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| Friday October 27 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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Today
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UNCLEAR LAWS LOSE TREASURY £6bn IN TAX
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Javid accused of nimbyism over housing developments in Tory seats
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Bridge not a sport, rules EU’s top court
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Monarch in legal battle over airport slots
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Fifth of UK companies ‘ignoring advice on data protection reforms’
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Banker ruling shows ease of extraditing professionals to US
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Brexit puts outdoor wedding law on hold
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London lawyers work the longest hours
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Blue Bag diary: A short, 42-page guide to the MoJ
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Analysis: Legal Services Act – not so radical
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Media law update: Back to the future of common law libel
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Special focus: Wales creeps closer to separate legal system
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Analysis: Plain packaging: booze and sweets could fare better than cigarettes
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| Tweet us @timeslaw with your views. |
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Media law update
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Premium
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Back to the future of common law libel
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The Court of Appeal has cleared up confusion around defamation laws, making it easier to bring claims in the process
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Story of the Day
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Legal wrangles widen tax gap by £1 billion in a year
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Disputed points of law have led to a £6 billion shortfall in tax taken by the Treasury, lawyers have claimed as they blamed tax officials for “muddying the water” over legal interpretation.
Figures published yesterday show that legal rows caused the “tax gap”, the difference between how much tax is owed and how much is taken, to increase by 9 per cent last year.
Officials at Revenue & Customs maintain that a significant amount of tax is underpaid every year because taxpayers’ interpretation of the law differs from its own.
That gap stood at £34 billion in 2015-16, up by £1 billion on the previous year.
Pinsent Masons, the City of London law firm, claimed that for the most recent year large businesses accounted for £9.7 billion, or nearly 30 per cent, of the tax gap, while smaller businesses accounted for £15.5 billion.
“HMRC is pushing the envelope in grey areas and muddying the water when it comes to enforcing its interpretation of the law,” Jason Collins, a Pinsent Masons partner, said.
“Any kind of tax planning is now being scrutinised by HMRC to see if it can be challenged. No area is off limits for HMRC and this is reflected in the recent jump in the tax gap relating to legal interpretation.”
Lawyers also argued that the increase could result from poor guidance to smaller businesses over complicated rules. “This means more differences of opinion over legal interpretation are ending up as disputes rather than being resolved at an earlier stage,” Collins said. “The tax gap for legal interpretation is likely to rise further with major changes to the tax system looming.”
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Special focus: Devolution
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Wales creeps closer to separate legal system
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As the Welsh assembly gains more power, the arguments for a distinct jurisdiction become stronger
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News round-up
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Javid accused of nimbyism over housing developments in Tory seats
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The communities secretary, Sajid Javid, has been accused of operating a nimby policy towards proposed housing developments in Conservative-held constituencies.
Lawyers said that Javid was undermining Theresa May’s stated commitment to boost the number of new homes in Britain by refusing proposals in the face of expert advice.
The national law firm Irwin Mitchell claimed to have studied all 69 called-in applications and recovered appeals for housing proposals issued in the name of the communities secretary since he took office in June. They effectively involved the department rejecting applications.
The lawyers claimed that 64 of the applications involved sites in Conservative constituencies. “That is 93 per cent, a pretty amazing statistic, particularly given that the Tories only have 56 per cent of English MPs,” Carl Dyer, a partner at the firm and its head of planning, said.
The firm’s research also found that 14 of the call-ins or appeals involved Javid refusing permission despite the planning inspector having recommended that the development go ahead. Of those 14 decisions, 13 were in Conservative held seats. The exception was in the Buckingham constituency of the speaker, John Bercow, where plans for 130 homes were refused in July.
“Those 14 decisions represented nearly 2,400 homes, which could have permission if the secretary of state had upheld the inspectors’ recommendations,” Dyer said.
“Or put it another way: Mrs May announced £2 billion of spending to deliver just 5,000 more affordable homes a year for five years. The numbers are not directly comparable, but Javid's refusals, if sustained for the life of a parliament, correspond to about a billion pounds worth of housing provision.”
