Knowing Receipt Claims: Maryam Oghanna writes for Private Client Business Journal
19 March 2024
Views
Contentious Trusts and Estates Senior Associate, Maryam Oghanna, has written an article for Private Client Business Journal on knowing receipt claims.
In the article, entitled ‘Knowing Receipt after Byers v Saudi National Bank’, Maryam discusses the law on knowing receipt and the distinction between dishonest assistance and knowing receipt claims in light of the recent Supreme Court Decision in Byers v Saudi National Bank. The Supreme Court held that a knowing receipt claim cannot be made if the claimant’s equitable proprietary interest in the relevant asset has been extinguished at the time of the alleged knowing receipt.
The full article can be read here, behind a paywall.
Construction insolvencies are up – what can developers do?
19 March 2024
Views
Thérèse Marie Rodgers, Counsel in the Construction team, has written a piece for React News discussing how the strict application of contractual rights is not always the best way forward.
The latest monthly figures from the government’s Insolvency Service, out last week, show that 4,370 construction firms failed in the UK in the year to the end of November 2023 – around 7% up on the previous year.
While we wait to see whether an upward trend in construction sector insolvencies continues to the end of the year, the figures still make grim reading for the construction industry, and have ramifications for the property and development sectors.
The rate of inflation has been impacting the already slim margins of contractors, many of whom were still recovering from the financial pressures resulting from pandemic-related delays. With the majority of the Building Safety Act 2022 now in force, this financial stress will increase on contractors.
Where difficulties start to arise on some projects as a result, employers and developers should consider whether strict application of their contractual rights is the best option for the project as a whole.
For example, levying liquidated damages as soon as a party is entitled to may initially appear attractive – but it could be the difference between a contractor completing a project or becoming insolvent.
The collapse of a sub-contractor causes delays, but a main contractor’s failure can have a far more serious effect, halting projects for months. Buckingham’s collapse in August left its clients with unfinished projects and the unenviable challenge of finding a replacement contractor.
New challenges
While the focus of the Building Safety Act has been on higher-risk buildings (namely those that are 18m or taller, or seven storeys high), parts of the act will have implications for all buildings. This means that all contractors will need to expend time and money ensuring they are adhering to the evolving applicable laws and regulations for each specific project.
The significant increase to the limitation periods for claims under the Defective Premises Act 1972 – 30 years for works completed before 28 June 2022, and 15 years for claims for works completed after 28 June 2022 – is likely to affect all players in the construction cycle, with claims arising in relation to projects long since completed.
In respect of higher risk buildings, the act brings multiple challenges. The new gateway process introduces the requirement for building control approval before building work can commence, and once it is complete, prior to occupation of the building.
These stages are likely to cause delay, and the risk of submitting the relevant applications and incorporating the period for any such applications into the programme will need to be considered at the outset of a project. There is also more onerous competency and golden thread requirements, which are likely to cause increased costs or put a further squeeze on profit margins.
Warning signs
What are the signs that a contractor may be nearing insolvency? On site, you’d expect to see work stalling, contractual milestones being missed and fewer people on site, as well as equipment, plant and materials disappearing.
Problems with cash flow may lead to the contractor requesting early payments, and potentially submitting over-inflated claims. Further down the chain, sub-contractors might complain of lack of payment – and may even request direct payment.
There are some practical actions developers or employers can take in these circumstances, such as ensuring it has a complete set of contractual documents – all guarantees and warranties, including any sub-contractor collateral warranties – and to check the insurance required under the building contract is still in place and all premiums paid.
It is prudent to increase monitoring of the progress of the works to ensure the information on the contractor and status of the project is understood. It would also be beneficial to understand the contractual position in the event of a contractor insolvency. Are protections in place, such as a performance bond, parent company guarantee, step-in rights and termination rights?
A new agreement
Notwithstanding the above, in the vast majority of scenarios, it’s in everyone’s interest to reach a commercial solution that gets the project completed with the contractor continuing in business. That’s likely to need open and frequent communication – initially to understand whether the contractor is willing and able to complete the project, and whether realistically that can be achieved by a commercial agreement.
Such agreements could restructure payment arrangements, speeding up payments, making them more frequent and perhaps providing that the employer pay subcontractors directly. It’s key that safeguards are put in place to ensure any such funds are only being used to complete the project at issue, and not propping up other projects.
A moratorium on liquidated damages may also assist, with the incentive of waiving them altogether if a new agreed programme to complete the project is met.
If completion by the contractor isn’t possible, the discussion should focus on an orderly handover of works. To what stage of the project is the contractor able to complete? When will an alternative contractor need to be engaged to complete the works? Relieving some pressure on the contractor in this way could lead to improved performance.
Whichever option you take, you must protect your interests. Don’t just agree a new programme without maintaining an incentive for performance, and ensure you have a remedy should the project deteriorate.
