Half a Million Face Offshore Cash Probes

Hotel Pool 2HM Revenue and Customs (HMRC) claim that they have been informed of half a million people who hold cash in offshore tax havens…indicating that the stashing of cash in low-tax areas is a pastime of the middle classes as well as the wealthy.

 
The discovery has led HRMC to increase their estimate of the potential tax yield to ‘billions of pounds’. The information has been obtained through a series of information-sharing agreements between HMRC and foreign tax authorities and includes information from banks and ‘whistleblowers’.
 
HMRC offered a series of amnesties for taxpayers to ‘come clean’ about such accounts in exchange for beneficial treatment by tax inspectors, but it would appear that their entreaties have been largely ignored.
 
Recently, a whistleblower based in Geneva gave HMRC the names of 7,000 UK customers who collectively hold some £13 billion in accounts in Switzerland.
 
The information received to date has led to many raids by HMRC officers and eight arrests.
 
A specialist unit is being set up by HMRC to investigate those with undeclared offshore assets and those who seem to have lifestyles which cannot be financed by their disclosed income.

Posted June 16th, 2011 in Uncategorized |

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Prize Scam Resurfaces

We recently ran a news item dealing with the successful prosecution of firms running bogus ‘prize draws’ which promised prizes to people. The catch being that the procedure which had to be followed in order to claim a ‘prize’ cost several pounds.
 
The prizes allocated to most ‘winners’ were of far less value than the payments made to the organisers and the scheme was designed to yield a good profit for them. The Office of Fair Trading successfully prosecuted the organisers and it was hoped that this would be the end of this type of scam.
 
Regrettably, the scam is back, offering prizes as before, but with a subtle twist. Now, the procedure requires you to apply for a ‘claim number’ (to see if you qualify for a prize) at a cost of at least £9.
 
The scheme is clearly designed to run at a profit for the organisers and is based at a very similar address to that of the companies prosecuted earlier in the year.
 
The OFT have been informed. If you have relatives who might be inclined to enter such prize draws, it is worth having a word of warning with them.
 

Posted June 15th, 2011 in Uncategorized |

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Expert Report Disclosable, Says Court of Appeal

Sometimes, people tell you things you don’t want to hear. When the person doing the telling is an expert witness you have instructed, problems can result.

 
In court proceedings in which an expert witness report is needed, unless a ‘single joint expert‘ is appointed, each party to the dispute will appoint its own expert. In practice, this is normally organised by the solicitor, who informs the other parties to the dispute who the expert will be.
 
Although it may seem perverse, when an expert witness is instructed by the firm representing you, the witness is not ‘your witness’ because the expert owes a duty to the court to prepare a report that is fair and free of bias.
 
Accordingly, it is by no means unusual for the expert’s report to come as something of a disappointment. When this occurs, there is something of a dilemma.
 
Until the expert’s report is used in proceedings, it is a legally privileged document and the ‘other side’ cannot demand it is disclosed. Accordingly, one option is simply not to disclose the report.
 
Another option is to obtain a second report in the hope that it will be more to one’s liking. However, the problem with this approach, as confirmed by a recent case in the Court of Appeal, is that once the decision is made to use the second report and it is disclosed, the Court can order the disclosure of the first report.
 
The appointment and use of experts is a matter requiring considerable knowledge and experience. We can assist you in the effective pursuit of any legal claim or litigation.

Posted June 14th, 2011 in Uncategorized |

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Land Scam Firms Closed Down

Stone wallA scam which traded on the greed of the gullible has been closed down by the the Financial Services Authority (FSA) after nearly £4 million was ‘invested’ by people seeking returns promised to be between 200-300 per cent.

 
The ostensible investments were small plots of land that it was claimed would be sold at tremendous profits. Normally these were presented as being potential ‘ransom strips’, areas of land which would have to be acquired for large property developments to go ahead.
 
These were never likely to achieve the values claimed. Indeed, one site being marketed is in a designated area of outstanding natural beauty, making planning permission for development a near impossibility.
 
After making a series of injunctions against so-called ‘landbank’ companies, the FSA has started to issue winding-up proceedings against them
 
However, because the businesses were unauthorised investment schemes, investors are not covered by the Financial Services Compensation Scheme and are unlikely to get their money back. An FSA spokesman commented that ‘by the time we can catch up with the operators, most of the money has disappeared and investors are left with land that has a value which simply does not reflect the money paid for it’.
 