A spokesman for the Department for Communities and Local Government said: “The secretary of state in considering called-in applications and recovered appeals will always focus on the merits of the individual cases before making a decision, having full regard to the inspector’s report. His role is to reach a view based upon his consideration of the facts.”
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Bridge is not a sport, rules EU’s top court
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The game of bridge may flex the intellectual muscles but the EU’s top court has ruled that it is not a sport because it involves “negligible” physical activity.
The Court of Justice of the EU ruled that the mental gymnastics, logic and memory skills that have made bridge one of the world’s most popular card games were not enough to classify the game as a sport.
The ruling, which overturns a recommendation in June 2017 from the court’s own legal adviser, is a blow to the English Bridge Union, which had claimed that as a sport, bridge qualified for VAT relief on tournament entry fees.
However the court ruled yesterday that for the purposes of VAT rules, the ordinary meaning of sport should apply, namely activities that are “characterised by a not negligible physical element”. It said: “The court concludes that an activity such as duplicate bridge, which is characterised by a physical element that appears to be negligible, is not covered by the concept of ‘sport’ within the meaning of the VAT Directive.” Duplicate bridge is a variation on traditional contract bridge that is widely used in competitions.
However, devoted players could still have a trick up their sleeve: the court said its ruling did not preclude that the game could be covered by another VAT exemption for “cultural services”.
Lawyers were relatively unsympathetic to bridge players. Mark Stephens, a partner at the London law firm Howard Kennedy, said: “Court time has been wasted in this case. Of course bridge isn’t a sport — it’s barely snap — and it is not entitled to tax relief. The ruling means that all of those bridge players pumping iron in preparation for international competition will now have to pay the taxman his fair share.”
Adam Leadercramer, partner at Onside Law, a sport specialist law firm, said: “Linking sport to physical activity is an established view, so the court’s ruling is in line with thinking elsewhere.” Leadercramer said the Charity Commission took the view that for a sport to qualify for charitable status it must be capable of improving fitness levels.
However, the lawyer said there was speculation that the International Olympic Committee could approve so-called e-sport — playing computer games, in other words — for a forthcoming Olympic games. “That demonstrates that some international bodies are potentially taking a broader view,” he said.
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Monarch administrators launch legal battle over airport take-off slots
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The administrators of Monarch Airlines are seeking a judicial review to allow them to sell its take-off and landing slots, Robert Lea writes.
Almost four weeks after Monarch was put into bankruptcy protection, insolvency partners at KPMG, one of the “big four” accountancy practices, have made an urgent application to the High Court over whether they have the right to sell the 18 slots at Gatwick Airport.
They could be worth as much as £60 million at auction, because it is so rare for the spaces to become available.
If the administrators persuade a judge that they can sell the slots, it is likely that the proceeds will go to Monarch’s former owner, the private equity firm Greybull Capital, which is the carrier’s main secured creditor.
The question over the ownership of the slots has come to a head because yesterday was the deadline for Airport Co-ordination, the industry self-regulatory body that oversees the allocation of airport slots, to make sure that take-off and landing rights are in place for next year’s summer season. The body is believed to have challenged the KPMG partners over whether they, as mere administrators of an airline, have the same rights to the slots.
The administrators contend that they hold the rights to the slots for as long as they continue to hold an operating licence. Monarch’s licence is held by KPMG but is subject to a revocation process with the industry regulator, which is likely to run well into next month.
KPMG confirmed that it had instructed Freshfields Bruckhaus Deringer, the City of London “magic circle” law firm, to seek leave for judicial review. A ruling on the issue could be made within the week.
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Fifth of UK companies ‘ignoring advice on data protection reforms’
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Nearly a fifth of British corporations have failed to allocate money for legal advice on how to prepare for European data protection rules that come into force in May, it has emerged.
Some 17 per cent of FTSE 350 companies confessed to having allocated no money to spend on legal advice regarding the EU’s general data protection regulation (GDPR).
US-based companies were even less keen on forking out with 22 per cent of admitting that they were not instructing lawyers on the implications of the regulations. The regulations will affect any business that controls or processes the data of EU citizens, regardless of where the business is located.
On both sides of the Atlantic, companies were more interested in spending money on the technological implications of the forthcoming rules.