Worst-case scenario
If the worst happens, it’s not impossible to continue with an insolvent contactor, dependent on the type of insolvency proceedings and whether the contractor considers it’s able to complete the works. It might be the best option if the project is very near completion.
There is also the option of stepping in to engage subcontractors directly to complete the project or, following termination for insolvency, engaging directly with the subcontractors. This is the approach Liverpool FC has taken (at least in part) to complete its stadium following Buckingham’s insolvency.
Engaging a new contractor is not always a silver bullet, and can come with significant downsides. It could delay completion and is likely to be more expensive. The new contractor may not assume responsibility for the insolvent contractor’s works, or will charge a premium for doing so.
Should your project encounter contractor insolvency, careful consideration of all the options available is needed to get work back on track, with the minimum amount of disruption.
Originally published on 22 January 2024, the article can be accessed here behind the paywall.
Key partner hire for Forsters with the appointment of Jo Keddie
18 March 2024
News
Highly ranked and market recognised Partner Jo Keddie joins the firm from Winckworth Sherwood to strengthen Forsters’ full service Employment and Partnerships practice, which will continue to deliver leading edge employment advice to a diverse client base.
Forsters, the leading London firm, announces today that Jo Keddie is to join the firm on 2 April 2024. Jo joins from Winckworth Sherwood LLP, where she headed its Employment and Partnerships team. She also led the firm as Senior Partner from 2021 to 2023, having originally joined the partnership in 2010. In addition to Jo, colleagues Danielle Crawford and Daniel Parker will be joining the team at Forsters as Counsel and Senior Associate respectively.
Jo’s practice is a close strategic fit to that of Forsters. She represents a broad suite of clients in contentious and non-contentious matters, including corporates, senior executives and charities and has a wealth of experience in investigatory work involving regulatory bodies, corporate clients, and individuals.
Jo has top tier rankings in both the Legal 500 and Chambers directories for her expertise in acting in partnership and senior executive cases and has recently featured in The Lawyer’s prestigious Hot 100 listing for the second time.
Over the past year, Jo has acted in a number of high-profile litigation matters and investigations delivering her hallmark of pragmatic, commercial and strategic advice. Jo’s recent experience includes acting for several FTSE 100 C-Suite clients and Fund Managers in respect of their high value (regularly seven figures) and often complex departure terms. She has also advised a number of financial institutions, corporates and charities in successfully investigating and defending claims for unfair dismissal, whistleblowing, race and religious discrimination, sex discrimination/harassment and age discrimination.
The appointment of Jo is a significant boost to Forsters’ Employment and Partnerships team. Jo, who will head the practice, will join employment partner Joe Beeston and his team, adding further strength, depth and experience to the firm’s offering. The addition of three senior lawyers to Forsters’ full-service employment practice will bolster and scale up Forsters’ market presence, including in the financial and professional services, partnerships, private equity, sciences, technology, real estate and healthcare sectors among others.
Jo Keddie said: ‘This is such an exciting time to be joining Forsters following its move into amazing new premises at Baker Street. The opportunity to play a lead role in the firm’s strategic investment in employment and partnerships was compelling for me personally and we now have a fantastic platform to grow our team dynamically, as well as enhance the range of services we offer to our clients.
‘Culturally we are completely aligned in as much as we are focused on delivering successful strategies and outcomes for a diverse range of clients. Danielle, Dan and I greatly look forward to working closely with Joe and all our new colleagues to deliver a client-led strategy at Forsters. It is a perfect fit for us and our clients at every level.’
Natasha Rees, Senior Partner of Forsters, commented: ‘We are thrilled to have Jo Keddie and her team join us at Forsters. They will be a fantastic addition to the Employment and Partnerships team and the wider firm. Our clients have just seen us move to superb new premises at Baker Street, which are designed to help us deliver best-in-class advice. Our decision to appoint Jo was completely driven by what our clients need from us. We are really excited to have Jo joining the Forsters partnership and we are delighted that three such talented lawyers will be enhancing our team.’
Elizabeth Small quoted in The Times on the abolition of Multiple Dwellings Relief
15 March 2024
Views
Tax Partner, Elizabeth Small, has been quoted alongside other industry experts in The Times’ Bricks & Mortar on the upcoming proposed abolition of multiple dwellings relief (MDR).
The article ‘Want a house with an annexe?’ delves into what the announcement means for country houses. Since 2011, MDR has made country houses with annexes, cottages and converted outbuildings more appealing and affordable for buyers as it reduced the amount of Stamp Duty Land Tax (“SDLT”) payable.
MDR differs from the usual Stamp Duty Land Tax (“SDLT”) treatment by averaging the SDLT due across the number of properties that are being bought. Therefore, instead of paying tax on the total purchase price, the tax is calculated on the lower average. As SDLT rates increase as the property price rises, MDR can produce a lower SDLT liability. The MDR is subject to a minimum rate of 1% of the purchase price.