If an investment opportunity seems too good to be true, it is normally because it is not true.
 
 
 
A scam which traded on the greed of the gullible has been closed down by the the Financial Services Authority (FSA) after nearly £4 million was ‘invested’ by people seeking returns promised to be between 200-300 per cent.
 
The ostensible investments were small plots of land that it was claimed would be sold at tremendous profits. Normally these were presented as being potential ‘ransom strips’, areas of land which would have to be acquired for large property developments to go ahead.
 
These were never likely to achieve the values claimed. Indeed, one site being marketed is in a designated area of outstanding natural beauty, making planning permission for development a near impossibility.
 
After making a series of injunctions against so-called ‘landbank’ companies, the FSA has started to issue winding-up proceedings
Trading Estate form the Air
against them
 
However, because the businesses were unauthorised investment schemes, investors are not covered by the Financial Services Compensation Scheme and are unlikely to get their money back. An FSA spokesman commented that ‘by the time we can catch up with the operators, most of the money has disappeared and investors are left with land that has a value which simply does not reflect the money paid for it’.
 
If an investment opportunity seems too good to be true, it is normally because it is not true.

Posted June 13th, 2011 in Uncategorized |

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Selling Land Using an Attorney

Moorland2There are several possible instances – such as absence abroad – when land is to be sold and an attorney has to be appointed to undertake the transaction in the place of the beneficial owners.

 
The Land Registry allows this to be done but has quite specific requirements which govern when it will and when it will not accept a power of attorney.
 
The main requirements are that:
 
  • the power of attorney must validly executed as a deed;
  • the power of attorney must be in force at the date of the document in question; and
  • the power of attorney must give the attorney the power to undertake the transaction.
 
The original or a validated copy of the power of attorney must be supplied to the Land Registry. Alternatively, a specific form (‘Form 1’) can be submitted and signed by the conveyancer that confirms that the conveyancer holds the original or a copy of the power of attorney and that it satisfies the above requirements.
 
Where the power of attorney is more than 12 months old, the purchaser of a property can request evidence that it has not been revoked.
 
 
For more information see http://www.landreg.gov.uk/upload/documents/lrpg009.pdf

Posted June 13th, 2011 in Uncategorized |

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DNA and Fingerprint Retention Unlawful

FingerprintFollowing a Supreme Court ruling, moves are afoot to change the guidelines operated by the police for the retention of fingerprints and DNA samples.

 
Under the Police and Criminal Evidence Act 1984, the police were obliged to destroy such data taken from a person who was cleared with regard to an offence.
 
Following a change in the law in 2001, the Association of Chief Police Officers (ACPO) had issued guidelines to police forces in England and Wales stating that data should be destroyed ‘only in exceptional cases’.
 
However, the Court ruled that the guidelines were unlawful because they did not comply with European human rights law.
 
New guidance will have to be issued to Police Forces and the Government proposes to initiate new laws regarding the retention of DNA samples and fingerprints similar to those used in Scotland, which only allow the retention of samples for a limited period and with regard to a  certain types of crime.

Posted June 10th, 2011 in Uncategorized |

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Torex Three Face Trial

Three former directors of software company Torex will face criminal charges brought by the Serious Fraud Office. The company’s former chairman, accountant and legal director will have to answer to charges of conspiracy to defraud.
 
In January, two other former directors of the company were convicted of the same offence after the company had reported more than £1.6 million in fictitious profits in the company’s accounts for 2005 and 2006. The two were jailed in February, disqualified from acting as company directors and ordered to make contributions to the costs of their prosecutions.
 
The fraud came to light when the (then) chief executive discovered it and acted as ‘whistle blower’.
 

Posted June 10th, 2011 in Uncategorized |

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Claim on Wrong Basis Prevents Compensation for Loss

When a business sues for damages because of breach of contract, the damages are based on the loss of profits for the claimant that have resulted from the breach.

However, what is the position when, instead of claiming for loss of profits, the claimant seeks damages for the loss of value to the company that resulted from the breach?
 