The survey of 200 large corporations in the UK and US found that the mean technology budget set aside for FTSE businesses was £430,000, while their American Fortune-listed counterparts were spending even more at $1 million (£760,000).
It also emerged that companies are recruiting additional permanent staff to meet the increased regulatory demand. Some 40 per cent of the FTSE firms had set aside a budget of between £201,000 and £400,000 for additional permanent staff, while in the US 34 per cent had allocated between $501,000 and $1 million.
“While large businesses are taking GDPR compliance seriously, there remain worrying signs that they may be falling short in planning for implementation,” Behnam Dayanim, a partner in the Washington DC office of the US law firm Paul Hastings, said. He described the forthcoming regime as “high-stakes. The consequences of violation can be immense, both in terms of fines and in potentially crippling disruption of a business’s ability to exploit what in many instances is its most valuable asset”.
Businesses can be fined up to 4 per cent of global turnover if it is proved that they failed to comply with the rules.
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Banker ruling shows ease of extraditing bankers to US
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A ruling by a London judge to send a currency trader to face fraud charges in the US demonstrates “the relative ease with which City professionals can be extradited” to America, lawyers have argued.
Stuart Scott, the former head of currency trading at the City of London office of HSBC Holdings, was ordered by District Judge Michael Snow at Westminster magistrates’ court to be extradited to the US.
He faces fraud charges there over allegations around a $3.5 billion (£2.66 billion) currency order from Cairn Energy in 2011 that resulted in an $8 million profit for the bank. Scott said that he would appeal the ruling.
Andrew Smith, a partner at the London white collar crime specialist law firm Corker Binning, said that the judgment “demonstrates the relative ease with which City professionals can be extradited from the UK to the US on allegations of financial misconduct.
“Extradition lawyers in the UK know all too well that our judges will adopt a flexible interpretation of the conduct alleged in the extradition request in order to satisfy themselves that there is an equivalent UK offence.
“Given these risks, when faced with a US extradition request, a client should always be advised by UK and US lawyers about the merits of foregoing a protracted extradition battle and instead agreeing a negotiated return with bail conditions.”
Ben Keith, an extradition specialist barrister at 5 St Andrews Hill chambers in London, added: “It is very difficult to defeat extradition requests by the United States, especially in fraud cases.”
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Brexit puts outdoor wedding law on hold
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Ministers have shelved plans to reform to the law to meet public demand for weddings on beaches or other beauty spots such as woods or islands, at least during the squeeze on parliamentary time caused by Brexit.
The government has written to the Law Commission to say that it is not the right time for a full review of marriage laws on the place for ceremonies, although ministers are not ruling out further work in the future.
In December 2015, the commission said that the laws on the way marriages were conducted in England and Wales were “badly in need of reform”, not least because of the increased demand for marriages away from traditional venues, including outdoors and at home.
Providing a wider range of valid venues for marriage would allow weddings to be “cheap and personal”, the commission said.
Under current law, ceremonies in public places are non-legally binding because civil marriages must be conducted in a “licensed room”. With some exceptions, in England and Wales marriage must take place in a register office, approved premises, a building of the Church of England or the Church in Wales, a building that has been registered for the purposes of religious marriage other than in the Church of England or Church in Wales, or a naval, military or air force chapel.
Popular TV programmes such as Don’t Tell The Bride often feature weddings taking place outdoors, although couples are always shown going through an additional civil ceremony in the register office afterwards.
More venues currently offer what amount to outdoor weddings by registering structures such as bandstands, garden pergolas, beach huts or teepees for weddings. Outdoor weddings are allowed in Northern Ireland, the Republic of Ireland, Australia, Canada and many states in the US. Couples in Scotland can have religious and civil weddings in their own homes.
Dominic Raab, the justice minister, has written to the Law Commission acknowledging marriage as “one of our most important institutions”, but saying that any opportunities for primary legislation will be focused on protecting the most vulnerable children and families at this time.
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London lawyers work the longest hours
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Lawyers in London work longer hours than their counterparts anywhere else in the UK, a survey has revealed.
The average London practitioner works a 45-hour week, nine hours longer than they were contractually obliged to do. They were followed by legal professionals in Scotland, who on average work six hours a week longer than they were contractually obliged.