But what is considered an additional dwelling? Elizabeth explains that it is generally considered to be “somewhere where the occupant can shelter behind their lockable front door and be able to live in reasonable comfort, so with cooking and separate bathroom facilities and windows”.
The full article can be read here. Behind a paywall.
From 1 June 2024, property transactions that have not completed will no longer qualify for MDR. If you have concerns or further questions on this topic, please contact Elizabeth Small.
Totum’s Rising Star Award 2024: Natalie Carter is awarded Highly Commended
15 March 2024
News
Business Development and Marketing Executive, Natalie Carter, has been awarded Highly Commended in Totum’s Rising Star Awards 2024.
Working with our Private Wealth department, Natalie has been charged with seeking new business opportunities, building connections and developing strategic partnerships.
She joined Forsters in 2019 on a work experience placement, which turned into a permanent role in the BD & Marketing team. Over the last five years, her role has evolved from dealing with practical, task-driven responsibilities to that of a trusted advisor.
Natalie’s recognition is a testament to her focus and dedication, as well as the firm’s commitment to the career development of their employees.
The full article on this year’s winners can be read here.
The Lifecycle of a Business – Getting the most out of recruitment and motivating and retaining valued staff
14 March 2024
News
Setting up and running your own business is an amazing achievement. It requires vision, creativity, motivation and stamina. On occasion, it can even bring you fame, riches and fortune. But it can also result in reams of paperwork and cause sleepless nights. And as someone once said to me about children “It doesn’t get easier, it just changes”, so the same can be said for your business throughout its lifecycle. From setting up to exit, it will force you to consider issues that you might not previously have known anything about and it will need you to make many decisions, sometimes very quickly. What it certainly is not is mundane.
With this in mind, the corporate team at Forsters, together with some of our specialist colleagues, has written a series of articles about the various issues and some of the key points that it may help you to know about at each stage of a business’s life. Not all of these will be relevant to you or your business endeavours, but we hope that you will find at least some of these guides interesting and useful, whether you just have the glimmer of an idea, are a start-up, a well-established enterprise or are considering your exit options. Do feel free to drop us a line or pick up the phone if you would like to discuss any of the issues raised further.
We’ve already discussed various topics, such as, set up, directors, funding and shareholder-related matters, but now let’s concentrate on “Employment: 9 to 5”.
Getting the most out of recruitment and motivating and retaining valued staff
Our recent article talked about the steps that a first-time employer needs to take before they actually employ any staff . We’re now going to think about the next stage.
A plethora of factors is causing employers to step back and evaluate their approach to staffing; factors which have been around for a while but which, cumulatively, are having a significant impact.
First, there was Brexit, which resulted in the net migration out of the UK of a notable portion of the workforce. This was followed by COVID-19, which triggered a seismic shift in working practices, including a move towards home and hybrid working. There has also been the introduction of Gen-Z into the workforce, who have brought with them a fresh mindset and different approach to established working norms. On top of these, economic factors, including higher interest rates and the “cost-of-living-crisis”, have resulted in job applicants requesting more from their remuneration packages. All of these factors have shifted the priorities of the workforce and have changed the demands being placed on employers.
So, how can an employer ensure that they appeal to the right recruits for their business? How can an employer motivate somebody to reach their potential in the business? And how might an employer look to retain valued individuals?
We’ll consider some potential responses to these questions below.
Recruiting for your business: not just a job role
The nature of recruitment has changed steadily over recent years, with the involvement of recruiters becoming increasingly prevalent, as opposed to individuals approaching potential employers directly.
With this “middle-man” approach seemingly becoming the norm, it is important that you (as an employer) know what you are looking for. Are you looking for an individual to fulfil a perfectly sculpted job description? Or, are you looking for an individual who can grow with the business as a long term prospect? The likelihood of finding the best talent will be increased by focusing on the latter.
A high-level job specification and having an awareness of the key competencies is very important, but actually contemplating how the successful recruit will integrate with your existing workforce is paramount. Recruiters not only have on-going relationships with employers, but with candidates as well, and will be very familiar with the candidate’s personality and their fit with your business. Therefore, being able to articulate the personal specifications that you envisage the successful candidate having has become just as important as knowing what their role will entail.
Motivation: getting the best from your workforce
With the labour market becoming fairly volatile, it is particularly important that employers know how to both motivate and retain their workforce to ensure that they stay incentivised to give their time and energy to your business.
When looking to motivate an individual, the key lies in effective two-way communication. Line managers should seek to understand what an individual is seeking to gain from their role: this could include taking on specific types of work or specialist projects, for example. There might be a long term goal that the individual wants to work towards (such as a promotion or qualification), and working towards this together is likely to incentivise the individual to equally invest their time in the company when they appreciate that the company is also investing in their development.
