HM Revenue and Customs (HMRC) have now updated their instructions on how companies which move premises should inform them of a change of company address.

The essential point is that HMRC will not accept a notification of change of address until such time as the record at Companies House has been changed. This is done by lodging form 287 by post or updating the company’s record online.

Companies House does not notify HMRC of such changes. When HMRC receive a notification of change of address (this must be done by post or telephone; it cannot be done online), they check the Companies House record. HMRC will not change their correspondence address unless that record has been changed, so do make sure you wait for ten days or so after Companies House has been informed before you notify HMRC.

HMRC Can See Accountants’ Tax Advice to Client
HM Revenue and Customs (HMRC) have won a significant victory in a tax case when the court ruled that tax advice given by an accounting firm to its client is not privileged. In other words, HMRC can force accountants to divulge advice given to their clients on tax law matters.

The case involved insurance giant Prudential, but the ruling will be applicable to taxpayers large and small who engage accounting firms for tax advice.

The Special Commissioners ruled that where correspondence with accountants would add to the relevant facts determining tax liability, the issue of a notice requiring disclosure of tax planning advice was valid, and that legal professional privilege did not apply.

Correspondence between solicitors and their clients in which legal advice is given is subject to privilege and will not be disclosed to HMRC or anyone else.

Government Backtracks On Pensions
In one of the quickest policy changes on record, the Government has announced changes to the employee pension proposals made only a few weeks ago.

Under the changed proposals, employers will still be required to provide pensions for their employees, but the date from which this becomes necessary will now be phased in according to a timetable extending to 2016, not 2015 as originally announced. Under the proposals, employer contributions to their employees’ pensions will be phased in starting at 1 per cent in 2012, increasing to 2 per cent in 2015 and 3 per cent in 2016.

Employees will be required to contribute around 5 per cent of their salaries to the pension fund.

The Government is running a further consultation on its proposed pensions reforms, so additional changes are likely before the legislation is introduced. The consultation closes on 5 November 2009 and can be found at www.dwp.gov.uk/consultations.

Americans Be Warned
A new and very convincing attempt at identity fraud is doing the rounds by email. Aimed at US citizens living abroad, it purports to be from the US Internal Revenue Service (IRS). It requires non-domiciled or non-resident US citizens to complete the form (which is designed in the same style as the usual IRS forms) in order to renew their US non-resident tax status.

The form demands sufficient information (Social Security Number, bank details etc.) for the fraudsters to perpetrate an identity fraud and access funds from the disclosed bank account.

Do not be conned! The appropriate forms for claiming the non-resident deduction (US citizens pay tax on a world income basis, with a non-residence test based mainly on physical presence), which is currently $87,600, are form 2555 or form 2555EZ. These are sent with the package for completing form 1040 (the individual tax return). This package is sent annually to all registered US citizens living abroad. Normally, US citizens MUST file a tax return annually unless their income is less than the minimum amount (currently about $9,000 for a single person).

Identity fraud is a growing problem and businesses have recently been criticised for not doing enough to prevent it. The organisers of National Identity Fraud Prevention Week have published a guide to help combat identity fraud. This is available at http://www.stop-idfraud.co.uk/resource-centre.aspx.

How Land Remediation Relief Works - For Developers
Developers are being encouraged to develop brownfield sites by the extension of Corporation Tax relief available to them for redevelopment of these sites or of derelict or contaminated land.

The relief works by granting tax relief (Land Remediation Relief - LRR) on 150 per cent of the expenditure on labour, materials and sub-contracting where this has been incurred solely due to the condition of the land. Developers which incur losses for tax purposes as a result can also surrender these for cash. To qualify for LRR, the land must have been acquired by the claimant company for the purpose of a UK property business or trade.

LRR cannot be claimed if:

• the claimant company, or a party connected with it, was responsible in any way for causing the contamination or dereliction; or
• where arrangements have been put in place with the purpose of creating or enhancing a claim.

There are, as one would expect, a number of detailed provisions which apply.

For further information, see the HMRC guidance notes at .htm.http://www.hmrc.gov.uk/MANUALS/cirdmanual/cird60015.htm.

HMRC Attack Insurance Arrangement Fee
Traders which supply insurance contracts on products where the policies are underwritten by insurance companies should take note of a little-reported decision of the court. It involved Homeserve, which supplies insurance contracts to householders on behalf of insurance companies.

Homeserve’s documentation split the contract into two. The first part created a contract between the householder and the insurance company. The second part was a separate contract, between the householder and Homeserve, which represented an administration fee. Homeserve used this reasoning to exempt the administration charge from Insurance Premium Tax (IPT).

