Martin Hall's Business Law Updates

Changes to the rules on using cookies

2011-07-17T13:48:00.000+01:00

If you have any questions about this Update or any other business law related matter then please contact me using this link

New laws have come into force requiring your business to obtain consent from visitors to your website to store or retrieve usage information from users' computers or mobile devices. Previously, your business could simply tell visitors how you used cookies and how they could "opt-out" if they objected. Many websites did this by putting information about cookies in their privacy policies and giving people the possibility of "opting out".

What are cookies?

Cookies are small text files implanted by a website on the hard disks of visitors to the site (often without visitors being aware of this). Businesses use cookies for collecting information on the visitors to their website. For example:

Analysing their on-site browsing habits.
Remembering a user's payment details when buying products online.

While cookies and the information they transmit may not be able to identify a living individual on their own, they may well be able to do so in combination with other information held by the recipient of the transmitted information or a third party.

Are there any exceptions to the new rules?

There is only one exception to the new consent rule. Your business will not need to get consent for an activity that is "strictly necessary" for a service requested by the user. For example, you would not need consent for a cookie which your business uses to ensure when a user of your site has chosen the goods they want to buy and clicks the "add to basket" or "proceed to checkout" button, your site "remembers" what they chose on a previous page.

What steps can my business take now?

Check what type of cookies your business uses and how they are used. You should analyse which cookies are strictly necessary and may not need consent. Your business could also use it as an opportunity to clean up your web pages and stop using any cookies that have been superseded as your site has evolved.
Assess how intrusive your use of cookies is. The more privacy intrusive your activity, the more priority you should give to getting meaningful consent. For example, using cookies to create detailed profiles of an individual's browsing activity would be regarded as intrusive.
Decide what solution to obtain consent will be best in your circumstances.

Can browser settings be used to indicate consent?

Most browser settings are not sophisticated enough to allow your business to assume that the user has given their consent to allow your website to set a cookie.
Not everyone who visits your site will do so using a browser (for example, they may have used an application on their mobile device).
The ICO has therefore advised that if your business uses cookies or other means of storing information on a user's equipment, you must gain consent using another method.

What other options are there for indicating consent?

Your business needs to provide information about cookies and obtain consent before a cookie is set for the first time. If you get consent at this stage you will not need to so again for the same person each time you use the same cookie (for the same purpose) in future.

Pop-ups

Many websites routinely use pop-ups or "splash pages" to make users aware of changes to the site or to ask for user feedback. Similar techniques could, if designed correctly, be a useful way of informing users of the techniques your business uses and the choices they have.

Terms and conditions

Consent could be gained by using the terms of use or terms and conditions which the user agrees when they first register or sign up.
However, simply changing the terms of use to include consent for cookies would not be good enough, even if the user had previously consented to the overarching terms.
To satisfy the new rules, your business must make users aware of the changes and specifically that the changes refer to your use of cookies.
You will need to gain a positive indication that users understand and agree to the changes (for example, by asking the user to tick a box).

Settings-led consent

Some cookies are deployed when a user makes a choice about how the site works for them. Consent could be gained as part of the process by which the user confirms what they want to do or how they want the site to work. For example, some websites register which version a user wants to access (such as a version of a site in a particular language).

Feature-led consent

Some objects are stored when a user chooses to use a particular feature of the site (for example, watching a video clip). In these cases, presuming that the user is taking some action to tell the web page what they want to happen (for example, by clicking a link), your business could ask for their consent to set a cookie at this point.

Analytic cookies

Your business may often collect information about how people access and use your site in the background and not at the request of the user. This type of activity will still require consent.
You should consider how you currently explain your policies to users and make that information more prominent.
Provide more details about what your business does (for example, a list of cookies used with a description of how they work) so that users can make an informed choice about what they will allow.

Third party cookies

If your website displays content from a third party (for example, from an advertising network) this third party may read and write their cookies onto "your" user's devices.
If your website allows or uses third party cookies you should make sure your business is doing everything it can to get the correct information to users to enable them to make an informed choice about what is stored on their device.

What are the penalties for failing to comply?

If the ICO receives a complaint about your website, your business would be expected to respond by:
- setting out how you have considered the complaint; and
- providing a realistic plan to achieve compliance.
The ICO has confirmed that it will allow a 12-month lead-in period for businesses to develop ways of meeting the cookie-related requirements of the new laws, before it will consider using its enforcement powers.
However, the ICO will not condone organisations taking no action in the period up to May 2012 and may issue warnings if particular organisations are not making adequate preparations to be compliant by then.

More information

If you have any questions about this Update or any other business law related matter then please contact me using this link

On-line and Email Risks for Businesses - ignore at your peril

2011-07-17T13:24:00.002+01:00

If you have any questions about this Update, please contact me using this link

The use of the internet and e-mails can be very succesful marketing tools and increases in business efficiency can be easily achieved. I have seen the number of hard copy letters that I write and despatch by post reduce very significantly as the popularity of email has progressed. However, with every system there are risks and highlighted below are areas that need to be considered by employers and empoyees alike.

Reputational risks

Information that is written on the internet or in e-mails can seriously damage your business' reputation and the reputation of individual employees. Your employees could lose their job, be sued or face criminal charges and your business could be sued or fined.

Stop and think before you click

Writing something on the internet or in an e-mail is exactly the same as writing on paper and, because of the lack of control of who might ultimately see it, sometimes worse. Remember, your business cannot control what the recipient does with an e-mail - they can be forwarded within seconds.
Inappropriate information that is written online or in an e-mail can have severe financial repercussions for your business. It can also create serious personal and disciplinary issues for individual employees.
Even if your employees are e-mailing or using social media in their own time they could get themselves, and your business, in serious trouble.

E-mails and internet postings can be used in legal proceedings

E-mails and internet postings can be used against your business in legal proceedings or other regulatory investigations and you may have a legal obligation to disclose them to the other party, even if it is not aware of them.
Your business should never delete e-mails relating to a:

legal dispute; or
an investigation; or
a potential dispute or investigation.

It is very difficult to delete emails and online postings

Simply deleting e-mails or internet postings will not necessarily solve the problem – forensic IT equipment can still find supposedly "deleted" messages.

Do not be hurtful or spread rumours

Online content or e-mails that could be thought of as obscene, racist, sexist, bullying or hurtful should never be posted or sent. Your business could be held liable for discriminatory acts committed by your employees.
If a comment is made about another employee on-line or by email that amounts to harassment, your business could be liable even if the employee was using their own equipment when they made the comment.
Exaggerating or making false or inaccurate statements about another company or person on-line or in an email could lead to your business being sued, even if the e-mail was only sent to one person.

Take care with confidential information

Where possible, avoid sending confidential information by e-mail. Your business should take legal advice on how the information can be best protected.
Any e-mail containing confidential information should be clearly marked as "confidential".
If your business receives an e-mail that contains "dangerous" material (for example, another company's trade secrets), you should take legal advice immediately.

Do not make a contract by mistake

A legally binding contract can be made by a simple exchange of e-mails.
Your business should make it clear that it does not intend to be bound by what is communicated in an e-mail.

Do not copy someone else's work

Other people's work should not be used in e-mails or online posts unless:

your business has permission from the original author; or
you know that it is not protected by copyright.

Do not send or view offensive or unknown material

Encourage your employees to carefully monitor what arrives in their inbox, especially if they do not recognise the sender, or the title of the e-mail seems peculiar.
If there is any risk that an e-mail may contain a virus, it should not be opened and your IT department should be contacted immediately.
Make your employees aware that they may be disciplined or even dismissed for forwarding inappropriate e-mails or accessing inappropriate websites at work. In severe cases it could also be a criminal offence.

Avoid unproductive usage

Most businesses allow light personal internet and e-mail usage as long as it does not interfere with their employees' duties. However, you should make your employees aware that excessive, unproductive usage of the internet and e-mails at work may be treated as gross misconduct for which they could be dismissed.
E-mails can often be a waste of time. Encourage your employees to think carefully before copying someone in on an e-mail, especially if there is a long chain of e-mails attached. Do they really need to see it?

More information

If you have any questions about this Update, please contact me martinh@cleggssolicitors.com

Passing Off

2011-07-17T13:08:00.013+01:00

If you have any questions about this article then please contact me using this link

What is passing off?

Passing off enables your business to take legal action against someone who creates the impression that their goods or services are provided by you.

A decision in the patents county court illustrates how passing off can easily be committed by small localised businesses. The parties in this case were two tree-surgery businesses, based about ten miles apart. The judge found that the claimant's business had a small, highly localised goodwill. Although the two businesses had co-existed for over six years, the judge also held that the requisite misrepresentation existed when the defendant traded in the claimant's geographical area. The judge held that this was the kind of case in which damage followed if goodwill and misrepresentation were established. The judge imposed an injunction on the defendant, which prevented it trading in a number of nearby postcodes.

To be successful in a passing off action, your business must show that each of the following elements are present:

Goodwill

You must show that there is goodwill attached to the relevant goods or services. The goodwill of your business is the value of its reputation over and above the value of its assets. Goodwill distinguishes an established business from a new business.

Misrepresentation

There must be a misrepresentation by the defendant in the course of business that leads (or is likely to lead) the public to believe that the goods or services offered by them are goods or services provided by your business.

Damage

You must be able to demonstrate that the misrepresentation made by the defendant is likely to cause, or has caused damage to your business. For example:

Loss of profit.
Damage to reputation.
Loss of an opportunity to expand.

What remedies are available?

Interim remedies

If your business acts quickly, you may be able to obtain an interim injunction to restrain further dealings by the defendant pending a full trial. This will prevent further damage to the goodwill of your business during the intervening period.

Damages

If you are successful at trial, your business will normally be entitled to an award of damages or an account of profits. Damages are often difficult to assess, but are likely to involve quantification of:

Loss of sales.
Damage to goodwill and reputation.

Your business may also have the option of seeking an account of the defendant's profits, rather than an award of damages. However, this approach is rarely pursued as it is usually difficult to prove the proportion of the profits that were attributable to the passing off.

Delivery up or destruction

If your business is granted an injunction (or if the defendant voluntarily undertakes to cease dealing in the offending goods) the court may make an order requiring the goods to be either:

Delivered to you or your solicitors.
Destroyed by the defendant with the destruction verified on oath.

This approach ensures that the defendant is no longer in possession of the items.

If you have any queries about the content of this e-mail, please contact me using this link.

Data Protection a reminder of your obligations

2011-07-17T12:03:00.006+01:00

The legal obligations your business should consider when dealing with personal data about Customers, Suppliers, Employees or any other individual who you may encounter in the course of business.

Penalties for failing to deal with personal data appropriately

There could be serious financial, commercial and reputational implications for your business (including possible criminal penalties and fines) if personal data is not handled properly.

Protecting and securing personal data

Personal data is any information about an individual held on computer or in organised filing systems that could identify the individual, either on its own or together with other information your business or a third party holds. It needs to be protected and kept secure. This information includes:
- name;
- e-mail address;
- telephone numbers;
- date of birth; and
- notes written about someone (such as an annual performance review).
You must take particular care with sensitive personal data (for example, medical records) as more restrictive requirements apply to this type of data.
The individual could be a potential or actual employee, customer or supplier, or possibly someone captured on your business' CCTV footage.

Collecting personal data

Your business can only collect personal data if it has a legitimate reason for doing so (for example, because a new employee is coming to work for you).
When your business collects data about an individual, you will need to tell that individual what your business intends to do with their data (for example, if you are collecting a customer's e-mail address to confirm an order). If the purposes for which you want to use someone's data change later, you must approach them again.
Your business should only collect information it requires at the particular time (for example, a job applicant should not be asked for their bank details). This type of data should only be collected once the applicant has started to work for your business.
If your business wants to use someone's data for marketing purposes the individual must be informed. It is good practice to do this at the time the data is collected. In some cases (such as text or e-mail marketing) your business generally needs the individual's explicit consent.

