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| Thursday November 23 2017 |
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By Frances Gibb and Jonathan Ames
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This morning’s must-read of all things legal, including news, comment and gossip. For more in-depth coverage, read ...
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Subscribe to The Brief Premium
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Today
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JUSTICE BUDGET SLASHED BY TENTH OVER TWO YEARS
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Budget briefing: driverless car funding boost for lawyers
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Uber data breach could trigger flood of legal claims
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Monarch wins airport slot sale appeal
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British banks ‘could keep passporting rights after Brexit’
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Blue Bag diary: What if women ruled law firms …?
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Analysis: Britain is diminished without seat on UN court
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Disrupting developments: Law firms take the plunge with stock market flotation
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Analysis: Let the EU take charge of legal aid
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Event: Tax crackdown – fairness and avoidance
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| Tweet us @timeslaw with your views. |
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Event
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Tax crackdown – fairness and avoidance
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Times Law and Brief Premium are holding a timely event to analyse the mounting controversy over tax – who should pay it and how much should they pay? Please join us on December 4, 2017 at The Times’s offices to hear leading figures in the tax field debate the issues. On the platform will be: Sir Edward Garnier QC, former solicitor-general; Dame Margaret Hodge MP, former chairwoman of the House of Commons public accounts committee; Malcolm Gammie QC, tax barrister at One Essex Court; Christopher Groves, tax partner at City of London law firm Withers; and Alexi Mostrous, head of investigations at The Times
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Story of the Day
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Justice budget slashed by a tenth over two years
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Spending plans for the Ministry of Justice are down by £600 million or 9 per cent over the next two years.
The budget for the department is to fall from £6.6 billion in this financial year, to £6.2 billion in 2018-19 and £6 billion in 2019-20 under spending forecast figures released yesterday.
Evaporating cash at the ministry will cast further doubts over the possibility of a boost to civil legal aid eligibility, as the government announced a long-awaited review of the impact of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
The estimates were first released in the spring statement from the chancellor but published alongside yesterday’s budget.”
Angela Rafferty, QC, chairwoman of the Criminal Bar Association, said: “The poor and vulnerable in society are being denied access to justice. “While the official budget statement is silent about this vital pillar of state we can see from the spending forecast that there will be a £600 million reduction in an already meagre and inadequate budget for the ministerial department.” She added: “The system is desperate; it cannot endure any more cuts.”
Explaining the departmental resource budgets, however, the Treasury notes that the reduction would not be as much as anticipated. “Given potential new spending and administrative pressures faced by departments in 2019‑20," it said, "the government has decided not to proceed with the remaining £1.1 billion reduction in spending in that year."
“Taking these changes together, departmental spending in 2019-20 will therefore be higher than envisaged at budget 2016 by £2.1 billion.”
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Disrupting developments
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Law firms take the plunge with stock market flotation
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As the third British firm prepares to list on the London Stock Exchange, Steven Scott finds that the path to public ownership can be rocky
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News round-up
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Budget briefing: driverless car funding boost for lawyers
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Moves to fund investment in driverless vehicle technology and an exemption of most first-time buyers from stamp duty made most of the legal sector headlines from yesterday’s budget, as Times Law reports – but other announcements caught lawyers’ attention.
An oil and gas boom
A measure allowing the tax history of oil and gas fields to be transferred when sold will mean that buyers can claim more relief when they decommission pumping operations.
Michael Burns, a partner at the City of London law firm Ashurst, welcomed the move, claiming that “decommissioning is one of the most significant challenges in agreeing valuations on mergers and acquisition deals that bring new investment into the sector.
“To implement the concept of a transferable tax history will provide a useful additional tool in the armoury to help bridge valuation divides.”
The move would “allow buyers to obtain real and effective tax relief for the costs of decommissioning late life assets,” said Chris Bates, a lawyer at the London office of the transatlantic law firm Norton Rose Fulbright. He predicted that the tax break would “alleviate the current bottleneck around the transfer of mature fields in the North Sea to late life specialists”.
David Blumenthal, a partner at the fellow Square Mile firm Clyde & Co, said that the tax break “should provide a welcome stimulus for investment. It could help to extend the life of the basin, which we know still contains plenty of oil”.
But he sounded a note of caution, arguing that yet “more government support is needed to reverse the decline in oil and gas production in the North Sea that we have seen in the last few years”.
Planning is all talk, talk
Planning lawyers were disappointed that while the chancellor made all the right noises in acknowledging the UK’s housing crisis, he was prepared only to talk about the issue rather than acting to resolve it.
“Philip Hammond has acknowledged that a push on all fronts is needed to solve the problem, planning being just one piece in a complex jigsaw,” Lucy Thomas, another Ashurst partner, said before continuing rather glumly: “And what can planners expect? Radical reforms? The adoption of recommendations made by bodies such as the CIL Review Panel? No. More consultation.”
She claimed the budget statement revealed only that lawyers “can look forward to being asked about a variety of topics, including how housing density in urban areas can be increased, how the housing delivery test — which has not yet been implemented — can be strengthened and somewhat bafflingly, given how many times this question has been asked already, how the development process can be sped up”.