HM Revenue and Customs (HMRC) considered that the whole of the charge to the householder should be subject to IPT and the VAT Tribunal agreed. Homeserve appealed to the High Court, which upheld its appeal, ruling that the phrase separate contract meant a contract which was not the contract between the householder and the insurance company.

HMRC are said to be planning an appeal so watch this space.

This case illustrates the importance of making sure that contractual documentation is watertight as far as indirect taxes are concerned. If you make supplies that involve more than one VAT rate on a single charge, it is worth reviewing your documentation to make sure HMRC cannot justify the assertion that you are making a single composite supply, which may lead to more tax being payable than you anticipated.

Saving On Motoring
Saving on the cost of motoring in the UK is often a concern for business owners. The Government’s tax breaks for low emission cars give the advantage of a 100 per cent first year allowance, lower annual road fund tax and a reduced benefit in kind for the employees who use them. However, few cars meet the necessary criteria.

There is another way, however, to reduce motoring costs: buy a double cab pick-up truck. A vehicle which meets HM Revenue and Customs’ definition of a double cab pick-up is effectively treated as a lorry for tax purposes, meaning that the VAT on its purchase is recoverable and it also qualifies for the 100 per cent capital allowance.

Regrettably, however, the benefit in kind charges still apply to these vehicles.

Travelling and Tax
Employees
If you are an employee, you cannot claim tax relief on the cost of travel between your home and your normal place of work. There are exceptions to this general rule, however.

Travel costs from your home to a temporary place of work can be claimed for a maximum of 24 months. However, travel to a new place of work (i.e. where the likelihood from the outset is that you will work for more than 24 months at the new workplace) is not allowable. Similarly, if within the 24-month period you know that the secondment will exceed 24 months, the availability of tax relief ceases as soon as you are aware that the 24-month limit will be exceeded.

However, where presence at the other place of work is less then 40 per cent of your working time, tax relief on the travel costs to the secondary place of work is available as long as the secondment lasts. This is, in effect, the same as the position where travel between two places of work (or to attend training or an appointment elsewhere) is required by the same employer. Such travel is allowable for tax relief.

If you are an employee working from home, the cost of travel to anywhere else for work-related purposes is allowable.

The self-employed
If you are self-employed, you can claim for any travel expense which is required by your trade provided that the business element can be separated from any private element. In practice, where travel has a dual function (i.e. is both business and private travel), the cost of travel is apportioned for business and private purposes.

This requires the keeping of appropriate records of travel. With car users, a mileage log is usual, or a log can be made of business mileage only. A record of the vehicles used is also usual.

Companies Act Changes - Purchase of Own Shares
There has been confusion about some of the changes in company law brought in by the Companies Act 2006, which was fully implemented on 1 October 2009. One of the more beneficial changes for companies that want to reorganise their share capital (perhaps because a founder shareholder is nearing retirement or to facilitate new investment) is the ability of companies limited by shares to purchase their own shares unless there is any specific restriction on or prohibition of this in their articles. This is a great benefit to companies as a purchase of own shares can often be an efficient way to buy out the interest of a shareholder without requiring other shareholders to find substantial sums from their own pockets in order to finance it.

One of the less well-publicised aspects of this procedure can be found in Section 702 of the Act, which should be read by anyone considering a purchase of own shares. This makes it compulsory (for a period of ten years from the date of the transaction) to make available to any member of the public who requests them the details of any purchase of shares by the company and makes it a criminal offence for access to this information to be refused. It is also a criminal offence (Section 658) for a company to acquire its own shares improperly.

We would expect the use of purchase of own shares to become more frequent and the issue of redeemable shares to become more common when companies are set up, to allow greater flexibility of exit routes for founder shareholders.

When Arbitration Does Not Bind
Many commercial contracts have arbitration clauses which are intended to allow disputes to be settled without having to go to court. Such clauses are normally drafted so that the arbitrator’s decision binds both parties to the contract in most circumstances. They are popular as they permit resolution of disputes without the expense of taking formal legal proceedings.

However, arbitration clauses often become less than popular with one of the parties to the contract if the arbitrator makes a decision they don’t like. In such circumstances, it is not unusual for the loser to try to find reasons why the arbitrator did not have the authority to make the decision or why the decision is not binding.

A recent case illustrated that great care should be taken to make sure that an arbitration clause which is intended to be binding actually is binding in law.

It involved a dispute over a co-operation agreement in relation to oil and gas fields. The agreement contained an arbitration clause to the effect that the arbitrator’s decision was final, conclusive and binding. However, when the losing party sought to appeal the arbitrator’s ruling on a point of law, rather than on a matter of fact, the court ruled that this wording was not sufficient, under Section 69 of the Arbitration Act 1996, to exclude a point of law. To do so, the wording of the arbitration clause must specifically exclude a challenge on that basis.