Using data collected on individuals

Your business is generally allowed to use someone's personal data if they have given their consent. The data can also be used in other circumstances, for example, if your business:
- needs to use the data to fulfil a contract with a customer (such as using their address to deliver goods to them); or
- has a legitimate interest in using it, although this must be balanced with the individual's rights. For example, if a part of your business has been sold to a third party and you need to transfer customer data to it.
Data should only be used for the reason that it was collected (for example, if calls between staff and customers are recorded for training purposes only, they should not be used to discipline a member of staff).
If you want a third party to manage data (such as carrying out payroll services) you should take legal advice. Your business will still be responsible for protecting the data and will need to enter into a written contract with the third party.
Your business should also take legal advice if it is considering transferring any data outside the countries in the European Economic Area. It is very easy to transfer data outside of your own country (for example, by sending an e-mail to an office outside of the UK).
If the data is being used in marketing material, check that the recipient is aware that their data may be used for this reason and confirm they do not object. You will generally need the individual's explicit consent (opt-in) for e-mail, fax and text marketing. If the individual is an existing customer, you may be able to market similar products to them by these means without prior explicit consent. You should take legal advice if you want to do this.
If your business is considering using sensitive personal data (for example, information about ethnic origin, trade union membership or criminal records), you should take legal advice.

Storing personal data

All data must be accurate and up to date. Databases should be regularly cleaned and out-of-date information must be deleted.
Data should only be held for as long as it is required and for the reason it was collected. For example, if personal data was collected to deliver a product a year ago and not used since, it should not be held on the basis that it may be needed for another reason at some time in the future.

Keeping data secure and confidential

Personal data must be kept secure at all times. For example:
- computers and files should be password protected;
- personal data on laptops and other portable devices should be kept to a minimum;
- manual filing cabinets containing personal data should be locked and only accessible to authorised personnel;
- confidential documents should not be left unattended on desks; and
- personal data should be removed promptly from fax machines, printers and photocopiers.
When your business sends personal data, it must be done in a secure way (for example, confidential information should not be sent in the internal mail).
Personal data must be disposed of securely (for example, by shredding, placing in confidential waste bags, destroying or securely deleting electronic files). Confidential papers should not be put in the recycling bin.
When working away from the office or in public areas:
- ensure personal data stored on portable devices such as laptops, Blackberries, CD-ROMs or memory sticks is encrypted and kept secure at all times;
- avoid leaving papers or electronic devices lying around;
- make sure members of the public cannot see confidential documents or computer screens; and
- avoid talking about confidential matters when the public can hear.
Security breaches (such as accidentally losing personal data) should be reported to the appropriate person immediately.
Electronic documents, including calendar entries and meeting requests, should be password protected or designated private where appropriate.

Enquiries about personal data

Make sure your business has a system in place to deal with individuals who request details of the personal information your business holds on them. You are permitted to charge an administration fee of up to £10 for responding to this type of request.
Individual employees should not deal with this type of enquiry, unless they have been given specific authorisation to do so. The request should normally be passed to the person within your business who has responsibility for data protection issues.
Personal data should not be given out to the friends or relatives of an individual without that individual's specific consent.

More information

If you have any questions about the content of this checklist, please contact me using this link

Franchisors must take note of High Court decision

2011-07-17T09:50:00.032+01:00

A franchisor tried to terminate a franchising agreement on the grounds of damage to the franchised brand, because a franchisee's employee had obtained the personal data of a client and harassed them.

The Court decided that the actions of the employee were attributable to the franchisee but the franchisor did not have sufficient grounds to terminate. The Court reasoned that the franchisor's fear or concern of damage to the brand was insufficient, there must be evidence of actual damage which the franchisor could not provide.

Franchisors must review their franchise agreements to ensure that their brand and reputation is adequately protected. If you should need advice on this and other franchising matters then please contact me using this link.

Bribery Act 2010 –Part 3 Practical Steps to Take Now

2011-03-30T08:36:00.002+01:00

This is the third in my series of articles relating to the implication of the Act on businesses. You can view the preceding articles by clicking on Article I and Article 2

Small and medium-sized enterprises will inevitably have fewer resources to counter bribery than larger companies. However, you can take some straight-forward measures before the law comes into force to help prevent your business breaching the new legislation.

Director-level and senior management support

Make sure all senior managers and directors understand they could be personally liable under the Bribery Act 2010 for offences committed by the business. It is important that senior management lead the anti-bribery culture of your business, especially if it wants to take advantage of the "adequate procedures" defence to the offence of failing to prevent bribery.

Risk assessment

Make sure you understand the risks your business may be exposed to. For example, certain industry sectors (such as construction, energy, oil and gas, defence and aerospace, mining and financial services) and countries present a greater risk, as employees are more likely to engage in bribery in these areas.
Think about the types of transactions your business engages in, who the transactions are with and how you undertake the transaction. High-risk transactions include:
- procurement and supply chain management;
- involvement with regulatory relationships (for example, licences or permits); and
- charitable and political contributions.
Review how your business entertains potential customers, especially those from government agencies, state-owned enterprises or charitable organisations. Routine or inexpensive corporate hospitality is unlikely to be a problem, but you should put clear guidelines in place.
If your business operates in foreign jurisdictions, always check local laws.

Anti-corruption code of conduct

You should have a code of conduct setting out clear, practical and accessible policies and procedures that applies to your entire business.

Dealing with third parties

Your business will be liable if a person associated with it commits an offence on your behalf. You should review all your relationships with any partners, suppliers and customers. For example, if an agent or distributor uses a bribe to win a contract for your business, you could be liable. You must ensure that background checks are carried out on any agents or distributors before you engage them.

Policies and procedures

Review any existing policies and procedures your business has on preventing bribery and corruption and decide whether they need to be updated. If you do not have any policies or procedures in place, prepare them as a matter of urgency.

Effective implementation and monitoring

You should consider introducing a compulsory training programme for all staff. If only a few of your employees operate in a high-risk area, make sure the training is targeted at them.
Ensure anti-corruption policies and procedures are continually monitored for compliance and effectiveness, both internally and externally.

More Information

If you have any questions about the content of this Business Law Update, then please contact Martin Hall by email me or call me on 0759 522 5330

Bribery Act 2010 – Part 2 – The new offences

2011-03-16T08:46:00.000Z

This is the second in my articles about the Bribery Act 2010. To read the first article then click on this link

What are the new offences?

Bribing another person

A person will be guilty of this offence if they offer, promise or give a financial advantage or other advantage, to another person:

to bring about improper performance of a relevant function or an activity; or
to reward a person for the improper performance of a relevant function or an activity.

The types of function or activity that can be improperly performed include:
- all functions of a public nature;
- all activities connected with a business;
- any activity performed in the course of a person's employment; and
- any activity performed by or on behalf of a body of persons.
This is where the person performing the function is expected to perform it in good faith or impartially or is in a position of trust by virtue of performing it. The function will be covered even if it has no connection with the UK or is performed outside the UK.
It may not matter whether the person offered the bribe is the same person that actually performs or performed the function or activity concerned.
The advantage can be offered, promised or given by the person themselves or by a third party.

Being bribed

The recipient or potential recipient of the bribe will be guilty of this offence if they request, agree to receive, or accept a financial or other advantage to perform a relevant function or activity improperly.
It does not matter whether it is the recipient, or someone else through whom the recipient acts, who requests, agrees to receive or accepts the advantage. In addition, the advantage can be for the benefit of the recipient or another person.

Bribing a foreign public official

A person will be guilty of this offence if they intend to influence an official in their capacity as a foreign public official. The offence does not cover accepting bribes, only offering, promising or giving bribes. It does not matter whether the offer, promise or gift is made directly to the official or by a third party.

Failing to prevent bribery

A commercial organisation will be guilty of this offence if a person associated with it bribes another person, with the intention of obtaining or retaining business or a business advantage for the commercial organisation. The offence can be committed in the UK or overseas.
A business will be able to avoid conviction if it can demonstrate that it had adequate procedures in place designed to prevent bribery. The government has indicated that it will issue guidance on what "adequate procedures" are three months before the new law comes into effect.

In the next article I shall look at some practical steps to help you.

More Information

If you have any questions about the content of this Business Law Update, then please contact Martin Hall by email mailto:martinh@cleggssolicitors.com?subject=Bribery%20Act%20-%20Part%202 or call me on 0759 522 5330

Bribery Act 2010 - Part 1 – What it means for your business

2011-03-01T13:59:00.000Z

Although the Bribery Act 2010 is not yet in force, criticism has been levelled as to the extent of new systems that businesses will need to implement to ensure they comply. Kenneth Clarke (whose department, the Ministry of Justice, is running behind in the publishing of the Guidance) has said that "the guidance must make it absolutely clear that ordinary legitimate promotion – hospitality and similar activities in which people engage in order to promote the quality of their company and its products or services and to establish relationships with clients and customers – is all part of international trade."

The penalties for transgression by companies and their directors are draconian and everyone in business needs to be aware of their responsibilities. To enable you to do this I shall produce a series of three short articles help you understand risks to which you are exposed.

What is bribery?

Transparency International (a non-governmental anti-corruption organisation) defines bribery as "the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal or a breach of trust."

Why has the Bribery Act 2010 been introduced?

The Bribery Act 2010 was introduced to strengthen the existing bribery and corruption laws in the UK. The Organisation of Economic Co-operation and Development (OECD) has repeatedly criticised the UK system for being weak and ineffective compared with the more robust regimes in other countries, such as the US Foreign and Corrupt Practices Act.

What are the penalties for committing an offence?

Your business may be damaged by adverse publicity if it is prosecuted for an offence.
The offences of bribing another person, being bribed and bribing a foreign public official are punishable on indictment either by an unlimited fine, imprisonment of up to ten years or both. Both a company and its directors could be subject to criminal penalties.
The new corporate offence of failure to prevent bribery is punishable on indictment by an unlimited fine.
Businesses convicted of corruption could find themselves permanently debarred from tendering for public sector contracts.

More information

If you have any questions about the content of this article, then please feel free to contact me by email mailto:martinh@cleggssolicitors.com?subject=Brand%20Management or call me on 0759 522 5330

Martin Hall

Selling Goods to Consumers? Then read on

2011-02-15T14:59:00.003Z

This briefing sets out the remedies available to consumers when buying faulty goods. It also highlights the additional obligations your business owes to consumers when selling goods online, by telephone or by mail order.

Who is a consumer?
Consumers are people who buy for purposes not related to their trade, business or profession. They have a greater choice of remedies than trade buyers.

Implied terms in contracts for sale of goods

Certain terms are implied into any contract for the sale of goods and cannot be excluded in consumer contracts. In particular, goods must:

Correspond with their description. For example, a dish that is described as "ovenproof", but shatters when used under the normal conditions for making a casserole, will not correspond with its description.
Be of satisfactory quality. Quality includes:
- state, condition and fitness for all purposes which goods of that kind are commonly supplied;
- appearance and finish; and
- durability.
Your business could be protected if:
- you draw the consumer's attention to unsatisfactory quality before the contract is made;
- the consumer examines the goods before the contract is made and finds (or should have found) a defect.
A consumer cannot hold your business responsible:
- for fair wear and tear.
- for misuse or accidental damage by the consumer.
- where consumers tried their own repair or had someone else attempt a repair and this damaged the goods.

Remedies if products are not of satisfactory quality

A consumer has four remedies when products do not conform to the contract for sale:

Rejection. Consumers can reject the goods and request their money back, provided they complain within a reasonable time.
Damages. A consumer can claim damages, which will generally equate to the cost of repair or replacement of the goods. They may also be able to claim compensation for damage caused by faulty goods (for example, where a washing machine leaked). If buyers have accepted the goods, their only remedy is damages.
Repair or replacement. If a consumer requests a repair or replacement, your business will need to carry them out within a reasonable time and without significant inconvenience to the consumer. Your business can refuse to repair the goods if the cost would be disproportionately higher than the cost of the replacement (or vice versa).
Refund. A consumer can request a full or partial refund. Your business is entitled to request proof of purchase (for example, a till receipt or a credit card statement). Consumers do not have to accept credit notes when goods are faulty or not as described.

Time limits for bringing claims

The time limit for a consumer to bring a claim is six years (five years in Scotland). The date generally runs from the date the goods were sold, although there are some exceptions to this. The fact consumers have five or six years to bring a claim, in theory, does not mean all goods should last this long in practice.

Minimising losses

Consumers must take reasonable steps to mitigate their loss. For example, they should report faults as soon as possible, to make it easier for them to show the goods were inherently faulty at the point of sale and to prevent the goods from deteriorating further.