Financial motivation is also a reality. Following the introduction of gender pay reporting and ethnicity pay reporting, there is a growing conversation surrounding pay and remuneration transparency. Although reporting is not a requirement for all businesses, much of the workforce are beginning to look towards, and expect, transparent remuneration structures.
How to keep those motivated individuals working for YOU
Motivation and retention employ similar techniques, but whilst motivation is best seen through a professional lens and can be identified as having a cohesive workforce where everybody is positively achieving their individual professional goals and the goals of the company, retention tends to take a more personal perspective and results in individuals staying at a company long-term.
Retention can result from the “perks” of a job, including a competitive benefits and remuneration package, an inclusive culture and a sustainable work-life balance. Strong remuneration and a benefits package have long been the key ingredients for retention within the job market, but the cultural aspects of a workplace are becoming increasingly significant. For example, in determining what makes a “good employer”, employees now often cite the importance of an employer nurturing diversity and allowing individuals flexibility in their working day, including flexibility of working hours and location.
The younger generation of the workforce are increasingly looking for an environment that nurtures their authentic selves which means that, if an employer is looking to retain their workforce, they would do well to allow the differences amongst their workforce to thrive and be recognised.
Disclaimer
This note reflects the law as at 13 March 2024. The circumstances of each case vary and this note should not be relied upon in place of specific legal advice.
Helen Streeton quoted in Inside Housing on the landmark ruling demanding building owners pay for cladding fixes
13 March 2024
Views
Partner and Head of BTR, Helen Streeton, has been quoted in the Inside Housing article entitled “What the landmark Get Living ruling means for housing associations and leaseholders”.
Late in January, a first-tier tribunal ordered the owners of London’s Olympic village to pay £18m to fix fire safety issues on five blocks of flats. The judgement was the first use of new remediation contribution order (RCO) powers under the Building Safety Act 2022. It was hailed as a victory by the leaseholders, who have been unable to sell their flats since defects were uncovered, and Triathlon Homes, the housing association that brought the action.
The first-tier tribunal has ruled that Stratford Village Development Partnership (SVDP), the developer of East Village, and Get Living, its parent company, must pay £18m towards making five of the 66 blocks safe.
Helen Streeton, Head of Build-to-Rent at law firm Fosters, says the decision bumps up against other government legislation to cover remediation work. Under the ruling, the owners must now reimburse the government’s Building Safety Fund (BSF), which is paying £24.5m of taxpayers’ money to cover both Get Living and Triathlon’s share of the works.
On the RCO, she says, “its interface with the BSF is a bit odd. They’re not particularly aligned”. The Building Safety Fund allows people with responsibility for remediating the defective cladding to apply for taxpayers’ money, but “overlayed on that”, the Building Safety Act says “we can require you to contribute”.
“Although I understand the concept of somebody apart from the taxpayer being responsible for funding the works, I think it’s a massive decision for developers and building owners,” she says, as it “provides uncertainty” over whether they or their shareholders will have to pay back into the fund.
Helen adds that further thought will now be required around due diligence and the decision may deter investment into the residential HRB sector.
The full article, published on 27 February 2024, can be read here behind a paywall.
Commitment to Sustainability: Forsters and Kelly Noel-Smith shortlisted for industry awards
13 March 2024
News
Forsters LLP and CSR Partner, Kelly Noel-Smith, have been shortlisted in The Legal 500 ESG and LexisNexis Legal Awards 2024.
LexisNexis Legal Awards: Award for Sustainability – Forsters
Since our inception in 1998, Forsters has pioneered its approach to sustainability, and we are proud to see this commitment recognised.
This year has seen our most ambitious commitments to date.
In 2021, we signed up to a science-based emission reduction target to halve our greenhouse gas emissions by 2030. We were one of the first firms of our size to make this pledge. In Autumn 2023 our reduction target was approved by the Science Based Target initiative.
We have a rigorous best practice programme in place driven by significant external commitments and characterised by a thoroughness of approach both internally and in how we support our clients and wider stakeholders.
The LexisNexis Legal Awards celebrate groundbreaking contributions to the legal industry. The winners will be announced on 14 March.
The Legal 500 ESG Awards: Environmental/Sustainability: Private Practice Champion of the year (internal) – Kelly Noel-Smith
We are delighted to announce that Kelly has been recognised for leading our approach to sustainability and establishing Forsters’ best practice programme.
Kelly has been an integral driver of change, which has included:
Initiating a Sustainability Collaborations programme with clients and intermediaries to consolidate sustainable ways of working operationally.
The inaugural Legal 500 ESG UK Awards will celebrate the very best ESG initiatives across the UK legal market. The winners will be announced on 24 April.
Can the Government’s new Office-to-Residential rules solve the UK housing crisis?
