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Meta
Monthly Archives: April 2020
Fraudulent trading and misfeasance claim
Posted in Case Study
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High-net worth individuals with complex off-shore interests defending bankruptcy petitions
Posted in Case Study
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Crypto assets & smart contracts: a legal & regulatory update
Posted in Videos
Tagged crypto asset, cryptocurrency, smart contract
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Coronavirus: Key Employment Considerations for Private Households
As the COVID-19 pandemic develops, employers face the ongoing challenge of ensuring compliance with the latest government guidance. This requirement doesn’t just apply to large organisations but affects employers of all sizes, including private households. We take a look at: …
Posted in Shorter Reads
Tagged CoronaVirus, COVID-19, employee, employers, employment, employment law, tradespeople
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Flexible approach taken by Court under Remote Hearings Protocol (COVID-19)
In circumstances where an application was made for an adjournment of a four-day trial involving cross-examination of witnesses, the court showed extraordinary flexibility in seeking to accommodate parties’ circumstances and ensure the proper administration of justice. Hilary Stonefrost (instructed by …
Posted in Longer Reads
Tagged Joint Liquidators of Smith Technologies Limited (in liquidation) v Pearson and Mackie (26 March 2020)
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Coronavirus – HOW WILL IT IMPACT LOAN-TO-VALUE COVENANTS?
Drastic measures implemented to curb the COVID-19 pandemic and the resultant economic disruption are poised to impact a wide range of contractual arrangements, including loan agreements and the covenants contained within them. One of the covenants particularly impacted by any …
Posted in Shorter Reads
Tagged covenants, Loan to value, LTV
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Coronavirus: Key questions about Emergency Volunteering Leave
Understandably this has left many people wondering what this could mean for them, and, in true British spirit, how they can take advantage of this scheme to help the country at this critical time. In particular, there are five key …
Posted in Shorter Reads
Tagged CoronaVirus, COVID-19, employee, employer, employment, volunteering
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Coronavirus & PREPARING TO SELL YOUR HOME DURING THE OUTBREAK
Whilst it may not be possible to actively start marketing your home with the stay-at-home measures in place, there are some practical steps that you can take now which will help speed up the marketing and conveyancing processes once the …
Posted in Shorter Reads
Tagged conveyancing, CoronaVirus, selling home
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Covid-19 cooperation: A new world for intellectual property rights
Intellectual property is by definition restrictive. The various rights – copyright, trade marks, patents and designs – give the owner exclusivity to exploit the right or permit someone else to do so. Anyone who uses the right without permission will infringe the right unless they can call on one of the few, limited, defences.In normal times someone who “reverse-engineers” (i.e. copies) a product designed by someone else would expect a complaint of infringement. And if the original designer has permitted the adaptation of its design in this way, the improvements made by the adapter would probably qualify for separate protection. There would normally be a scramble to exploit the adapted product for maximum profit, and any unauthorised copying would also be subjected to infringement policing.But as well are all acutely aware, these are not normal times. So it is a development to be applauded that the ultra-competitive world of F1 Racing has used its formidable engineering prowess not to shave a couple of hundredths of a second of a lap time, but to help in the fight against Covid-19.Working with a group of collaborators including University College London and UCH, the Mercedes F1 team has adapted and refined an existing breathing-aid design (so that it uses 70% less oxygen), obtained regulatory approval, and enabled high volume manufacturing capacity in record time. Furthermore the team has made the design freely available to others who wish to use it. No IP rights being claimed or fought over – but instead making a much more efficient design available in the fight against this rapidly spreading virus. That deserves a round of applause for the entire design, testing and manufacturing team – a world championship performance.