Additional obligations for traders selling goods online, by telephone or mail order

There are four main obligations on your business when it sells goods online, by telephone or mail order. They are:

To provide up front information to consumers before the contract is concluded.
To provide certain information to consumers before the delivery of the goods or supply of the services requested. For example:
- a description of the main characteristics of the goods your business is offering; or
- the price of the goods your business is offering (including all taxes).
To commit to deliver the goods within 30 days.
To provide a seven (working) day cooling-off period, during which consumers can cancel the contract without penalty and without giving a reason. The only charge that can be made to consumers exercising their rights is the direct cost of returning the goods. If your business does not provide consumers with details about their right to cancel the contract, the period is extended from seven days to three months.

There are certain exceptions to these rules, such as the supply of products that, by their nature, may not be returned (for example, perishable food) or bespoke products.

More information

If you have any queries about the content of this briefing, please contact martinh@cleggssolicitors.com

Protecting the worth of your business – Brand Management

2010-11-09T13:33:00.000Z

This Business Law Update sets out the practical steps that will help your business protect, use and exploit any brands that it owns.

What is a brand?

A strong brand helps distinguish your products from your competitors'. It adds value to your business by enhancing consumer awareness and improving customer loyalty. A brand can be made up of many elements, including:

A logo (Nike swish).
A word (Kodak).
A colour (Virgin red).
A shape (Coca-Cola bottle).
A strap line or jingle (The future's bright, the future's Orange).
A domain name (Amazon.com).
A person's name (David Beckham).

A strong brand can be a very valuable commercial asset. According to a recent survey the top three global brands by value were:

Coca-Cola (worth $68,734 million).
IBM (worth $60,211 million).
Microsoft (worth $56,647 million).

Brands can also be lost or devalued if they are not adequately protected; they can even be destroyed by a single remark. Gerald Ratner, CEO of the jewellery group Ratners, famously described some of his own products as "total crap". An estimated £500 million was wiped off the value of the group and it eventually had to be completely re-branded as the Signet Group.

Creating and protecting a brand

Many elements of a brand can be protected as so-called intellectual property rights. These are legal rights that apply to creative work and, for example, prevent copying and unauthorised third party use.

Initial considerations

Make sure you take legal advice early on in the creative process. This will help ensure that whatever you create can be protected and does not infringe other people's brands or other rights.
Take great care if you involve third parties, such as brand consultants or advertising agencies, in creating a brand. Make sure that they sign confidentiality agreements and transfer rights in their creative output (such as copyright) to your business.
Carry out internet searches to check that the brand is not already being used by another business. Instruct a law firm to conduct further searches of the relevant registries if necessary.
Keep accurate records of the development process and date stamp these documents. This will help you provide evidence if any infringement claim is brought against you. For example, evidence that it was created as part of an original process, rather than copied.

Legal protection

Your business can use legal rights to protect your brand value:

Copyright applies to original work such as creative or artistic output including a piece of writing, music, photograph, software or video clip. It provides automatic protection to original work against other people copying the work without permission.
Trade mark rights arise through registration and/or use in a commercial context and can protect brand elements such as logos, slogans and colours.

Registration: why and where?

Some elements of a brand can get greater protection if they are registered (for example, as a registered trade mark). Applications to register these rights will be tested, among other things, on their merits and against existing third party rights. In the case of trade marks, this includes a consideration of whether the mark is distinctive.
Registration gives you the exclusive right to use the trade mark as registered and enforce that right against anyone using it without your permission. Unregistered rights are similar but are harder to enforce and therefore protect. For example, for an unregistered trade mark, your business will have to prove that it has the goodwill in the mark, which can be very difficult and expensive to establish.
Registration makes enforcement a lot easier but it may be costly and time-consuming. Your business will also need to consider whether to register on a national or cross-border basis (for example, across the European Union). The issues are complex so you should take legal advice beforehand.

Using a brand

Once a brand has been created and protected, it is important that you use it consistently and do nothing that could cause you to lose protection:

Draw up or review your existing brand guidelines. They should include clear rules on how the brand must be used throughout your business.
Strictly enforce your brand guidelines internally and externally to build up the brand, its market presence and therefore its value.
Even minor changes in the way your brand is used, for example, in font or colour, can create a new right that will need to be protected in addition to the rights you already have. Costs of protection, for example registration fees, can quickly mount up if you have lots of different variations of your brand.
Use copyright notices © and trade mark symbols (™ for an unregistered trade mark and ® for a registered trade mark) where appropriate. They act as an early warning system to would-be infringers and will help your business when seeking to prove that a defendant knew about your right.
Ensure that registered rights are used. Failure to do so can, in some cases, result in loss of protection.
Ensure that any renewal fees for registered rights are paid on time, otherwise you risk losing the protection of the registration.
Check that any brands licensed in from third parties, for example a registered trade mark, are being used in accordance with the terms of that licence.

Exploiting a brand

A brand can be commercially exploited in a number of ways. The main methods are by licence or assignment:

A licence is an agreement that gives another business the right to use your brand for a defined period in a defined territory. Once the term has ended, ownership and control of the brand returns to your business.
An assignment is an agreement that sells your brand to another business. You lose control of it but receive a lump sum in return.

Always take legal advice before allowing any third party to use your brand either formally or informally.

A written agreement governing use of the brand should always be signed if you are considering entering into an agreement with a third party.
Put guidelines in place governing the use of your brand by others (for example, subsidiaries, franchisees and distributors) and strictly enforce these guidelines. Your business should monitor use and ensure adherence to your brand guidelines.
Your business can request that a third party obtain your prior written approval for use of your brand.

Enforcing a brand

Your business can lose brand protection if you allow people to use your brand on an unauthorised basis, however minor. Misuse of your business' brand by others will also weaken its value. Your business must therefore monitor infringement and actively pursue infringers:

Keep accurate records of permitted third party use of your brands. Monitor use to ensure adherence to the terms of any agreement.
Have a system in place for reporting unauthorised use of your brand or use of similar marks or brands.
Make sure everyone understands the importance of reporting any misuse of your business' brand, even if the use is for different goods or services to your own.
Take legal advice immediately if your business becomes aware of any misuse of your brand. In many cases, time will be of the essence to prevent damage to your brand and consequential sales losses.

Do not infringe other people's brands

Be very careful if you use another company's brand in any of your marketing. For example, your business should not use somebody else's logo on your website to make it look like they have endorsed your product.
Your business can use a competitor's brands in your own adverts, subject to certain restrictions. For example, if you are comparing them with your own brand you must not insult or denigrate your rival's brand.
Take legal advice if your business is considering using a rival brand in any of your advertising, particularly in view of the fact that the law has recently changed in this area.

More information

If you have any questions about the content of this Business Law Update, then please contact Martin Hall by email mailto:martinh@cleggssolicitors.com?subject=Brand%20Management or call me on 0759 522 5330

Companies in administration

2010-11-08T17:05:00.000Z

What is administration?

Administration is the procedure in which a company that is, or is likely to become, insolvent can be reorganised or have its assets sold for the benefit of creditors. When a company goes into administration, an insolvency practitioner takes over the control of the company's affairs from its directors.
The main aim of administration is to rescue the company so that it can continue trading as a going concern.
If this cannot be achieved, there are two other reasons why a company may go into administration:
- To achieve a better result for the company's creditors as a whole than would be likely if the company was put into liquidation.
- To sell the company's property to make a distribution to the company's secured or preferential creditors.
A secured creditor is, in general terms, entitled to be repaid from the proceeds of the secured assets. Preferential debts include certain employee claims and contributions to occupational pension schemes.
In the majority of cases, the administration of a company leads to the sale of its assets. Administration may achieve a better result for the company's creditors than immediate liquidation, because, for example, the company may be able to continue trading allowing greater value to be achieved for its assets as part of a sale on a going concern basis.
Pre-pack administration is the process in which the sale of the company's assets is agreed before the company goes into administration, and is then completed immediately after the start of the administration. Click Here for Pre-Packs Explained.
The administration of a company must be completed within one calendar year unless the creditors or the court agrees to an extension. In practice, many companies remain in administration for more than one year and administrations can last several years.
When the purposes of the administration have been achieved, the company may come out of administration and continue normal trading, although this is unusual in practice. More commonly, the net proceeds of the company's assets are distributed to the company's creditors, often by a subsequently appointed liquidator.
When the net proceeds are distributed, creditors whose debts are not secured or preferential may receive a percentage of their debt by way of dividend. This may be as little as one or two pence in the pound, and can be nothing at all.

The administrator

The administrator must be a qualified insolvency practitioner. Often more than one administrator is appointed to act jointly.
The administrator acts as an agent of the company and an officer of the court and therefore has a duty to act in good faith. They must also be, and be seen to be, independent and impartial in their management of the company and its property.
Once appointed, the administrator must take all the company's property into their custody or control.
As the company's agent, the administrator can cause the company to contract with third parties. Sums due under such contracts are paid in priority to the administrator's fees and expenses, and distributions to floating charge holders and unsecured creditors.
Administrators have a duty to perform their functions as quickly and efficiently as possible and in the interests of the creditors as a whole.

What does administration mean for a creditor company?

As soon as a company is placed in administration, creditors are prevented from bringing or pursuing legal proceedings against the company or its assets.
It is possible to ask the administrator's or the court's permission to bring proceedings against a company that is in administration. However, a creditor who has a monetary claim is unlikely to be granted permission as it is generally only claims that relate to the ownership of property that are allowed to continue.
If your company is owed money by a company that has gone into administration, often the best option is to submit details of your claim to the administrator (known as your proof of debt) and wait for the administrator to assess it.
As a creditor, your company may be able to join a creditor's committee to help the administrator fulfil their functions. Administrators have a duty to report to the company's creditors on their progress. Becoming a member of the creditors' committee may provide you with an opportunity to access more detailed information and comment on the way the administrators are conducting the administration.

Limitation periods

When a company is in administration, although as a creditor you will be blocked from bringing an action against the company, time will continue to run for the limitation period of your claim. The limitation period for a simple contract claim is six years. Where time is running out, your company can protect its position by:
- Obtaining the administrator's acknowledgement of the claim. Note that this restarts the applicable limitation period and does not stop time running.
- Applying to the administrator of the court for permission to issue proceedings against the company.

What action can my company take if the administrator is doing a bad job?

If your company has any concerns with the conduct of the administrator, you should initially raise any issues with the administrators themselves or via any creditors' committee. If the matter is not resolved adequately there are a number of legal remedies that you can consider.

You can apply for a court order:
- On the basis that the administrator's conduct has unfairly harmed your interests, or the administrator is failing to perform their duties as quickly or efficiently as possible.
- On the basis of any wrongful exercise of legal authority by the administrator.
- To remove the administrator. This should only be used in extreme circumstances.

The courts do not permit these remedies to be used by any one creditor to leapfrog claims of other creditors, nor to require the administrator to devote a disproportionate amount of time or resources to their particular claim.

More information

If you have any questions about the content of this Business Law Update, then please contact Martin Hall by email or call me on 0759 522 5330

NIC holidays

2010-10-29T10:16:00.000+01:00

In the June 2010 Budget, the government announced that it would launch a scheme to promote the creation of new businesses in the parts of the UK that are most reliant on public sector employment.

Is my business eligible?

The scheme will be available to businesses started between 22 June 2010 and 5 September 2013 and will apply to earnings paid by participating businesses on or after 6 September 2010.
The scheme is only available to new businesses, which may be incorporated businesses, sole traders or partnerships.
The principal place of business of your company must not be in an "excluded region". You must be able to show that your business' "principal place of business" is outside of an excluded region. If you are unable to demonstrate this, the scheme will not apply.

Excluded regions

For the scheme to apply, the principal place of business must not be in an "excluded region", being any of the following:

Greater London.
The Eastern region, comprising of:
- Bedford, Cambridgeshire, Central Bedfordshire, Essex, Hertfordshire, Norfolk, Suffolk.
- The non-metropolitan districts of Luton, Peterborough, Southend-on-Sea and Thurrock.
The South Eastern region, comprising of:
- Buckinghamshire, East Sussex, Hampshire, the Isle of Wight, Kent, Oxfordshire, Surrey and West Sussex.
- The non-metropolitan districts of Bracknell Forest, Brighton and Hove, Medway, Milton Keynes, Portsmouth, Reading, Slough, Southampton, West Berkshire, Windsor and Maidenhead and Wokingham.