The figures come from the recruitment firm Douglas Scott, which surveyed more than 2,200 private practice and in-house lawyers in the UK. They will surprise some, not least the galley slaves toiling away in the Square Mile, which is replete with tales of junior lawyers being routinely press-ganged into late-night shifts to work on deals.
Nationally, the average lawyer works a 40-hour-week, although 88 per cent of the survey responses came from outside of London, which may have skewed the results downwards.
Nonetheless, banking and capital markets lawyers led the list of those working the longest hours, ahead of litigation and arbitration specialists.
And for the first time in three years, criminal law specialists were not among the group of lawyers logging the longest hours.
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In Brief
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- Challenge to Tory-DUP deal falls at first hurdle – Legal Cheek
- Phone hacking lawyer accuses former firm of ‘a series of lies’ in fee dispute – Law Gazette
- Appleby defends business model in leaked documents probe –The Lawyer
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Analysis
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Legal Services Act – not so radical
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Premium
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The so-called Tesco law has yet to bring about the revolution promised a decade ago, but change is coming, writes Iain Miller
It is hard to believe that the Legal Services Act 2007 is approaching its tenth anniversary. Hailed as a radical attempt to liberalise legal services in England and Wales, has the act really delivered on its promise?
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Read the full story
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Analysis
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Premium
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Plain packaging: booze and sweets could fare better than cigarettes
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The arguments that removed logos from tobacco products will be less effective against alcohol and chocolate packaging, argues Bethan Hopewell
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Tweet of the day
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| I take no pleasure in saying this, but we all said it was a disaster to privatise probation. Nobody listened. #Panorama |
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@PoOfficer
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Blue Bag
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A short, 42-page guide to the MoJ
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When a civil servant uses the expression “a short guide to …” regarding a Whitehall publication you know you’re in for a long, head-banging read.
And so it is with A Short Guide to the Ministry of Justice from the National Audit Office (NAO). The Whitehall copywriters have decided that 42 pages of tightly packed text, interspersed with innumerable graphs and tables, passes for short. Heaven help us all if the NAO ever decides to publish a really in-depth look at the ministry.
Thankfully, readers are not forced to dig far down before coming across two of the report’s headline statistics: on page 4, it reveals that austerity has certainly bitten, with the MoJ having shed 25 per cent of its workforce between 2011-12 and 2016-17. Its expenditure last year was £10 billion, 13 per cent down on the 2011-12 figure.
It is now has 68,651 employees (you’ve got to admire the NAO’s precision), but that includes those at the Courts & Tribunals and Prison & Probation services.
The ministry says that it granted 95 per cent of legal aid applications over the past year, a total of 468,000, and that it spent £1.88 million on the system.
The Brief gave the document as much of a read as time permitted, and was surprised to find that the graphic designers appeared to have resisted the temptation to use gavel imagery to illustrate the guide. However, more attentive readers might find some hidden treasure.
Answer to the riddle of online courts — for a fiver
Those self-same Whitehall mandarins will have to stretch their budget by nearly a fiver to discover whether the Ministry of Justice’s highly touted court modernisation programme is likely to succeed.
Joshua Rozenberg (“Britain’s best-known commentator on the law”, according to ... er … J Rozenberg) has beaten the publishing house pre-Christmas rush with an early release of The Online Court: Will IT Work? The ebook aims to run the rule over the government’s “breathtakingly ambitious” plans for cyber-justice.
Rozenberg, who presents Law in Action on BBC Radio 4, kicks off his analysis with the arresting prediction that in just over four years, “most civil disputes in England and Wales will be resolved through an online court”.
Which neatly brings us on to the subject of artificial intelligence and the law. So while we are plugging publications, check out The Brief Premium’s ground-breaking report, Rise of the Robots. Who knows, by 2022 Auntie Beeb might get a robot to present Law in Action.
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Quote of the day
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“The average moviegoer can tell the difference between Harpo and Ingrid Bergman.”
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The critic Roger Lewis recalling Groucho Marx’s response to lawyers for Warner Bros, who had been threatening to sue the Marx Brothers for copyright infringement over their film A Night in Casablanca
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Read the full story
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