12 March 2024
Views
Andrew McEwan, Senior Associate in the Commercial Real Estate team, recently wrote an article for CoStar on the new legislation around permitted development rights and how it can assist the UK housing crisis.
Housing Secretary Michael Gove recently announced legislation to relax the rules around permitted development rights. New flexibilities came into force on 5 March and have been introduced to support office-to-residential conversions, a trend that has been gathering pace over the past few years.
The government has made the changes with the intention of creating a more favourable planning context to address the fact that a large proportion of office buildings are becoming obsolete (due to the twin effect of more home-working and tightening sustainability requirements) while we remain in the grips of a worsening housing shortage.
Office-to-residential conversions have, however, produced inconsistent results to date, and the latest changes are likely to be met with opposition from local authorities who continue to face a lack of funding which would help alleviate some of the delays experienced with the ‘traditional’ planning regime.
You can read the original article, published on 29 February 2024, behind the paywall here.
Department stores considering a wide range of uses to fill vacant spaces – Andrew Denye speaks to Property Week
12 March 2024
Views
Partner and Head of Retail, Andrew Denye, has been quoted in a Property Week article discussing the wide range of uses former department store owners are considering to fill the vacant spaces.
This April will mark eight years since the high-profile collapse of BHS. With all 167 of its shops closing, it proved to be the tip of the iceberg for department store chains and their problems. Since then, Debenhams and House of Fraser have suffered a similar fate, albeit not a complete wipeout, while long-established chains such as Beales now only operate a couple of sites.
So, what has become of these properties and what are the challenges their owners face in repurposing some of them?
For Andrew Denye, head of retail at law firm Forsters, it is simply the scale of the buildings that has left some landlords struggling to find a way forward. “It took a while for landlords to work out what on earth they were going to do” he says. “Some of these spaces are bigger than shopping centres. That’s a very big hole to fill.”
Denye has already spotted an uptick in department store deals coming through. “We’ve got more big-box deals on our books than at any point over the past 10 years. There’s been a really positive uptick in people looking at these spaces.”
Originally published on Property Week on 1 February, the full article can be read here behind the paywall.
Forsters’ Residential Property team shortlisted in the RESI Awards 2024
11 March 2024
News
Once again our Residential Property team at Forsters has been shortlisted for ‘Legal/Professional Team of the Year’ in the RESI Awards 2024.
The RESI Awards, organised by Property Week, celebrate the fantastic achievements of the residential property sector.
This shortlisting recognises the high-quality work we deliver for our clients. We are delighted to be named amongst other industry leaders.
Our Residential Property team acts for clients on all aspects of their property requirements, supporting clients to navigate the legal practicalities of buying, selling, financing, and managing your asset. We provide a client-focused service, giving technical advice whilst also taking a commercial approach to ensure we achieve our clients objectives.
A look at landed estates: Charles Hancock is quoted in CityWealth
7 March 2024
Views
Private Client Senior Associate, Charles Hancock, has been quoted in the CityWealth article ‘A look at landed estates’. In the article, CityWealth editor, Ashleigh John, discusses the current trends and concerns for landed estates and their owners with leading industry experts.
The Sector Race to Net Zero – a fund level perspective
7 March 2024
Podcasts and videos
We all recognise the real estate industry is shifting towards net zero, but where are the different sectors at on their journey?
In the second of our Race to Net Zero podcast series we set out to explore this question, taking a fund level perspective with Ben Lonsdale, Director of ESG at Patrizia, and Edward Glass, Senior Associate in Forsters’ Commercial Real Estate team. Together, we delve into the different decarbonisation pathways parties are considering, discuss whether green regulation can help drive change, and understand the importance of the S in ESG.
The conference, hosted by the Contentious Trusts Association (ConTrA) and Informa Connect, brings together professionals in the world of contentious trusts to share knowledge and develop networks.
Ashleigh, as the co-chair of ConTrA, will be chairing the conference alongside the founders of ConTrA and her current ConTrA co-chair, James Lister, Partner at Stevens and Bolton.
Maryam will be presenting the session entitled ‘Enforcement across borders’, exploring methods of enforcement for offshore assets and the difficulties arising in pursuing a judgment debtor in multiple jurisdictions. She will be joined by Sebastian Auer, Partner at Gasser Partner; Ami Sweeney, Associate Director at Grant Thornton; and Faye Hall, Partner at FRP Advisory.
Non-dom rules to be replaced with four-year temporary residence regime
6 March 2024
News
The Chancellor of the Exchequer, Jeremy Hunt, has announced that the government will abolish the current tax regime for individuals who are UK resident but not UK domiciled in favour of a residency-based system, which will apply from 6 April 2025.
The proposed changes are wide-ranging and will affect both individuals currently living in the UK and those planning to move to the UK. The good news is that the 6 April 2025 implementation date gives those who are already UK resident time to take advice and plan before the changes take effect.