In what circumstances will NIC holidays be available?

NIC holidays will be available for the first ten qualifying employees that your business employs in its first year. This limit includes directors, part-time employees, casual employees and employees whose earnings are below the NICs threshold. It also includes employees who leave your business during the scheme period.
Your business' first year commences when it starts, or if earlier, when it first employs an employee.
The holiday period for each employee begins when the employee is first employed or 6 September 2010 (whichever is the later). It ends one year later or on 5 September 2013 (whichever is sooner).
If your business is taken over or sold, the scheme will end immediately.

NIC deductions

During a holiday period your business will not be liable for Class 1 employer NICs, up to a maximum exemption of £5,000 for each employee. However, any unused amount below £5,000 in relation to any employee cannot be used in relation to another employee.

What restrictions apply to the scheme?

If your business operates in a restricted industry sector (such as the coal sector) it will not be eligible to participate in the scheme. Details of these restricted sectors are available on the Business Link website: Employer NICs holiday – who can apply?
The maximum amount of relief available under the scheme is £50,000 (£5,000 for each of the ten employees). However, businesses will, generally, only be entitled to a maximum of EUR200,000 EU State Aid, including relief under the scheme, in any three-year period. This figure is reduced to EUR7,500 in the agriculture sector, EUR30,000 in the fisheries and aquaculture sector, and EUR100,000 in the road transport sector.
Your business will not be regarded as "new" if you have at any time in the six months before the start of the business carried on another business consisting of (most of) the same activities.
Your business will not be regarded as "new" if you start a business when another person has ceased carrying on a similar business as a consequence of an agreement between yourself and that other party.

What will my business need to do to comply with the scheme?

If you decide to take advantage of the scheme you will need to notify HMRC by completing an application form. Most businesses can apply online via the Business Link website.
Your business will need to retain records relating to the scheme for at least three years from the date when the final deduction is (or could be) made under the scheme.
Relief under the scheme should not be factored into your business' end-of-year tax return. Instead a separate scheme return, showing relief claimed under the scheme, should be made at the same time as the end-of-year return.

What are the next steps?

Your business should read HMRC's guidance carefully to ensure that you understand its scope and limitations properly. You should pay attention, in particular, to the anti-avoidance provisions, your record-keeping obligations, and the limitations and administrative requirements for the scheme to comply with EU State Aid rules. For details of the guidance, visit the Business Link website: Regional employer NICs holiday for new businesses.
The scheme is expected to become law in early 2011. This means that it will start before it actually becomes law.

More information

If you have any questions about the content of this Update, please contact Martin Hall by email mailto:martinh@cleggssolicitors.com?subject=NIC%20Holidays or call me on 0759 522 5330

Franchising: Questions & Answers

2010-10-09T15:56:00.000+01:00

What is a franchise?

A franchise must include a franchisor and at least one franchisee.

The franchisor is the business or individual that sells the right to use its products or services to another business or individual. The franchisor:

Allows the franchisee to use a name which is associated with the franchisor.
Exercises continuing control over the franchisee.
Provides assistance to the franchisee (for example, advice on finding and acquiring premises).

The franchisee is the business or individual that purchases the rights to use the franchisor's products or services. The franchisee will periodically have to make payments to the franchisor.

What are the advantages of franchising for the franchisor?

Franchising provides a business with the opportunity to secure distribution for products or services more quickly than if it had to train up its own employees and develop its own internal marketing, sales and distribution organisation.
Using a franchisee's capital will enable a business to expand more quickly than if it had to find the funds itself.
Many businesses involved in the supply of goods or services motivate their employees by linking their remuneration to sales. Franchising takes this one step further by linking the franchisee's financial well-being to the success of the franchisor's business.
Franchising a business may provide the franchisor with increased purchasing power and possibly reduced overheads, therefore increasing its profitability.

What are the disadvantages of franchising for the franchisor?

Loss of control. While a franchise agreement will impose substantial restrictions on the franchisees, it is important to remember that they will be independent third parties who will be seeking to maximise their own profits, sometimes at the expense of the franchisor.
Part of the franchisor's profits will be used to support the franchisee's business.
By involving a third party, the franchisor will have to divulge substantial know-how and information concerning its business. Although a franchise agreement will contain restrictions on the franchisees' ability to make use of this information for their own purposes, these types of provisions are often difficult to monitor and enforce.
The business skills required to control franchisees and provide back-up are different from those involved in operating a business with its own employees.
A franchisor may owe a duty of care to its franchisees and prospective franchisees. The High Court has recently held that a franchisor must ensure that when they provide advice to a prospective franchisee, they must do so with due skill and care.

More information

Cleggs policy is not to charge for the time it takes for us to understand the nature of a clients problem - we only charge for giving advice after agreeing both the fees that we will charge and the scope of the work that we will carry out. So if there are any points that you wish to discuss about the content of this Update, please email me at martinh@cleggssolicitors.com or call me on 0759 522 5330 - it costs nothing to talk!

Compulsory Liquidation

2010-08-17T13:16:00.001+01:00

What is compulsory liquidation?

Compulsory liquidation (or winding up by the court) is a procedure by which the assets of a company are sold, and the proceeds are distributed to the company's creditors. A court order is required to put a company into compulsory liquidation. At the end of the liquidation, the company is dissolved. The most common reason for a winding up order is that the company is insolvent.

What does compulsory liquidation mean for a creditor of the company?

In an administration or liquidation, all unsecured creditors, must share equally any available assets of the company, or any proceeds from the sale of any of those assets, in proportion to the debts due to each creditor.

As an unsecured creditor, your business may receive a dividend paid in proportion to the debts owed to you at the end of the liquidation and possibly an interim dividend. An interim dividend is a dividend that is declared and distributed before the company's annual earnings have been calculated. In some cases, the dividend to unsecured creditors will be just a few pence in the pound, and it may be nothing at all. If your business has the benefit of security, you are entitled to be paid from the proceeds of sale of the secured assets, subject to certain exceptions.

The liquidator is an officer of the court and therefore has a duty to act fairly and impartially. As a creditor, your business will be invited to provide the liquidator with details of your claim (this is known as your proof of debt). The liquidator will then assess all the proofs of debt. Your claim may be accepted in whole or part or be rejected.

There is an automatic stay of legal proceedings against the company or its assets. If your business decides to bring or pursue legal proceedings against the company, you must first apply to court for permission. If your claim is for money only, you are unlikely to be granted permission. Generally, only claims connected to property are allowed to continue.

Your business is entitled to receive reports on the progress of the liquidation from the liquidator. You may also form a liquidation committee with at least two other creditors, to help the liquidator fulfil his functions.

What can a creditor do if they think the liquidator is doing a bad job?

Your business could challenge the level of the liquidator's remuneration or the liquidator's decision in relation to any proof of debt. In extreme cases, and where it is in the interests of the liquidation, a liquidator may be removed by a court order or a meeting of the company's creditors.

More information

If you have any queries about the content of this Update, please contact me at martinh@cleggssolicitors.com

Looking to expand your business into a new market or territory? Then you should consider Distributorship and Agency

2010-08-06T07:50:00.016+01:00

There are different ways to expand your business into a new market or territory. Two common methods are distributorship and agency. It is important to be aware of the key differences between appointing or being appointed as an agent or a distributor when considering how best to market, sell, or distribute your products.

Appointing a distributor

In a distributorship arrangement, your business sells your products to a distributor, who then sells the products on to their customer, adding a margin to cover its own costs and profit.
By selling to a distributor who contracts with and resells to customers, your business may be able to pass on a large degree of the risk associated with the products. The assumption of risk by the distributor is reflected in the margins on resale of the products, which will generally be greater than the commission payable to an agent (who assumes far less risk than a distributor).
Your business will have far less control over the activities of the distributor than over the activities of an agent. Different types of products (such as bespoke products which require contact with the end customer, or products which require highly specialised after sales care by your business) may therefore require different arrangements.
Competition rules may impact on the appointment of a distributor. However, they generally do not apply to genuine agency arrangements.

Appointing an agent

In an agency arrangement, your business appoints an agent to negotiate and possibly conclude contracts with customers on your behalf. The agent is paid commission on the sales they make, usually on a percentage basis.
As the agent is only an intermediary, generally he is not a party to the contract between you and the customer. Your business will retain a far greater degree of risk than in a distributorship arrangement.
Your business will have greater control in an agency arrangement, which may be an important issue for certain types of products (for example, those for which brand image is crucial). However, as principal, your business would generally be liable for the acts of the agent.
Competition rules generally do not apply to a genuine agency relationship, that is, if the agent bears no significant financial or commercial risk in relation to its agency activities.
There are specific laws in the UK, and the European Union, which apply to commercial agents, but which do not apply to distributorship arrangements.

More information

Cleggs policy is not to charge for the time it takes for us to understand the nature of a clients problem - we only charge for giving advice after agreeing both the fees that we will charge and the scope of the work that we will carry out. So if there are any points that you wish to discuss, then please email me at martinh@cleggssolicitors.com or call me on 0759 522 5330. - it costs only the price of the call!

Pre-packs explained

2010-08-03T12:40:00.001+01:00

What is a pre-pack?

A pre-pack is the name given to an arrangement under which the sale of all or part of a company's business or assets is negotiated with a purchaser before the appointment of an administrator. The sale is completed by the administrator shortly after their appointment. This reverses the standard process, where the administrators start marketing the business after they have been appointed. The purchaser may be a competitor or, as is often the case, the existing management team.

What are the advantages of a pre-pack?

The main advantage of the pre-pack process is the speed with which it can be concluded. For example:
- the costs of the administration process can be reduced, which can result in a better return for creditors;
- key staff can be retained because they do not have the time to seek alternative employment;
- more jobs may be saved than in a normal administration process;
- if stock has a limited shelf life, there is more scope for it to be sold at full value;
- adverse publicity, media speculation or damage to the goodwill of the business may be reduced.
Some unsecured creditors, such as suppliers, may be engaged by the new business.
Often there is no other option. The alternative would be liquidation and the immediate cessation of the company's business.

What are the disadvantages of a pre-pack?

A lack of transparency. Pre-pack arrangements are generally made quickly and in private, albeit with the co-operation of secured creditors. Unsecured creditors are often unaware that a pre-pack is going to happen, so they do not have the opportunity to protect their interests by considering and voting on the pre-pack proposal.
A lack of accountability. Administrators involved in pre-packs do not have to obtain prior approval for their actions from the court or creditors in the same way as they do in a normal administration. There are no specific regulations which deal with pre-packs, which can lead to a lack of confidence in the openness of the procedure.
They do not maximise returns for unsecured creditors. A pre-pack sale of a business is often conducted with limited marketing compared with a normal administration. It is therefore impossible for the proposed administrator to test the market fully because of the risk of the company's financial difficulties being leaked, which could destroy the value of the business. Consequently, the assets of the company may be sold at an undervalued price or the goodwill of the business may not be valued accurately because of the speed of the sale.
Writing-off liabilities using a pre-pack is a short-term fix. A pre-pack doesn't subject the company to a restructuring, which is often necessary if the business is to survive in the long term. It is debatable whether a business that has already failed will do any better under the control of the same management team.
Pre-packs are similar to the outlawed practice of creating "phoenix" companies. Creditors tend to be suspicious of pre-packs when the business is sold back to the original owners. Under the pre-pack guidelines administrators have to disclose to creditors the name of the buyer and whether there is any connection between the buyer and the company. There are concerns that there is the potential for abuse of the process by directors seeking to purchase the business at an advantageous price and simply avoiding paying creditors.

Issues for directors of a pre-packed company

The directors of a company who are involved in a pre-pack need to make sure that they do everything they can do to minimise loss to creditors. Directors should take independent legal advice, especially if they acquire an interest in the company's business and assets through the pre-pack.
The Insolvency Service has indicated that it will use its enforcement powers to penalise any directors who misuse the administration process to seek to gain a benefit themselves.