A recent High Court case had to consider this point specifically. It involved a franchise agreement, which was terminated by the franchisor in breach of the franchisee’s contract.
The franchisee claimed damages on the basis that the loss of the franchise had reduced the value of the company. The claim compared the hypothetical value of the company at the point immediately before the franchise was terminated with the value of the company if it ceased doing business.
 
Mr Justice Flaux was unimpressed with the claim. He pointed out that the company was continuing to trade and that the claim was based on ‘a hypothesis upon a hypothesis’.
 
Because the claim was based on a loss in valuation argument, not on the basis of the loss of profits, there was no valid claim. Had the claim been for loss of profits, once the breach of contract was proved, the argument would only have been about the quantum of the loss. Alternatively, had the breach of contract caused the failure of the business, then a claim for the loss of value of the business would have been  appropriate.
 
The case was lost simply because the wrong case was brought.

Posted June 10th, 2011 in Uncategorized |

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Government Consults on Further Changes to Employment Law

As part of its comprehensive review of employment law, the Government has launched a consultation on plans to introduce a new system of flexible parental leave from 2015.

 
Under the proposals, mothers would be entitled to 18 weeks’ maternity leave and pay, taken in one continuous block, around the time of their child’s birth. Once the early weeks of maternity and paternity leave have ended, parents would be able to share 30 weeks of additional parental leave, of which 17 weeks would be paid. Unlike the current system, this leave could be divided into blocks between the parents, with both parents able to take leave at the same time should they wish. Employers would have the ability to ensure that the leave is taken in one continuous period if agreement cannot be reached. They would also be able to ask staff to return for short periods to meet peaks in demand or to require that leave be taken in one continuous block, depending on business needs. In addition, there would be four weeks of parental leave and pay available to each parent, to be taken in the child’s first year, and the father’s current right to take 2 weeks’ paid paternity leave around the time of the baby’s birth would be retained.
 
Business Secretary Vince Cable said, “These measures are fairer for fathers and maintain the existing entitlements for mothers – but crucially give parents much greater choice over how to balance their work and family commitments.”
 
Flexible Working
The consultation also proposes extending the right to request flexible working to all workers who have been with their employer for 26 weeks. To achieve this, the system for considering flexible working requests would be made more adaptable, with the statutory process replaced with a new duty on employers simply to consider requests ‘reasonably’. A statutory Code of Practice would be published, setting out best practice on the benefits and adoption of flexible working, including guidance on what is a ‘reasonable’ process for handling requests. It is proposed that employers should be allowed to take into account employees’ individual circumstances when considering conflicting requests. There are no plans to alter the current 8 business reasons for a business to turn down a request.
 
Equal Pay
It is proposed that where an Employment Tribunal finds that an employer has discriminated on the ground of gender in relation to pay, it will have the power to order the employer to conduct a pay audit and publish the results.
 
The Working Time Regulations
Amendments to the Working Time Regulations 1998 (WTR) are also planned, including a tidying up exercise, to bring the WTR into line with recent judgments in the European Courts, so that annual leave entitlements can be rescheduled, and carried over to the next leave year, when a worker falls ill during planned annual leave. The proposal is to limit this to the four weeks’ minimum annual leave entitlement under the EC Working Time Directive.
 
The consultation document can be found here. The consultation closes on 8 August 2011.

Posted June 10th, 2011 in Uncategorized |

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IHT – Prepare to Have Valuations Queried

Alms HousesThe potential for reducing Inheritance Tax (IHT) bills by placing ‘soft’ valuations on assets is all too clear and has led HM Revenue and Customs to undertaking almost 10,000 investigations into IHT returns in 2010. This represents an ‘investigation rate’ of approximately 1 per 50 deaths. However, since more than 95 per cent of estates are not subject to IHT (either because they are within the nil rate band or the estate passes to a spouse or civil partner), the likelihood of a valuation being challenged where IHT is, or could be, at stake is considerable.

 
It is important to ensure that valuations of assets on death are carried out properly and professionally and can be substantiated. If your estate is likely to be subject to IHT, we can assist you to ensure that to the fullest extent, it ends up in the hands of your family, not the Exchequer.
 
 
From  Hacker Young – reported in Accountancy Age, 7 June 2011. Statistics from HMRC and the Office for National Statistics.
 

Posted June 9th, 2011 in Uncategorized |

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