Summary
From 6 April 2025, the remittance basis of taxation, which allows UK resident individuals who are not UK domiciled to pay tax only on foreign income and gains that are “remitted” to the UK, will be abolished. It will be replaced with a new regime under which those who have been UK resident for at least four years will pay income tax and capital gains tax (“CGT“) on their worldwide income and gains.
Draft legislation has not been published, but the government has made it clear that the new rules will also apply to income and gains arising within trusts. The result is that the generous trust protections introduced in 2017 will no longer be available to those who have been resident for four years, even if their trusts were set up before 6 April 2025.
Four years of residence tax-free
Individuals who become UK resident after a period of at least 10 years of non-UK residence will not pay UK income tax or CGT on their foreign income and gains in their first four years of UK residence, even if they bring the income and gains to the UK.
This means that individuals who are only temporarily UK resident will be able to spend their foreign income and gains freely in the UK without incurring UK tax – and without the need to navigate the complicated remittance basis rules.
Foreign income and gains arising in non-resident trusts, and distributions from those trusts, will also be tax-free during the four year period.
Transitional rules
For those who are already UK resident, there will be several transitional rules.
Pre-6 April 2025 income and gains
The remittance rules will continue to apply to unremitted foreign income and gains generated prior to 6 April 2025 on assets held personally. That is, the income and gains will continue to be free of tax provided they are not remitted.
This will not be the case for income and gains arising in trusts before 6 April 2025, which will be taxed in full if matched against distributions made on or after 6 April 2025 regardless of whether they are remitted (though distributions made within the first four years of residence won’t be matched or taxed).
Those who are already UK resident may need to consider planning in advance of the changes.
Temporary Repatriation Facility
A new Temporary Repatriation Facility will be available from 6 April 2025 to 5 April 2027. This will allow those with pre-6 April 2025 unremitted income and gains to remit them and pay tax at a reduced rate of 12%. Again, this will not be available for pre-6 April 2025 income and gains in trusts.
Reduced rate of tax on foreign income earned in 2025/26
Existing remittance basis users who will have been UK resident for at least four years on 6 April 2025 will only pay income tax on 50% of their foreign income in the 2025/2026 tax year.
Capital gains tax rebasing
Those who have been UK resident for more than four years (whether in 2025/26 or later) will be able to choose to “rebase” any assets held personally on or before 5 April 2019 to their market value on that date, so that only the post-5 April 2019 gain will be subject to CGT on a disposal.
Inheritance tax
The inheritance tax (“IHT“) regime, which is currently based predominantly on domicile, will also move to a residency-based system. The government intends to consult on the details. However, it is proposed that individuals will be subject to IHT on their worldwide assets after they have been UK resident for at least 10 years, and will remain so for 10 years after ceasing residence.
It is envisaged that the current regime will continue to apply to non-UK situated assets settled onto trust by a non-UK domiciled individual prior to 6 April 2025. For trusts established on or after 6 April 2025, chargeability to IHT will depend on whether the individual was within the scope of IHT at the time of funding the trust.
Planning ahead
The remittance basis has been a feature of the UK’s tax system since 1799. With both the government and the main opposition party now committed to its abolition, its future seems all but certain. Hopes that a replacement regime would be the subject of consultation (not just on the detail of the IHT aspects) will be dwindling rapidly. Many will be disappointed that both main political parties have committed to a limited inpatriate regime when compared to those offered by some other countries in Europe.
For those who are already UK resident, however, the transitional provisions that have been announced present opportunities that will deserve careful consideration as further details become available.
The Lifecycle of a Business – What to think about as a first-time employer
6 March 2024
News
Setting up and running your own business is an amazing achievement. It requires vision, creativity, motivation and stamina. On occasion, it can even bring you fame, riches and fortune. But it can also result in reams of paperwork and cause sleepless nights. And as someone once said to me about children “It doesn’t get easier, it just changes”, so the same can be said for your business throughout its lifecycle. From setting up to exit, it will force you to consider issues that you might not previously have known anything about and it will need you to make many decisions, sometimes very quickly. What it certainly is not is mundane.
With this in mind, the corporate team at Forsters, together with some of our specialist colleagues, has written a series of articles about the various issues and some of the key points that it may help you to know about at each stage of a business’s life. Not all of these will be relevant to you or your business endeavours, but we hope that you will find at least some of these guides interesting and useful, whether you just have the glimmer of an idea, are a start-up, a well-established enterprise or are considering your exit options. Do feel free to drop us a line or pick up the phone if you would like to discuss any of the issues raised further.
We’ve already discussed various topics, such as, set up, directors, funding and shareholder-related matters, but now let’s concentrate on “Employment: 9 to 5”.
What to think about as a first-time employer
A key part of any operating business is its workforce. To the untrained eye, becoming an employer appears to happen overnight; one minute there is just a company name, the next it has employees (…and much more!). But “appearances can be deceptive” and there are some non-negotiable foundations to be laid before the first employee walks through the door (or logs on remotely).