More information
If you have any queries about the content of this checklist please contact me at martinh@cleggssolicitors.com or call me on 0759 522 5330

June 2010 Budget (SMEs)

2010-07-25T09:38:00.002+01:00

This Update highlights the key issues for small and medium-sized enterprises (SMEs) in the 22 June 2010 Budget. I hope that you find it useful

Key tax measures in the Budget

Corporation tax rates reduced from 2011-12

The main rate of corporation tax will be reduced to 27% (from 28%) for the year commencing 1 April 2011. This will apply to companies and groups whose annual profits exceed £1.5 million. Further annual reductions of 1% each subsequent year will also be made, culminating in a rate of 24% for the year commencing 1 April 2014.

The small companies rate of corporation tax will be reduced to 20% (from 21%) for the year commencing 1 April 2011. This will apply to companies and groups whose annual profits do not exceed £300,000.

Capital gains tax (CGT) rises to 28%

For gains arising on or after 23 June 2010, the rate of CGT increases to 28% for higher and additional rate taxpayers, trustees and personal representatives. Basic rate taxpayers will continue to be liable at 18%. The new rate will apply equally to any deferred gains that come into charge on or after 23 June 2010.

To a limited extent, a planning opportunity exists for the directors of owner-managed companies, who are able to control the amount of income that they receive in a given year. If such directors are planning to realise capital gains (for example, on the sale of a second home or an investment portfolio), they may be able to reduce their income levels for the year of the disposal in order to pay CGT at the lower rate.

Entrepreneurs' relief increases to £5 million

With effect from 23 June 2010, the lifetime limit for entrepreneurs' relief rises from £2 million to £5 million. This means that a tax rate of 10% will apply to the first £5 million of qualifying gains.

The increased lifetime limit will apply in relation to disposals on or after 23 June 2010. To the extent that any gains realised by the taxpayer before that date exceed the old £2 million lifetime limit of entrepreneurs' relief, CGT will remain payable at the full rate of 18% on the excess, but only the £2 million of relief claimed will be set against the increased limit for future qualifying disposals.

Standard rate of VAT increased

The standard rate of VAT will increase (from 17.5%) to 20% with effect from 4 January 2011. The 20% rate will apply to supplies made on or after 4 January 2011 and acquisitions or importations taking place on or after that date. This measure does not affect supplies subject to other rates of VAT, such as the zero-rate or reduced rate.

Business

Corporate tax reform

The government announced a "roadmap for corporate tax reform", with further details to follow in the autumn. The reform will be based on the government's view that a broad tax base, a low corporate tax rate and a more territorial approach will make the UK's tax system more competitive. The Budget Report states that "the manufacturing sector as a whole will pay less corporation tax as a result" of the government's reforms.

Capital allowances: writing down allowances and annual investment allowance reduced

From 1 April 2012 (for corporation tax) or 6 April 2012 (for income tax), the annual rate of writing down allowances for both new and unrelieved expenditure on plant and machinery will be reduced to 18% (from 20%) and the annual rate for special rate pool expenditure will be reduced to 8% (from 10%). In addition, also from 2012, the maximum annual investment allowance will be reduced to £25,000 (from £100,000).

Small business tax review

The government has announced that it "remains committed" to a review of IR35 and small business tax, and that it will release further details "shortly".

Zero-emission goods vehicles: 100% first year allowance

There will be a 100% first year allowance, subject to certain conditions, for the purchase of new and unused (not second-hand) zero-emission goods vehicles has been introduced. The allowance will have effect for a five-year period beginning on 1 April 2010 for companies (6 April for unincorporated businesses) until 31 March 2015 (5 April 2015 for non-corporates).

Employment and pensions

Enterprise management incentives (EMI) changes

The June 2010 Budget confirmed that a previously announced change to enterprise management incentives (EMI) legislation will go ahead. The change will enable companies with a permanent establishment in the UK to grant EMI options (currently, only companies which carry out a qualifying trade wholly or mainly in the UK can grant EMI options).

PAYE, workplace canteens and employer-supported childcare

The June 2010 Budget Report included the following announcements regarding PAYE and income tax measures:

A commitment to explore ways of improving the PAYE system, starting with a consultation with employers and payroll providers on ways of capturing more frequent or even real-time PAYE data.

A consultation on introducing powers for HMRC to require financial security where PAYE and NICs are at serious risk of non-payment. The consultation will also consider the proposed criminal penalty for failure to provide a financial security.
Legislation to restrict tax breaks for workplace canteens will take effect from April 2011.
Confirmation of changes to employer-supported childcare such as nursery vouchers, including the restriction of the tax benefits for higher and additional rate taxpayers, which will take effect for new joiners to a scheme on or after 6 April 2011.

NIC employer contributions

Employer NIC contributions will increase (from 12.8% to 13.8%) from 6 April 2011. The secondary (employers') threshold will be increased by £21 above the Retail Price Index, also from 6 April 2011. At the same time, the upper earnings limit will be reduced to align it with the higher rate threshold.

Regional employer NICs holiday for new businesses

The government will shortly announce details of a scheme to promote the creation of new businesses in those parts of the UK that are most reliant on public sector employment. Those areas are Scotland, Wales, Northern Ireland, the North East, Yorkshire and the Humber, the North West, the East Midlands, the West Midlands and the South West.

During a three-year period, new businesses in these areas will be exempt from the first £5,000 of Class 1 employer NICs due in the first twelve months of employment. This will apply for the first ten employees hired in the first year of business. Subject to meeting the necessary legal requirements, the scheme is intended to start from 6 September 2010 but this has yet to be confirmed. Most kinds of business (including property and investment businesses) will be eligible for the scheme.

Research and development tax relief: abolition of IP ownership condition for SMEs

The government has announced that legislation will be introduced to abolish one of the conditions that a SME must satisfy in order to claim the enhanced tax relief for research and development (R&D) expenditure. Companies that are SMEs may claim an enhanced tax relief at the rate of 175% for qualifying expenditure on R&D.

One of the conditions that a SME company must satisfy in order to claim this relief is that the company owns any intellectual property (IP) deriving from the R&D to which the expenditure is attributable. The government has announced that this condition will be abolished. The change will have effect for any expenditure incurred by a SME company on R&D in an accounting period ending on or after 9 December 2009.

Enterprise Investment Scheme: investment in businesses "in difficulty" will not qualify

The Enterprise Investment Scheme (EIS) can be a valuable source of capital for SMEs: investors are entitled to tax reliefs, provided a number of conditions relating to the investee company are satisfied. The government announced in the Budget that EIS relief will not be available for investments in businesses that are in financial difficulty. This change will take effect from a date to be announced, irrespective of when the money was raised under the EIS investment. This means that the existing investments may be affected. The same change will also apply to investments by Venture Capital Trusts.

More information

If you have any queries about the content of this checklist, please contact me at martinh@cleggssolicitors.com

The Queen’s Speech

2010-06-07T07:34:00.002+01:00

The coalition agreement and the Queen's Speech contained a number of legislative proposals that are likely to have an impact on small and medium-sized enterprises (SMEs).

Tax

Key proposals for taxation reform include:

A detailed agreement will be sought on taxing capital gains on non-business assets similar to income tax rates, with "generous exemptions for entrepreneurial business activities". The rate of capital gains tax is likely to increase from 18% to close to 40% (or even 50%) on gains that do not qualify for the entrepreneurial exemptions.
The planned 1% rises in employer and employee National Insurance Contributions (NICs) will go ahead from April 2011, but the employer NIC threshold will increase by £21 per week.
A review of small business taxation, including IR35 (a rule to stop the avoidance of tax and NICs by using intermediaries (typically a service company owned by the "employee")). The stated aim is to seek to replace IR35 with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed or restrict labour flexibility.
Reform of the corporate tax system by simplifying reliefs and allowances and tackling tax avoidance to reduce headline rates of tax. No detail is provided in the coalition agreement as to how this will be achieved.

Finance

The government intends to ensure the flow of credit to viable SMEs. Consideration will be given to a major loan guarantee scheme and the use of net lending targets for the nationalised banks.

Pensions

There will be a simplification of the rules and regulations relating to pensions to help reinvigorate occupational pensions, encouraging companies to offer high-quality pensions to all employees. The government will work with business and industry to support auto-enrolment.

Employment

Although the coalition agreement does not provide a huge amount of detail on the government's employment policies, it sets out a number of proposals that have an impact on this area, including:

Reviewing employment and workplace laws, for employers and employees, to ensure they maximise flexibility for both parties while protecting fairness and providing the competitive environment required for enterprise to thrive.
Encouraging shared parenting from the earliest stages of pregnancy. This will include a system of flexible parental leave.
Extending the right to request flexible working to all employees.
Promoting equal pay and taking a range of measures to end discrimination in the workplace.

Property and environment

The government states that the Energy Security and Green Economy Bill will deliver a national programme of energy efficiency measures to homes and businesses.

Commercial: alcohol retailers

The proposed Police Reform and Social Responsibility Bill will overhaul the Licensing Act 2003. It will provide local authorities and the police with stronger powers to remove licences from, or refuse to grant licences to, any premises that are the source of alcohol-related problems. The Bill bans the sale of alcohol at below cost-price and allows local councils to levy higher fees for late-night licences to pay for additional policing, as well as providing local councils with the powers to close down shops or bars persistently selling alcohol to children. The Bill also doubles the maximum fine for selling alcohol to children to £20,000.

Construction

The coalition government has also announced that spending on all Building Schools for the Future projects that have not reached preferred bidder stage will be frozen. The Department of Health has also placed on hold its timetable for implementing the new ProcCure21+ framework. Although the programmes have not been abandoned, the announcement is likely to stop (or at least delay) spending on dozens of projects worth millions of pounds. The decision will have a significant impact on the construction industry and is likely to affect contractors, sub contractors, suppliers and professional consultants.

More information

If you have any queries about the content of this checklist, please contact Martin Hall at mailto:martinh@cleggssolitors.com?subject=The%20Queen's%20Speech

Data protection and Direct marketing

2010-05-29T08:45:00.005+01:00

This update highlights the key data protection issues your business should consider when carrying out direct marketing. It explains how your business should collect information about your customers (including individual customers, named individuals within a business and businesses themselves) and how to communicate information about your products and services to existing and potential customers.

What are the penalties for failing to comply?

Serious financial, commercial and reputational issues for your business, including possible criminal penalties.
A negative impact on the ability of your business to use databases for marketing purposes.
Reputational loss and the potential to be barred from trade bodies.

What customer data needs to be protected and secured?

Any information about a customer that is held on computer or in an organised filing system that could identify them (for example, names, addresses or e-mail addresses).

Collecting customer data for marketing purposes

Generally, your business can only collect information if it has a good reason for doing so (for example, you want to market new products to the customer contact).
Make sure that people are aware when your business collects their data that it may be used for marketing and other purposes. The most effective way of getting this is by issuing a fair processing notice (FPN). An FPN is a notice given to an individual to explain what their personal data will be used for (for example, the notice may say that the personal data will be passed to third parties for marketing purposes).
If your business has a website and intends to collect data using it, the website should include a prominent privacy statement with an FPN.
Always take legal advice if your business is planning to collect bank or credit card details, as there are security implications.

Storing customer data for marketing purposes

Ensure that personal information is kept secure at all times (for example, data stored on mobile devices should be kept to a minimum).
Regularly "spring-clean" databases to ensure that data is accurate and up-to-date.
Make sure customer data is only stored for the purpose it is collected and only for as long as it is required (for example, do not keep an event delegate list for marketing purposes unless delegates were aware that their details could be used for marketing purposes and were given the opportunity to opt out).

Opting in and opting out

Always give people the opportunity to opt in or out of receiving marketing from your business. This should be made as simple as possible (for example, clicking an unsubscribe link in an e-mail).
Retain details of any opt-out requests you receive so that the individuals who have opted out in the past are not contacted in the future (this is known as "suppressing" the details). If you simply delete their details, you may obtain their data later from another source and will not know that they have opted out of marketing contact.
Avoid contacting someone who has opted out, unless they are being contacted for another purpose (for example, sending a bill). In this instance, it would be acceptable to include a message from time to time stating that your business would like to send them marketing material and invite them to opt back in.
It is not generally acceptable to include pre-ticked opt-in boxes or to rely on silence as an indication to opt in. Positive action is required from a customer (for example, returning a form).