Key Words Do Not Breach Trade Mark
The Advocate General has recently given his opinion that the use of a competitor’s trade mark as a key word, in order to trigger the appearance of one’s own advertisement when an Internet search is carried out, is not an infringement of the owner’s trade mark.

Key words are used to guide Internet searches to websites, so the use of a competitor’s name to bring searchers for their products to another website is relatively commonplace.

Following a legal action against Google, the Advocate General concluded that Google’s use of trade marks as key words to trigger adverts was permissible. However, he was at pains to point out that use of visible trade marks within the adverts (key words are often placed so that they are invisible to visitors to the site but visible to web search engines) would be an infringement.

The case will come as a relief to Google and many advertisers, as key words are the basis under which Google’s adwords service operates. This service allows advertisers to place advertisements on results pages of web searches, driven by the words used for the search.

The decision in this case has been widely criticised and it is quite possible that the Advocate’s opinion (which is not binding) will not be followed by the European Court.

Using Internet Image Costs Firm Dear
Many people think that making use of images from the Internet is allowed and that such images are free for anyone to use. However, unless the owner of an image has specifically granted a public right of use, it is copyright and the owner may sue for breach of copyright if there is use of the image without authorisation.

A removal firm recently found this out to its cost Ð in this case an out-of-court settlement of £2,000 plus legal costs. The payment came about when the firm was sued by Getty Images for using a single picture from its picture archive.

Some owners of image rights (and Getty is one) use software to search for their images, and issue demands for considerable sums to users who make unauthorised use of them.

If you are publishing any material, it is essential to make sure you have the legal right to do so, or the rightful owner may sue you for damages. It is also important to make sure that any material which you publish that is created for you by third parties contains only authorised material. Image rights are often inexpensive to acquire, but surprisingly often this is ignored or forgotten about: this can be an expensive mistake.

Copyright applies equally to text and in a recent case copying a mere eleven words was considered to be a breach of copyright - plagiarists beware!

Ambiguous Terms In Insurance - When Wrong Is Right
Insurers often try to give themselves wiggle room to contest claims, which is one reason why they put so many questions in proposal forms. Over the years, the courts have established that where such a question is ambiguous, the legal construction put on it (what it means in law) will be taken as being what a reasonable person would understand by the question.

Recently, a case amplified this principle, when the court decided that the subjective understanding of the insured was irrelevant if the objective construction of an ambiguous question could be deduced from the wording.

In the case in point, the directors of the insured company answered no to a question about whether the company or its directors or partners had, either personally or in connection with any business in which they had been involved, been the subject of insolvency proceedings or made bankrupt.

One of the directors was associated with companies which had been placed in administrative receivership or which had been the subject of a creditors’ voluntary liquidation.

The court ruled that the no answer in the proposal was correct - the question was intended to deal only with the company plus its directors and partners and was not concerned with companies associated with a director.

What is surprising is that the court went on to say that the insured’s own subjective interpretation of the question in the proposal form is not relevant - what matters is how the question should be construed objectively. Therefore, where the insured answers such a question incorrectly, provided that the question is ambiguous, it could be construed against the insurer.

No doubt insurance companies will be reviewing the questions on their proposal forms in the light of this decision.

More Big Fines for Competition Law Breaches
The Office of Fair Trading (OFT) has announced that it has levied fines totalling more than £39 million on recruitment agencies operating in the construction sector for breaches of the Competition Act 1998.

The agencies involved agreed to boycott another company (Parc UK), which had entered the market and threatened their business model, and colluded to fix target fee rates for supplying candidates to the construction industry.

A whistleblower informed the OFT in exchange for leniency over its own breaches.

The OFT is not afraid of using its considerable powers where breaches of competition law are concerned. Businesses of all sizes should take care not to engage in anti-competitive behaviour of any kind: much of this behaviour is criminal in the eyes of the law.

Data Protection - The Gloves Come Off
Following the widely-reported case in which the construction industry worker blacklist was uncovered, it has been revealed that the Information Commissioner’s powers of enforcement - i.e. the scale of fines that can be levied by the Information Commissioner’s Office (ICO) - are to be greatly increased from next spring.

From that time, where an organisation seriously breaches one or more of the eight data protection principles contained in the Data Protection Act 1998 (DPA), the ICO will be able to levy a substantial penalty. This will include situations in which a breach of data security occurs.

Although the details of who will be fined (the organisation or the data controller) and the likely level of the fines have not yet been announced, what is clear is that organisations that process data should make sure that they are ready by carrying out a proper review of their compliance with the DPA and evaluating their data security measures.