In no particular order, the housekeeping matters that you will need to have addressed as a first-time employer are: employer’s liability insurance, immigration considerations, relevant documentation and payroll and pension services.
Employer’s liability insurance
All employers have an obligation to ensure the health and safety of their employees. One way that the law ensures that this obligation is fulfilled is by requiring all employers to take out a valid employer’s liability insurance policy, covering disease and bodily injury of employees in the UK, with minimum cover of £5 million for each potential claim. Failure to have this in place on or before an employee’s first day is a criminal offence, carrying with it fines of up to £2,500 for every day that a valid policy is not in place.
Immigration
Unless an employee has the automatic right to work in the UK (i.e. they are a British or Irish national) or otherwise has a visa allowing them to work, the employee will need to be “sponsored” by their employer in order to have the right to work in the UK. Where this is the case, the employing entity will need a “sponsor licence”. To get this arranged, a comprehensive application needs to be submitted to the Home Office; this can take a few months to process, meaning that some pre-planning will be required in the event a future hire needs to be sponsored.
Documentation
There is a minimum suite of documentation that an employer must provide to new employees. This includes certain mandatory policies (such as disciplinary and grievance procedures), best practice policies (such as those relating to equal opportunities and whistle-blowing), the minimum particulars of employment and data privacy documentation.
The particulars of employment, which must be provided to an employee on or before their first day of employment, set out the bare bones of the employment arrangement, such as the names of the parties, rate of pay, commencement date, place of work, job title and so on. Typically, however, employers will provide more comprehensive contracts of employment which, if well drafted, will include bespoke clauses for the specific employment relationship, including in relation to confidentiality, intellectual property and post-employment restrictive covenants.
Employers process lots of employee and candidate data and they must provide privacy notices to the individuals whose data they will be processing, explaining how and why they will process their personal data.
Payroll and pensions
Last, but absolutely not least, employers must organise all applicable financial processes (and if necessary, appoint a payroll provider to manage the processes on their behalf). This will include setting up an auto-enrolment pension scheme for all eligible employees and making sure that all pay arrangements meet the National Minimum Wage requirements. Employers must also ensure that they are registered with HMRC (which they can do up to four weeks in advance) and that appropriate deductions for income tax and National Insurance contributions are made.
All of this might feel a little daunting, particularly alongside everything else which goes with establishing a business in the UK but, thankfully, the Forsters’ employment team are always at hand to assist and guide new businesses during these early stages…and beyond…
Disclaimer
This note reflects the law as at 6 March 2024. The circumstances of each case vary and this note should not be relied upon in place of specific legal advice.
Connected thinking on rooftop solar – Victoria Towers writes for EG
4 March 2024
Views
Victoria Towers, Partner and Co-Head of Industrial and Logistics, has written a piece for EG on the benefits of collective thinking to streamline the legal processes causing delay to rooftop solar.
With time running out for promised legislative change to facilitate rooftop solar, there is much to be achieved in banging a few heads together and streamlining some of the legal processes currently causing delays.
The issue is acute for power-hungry industrial and logistics development, when rooftop solar is often incorporated as part of any planning application and the market is clamouring for fast delivery of new space in the right locations.
It was October, in energy secretary Claire Coutinho’s speech to the Conservative Party conference, promising to reduce red tape for solar panels on industrial rooftops, that she bemoaned solar farms covering our green and pleasant land, and pledged to make it easier for solar panels to be installed on industrial rooftops, warehouses, car parks and factories, cutting through the planning red tape that limits the amount of solar that businesses can currently install.
At the same time, her department’s Solar Taskforce has been looking at barriers to rooftop solar after highlighting the untapped potential of commercial sites, such as warehouses. The task force is due to be wound up around February, and its work will be used for a solar roadmap, to be published later this year.
This time last year, a survey by Forsters found 77% of developers and investors currently used solar panels on industrial and logistics real estate or planned to. The Department for Energy Security and Net Zero should be pushing at an open door.
The government’s own figures show progress in getting photovoltaics on to buildings. An update published in January showed that 50% of capacity came from ground-mounted or stand-alone solar installations at the end of September 2023, but – rather perversely – the majority of the remaining capacity was on domestic buildings, not commercial.
November’s Autumn Statement addressed the issue, promising reform of the grid connection process to cut waiting times, including freeing up more than 100GW of capacity so that renewable energy projects can connect sooner, potentially reducing connection delays from five years to no more than six months.
Co-operation is key
For those of us negotiating these connections for industrial developments, day in and day out, investment is certainly needed. Not only in the grid infrastructure itself but also – much like the challenges around the planning process – in the process of securing a connection. Client projects seem to be held to ransom on substation and wayleave arrangements when they want to connect to the grid.