Sending solicited marketing

If an individual or company has contacted your business requesting marketing material, you can send it out even if they are included in an opt-out list or have registered with a preference service.
A preference service holds the details of people who do not wish to receive direct marketing material.
Individuals and businesses can register with preference services to indicate that they do not wish to receive direct marketing by a particular means (for example, by mail or telephone).

Sending unsolicited marketing by post or telephone

Your business can contact individuals and companies on its databases by post or telephone unless they have stated that they do not wish to receive direct marketing.
Before sending out marketing, your business must check whether an individual or company has opted out or signed up to the telephone preference service. It is good practice to check the mail preference service as well.

Sending unsolicited marketing by SMS, fax or e-mail

Your business will generally need explicit consent from individuals (including named individuals at a company), but not businesses, to send unsolicited marketing by SMS, fax or e-mail.
Before sending out marketing to individuals (including named individuals at a company) your business should check that they have given specific consent and that they have not opted out or signed up to a relevant preference service.
Before sending out marketing to a company, your business must check that they have not opted out or signed up to a relevant preference service.
If your business has collected a customer's SMS or e-mail details when selling something to them or negotiating to sell something to them, you can use those details in future to market the same or similar products to them without prior express consent. This is known as the "soft opt in".
Your business is required by law to check databases against the relevant preference service regularly and comply with the preference.

Using external databases

Your business should always take legal advice if it is considering purchasing an external database to make sure that you get the rights you need to use it effectively.
The best way to ensure that your business can use the data is to contact the new customer by issuing an FPN to introduce your business and explain how you intend to use their data. In cases where your business requires explicit consent for marketing purposes (SMS, e-mail and fax marketing to individuals) the customer must give consent.
Always check whether any of the customers on the database that your business purchased have signed up to any preference services.
Your business should also check the details on the new database against existing databases to see whether anybody has opted out.

Selling databases to a third party

Your business may be able to sell or transfer a database if it has all the customers' consent or it is in your legitimate interest (for example, if it is part of a merger).
Always take legal advice before selling a database. You need to put in place a formal agreement as your business will still be responsible for protecting the data.

Allowing third party access to data held by your business

Your business may want to allow a third party to manage data it holds (for example, using a fulfilment house or a call centre).
Always take legal advice before allowing a third party access to the data. You will need a formal agreement in place to deal with confidentiality and security of the data. This applies even if the third party is a group company.

More information

If you have any questions about the content of this checklist, please contact me martinh@cleggssolicitors.com

Bribery Act 2010 - what it means for your business

2010-05-12T13:54:00.000+01:00

New offences that have been introduced by the Bribery Act 2010 which also imposes significant penalties for committing them.

What is bribery?

Why has the Bribery Act 2010 been introduced?

What are the new offences?

1. Bribing another person

A person will be guilty of this offence if they offer, promise or give a financial advantage or other advantage, to another person to bring about improper performance of a relevant function or an activity, or to reward a person for the improper performance of a relevant function or an activity.
The types of function or activity that can be improperly performed include:
- all functions of a public nature;
- all activities connected with a business;
- any activity performed in the course of a person's employment; and
- any activity performed by or on behalf of a body of persons.
where the person performing the function is expected to perform it in good faith or impartially or is in a position of trust by virtue of performing it. The function will be covered even if it has no connection with the UK or is performed outside the UK.
It may not matter whether the person offered the bribe is the same person that will actually perform, or has performed, the function or activity concerned.
The advantage can be offered, promised or given by the person themselves or by a third party.

2. Being bribed

The recipient, or potential recipient of the bribe, will be guilty of this offence if they request, agree to receive, or accept a financial or other advantage to perform a relevant function or activity improperly.
It does not matter whether it is the recipient, or someone else through whom the recipient acts, who requests, agrees to receive or accepts the advantage. In addition, the advantage can be for the benefit of the recipient or another person.

3. Bribing a foreign public official

A person will be guilty of this offence if they intend to influence an official in their capacity as a foreign public official. The offence does not cover accepting bribes, only offering, promising or giving bribes. It does not matter whether the offer, promise or gift is made directly to the official or via a third party.

4. Failing to prevent bribery

A commercial organisation will be guilty of this offence if a person associated with it bribes another person, with the intention of obtaining or retaining business or a business advantage for the commercial organisation. The offence can be committed in the UK or overseas.
A business will be able to avoid conviction if it can demonstrate that it had adequate procedures in place designed to prevent bribery. The government has indicated that it will issue guidance on what "adequate procedures" are before the new law comes into effect.

What are the penalties for committing an offence?

The offences of bribing another person, being bribed and bribing a foreign public official are punishable on indictment either by an unlimited fine, imprisonment of up to ten years or both. Both a company and its directors could be subject to criminal penalties.
The new corporate offence of failure to prevent bribery is punishable on indictment by an unlimited fine.
Businesses that have been convicted of corruption could find themselves permanently debarred from tendering for public-sector contracts.
Your business may also be damaged by adverse publicity if it is prosecuted for an offence.

Practical steps to take before the Bribery Act 2010 comes into force

If you have any questions about the content of this checklist, please contact me at martinh@cleggssolicitors.com or call me on 0759 522 5330

You must review your terms and conditions of business

2010-05-10T15:51:00.001+01:00

The Office of Fair Trading has recently obtained a court order requiring the estate agent Foxtons to amend its terms of business with consumer landlords. Last year the High Court ruled that Foxtons' renewal commission terms were unfair and not transparent. This decision is important for businesses in many other industry sectors which sell their products and services to consumers. This is because it highlights that important terms, particularly those which may disadvantage consumers, must be clear, prominent and actively brought to consumers' attention.

If you have not reviewed your terms and conditions recently then I urge you to do so.

Why have more than one class of shares?

2010-05-04T08:12:00.000+01:00

By using different classes of shares, both flexibility and control can be exercised by a company in various areas, probably the most useful I set out below.
Special rights can be given to different classes of shares:

to enable only some of the shareholders to hire or fire directors. Most commonly used to ensure that each class of share can have its "own person" at the heart of the decision making process.
to enable payment of dividends at different rates to different classes of shares or to some classes to the exclusion of others. This can, in certain circumstances, give flexibility from a taxation point of view.
to modify the voting rights of a class of shares.
to bring into play rules relating to the transfer of shares. This is commonly used to ensure that, if one sharesholder wishes to dispose of his or her share,s then the other members of that class of share have the right of first refusal.
to give preference to repayment of capital on a winding up.

However, the most important right, if you are an "investor" shareholder, and not involved on a day to day basis, is the right to require your class of shares' approval before the Company can enter into certain transactions. Examples of where this "investor" control is important are:

the sale of a part of the Company's business or a material asset.
entering into or extending commitments with funders.
transactions outside an agreed scope.

Creating different classes of shares is not as costly as you might think. Please contact me for further details.

Increase in normal minimum pension age

2010-04-24T09:40:00.000+01:00

On 6 April 2010, the earliest age at which a member of a UK registered pension scheme can ordinarily draw his or her pension increased from 50 to 55. This age is known as normal minimum pension age (NMPA). Subject to two exceptions, a pension scheme that pays a pension before NMPA on or after 6 April 2010 will make an unauthorised payment, meaning that the member will become liable for an unauthorised payments charge.
In addition, repeated unauthorised payments may open a scheme to a potential scheme sanction charge.

The two exceptions are:

Ill health pensions - Members who meet the ill-health condition can continue to receive early payment of their pensions after 6 April 2010, whether or not they have reached NMPA.
Protected pension ages - Members who had a right (including a prospective right) on 5 April 2006 to take their pensions between the ages of 50 and 55 are entitled to exercise that right after the change to NMPA comes into effect. The right must:

be unqualified, for example, it cannot depend on a sponsoring employer giving consent; and
have been contained in the scheme's governing documents on 10 December 2003, the date when the government announced its plans to change NMPA.

Unauthorised payments charge - An unauthorised payments charge is a charge to income tax made on an unauthorised payment. The charge is made at a rate of 40% of the unauthorised payment. An additional surcharge of 15% is levied if the unauthorised payment exceeds specific limits.

Scheme sanction charge - A scheme sanction charge is a tax charge on registered pension schemes that make unauthorised payments. A scheme sanction charge is payable at the rate of 40% of the unauthorised payment. The scheme administrator is liable to pay the charge.

What steps should businesses take in relation to the changes?

Find out whether your pension scheme rules provide protected pension ages for certain members.
Take legal advice on whether your pension scheme rules need to be amended.
Prepare announcements for any affected members of your pension scheme.
Put in place administration systems to deal with any complex or transitional cases.

If you would like to discuss any of the issues raised in this e-mail please contact me at martinh@cleggssolicitors.com

Checklist: 2010 Budget

2010-04-19T07:37:00.014+01:00

I thought it worthwhile circulating this checklist which highlights some of the key issues from the 2010 Budget that are likely to impact small and medium-sized enterprises (SMEs). What happens if there is a change in government on May 6th? - who knows!

Public procurement and SMEs

Government department targets will be introduced to increase the proportion of central government procurement spend that goes to SMEs by 15% throughout the supply chain. Departments will be encouraged to work with main contractors to open up supply chains to SMEs.

Business lending commitments

Royal Bank of Scotland (RBS) and Lloyds Banking Group (LBG) have agreed new, legally binding lending commitments for the 12 months from March 2010. LBG have agreed to £44 billion of additional business lending and RBS to £50 billion. Both banks have also agreed to a new customer charter for lending to SMEs, which includes a commitment to a 1.5% arrangement fee cap.

Small Business Credit Adjudicator

The Small Business Credit Adjudicator has been created to help SMEs gain access to credit. The adjudicator will work with an enhanced Business Link "Financial Intermediary Service" to ensure that SMEs are treated fairly when applying to their bank for finance. It will be given statutory powers to ensure that its judgments are enforceable.

Annual Investment Allowance

The Annual Investment Allowance for purchasing plant and machinery has been doubled from £50,000 to £100,000 from April 2010.

Increases to VAT registration and deregistration thresholds

The following increases in the VAT registration and deregistration thresholds came into effect on 1 April 2010:

The taxable turnover registration threshold (which triggers the obligation to register for VAT) will increase from £68,000 to £70,000.
The taxable turnover deregistration threshold (which triggers the right to apply for deregistration) will increase from £66,000 to £68,000.

Small business rate relief

There will be a temporary increase in the level of small business rate relief in England, so that eligible small businesses occupying properties with rateable values up to £6,000 will pay no business rates for one year from October 2010. Small businesses that benefit from the rate relief taper (that is, rateable values up to £12,000) will be entitled to significant reductions.

Entrepreneurs' relief

The lifetime limit for entrepreneurs' relief has been doubled from £1 million to £2million. Entrepreneurs' relief is a relief from capital gains tax which can be claimed on gains arising from disposals of businesses, shares in personal companies and associated business assets.

Empty Property relief

Empty commercial properties with rateable values of up to £18,000 will continue to be exempt from business rates.

More information

If you would like to discuss any of the issues raised in this checklist then please contact me at martinh@cleggssolicitors.com

Changes to the Insolvency Rules 1986

2010-04-11T16:41:00.001+01:00

Substantive changes to the Insolvency Rules 1986 came into force on 6 April 2010. Some of the amendments will affect businesses that find themselves as creditors of insolvent companies. Here are the key points that businesses that find themselves in that situation should be aware of:

• Insolvency practitioners can now
send and receive documents electronically. The expectation is that communications between insolvency practitioners and creditors will, increasingly, take place electronically.

• Insolvency practitioners can hold “virtual” creditors’ meetings, with creditors attending via, for example, video conferencing.

• Costs and expenses incurred by insolvency practitioners in the run up to the administration of a company become recoverable from the assets realised in the administration, effectively meaning that creditors bear these costs directly.

If you would like to discuss any of the issues raised in this e-mail then contact me at martinh@cleggssolicitors.com

Data Protection: New powers for the Information Commissioner

2010-04-08T20:01:00.007+01:00

Back in January, I gave you advanced warning that the Information Commissioner was to be given new powers to impose fines of up to half a million pounds. Re-reading my original article together with the Data Protection Check List it contained is recommended.

