hallam had determined that Mr. Lonsdale's compensation should be in the sum of £7,500.00. However Mr. Lonsdale did not agree and began proceedings in the Oxford County Court for the sum of £19,670.00 which was equivalent to two years gross commission. The relevant law was interpreted by the Court of Appeal as not dealing with the way in which compensation should be assessed. The Court considered the decision of King & Tunnock and that decision concluded that what is compensated is the termination of its relationship not future losses. It is therefore important to remember as a result or consequence of termination of an Agency that the principal will not be liable to damages as one would normally interpret them under a breach of contract claim. The Court of appeal dismissed Mr. Lonsdale's appeal stating that whilst the award of compensation was very broad it was not too low in the light of the evidence regarding the commercial relationship between the parties. The commercial relationship between the parties was such that the Company Howard & Hallam had been suffering severe losses prior to it terminating its relationship with its commercial agent and the Court determined that this was a necessary factor to be taken into account in the assessment of compensation. The internet boom is certainly not over and although the high levels of activity of start ups in the late 90's both in the USA and in this country will not be repeated the software distribution and Value Added Reseller agreements are still vital tools for any corporation or business to protect themselves against infringement. The overriding considerations for corporate clients will be the desire to protect their legal and contractual rights by drafting an agreement which is capable of being understood, staying within budget for legal fees, anticipated legal problems and future issues such as assignment, mergers or acquisitions and anticipating internationally issues as well as domestic considerations. We can provide Distribution or Agency agreements to cater for most clients needs and to save the cost of litigation although this cannot always be avoided. It is vital that advice is sought at the most earliest stages of undertaking operations in the United Kingdom and European Union. © Alexander Lawyers LLP 08/07 Back to Top

Offshore Financial Centres There have been rapid developments in the reporting of activities connected to Offshore Financial Centres and these Centres remain at the forefront of efficient tax planning. It is common misconception that the answer to all the UK residents tax issues is to either incorporate or set up an Offshore Company to legitimately avoid taxation, or merely to move to an Offshore jurisdiction. The latter is by far more the most efficient tax planning method but it should be emphasized that some taxation will still be payable if the UK resident has income which is generated within the UK. A significant development in connection with Trusts is that as a result of the Chancellors Budget new rules apply from the 22nd March 2006 regarding the Inheritance tax treatment of Accumulation and Maintenance Trusts and Interest in Possession Trusts. The rules align the Inheritance tax treatment of the majority of such Trust with the treatment of discretionary Trusts. What these new rules basically do is to curtail significantly the use by UK residents of Trusts for the avoidance of tax. The tax treatment of non-UK residents is entirely different to that of UK residents and here there are a variety of schemes or plans which can be utilised in order to cushion the effects of taxation. The International Trust concept where the settler creates a valid Trust with property or assets held in the UK in an Offshore legal entity such as the British Virgin Islands etc, is still an important and effective solution for non-UK residents to protect UK assets. It is important to emphasise as with all planning on tax issues that it is crucial for the client to obtain guidance on establishing the most appropriate ownership structure for his or her circumstances. The issues which are relevant in making the decision are; the residence of the client and his spouse, whether or not the parties are likely to live in the UK long enough to be deemed residents in the UK for Inheritance tax purposes, the value of the property and the value of any improvements; whether or not it is a cash purchase and for what period each year will the property be occupied by the client and his family. It is once again the residence of the client which is of crucial significance. If he or she is here for less than 90 days a year he/she will not be treated for UK income purposes as being resident and the traditional Trust Company should be employed. This is subject to the caveat that any activity by the client should be avoided which may be construed or interpreted as generating income from a Company in the UK. Once again it is important to emphasize that as in the case of any tax planning, adequate time should be allowed to access the best legal advice. © Alexander Lawyers LLP 08/07 Back to Top