Some breaches of the DPA are already criminal offences which can result in a custodial sentence being given.

The eight data protection principles provide that personal information must be:

• fairly and lawfully processed;
• processed only for specified, lawful purposes;
• adequate, relevant and not excessive;
• accurate and up to date;
• not kept for longer than is necessary;
• processed in accordance with the rights of the individual under the DPA;
• kept secure; and
• not transferred to countries outside the EU without adequate safeguards being in place.

Further details and guidance on the new enforcement powers will appear on the ICO’s website at http://www.ico.gov.uk/.

Licensees Breathe Sigh of Relief As Pubwatch Challenge Fails
Licensees will be happy to note that the Pubwatch scheme, which allows publicans to ban troublemakers from participating pubs, survived a legal challenge recently.

Builder Francis Boyle had challenged a ban on him by members of the Haverhill Pubwatch scheme. He claimed the ban was a violation of his human right to a fair hearing because he had no representation at the meeting at which the ban was ordered. He requested that the decision be subject to judicial review.

His argument was based on the fact that since Pubwatch members receive intelligence and advice from the Police and local authorities, Pubwatch should be classified as a public body. The decisions of such bodies are subject to judicial review.

Judge Mackie concluded that Pubwatch schemes are not public bodies if all they do is receive advice and support given by the Police and local authorities. As Pubwatch is a private organisation, the decisions it reaches are not subject to judicial review.

Sickness and Holiday Leave
The EU Working Time Directive lays down minimum health and safety requirements for the organisation of working time. The purpose of the entitlement to paid annual leave is to enable a worker to rest and to enjoy a period of relaxation and leisure. The purpose of the entitlement to sick leave, however, is to enable a worker to recover from illness.

In Pereda v Madrid Movilidad SA, the European Court of Justice has ruled that a Spanish worker who suffered an accident at work, with the result that he was on sick leave for most of the annual leave period allocated to him, had the right, on request, to reschedule his holiday, even if this meant carrying it forward to the following leave year.

This follows the earlier case of Stringer and others v HM Revenue and Customs, which established that the right to take annual leave is not extinguished if an employee is on long-term sick leave. It is up to the national courts to decide whether paid leave can be taken during a period of sickness or whether it should be carried over to another year.

Both decisions have raised questions regarding the operation of the Working Time Regulations 1998 (WTR), which implement the EU Directive into UK law.

Under the WTR, if a worker becomes ill just before taking annual leave or during the holiday itself, he or she does not have any automatic right to convert that holiday to sick leave. Also, workers must take a minimum of four weeks’ holiday in each leave year. It will therefore require further case law or a change in the legislation to clarify the situation. The Department for Business, Innovation and Skills has said that it is examining the terms of the judgment and will issue further guidance in due course.

This is a grey area and, until the situation becomes clearer, we recommend that employers seek advice on their individual circumstances.

Workplace Car Parks - Transient Hazardous Conditions
The Health and Safety Executive reports that nearly 11,000 workers suffered serious injury as a result of a slip or trip in the last year. A recent case in the Scottish Court of Session examined the extent of an employer’s liability after an employee slipped and was injured as a result of ice in the car park at her place of work (Munro v Aberdeen City Council).

Ms Munro based her claim on Regulation 5(1) of the Workplace (Health, Safety and Welfare) Regulations 1992, which provides that the workplace shall be maintained (including cleaned as appropriate) in an efficient state, in efficient working order and in good repair. It was accepted that the duty imposed by Regulation 5(1) is strict and, were it to apply in this case, Ms Munro would be entitled to compensation without having to prove negligence on the part of the Council and there would be no reasonable practicability defence available to her employer.

Aberdeen City Council argued that Regulation 5(1) did not apply but that Regulation 12(3) was relevant in this case. This provides that, so far as is reasonably practicable, every floor in a workplace and the surface of every traffic route in a workplace shall be kept free from obstructions and from any article or substance which may cause a person to slip, trip or fall.

Ms Munro lost her case. The Court of Session drew a distinction between absolute duties for longer-term dangers and qualified duties for more transient hazards and in so doing found itself in agreement with the reasoning of Lord Emslie in McEwan v Lothian Buses, which was that if the absolute duty presented under Regulation 5 were to be given a wholly unrestricted meaning, then many of the other Regulations would become otiose and the qualification of reasonable practicability in particular defined situations (for example under Regulation 12(3)) might as well not be there at all.

Whilst employers will be relieved to know that the law recognises that it is not always reasonably practicable to eliminate short-lived, transient risks, it is advisable to identify areas that are most likely to be affected by ice and the risks to employees and to members of the public. Have in place a procedure to take appropriate action whenever freezing temperatures are forecast.