Carl Dyer, a partner at the national law firm Irwin Mitchell, was even more jaded in his analysis. “The green belt, including all the brown field parts of it, remains sacrosanct,” he said. “Of course it does, it's mostly in Conservative Party seats. Targeting new housing in urban areas makes it so conveniently on the other side of the borough boundary for most of the government’s supporters.”
Engines and powerhouses
Lawyers pointed out that driverless cars were just one piece of the brave new world of modern transport, and Hammond’s announcement of more funding for infrastructure projects represented at least a positive start.
Chris Rawstron, a partner at the Birmingham office of Irwin Mitchell, said there were “no cities from the Midlands and the North of England in the top ten for fast economic growth. This must change and providing tangible investment in transport infrastructure can contribute to productivity gains, something which is vital for our future prosperity”.
Rawstron welcomed what he described as the government’s “ongoing commitment” to the so-called Midlands Engine and Northern Powerhouse projects, “along with confirmation of a second devolution deal in the West Midlands. This will provide a further devolution of powers from Whitehall and a funding boost to the region”.
Taxing time limit
There is no avoiding pure, unadulterated tax in a budget and Hammond’s announcement that Revenue & Customs would extend investigation time limits to 12 years for all offshore planning set off alarm bells for specialist lawyers.
“This time extension means HMRC will be able to analyse at least 12 years of back taxes where there is an offshore element,” said Jason Collins, a partner at the City law firm Pinsent Masons.
The time limits have been extended from the usual four years, or six in cases of carelessness. The 20-year limit for fraudulent conduct remains in place.
“It is not clear yet whether this will be retrospective,” Collins said. “If it is, anyone engaged in offshore tax planning in the late 2000s could find their affairs being reopened.”
He added that despite the “noise” around the recent Paradise Papers revelations, the government “recognises that offshore centres are not teeming with service providers helping their clients evade taxes. Non-compliance will largely be technical in nature or based on genuine mistakes.
“HMRC has cleverly bought itself double the time to analyse, track down and pursue such non-compliance.”
It’s that Brexit again
No chancellor could have got through yesterday’s statement without mentioning the B word — and that doesn’t mean budget.
Hammond doled out an extra £3 billion for Brexit preparations over the next two years, and Bernardine Adkins, a partner at the Anglo-Canadian law firm Gowling WLG, reckoned it was the minimum required.
She described the announced investment as being “for preparations only. Considerable funding is needed to set up replacement agencies for their EU counterparts by March 2019, or to increase resources to existing agencies where existing EU competencies are being repatriated”.
Adkins pointed to the Trade Bill, which includes a provision for creating a trade remedies authority. “Other new or expanded agencies will be needed across the economy,” she said, highlighting air transport, competition, fisheries, pharmaceuticals, financial services and agriculture.
“What is needed also is some clarity as to the estimated operational costs of these new/expanded competencies on an ongoing basis,” she said.
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Uber data breach could trigger flood of legal claims
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Uber could face a “huge number” of legal claims after personal information of millions of users and drivers was lost when the company was hacked, lawyers have predicted.
Hackers stole the personal information of 57 million users and drivers last year, but the breach was only revealed yesterday in a blog post by the company’s new chief executive Dara Khosrowshahi.
Lawyers called on the company to clarify the extent of the data breach.
“Uber clearly has many questions to answer with regard to the failure to hold customers’ and drivers’ personal information securely as well as a failure to report the breach to the relevant regulatory authorities and notify those affected,” said Sean Humber, a partner at the London law firm Leigh Day, which recently acted on behalf of Uber drivers.
He added that customers and drivers affected by the data breach could bring claims for compensation for the distress caused and any losses suffered as a result of the misuse of their private information and breach of the Data Protection Act.
Susan Hall, a partner at the national firm Clarke Willmott, agreed that Uber executives would face some uncomfortable questions.
“While the common weakness in most hacks is the human factor, it’s tempting to think of this as unsophisticated users falling vulnerable to people with much greater technical knowledge,” she said, adding: “This does not seem to have been the case here. It seems more likely to be a case of Uber’s IT developers being careless and making use of shortcuts which exposed the company to the kind of security risks which occurred here.”
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Monarch wins airport slot sale appeal
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Monarch has won an appeal allowing it to sell its remaining flight slots at two airports, in a ruling that will significantly benefit the bust airline’s creditors.
Administrators at KPMG, the “big four” accountancy practice, are aiming to raise capital by transferring slots at Gatwick and Luton airports to other airlines.
Sitting in the Court of Appeal, Lords Justice Floyd and Newey and Lady Justice Asplin unanimously overturned a ruling made by the High Court this month.
The court ordered that the slots be immediately allocated to Monarch.
Lawyers for the administrators, led by the City of London “magic circle” law firm Freshfields Bruckhaus Deringer, said that the ruling was the first in which the Court of Appeal had considered the duties of airport slot co-ordinators.