Posted in Shorter Reads
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Coronavirus: Corporate Residence – Updated HMRC Guidance
Since last writing (published here yesterday), HMRC has responded to calls to update its guidance on corporate residence during the global coronavirus pandemic, here, and on permanent establishments here.This guidance, which mirrors that previously set out for individuals (here) is very welcome, and greatly to HMRC’s credit. HMRC expresses its sympathy to those affected in respect of the disruption being endured.Tax Residence of Foreign-Registered CompaniesIn summary, HMRC’s general view is that:”We do not consider that a company will necessarily become resident in the UK because a few board meetings are held here, or because some decisions are taken in the UK over a short period of time. HMRC guidance makes it clear that we will take a holistic view of the facts and circumstances of each case.”This is helpful, though generic. HMRC points to existing guidance and states that each case will turn on its own facts.Fortunately, the UK has one of the most comprehensive sets of double tax treaties of any jurisdiction. Those treaties routinely contain “tie-breaker” provisions that can determine residence if, under their own domestic laws, a person or company would be resident in both jurisdictions. For companies, that test determines the “place of effective management” of the business *(“POEM”). The OECD issued its own reassuring guidance on those provisions here.HMRC’s updated guidance seems to accept the OECD’s view that:”It is unlikely that the COVID-19 situation will create any changes to an entity’s residence status under a tax treaty. A temporary change in location of the chief executive officers and other senior executives is an extraordinary and temporary situation due to the COVID-19 crisis and such change of location should not trigger a change in residency, especially once the tie breaker rule contained in tax treaties is applied.”HMRC’s case-by-case approach is less clear than that taken by the Irish Revenue, which simply states:”Where an individual is present in the State and that presence is shown to result from travel restrictions related to COVID–19, Revenue will be prepared to disregard such presence in the State for corporation tax purposes for a company in relation to which the individual is an employee, director, service provider or agent.”Similarly, the Australian Tax Office states in its Coronavirus Q&A:”If the only reason for holding board meetings in Australia or directors attending board meetings from Australia is because of impacts of COVID-19, then we will not apply compliance resources to determine if your central management and control is in Australia.”Nevertheless, assuming that HMRC is true to its word about its sympathy for individuals and businesses affected by the coronavirus lockdowns, then the result ought in almost every case to be the same. One would expect that the only exceptions to such an outcome would be where HMRC has cause to attack the arrangements for reasons unrelated to the coronavirus pandemic.Permanent EstablishmentHMRC summarises its general position as follows:”We do not consider that a non-resident company will automatically have a taxable presence by way of permanent establishment after a short period of time. Similarly, whilst the habitual conclusion of contracts in the UK would also create a taxable presence in the UK, it is a matter of fact and degree as to whether that habitual condition is met. Furthermore, the existence of a UK PE does not in itself mean that a significant element of the profits of the non-resident company would be taxable in the UK.”HMRC’s updated guidance on Permanent Establishments seems more heavily reliant on pre-existing advice and practice than its approach to company residence. A few headline points arise:HMRC accepts that Permanent Establishments are not brought about “after a short period of time”: the length of time in question is open to some doubt, but in the context of the global coronavirus-related lockdowns, it would seem fair to suppose that the duration of the UK’s lockdown restrictions, at least, would be such a “short period”.To avoid the question of whether contracts are “habitually” concluded in the UK, it should be avoided wherever possible. Good records should be kept of the place all contracts are concluded, and they should be stored outside the UK – preferably in the jurisdiction in which the company is registered (e.g. at its registered office).As the OECD noted in its recent guidance, pointing to the degree of permanence required to create a Permanent Establishment:”it is unlikely that the COVID-19 situation will create any changes to a PE determination. The exceptional and temporary change of the location where employees exercise their employment because of the COVID-19 crisis, such as working from home, should not create new PEs for the employer. Similarly, the temporary conclusion of contracts in the home of employees or agents because of the COVID-19 crisis should not create PEs for the businesses.”The OECD guidance is clearer than HMRC’s about the low risk of bringing about a “dependant agent” Permanent Establishment:”An employee’s or agent’s activity in a State is unlikely to be regarded as habitual if he or she is only working at home in that State for a short period because of force majeure and/or government directives extraordinarily impacting his or her normal routine.”This seems to us to be the correct analysis, and it is one we would expect HMRC to share in relevant cases.General CommentsThe tax challenges caused by the global coronavirus pandemic are being faced by every central revenue authority. Some, like Ireland’s and Australia’s, have responded by clear statements of principle on which affected individuals and businesses will expect to rely. HMRC has taken a rather different approach, emphasising that decisions will depend on case-by-case analysis, whilst making general (but non-binding) statements indicating that it will take a sensible view. This is perhaps a consequence of the poor standard of discussions about tax in the UK and the pressure that HMRC faces from its political masters and the press: potential for abuse would abound if HMRC nailed its colours to the mast. Nevertheless, one trusts that HMRC will be true to its commitments and decide cases on a rational and just basis.Meanwhile, affected companies and directors – especially those stuck in the UK – would be well-advised to take advice on this new guidance and its implications for their businesses. Two points will arise in every case:Exemplary records must be kept throughout the lockdown period to satisfy HMRC if the need arises in future; andOnce the lockdown (in the UK, at least) comes to an end, then individuals and businesses should expect that HMRC will dis-apply its coronavirus guidance and revert to the status quo ante.
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