Although it was originally thought that sup
port for this level of fine would not be found in Parliament, it became law on 6th April 2010.

If your business has committed a serious data protection breach,
then the Information Commissioner has the power to issue a monetary penalty (MPN) which must not exceed £500,000. However, before doing so, the Information Commissioner will issue a notice of intent stating the intention to impose a fine and providing a set length of time to respond. The data controller can contest the issue of the MPN and/or the proposed size of the fine. The Commissioner must consider any representations and then decide whether to proceed with the imposition of the MPN. This is less likely where the data controller can show that reasonable preventative steps were taken.

Due to the potentially serious financial and reputational consequences of a data protection breach you should consider taking specialist legal advice if either:

you discover that a breach has taken place; or
your business receives a notice of intent.

If you would like to receive a more detailed briefing or have any questions that you would like me to answer then please contact me.

Provision of Services Regulations 2009 checklist

2010-03-19T09:52:00.000Z

The Provision of Services Regulations 2009 came into force on 28 December 2009. The Regulations apply to the majority of private sector businesses in the UK. They apply to business-to-business and business-to-consumer services.

The Regulations impose obligations on businesses to make certain information available to customers, and to deal with customer complaints promptly. They also prohibit discrimination against individual customers in the provision of services on the basis of their place of residence.

This checklist highlights the obligations that the Regulations impose on your business and the consequences for your business of failing to meet those obligations.

General points

You should check the information that you currently provide to your customers and ensure that you include any additional information that is required by the Regulations (see Information requirements below).
Make sure that you have procedures in place that enable you to provide the relevant information clearly and in good time before any contracts are concluded.
Ensure that you are ready to provide the relevant information that must be provided if requested by a customer (see Information to be provided if requested below).
Check that you have a complaints handling process in place and ensure that you deal with any complaints you receive as quickly as possible.
You must not discriminate against individual customers on the grounds of their place of residence (town, region or country) in your general conditions of supply (for example, your standard terms and conditions). This prohibition will not apply if you can objectively justify the reason for the discrimination.

Information requirements

Mandatory information

Name.
Legal status (for example, sole trader or partnership).
Address of where you are established (for example, your registered office).
Contact details for direct communication (for example, your e-mail address).
Contact details for making complaints and for information requests. These should include a postal, fax or e-mail address, telephone number and your registered office (if different from your postal address).
Price of services, if pre-determined.
Main features of service, if it is not obvious from the context.
VAT number, if registered for VAT.
If applicable, your trade registration scheme and your registration number.
If applicable, UK authorisation scheme details and the relevant regulatory body or single point of contact. The point of contact in the UK is http://www.businesslink.gov.uk/.
General terms and conditions, if any.
If applicable, your professional body's name, your professional title and the country in which the title was granted.
Contract terms on law and jurisdiction applicable to your service contracts, if any.
Any after-sales guarantee which provides more protection than that required by law.
If you are required to hold professional liability insurance, details about this, the geographical coverage and your insurer's contact details.
If you are subject to a code of conduct, trade association or professional body that has non-judicial dispute resolution procedures, details of this and how to access information about it.

Information document with a detailed description of your services

If you provide your customers with an information document with a detailed description of your services, the following information must be included:

Whether you carry on other activities which are directly linked to the service in question, details of this and the measures taken to avoid conflicts of interest.
If you are subject to a code of conduct, trade association or professional body that has non-judicial dispute resolution procedures, details of this and how to access information about it.

Information to be provided if requested

If you do not have pre-determined prices, the method for calculating the price (or a sufficiently detailed estimate).
Whether you are carrying out a regulated profession (for example, legal or financial services), reference to the applicable professional rules and how they can be accessed.
If you carry on other activities which are directly linked to the service in question, details of these and the measures taken to avoid conflicts of interest.
Whether you are subject to any codes of conduct, what these are and how to access such codes electronically.

How to make information available

You can make information available to a customer using any one of four methods:

You provide customers with information on your own initiative.
It is easily available to the customer at the place where you provide the service, or where the contract for the service is concluded.
It is easily available to the customer electronically (for example, on your website).
It appears in any information document you supply to the customer in which you give a detailed description of the service.

Consequences of failure to meet your obligations under the Regulations
If your business breaches its obligations under the Regulations:

Enforcement bodies (such as the Office of Fair Trading) have the right to take action if a breach of the Regulations by your business harms, or has the potential to harm, the collective interests of consumers.
A business that acts as a customer in a business-to-business transaction can take action against your business for a breach of the Regulations on its own initiative.

More information
If you have any questions relating to the content of this checklist please contact me at my email address

Mandatory Code of Conduct for Alcohol Retailers

2010-03-19T08:29:00.001Z

All our clients who sell alcohol should be aware that the Government has recently announced a new code of conduct for alcohol retailers. This checklist will help you keep track of the implementation dates for the five new mandatory licensing conditions.

Mandatory licensing condition	Coming into force
Banning promotions such as "all you can drink for £10" or "women drink free" deals.	6 April 2010
Banning "dentist's chairs" where alcohol is poured directly into the mouths of customers.	6 April 2010
Ensuring free tap water is available for all customers.	6 April 2010
Making sure all sellers of alcohol have an age-verification policy in place.	1 October 2010
Ensuring small measures of alcoholic drinks are made available to customers.	1 October 2010

Penalties for breaching the code
Premises that breach any of the above conditions will risk a range of sanctions, including:
Having additional conditions imposed on their licence.
Losing their licence.
A maximum £20,000 fine and/or six months imprisonment.
More information
If you have any questions about the content of this e-mail please contact eiher:
Martin Hall
Or
Leah McSherry

Pre-Budget Report - Summary

2010-02-04T15:51:00.001Z

These are some of the key issues from the Pre-Budget Report that are likely to have an impact on certain businesses.

Small companies’ rate of corporation tax

The increase in the small companies' rate of corporation tax will be deferred for a further year. The rate will remain at 21% for 2010-11 and will increase to 22% for 2011-12.

Employers' National Insurance Contributions

Employers' National Insurance Contributions will rise from their current level of 12.8% to 13.8% from April 2011. A 0.5% increase was announced in the 2008 Pre-Budget Report and a further increase of 0.5% was introduced in the 2009 Pre-Budget Report.

Research and development tax relief

The Government has announced that one of the conditions that a small or medium-sized enterprise (SME) had to satisfy in order to claim the enhanced tax relief for research and development will be abolished. A SME company was previously obliged to prove that it owned any intellectual property derived from the research and development to which the expenditure was attributable. If your business is classed as a SME you may claim an enhanced tax relief at the rate of 175% for qualifying expenditure on research and development. The change will have effect for accounting periods ending on or after 9 December 2009.

Electric cars and vans

The Government announced that it will provide greater incentives for businesses to reduce emissions from their company car fleets by introducing a number of measures including:
• Exempting electric cars from company car tax (CCT) for five years from 2010.
• Extending CCT bandings in 2012.
• Exempting electric vans from the van benefit charge for five years and introduce (subject to confirming compatibility with state aid rules) a 100% first-year allowance for business expenditure on new electric vans.

Business rates: empty property relief

For the year 2010/11 empty commercial properties with rateable values of up to £18,000 will be exempt from business rates. The temporary increase in the threshold for empty property relief announced in the 2008 Pre-Budget Report has been extended and the threshold increased to £18,000. This higher threshold reflects the effects of the 2010 business rates revaluation.

Business Payment Support Service

The Business Payment Support Service (BPSS) helps viable businesses facing temporary financial difficulties to spread tax payments over an agreed timetable. It was announced in the 2009 Pre-Budget Report that the time to pay facility will continue for as long as it is needed. HMRC will require businesses seeking time to pay arrangements worth £1 million or more to provide an Independent Business Review in support of their request. It is expected that the new requirement will be implemented from April 2010.

Changes to business rates reliefs from 1 April 2010

Revaluation of business rates takes place every five years and the next revaluation will take effect from 1 April 2010. The Valuation Office Agency has provided details of various resources to help businesses with the revaluation process, including a dedicated website http://www.voa.gov.uk/.

Small Business Rate Relief provides certain business rate payers with a reduction of up to 50% on their bills. It is available where the rateable value of your property falls below the threshold, currently set at £14,999 (or £21,499 for properties in Greater London). The threshold will increase from £17,999 (or £25,499 for properties in Greater London) on 1 April 2010.

VAT rate increase reminder

The standard rate of VAT reverted to 17.5% from 1 January 2010. Shops are allowed to add the extra VAT to prices at the tills for up to 28 days, giving them additional time to complete the re-pricing of stock.

Do you really want to risk a £500,000 fine?

2010-01-07T15:03:00.019Z

It is proposed that the Information Commissioner be given new powers to impose fines of up to £500,000 on directors who break data protection laws even if it is by mistake! This move looks as though it is a reaction, albeit a knee jerk reaction, to the breaches of the Data Protection Act that have led to personal data falling in to the wrong hands and which have received very high profile press coverage.

Up to now, if there were breaches then, the Information Commissioner would simply give those who breached the Act a "formal ticking off". The proposal is widely predicted to be confirmed shortly and the legislation will then be drafted and put before parliament.

Contrary to popular belief, there are not many businesses who do not need to formally notify the Commissioner that they process Personal Data. Not to notify, when you are required to do so, is an offence and, for the sake of an annual fee of £35, it seems a small price to have to pay for peace of mind.

To assist our clients and professional contacts I attach a check list which you should find useful. This checklist highlights the key legal obligations clients should consider when dealing with personal data about customers, suppliers, employees or any other individuasl who you may encounter in the course of your business. It is not intended to be all encompassing legal advice on all situations. If you should require specific advice then you should contact me. If you would like some further explanation relating to the Checklist, then you should also contact me or use the hyperlinks in the text.

DATA PROTECTION CHECKLIST

Penalties for failing to deal with personal data appropriately

In addition to the serious financial risks set out above there are commercial and reputational implications for your business (including possible criminal penalties and fines) if personal data is not handled properly.

Protecting and securing personal data

Personal data is any information about an individual held on computer or in organised filing systems that could identify the individual, either on its own or together with other information your business holds. It needs to be protected and kept secure. This information includes:

name, e-mail address, telephone numbers or date of birth; and
notes written about someone, such as an annual performance review.

The individual could be a potential or actual employee, customer or supplier, or possibly someone captured on your business' CCTV footage.

Collecting personal data

Your business can only collect personal data if it has a good reason for doing so (for example, because a new employee is coming to work for you).
When your business collects data about an individual, you will need to tell that individual what your business intends to do with their data (for example, if you are collecting a customer's e-mail address to confirm an order).
Your business should only collect information that it requires at the particular time (for example, a job applicant should not be asked for their bank details). This type of data should only be collected once the applicant has started to work for your business.
If your business wants to use someone's data for marketing purposes the individual must be informed. It is good practice to do this at the time the data is collected. In some cases, such as text or e-mail marketing, your business will also generally need the individual's explicit consent.

Storing personal data

All data must be accurate and up to date. Databases should be regularly cleansed and out-of-date information must be deleted.
Data should only be held for as long as it is required and for the reason it was collected. For example, if personal data was collected to deliver a product a year ago and not used since, it should not be held on the basis that it may be needed for another reason at some time in the future.

Keeping data secure and confidential

Personal data must be kept secure at all times. For example:

computers and files should be password protected;
personal data on laptops and other portable devices should be kept to a minimum;
manual filing cabinets containing personal data should be locked and only accessible to authorised personnel;
confidential documents should not be left unattended on desks; and
personal data should be removed promptly from fax machines, printers and photocopiers.

When your business sends personal data, it must be done in a secure way (for example, confidential information should not be sent in the internal mail).
Personal data must be disposed of securely (for example, by shredding, placing in confidential waste bags, destroying or securely deleting electronic files). Confidential papers should not be put in the recycling bin.
When working away from the office or in public areas:

ensure that personal data stored on portable devices such as laptops, iPhones, Blackberries, CD-ROMs or memory sticks is encrypted and kept secure at all times;
avoid leaving papers or electronic devices lying around;
make sure that members of the public cannot see any of your employees' confidential documents or computer screens; and
avoid talking about confidential matters when the public can hear.