In overturning the lower court’s decision, Lord Justice Newey accepted the administrator’s submission that, despite entering administration, Monarch retained its accrued right to be allocated the slots which it would then be able to exchange with other airlines for value for the benefit of its creditors.
“We are delighted with the ruling,” Blair Nimmo, a partner at KPMG and joint administrator, told Reuters. “We will now progress the slot exchange transactions we have underway, whose buyers will be announced at completion.”
Monarch collapsed at the beginning of last month. Airport Co-ordination, the company that organises slots, said that it would not appeal the ruling.
Freshfields instructed Marie Demetriou, QC, of Brick Court Chambers in the Temple, along with David Allison, QC, of South Square chambers in Gray’s Inn. The City law firm Bates Wells Braithwaite acted for Airport Co-ordination and instructed Michael Crane, QC, of Fountain Court Chambers in the Temple.
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British banks could keep passporting rights after Brexit, claims lawyer
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The threat that British banks would lose their “passporting rights” after Brexit have been overstated, a specialist lawyer has claimed.
Michel Barnier, the EU’s chief Brexit negotiator, told reporters in Brussels on Monday: “The legal consequence of Brexit is that the UK financial service providers lose their EU passport. This passport allows them to offer their services to a market of 500 million consumers and 22 million businesses.”
However, Ian Borman, a partner at the City of London office of the US law firm Winston & Strawn, said that the EU position was predictable and not as significant as some might assume. “The practical significance of this can be overstated,” he said.
“The fact that financial institutions, faced with the worst possible type of Brexit, are not making more significant moves and are still investing in London, albeit cautiously, tends to support the view that the absence of a passport will reduce the number of people employed here.”
However, he went on to say that “it remains to be seen whether Brexit will cause the absence of passporting for EU regulated entities into the UK, which may reduce competition in the UK financial market and benefit UK regulated entities”.
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In Brief
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In today’s Times Law …
And elsewhere …
- ‘Butcher of Bosnia’ Mladic convicted of war crimes and genocide – The Times
- Remove risk of jail for having an abortion, demand medics –The Times
- Killer driver to base appeal on testing scandal—The Times
- Boffins help judges get to grips with courtroom science – Law Gazette
- Military amnesty proposal will cause deep concern in Northern Ireland – The Irish News
- Faiz Siddiqui sues Oxford over ‘inadequate’ 2:1 degree -- The Times
- Even Rolf Harris deserved better than this, argues Danny Finkelstein, who says one false allegation should never have reached court – The Times
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Analysis
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Britain is diminished without seat on UN court
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Politicians must wake up to the effects of the UK’s new reputation for isolationism, writes Khawar Qureshi, QC
It is no exaggeration to state that the loss of a British seat on the judicial arm of the UN will have ramifications far beyond the tranquil confines of the Peace Palace in the Hague.
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Read the full story
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Analysis
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Premium
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Let the EU take charge of legal aid
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Britain may be quitting the bloc, but Caterina Franchi still reckons that a union-wide system could save access to justice in Europe
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Blue Bag
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What if women ruled law firms …?
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Women seem to have less difficulty in the modern world winning democratic elections to top political office. Theresa May and Angela Merkel spring to mind fairly quickly, and even Hillary Clinton won the popular vote in the US before being reminded that an arcane electoral college would have the last word. But women still struggle to get to the top of law firms.
Plenty of reasons have been posited for that lack of gender diversity around partnership management tables. And now a website called Law Story, which styles itself as The Archers meets Suits with cod-Lichtenstein pop art imagery, recently held a roundtable chinwag to assess what life would be like in the legal profession if women ruled the law firm world.
The consensus view? Female bosses would make no difference at all. Stereotyped views of women being more caring, inclusive and less confrontational are rubbish, the panel of law students and practising lawyers concluded.
“It’s not about men or women at the top,” said Kevin Poulter, a partner at the London law firm Child & Child, “but ways of thinking and perceptions.” Poulter launched Law Story six months ago with Lise Seager, who runs her own law firm, and Simon McCall, a former in-house lawyer. So far it has produced 22 written “episodes” detailing scenes in a quasi-Barbara Cartland style.
The most recent involves Amber, a lawyer whom the readers find leaving her office at LB Law at 7.15pm (slacker! Ed), when “she’s tired and confused — and still not a partner” (perhaps that’s because so knackered and confused, Ed again).
“Amber’s mind flitted between memories of her holiday on Zante a few months back and the meeting with Fay three days ago. In the Greek sunshine she had been optimistically planning her life as a law firm partner. Now she had learnt that it wasn’t going to happen.”
There is a bit of a cliffhanger ending and an opportunity for readers to vote for the best next move for the heroine.
If only choosing “magic circle” senior partners was so easy.
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Quote of the day
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“Until we have a stable and skilled workforce that can build developments and a consistent and effective planning system, the housing supply will not increase at a sufficient rate.”
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Justin Neal, a partner and head of real estate at the London law firm Gordon Dadds, commenting on Philip Hammond’s budget statement yesterday.
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