A question often presents itself when repeatedly agreeing substation leases with providers: why, when dealing again with the same provider, can we not cut through the negotiation and proceed on similar terms? There are a handful of points that are site-specific, but the usual obligations around repair, alterations, use and works in the vicinity of any cabling do not need to be brokered every time. Surely it is better for all those concerned to ensure that the legal documentation is progressed as swiftly and efficiently as possible.
To that end, it does not seem beyond contemplation to have a common ground as a starting point – but standard terms will only work if drafted well. A few years ago, a template wayleave agreement was introduced, but the result was too complicated and everyone quickly broke away from the standard approach. As the pressure increases on all those involved, it seems that we should look at agreeing a succinct, market-appropriate suite of documents that can be called on.
We know that most substation providers have a list of requirements – for example, uncapped indemnities – but many of these are unrealistic and deter investment. Investors don’t like indemnities where they are unnecessary, and quite often facts can allay the concerns that providers have. For instance, an indemnity should not be required on a site that is verified as remediated from an environmental perspective.
Mindset shift
Another frustration comes in the interplay between utility companies. If a gas pipe and an electricity cable are both needed, we would expect some joined-up thinking in using the same route and consulting with each other over installation.
We need more co-operation between independent distribution network operators and distribution network operators. We find ourselves in situations, albeit rare, where we are only permitted to liaise with the IDNO, which in turn has to pick up with the DNO. Alternatively – and again rather confusingly – we liaise with each entity but they do not have any contact with each other. This makes negotiations more protracted and challenging.
There is an interesting legal question here as to whether a potential power user has a right to be connected to the grid. We know the regulatory backdrop, but more and more we are being presented with a “take it or leave it” attitude to negotiations, where the view seems to be that if the end user does not agree to the terms, then the relevant development can be left without power. How has it come to this?
An attitude shift and greater uniformity should not require test cases or legislation. Instead, there should be a focus on working together, taking a sensible approach and not reinventing the wheel every time negotiations are commenced. Strict timelines, set in legislation, would focus minds, but it is hard to imagine a sanction that would not make the situation worse by drawing resources away from investment in grid infrastructure.
Developers are incurring huge costs as a result of delays in getting substations built, signed off and energised. Industrial and logistics development needs to be quick to meet demand – and we need the providers to be more responsive and more reasonable.
The article was originally published on 27 February 2024 and can be read here behind the paywall.
Q&A: Five minutes with Victoria Du Croz, Head of Planning at Forsters, featured in Property Week
1 March 2024
Views
Head of Planning, Victoria Du Croz, spoke to Property Week in their regular ‘Five Minutes With’ column on how she got started in property, her favourite destination, her top book and album recommendations and the celebrity she would most like to meet.
How did you join the property industry?
“I was able to do a few law modules while studying English literature at Durham University and found the subject fascinating. I got accepted on to a vacation scheme at Lovell White Durrant (now Hogan Lovells), at the end of which I was offered a training contract. After qualifying, I could not decide between international banking or planning, but I am so relieved I chose the latter and have not looked back.”
What does your job entail?
“I am head of planning at Forsters, working closely with my commercial and rural estates colleagues to advise on all aspects of planning law. We advise major developers, institutional investors, housebuilders, high-net-worth individuals, strategic land promoters, landowners, local authorities, film studios, hotel operators – basically anyone who needs planning law advice.”
What do you like most about the property industry?
“I love that there is a physical building at the end of it. I am incredibly proud of the schemes I have worked on – my family says that from the way I talk about the finished buildings, you would think I had personally built them.”
The article was first published on Property Week on 16 February 2024, and is available to read in full here, behind the paywall.
Anthony Goodmaker awarded Property Lawyer of the Year at the YN Property Awards 2024
1 March 2024
News
Following the announcement in early February that Anthony Goodmaker, Partner in Forsters’ Commercial Real Estate team, was made a finalist in the YN Property Awards, we are delighted to share he has since been awarded Property Lawyer of the Year 2024.
This award is testament to his dedication to his work and his clients. Speaking of the award, Anthony says “I am delighted to win this award at an event which raises significant funds for an amazing charity in the community. I am honoured to have been chosen by the judging panel in what has been a difficult year in the real estate industry. We hear a lot about this being the era of the specialist lawyer but hopefully this award also shows that there’s nothing wrong with being a generalist too, especially in this market!”
The YN Property Awards are an opportunity for professionals across real estate to come together and celebrate industry successes while raising vital funds for Norwood, the oldest Jewish charity in the UK. Each year Norwood supports more than 2,500 people, including some of the Jewish community’s most vulnerable children, adults and families. From specialist therapy to counselling to parent programmes, their work is invaluable. We are very pleased to continue supporting this worthy cause.
Well done to Anthony, alongside all the other winners and finalists for their achievements.