Security breaches, such as accidentally losing personal data, should be reported to the appropriate person immediately.
Electronic documents, including calendar entries and meeting requests, should be password protected or designated private where appropriate.

Using data collected on individuals

Your business is generally allowed to use someone's personal data if they have given their consent. The data may also be used in other circumstances, for example, if your business:

needs to use the data to fulfil a contract with a customer (such as using their address to deliver goods to them); and
has a legitimate interest in using it, although this has to be balanced with the individual's rights. For example, if a part of your business has been sold to a third party and you need to transfer customer data to it.

Data should only be used for the reason that it was collected (for example, if calls between staff and customers are recorded for training purposes only, they should not be used to discipline a member of staff).
If you want a third party to manage data, such as carrying out payroll services, you should contact me for further information. Your business will still be responsible for protecting the data and will need to enter into a written contract with the third party.
Your business should also contact me for further information if it is considering transferring any data outside the UK. It is very easy to transfer data outside of your own country, for example, by sending an e-mail to an office outside of the UK.
If the data is being used in marketing material, check that the recipient is aware that their data may be used for this reason and confirm that they do not object. You will generally need the individual's explicit consent (opt-in) for e-mail, fax and SMS marketing. If the individual is an existing customer, you may be able to market similar products to them by these means without prior explicit consent. You should contact me for further information if you wish to do this.
If your business is considering using sensitive personal data (for example, information about ethnic origin, trade union membership or criminal records), you should contact me .

Enquiries about personal data

Make sure your business has a system in place to deal with individuals who request details of the personal information that your business holds on them. Individual employees should not deal with this type of enquiry unless they have been given specific authorisation to do so. The request should normally be passed to the person within your business who has responsibility for data protection issues.
Personal data should not be given out to the friends or relatives of an individual without that individual's specific consent.

Noddy, you will be hanging up your stocking on the wall!

2009-12-14T16:14:00.003Z

Open Letter to Noddy Holder and the other members of Slade

Dear Chaps,

Those who know me think that I am a level headed sort of chap but, I have to admit that last week I acted totally out of character and I ventured into that monument to retail sales known as Meadowhall. You have probably seen the vast expanse of it when you have been travelling between gigs along the M1 over the Tinsley Viaduct at Sheffield. You will be please to learn that although there is still some way to go to the climax of the festive season, the melodious strains of your classic hit, "Merry Christmas Everybody" is being played in many of the shops. There are not many people that will make a net gain out of Christmas this year - I most certainly will not - but I am please to tell you that you probably will!

How do I know this? Well your music has the benefit of copyright and enjoys the protection of the Copyright, Designs and Patents Act 1988. This means that if anyone wants to play your music in any public place then they need your permission. This permission is known as a licence and it has to be obtained in advance for a fee.

Recently, I was explaining all of this around the dinner table at home and, after a short period of no reaction, the question was raised "how does Noddy cope with all of the requests he must receive and find time to appear in those nutty advertisements?" I explained to them, you do not personally deal with the licences, there are two organisations that deal with them for you and other songwriters and performers. They are known as the Performing Rights Society (PRS) and Phonographic Performance Limited (PPL) and, I suppose, are best described as the equivalent of Santa's little helpers. An annual licence is required from both organisations.

Noddy, did you know that many businesses do not realise that public place extends to any commercial environment? So, if a radio, CD, DVD or TV is played in an office not normally accessed by the public then two licences are still required even if the equipment is only used to play festive music.

Both organisations have inspectors who seek out defaulters that do not have the required licences and, if discovered infringing the copyright, those businesses will be asked to pay a premium of 50% for the first year licence fee. If they refuse they are likely to be prosecuted and fined.

A client came to see me some months ago who was facing such a fine and could not understand how they discovered he had a radio playing in his workshop. It transpired that he had accessed the PRS website and enquired as to the price but did not go ahead because he thought it too expensive and the radio station had paid for the licences. The information gleaned from the website was used for a visit by one of the inspectors who promptly informed him that radio stations do indeed need licences but that he needed to have additional permissions. Needless to say, he now has paid the fine and obtained the licences.

So it seems you can have a good Glam Rock Christmas happy in the knowledge that your ownership is being protected.

I T' S C H R I S T M A S !

Company Directors – Ignore this at your peril!

2009-10-18T17:05:00.000+01:00

A fundamental change in company law relating to Directors is now effective because of provisions of the Companies Act 2006. This relates to directors duties and it is essential that all directors review the way that they operate and their other interests which may, unless dealt with properly, bring about personal liability. Company Directors have always owed a duty of care to their company. This derives from many years of common law and the decisions in a myriad of court cases. So what’s new? These duties are now statutory rules and are set out in the Act for all to see. They include a duty to promote the success of the company, a duty to declare interests and a duty to exercise reasonable care, skill and judgement. These codified rules together with those sections of the Act which makes it easier for shareholders to sue the directors in the name of the company for negligence, breach of duty and breach of trust,presents all Directors with a formidable threat. Many Companies are well run but, in these times of uncertainty, if anything does go wrong disgruntled shareholders will be looking for someone to blame – you may not like it but we now live in a litigious society. A more detailed analysis of Director's Duties is contained in the Business Law Briefing No: 1 available on our website

Nottingham Evening Post

2009-10-03T09:39:00.001+01:00

For those of you who read of my “other exploits” recently publicised in the Business Section of the Nottingham Evening Post (always a good read, especially on a Tuesday) and called to wish me luck, I can report that there were some seriously fast cars in front of us but thanks to some incredible lap times by my driving partner, Adrian Beer, and some consistent pace by me, we managed to get in the top 10 at 9th out of 72 starters. We did have the honour of being the highest placed MGB.

©Mike Breedon

Special Offer to help you preserve the Cash Flow of your business

2009-09-20T10:45:00.001+01:00

The current economic climate underlines the need for businesses of all sizes to have positive cash flows.

Now is the time for terms and conditions of sale to be reviewed to ensure that the people that owe you money get the "hint" and are persuaded to pay up rather than abuse the credit terms that you have given them. There is a careful balance that needs to be observed between getting paid quickly and upsetting a customer so that they go elsewhere.

It is important that your terms and conditions are well written to protect the viability of your business. Good terms and conditions should contain, amongst other things, provisions for:

charging interest on late payments (which could be as much 8.5% at today's rates)
being able to recover reasonable administration fees to cover your credit control costs
being able to recover your goods if the person who owes you money does not pay.

To back up these terms and conditions you need to have a robust credit control system with well worded reminder letters.

Legal recovery needs to be an act of last resort and terms and conditions need to be written so that a debtor has every incentive to pay what he owes within your credit terms. Experience tells me that customers will appreciate and respect you for being straight and firm in your resolve to recover money rightfully due to you as, after all, they are in business as well and facing similar challenges.

If you feel that your general terms and conditions of sale are not as effective as you would like then you should consider taking up Cleggs' initial assessment review for a fixed fee of £50 plus VAT. If after such assessment you decide to go ahead with our recommendations, then the initial fixed fee that you have paid will be credited against any further charges that we may make. Please contact me for full details of this offer.

Companies need to sign documents properly

2009-09-20T09:39:00.000+01:00

This case clearly shows how important it is to have a proper policy in place for directors and other officers who sign documents on the Company’s behalf. Please send me an email if you would like to discuss any of the points set out in this update.

The Facts of the Case

Mr Carter and Mr Jewson were two directors of Carson Country Homes Limited (“Carson”). As part of Carson’s banking arrangements with Barclays Bank, a debenture was to be created giving security to the bank over Carson’s assets. A debenture requires to be executed as a deed.

Mr Jewson dealt with the administration and financial affairs of Carson and Mr Carter, who was not always available, was in the habit of allowing Mr Jewson to sign documents for him so long as he was aware of what was happening. Mr Jewson signed the debenture for the bank. He did so for himself and he also signed for Mr Carter, replicating his signature, but he failed to tell Mr Carter of the transaction.

Shortly afterwards, Barclays had to appoint Administrators under their debenture and it was not until Mr Carter objected, that the bank was aware that the signature was a counterfeit. Mr Carter’s argument was that his signature had been forged and that the bank’s security in the form of the debenture was not valid and, therefore, the administrators’ appointment was invalid. The administrators applied to the Court for it to decide if they had been validly appointed.

Reasons for the Decision

It is not hard to see that the Court found in favour of the Administrators appointed by Barclays.

Reasons for the decision show clearly how Companies should execute deeds. Under section 44 of the Companies Act 2006 a Company has validly signed a document as a deed by any of the following methods:

• the company seal must be fixed to the document (a rare occurrence these days but not unknown); or
• two directors; or
• one director and the company secretary; or
• a director in the presence of a witness (not always accepted by banks who usually insist on two directors).

Section 44 also goes on to provide that a party acting in good faith for valuable consideration can rely on the presumption that a document is correctly execute if it appears to have been signed in accordance with section 44. Barclays were such a person (the valuable consideration being the banking facilities made available to Carson) and they did not have to question that the document which appeared to have been signed by Carter and Jewson was, in fact, signed by both of them.

So Mr Carter’s argument that he was unaware of the transaction received little sympathy. Although this case involved a counterfeit signature which is quite rare, disputes normally arise when Companies try and argue that the person signing the agreement had no authority but the same rules and presumption apply.

Changes to the Memorandum of Association on 1st October 2009

2009-09-02T15:07:00.000+01:00

In my last up-date, I discussed the changes made by the Companies Act 2006 to the Articles of Association. There are more radical changes about to be implemented to the Memorandum of Association and I think this change is probably the most significant under the Act as it affects the basic constitutional document. From from 1st October 2009, the memorandum (for all companies) will no longer by a dynamic document, it cannot be changed.

Companies formed after 1st October (new companies) will file a "one off" memorandum with Companies House as part of the formation requirements. The essence of this new document is simply a "snap shot" in time to identify the new company and contain a statement by the subscribers that they wish to be incorporated.

For companies formed before 1st October 2009 (existing companies) the objects clause will be deemed to transfer into the Articles of Association which will then become the sole constitutional document of the Company.

New companies can be formed with unrestricted objects but existing companies will continue to be bound by the objects transferred into the Articles.

However, existing companies can take advantage of this unrestricted status by changing their Articles. By unrestricting their objects, any risk of the Company acting beyond its powers can be eliminated.

If you would like to discuss further how your existing Company could take advantage of this and all the other new provisons of the 2006 Act then feel free to contact me by email.

ARTICLES OF ASSOCIATION – MAJOR CHANGES MEANS THEY MUST BE REVIEWED

2009-07-28T13:27:00.000+01:00

Is your business incorporated as a limited company? (whether public or private, limited by shares or guarantee) - then you need to ensure that the Articles of Association are reviewed as soon as possible. The Articles are the regulations governing the mode of conducting the business and its internal organisation. The Memorandum of Association sets out the purposes for which the company was formed and its capital. The Companies Act 2006 is gradually replacing the Companies Act 1985 over a period of time and the next significant date is 1st October 2009. On this date, the 2006 Act provides that the Memorandum will become a more simplified document only required to be presented at registration. It is the New Model Articles of Association (which will apply by default to all new companies which are incorporated on or after 1st October 2009 unless they register their own) that may cause problems for existing companies. The changes brought in by the Act means that there are various provisions in the Articles of existing companies which may be overridden by the new law. An example being, director’s duties and authorisation of transactions where there are conflicts of interest, to which I referred in my previous update. However, it is not all bad news, there is additional flexibility in the some provisions of the new Act which can be used to a company’s advantage.

If you should need help or further guidance then you should contact me by clicking on the link in the panel to the right of this Update

Welcome

2009-06-24T19:54:00.000+01:00

My aim with this blog is to provide a variety of articles, information and news on topics relating to Corporate and Business Law. Through it, I aim to raise the awareness of clients (and potential clients!!!) and my professional contacts of topics that affect businesses. Each post is not intended to be an all encompassing review and readers should be aware that the Law is constantly changing and evolving. You should take specific legal advice before applying any of the information in any posting to actual issues or transactions. Readers can contact me anytime by clicking on "Contact Me" in the Important Links section. Please feel free to subscribe by clicking on "Posts" below. When you subscribe to a feed, it is added to the Common Feed List. Updated information from the feed is automatically downloaded to your computer and can be viewed in Internet Explorer and other programs.