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Monthly Archives: April 2020
Coronavirus – Can Employers be obliged to alter contractual remuneration arrangements?
Bankers’ bonuses are currently subject to a bonus cap introduced by EU regulations which aim to limit bonus pay-outs to 100% of salary, or 200% with approval from shareholders. In the UK, regulated firms must also comply with the Remuneration …
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Tagged bankers bonuses, banks, bonuses, CoronaVirus, COVID-19, employment, PRA
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Coronavirus: Tax and Estate Planning Tips in the Lockdown
Being optimistic, we have been giving some thought to what positives we can draw from these dark and difficult times. Being at home for an extended period and having more time provides an opportunity to get on with the tasks …
Posted in Longer Reads
Tagged CoronaVirus, estate planning, tax, TEP
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Coronavirus: MAC clause used to withdraw from £510m property acquisition
News sources are reporting that Columbia Threadneedle has withdrawn from its £510m agreement to buy Manchester Airport Group’s Victoria portfolio, despite having exchanged. A Material Adverse Change (MAC) clause in the contract has allowed the fund manager to withdraw from the …
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Tagged CoronaVirus, COVID, MAC, Manchester airport, Material Adverse Change
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Setting up a business after Coronavirus: making the dream a reality
Many of us may have used this enforced period away from our normal offices, jobs and routines as an opportunity to think about what we would like to do in the future. Perhaps you have rediscovered a skill, and you’re …
Posted in Longer Reads
Tagged business, CoronaVirus, set up, start-up
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Covid-19, Travel Restrictions, and Tax Residence of Companies: OECD Guidance Released
One of the consequences of the lockdowns being implemented in a number of countries – including the UK – as a result of the coronavirus pandemic is that normally internationally-mobile company directors find themselves stuck in one jurisdiction, unable to leave (or, at least, to do so whilst following official advice).The personal consequences for affected individuals (such as enforced separation from family and colleagues) might seem bad enough – and that is where thoughts inevitably first turn.Compounding that, are the personal tax implications. Though many countries have issued general guidance indicating that days spent during an enforced stay ought not to be counted when assessing whether a person is resident in that jurisdiction. For the UK Government, HMRC has issued such guidance, confirming that the “exceptional circumstances” provisions of the statutory residence test should apply, which is much to be welcomed: see here.However, less attention has been given to the tax residence status of companies as a result of directors finding themselves stuck.Like many countries, the UK treats a business as being resident in the UK if its place of “central management and control” is in the UK (provided that no applicable double tax treaty establishes its residence in another jurisdiction). Unlike the statutory residence test for individuals, these rules have been developed by case law over a long period of time (the leading case, De Beers Consolidated Mines Ltd v Howe (Surveyor of Taxes), dates back to 1906).The “central management and control” of a company is the jurisdiction in which its strategic policy and management decisions are taken. Those decisions can be contrasted, for example, with less strategic operational decisions, and also the execution and implementation of decisions already taken elsewhere.Directors forced to remain in the UK might not think twice about continuing their involvement in the business. E-mail, mobile phones, and video conferencing mean it has never been easier to work wherever you are. However, if that place is in the UK then care should be taken to avoid HMRC treating the company as being “managed and controlled” – and so tax-resident – here.Other jurisdictions, such as Ireland, Australia and Jersey, have issued guidance confirming that their national revenue authorities will not seek to capitalise on the global dislocation caused by coronavirus by asserting that foreign companies have become resident there because of the actions of their directors.HMRC has not – yet – issued similar guidance, and so company directors would be prudent to assume that existing UK rules on e-communication still apply. Whilst there is little direct judicial authority on the point, it is widely thought possible that a director who takes decisions in the UK – including through participation in board meetings – can inadvertently cause the company to become resident here.Fortunately, on 3 April, the OECD released guidance for member countries (including the UK) on the application of tax treaty rules to the residence of individuals and companies – at least, insofar as double tax treaties are concerned. The OECD guidance confirms inter alia that “It is unlikely that the COVID-19 situation will create any changes to an entity’s residence status under a tax treaty.”It is hoped that the UK Government will accept the OECD’s timely and practical guidance and that HMRC will shortly issue updated guidance of its own confirming that directors forced to remain in the UK can continue their work without fear of making their business tax resident here.
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Coronavirus – comment on Chancellor’s overhaul of business bailout scheme
Banks will be banned from asking small firms for personal guarantees on loans up to £250k only, and will relax other rules to ensure businesses can access the money they need. This further intervention from the government is very welcome. …
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Tagged CBIL, CoronaVirus
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Coronavirus: What happens if you have a vulnerable person in your household?
This is a stressful time. It is even more stressful if you have a loved one in your household who has been identified by the government as ‘extremely vulnerable’. Many employees will be faced with this dilemma, and many employers …
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Tagged CoronaVirus, employee, employer, employment, vulnerable person
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Contracts and coronavirus (5/5)
The COVID-19 pandemic will likely continue for some time. To help your business adjust to these uncertain times, each day this week we are posting on what to keep in mind concerning your business’s commercial contracts.As this is the last post in this week’s series, today we will give some practical tips about what to ensure your standard terms and conditions include from now on, in case (for instance) we encounter a ‘second wave’ of the pandemic later this year or next year. We would suggest:a) where you are the supplier:ensuring any force majeure clause in contracts you are negotiating or planning to enter into explicitly refers to pandemics and epidemics, and includes a right to terminate if the force majeure event continues for more than a certain period of time (this may not be enough for you to rely on this, particularly as COVID-19 is no longer something unforeseen, but it could help in certain situations); andincluding wording to the effect that no force majeure event exonerates a party’s payment obligations, and consider having a right to terminate if the customer does not pay on time; andwhere possible, using wording that refers to using your reasonable endeavours to undertake something, rather than agreeing outright to do it (this may give you a little leeway, depending on the circumstances).b) where you are the customer:where possible, insisting on your own standard terms, which should take the opposite position to the above tips for suppliers;negotiating longer payment timescales, in case of cashflow difficulties, as well as a lower interest rate for late payments; andseeking provisions giving you priority if there is an adverse impact on the supplier’s ability to provide you with the goods/services you are purchasing, so that you are first in the queue for any scarce resources.We hope you’ve found this week’s series of posts on contracts and coronavirus helpful. You can find additional COVID-19-related resources from Collyer Bristow here. If you have any specific queries regarding your business’s contracts, our Commercial team is on hand to help.
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The Morrisons Supermarkets cases: the employment law perspective
One of the worst nightmares for any employer is when an employee goes “rogue” during the course of carrying out his duties, causing possible embarrassment but also potentially making him legally liable for the consequences of the wrongful act. The …
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Tagged disgruntled employee, morrisons
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