Useful tips when Letting your property (OR PURCHASING A LET PROPERTY) If you are granting a shorthold tenancy make sure that the agreement covers all the terms you have agreed with your Tenants. Anything you have agreed which is not incorporated within the formal agreement may not be enforceable. If you are buying a property to Let with the assistance of a Mortgage make sure that you comply with all mortgage conditions applicable to Letting the property. Sometimes it is more cost effective to grant a Shorthold tenancy for 12 months with a break option for either party to terminate after 6 months. This can save the cost and aggravation of renewing the tenancy. If the property is tenanted when purchased, serve a Section 21 Notice under the Landlord and Tenant Act immediately following your purchase of the investment property. This will give you the option to terminate the Tenancy at the earliest moment should the tenant not work out. If you are letting your own property, serve a Section 21 Notice shortly after granting the tenancy for the same reasons as identified above. There are two forms of Section 21 Notices. Make sure that you use the correct form of Notice as this could affect your application for possession of the property. A Section 21 Notice must give a minimum of 2 calendar months notice to your Tenant. You cannot terminate an Assured Shorthold Tenancy earlier than the end date specified in the Tenancy Agreement without a valid reason. If the Tenant still does not depart from the property at the expiry of the Section 21 Notice then court proceedings for possession can be commenced. These can take up to 3 months before a result is achieved. If you have taken court proceeding against your tenants do not demand and/or accept any payment of rents otherwise you may prejudice your position. The rent due over this period should be dealt with as part of the court proceedings. © Alexander Lawyers LLP 08/07 Back to Top

Health & Safety: More onus on you The Health & Safety Executive (HSE) has now introduced revised regulations (CDM 2007) which came into force on 6th April 2007. This revision is clearly aimed at reducing accidents and ill health in the construction industry. In domestic cases building owners still have no such particular duties, but designers and contractors must comply with CDM 2007. On larger commercial projects clients, designers, and contractors have additional duties. For example the client must appoint a CDM Co-ordinator (the successor to the Planning Supervisor) and a Principal Contractor. There now has to be a Construction Phase Plan and at the end of the project a Health and Safety file which, as before, is handed over to the client. Under the new regulations there is a much wider definition of design, which now extends not only to operations but also to the co-ordination of design works. Designer includes for these purposes a quantity surveyor. In every major building project a Senior Co-ordinator must now be appointed. The party who commissions the design is the party responsible. Complex issues may arise under the new regulations, for instance where a contractor takes over another's work based on a prior design and the employer uses this to his detriment and cost. At Common Law the contractor may remain responsible, except where he uses JCT 2005 with the express reservation that he is not responsible for checking the design. Other changes include the renaming of the pre-construction phase Health and Safety Plan which is now called the Pre-construction information. Here the onus is on clients to ensure that others are responsible for checking the Health and Safety arrangements. No work can start on site unless until the Health and Safety Plan has been prepared. Importantly where design has been carried out abroad, the person commissioning that design will be responsible for compliance under CDM 2007 and if the designer is not within Great Britain then the client will be responsible for the design. These regulations extend to all contractors so that contractors are responsible for ensuring that before the start of a project suitable welfare provisions exist on site and will continue throughout the project. The client also has a duty to ensure that such arrangements are made prior to start on site. In summary a tightening up of the regulations with fewer escape routes. © Alexander Lawyers LLP 08/07 Back to Top

Access to Neighbouring Land Act 1992 The Act enables anyone who needs to carry out works on their property ("dominant land") which can not be done without access to adjoining land ("servient land") to obtain that access subject to obtaining an Access Order from the Court. The applicant must: Be the person who needs to enter the servient land; and Need, but does not have, consent to enter. The Court must be satisfied before making an Access Order that: The works are reasonably necessary for the preservation of the whole or part of the dominant land; and The works cannot be carried out, or would be substantially more difficult to carry out, without access to the servient land. The Court will not make an Access Order where: The use or enjoyment of the servient land by the owner or occupier would be disturbed; or The owner or occupier of the servient land would suffer hardship to such a degree that it would be unreasonable to make the Order Basic preservation works include: Maintenance, repair or renewal of any part of a building; Clearance, repair or renewal of any drain, sewer, pipe or cable; Treatment, cutting back, felling, removal or replacement of foliage which is, or is in danger of becoming, damaged, diseased, dangerous, insecurely rooted or dead; Filling in or clearance of any ditch. Works may be considered reasonably necessary for the preservation of the dominant land even if they involve: Alteration, adjustment or improvement to the dominant land; or Demolition of the whole or part of a building. An Access Order will specify: The works which may be carried out by entering the servient land; The particular area of the servient land that may be entered; and The date on which, or period during which, the servient land may be entered. An Access Order may: Impose such terms and conditions the Court considers reasonably necessary to avoid or restrict any loss or inconvenience; Require the payment of a fee to the owner or occupier of the servient land for access; Require the applicant to pay other costs, such as the costs incurred by the owner or occupier of the servient land for dealing with the Court application. © Alexander Lawyers LLP 05/05 Back to Top

These briefing notes should not be regarded as constituting legal advice in relation to particular circumstances. These briefing notes are merely a general comment on the relevant Law. If specific advice is required in connection with any of the matters covered by any of these notes, please contact the office for assistance.

 
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