UK retailers to re-visit advertising campaigns following ECJ ruling (TLT LLP)

http://www.lease-a-finance-director.co.uk

 

UK retailers to re-visit advertising campaigns following ECJ ruling

Updated June 2011

Following a recent ruling by the European Court of Justice (ECJ) UK retailers and advertising agencies will be required to provide customers with more information regarding their advertised services or products. Failure to do so could result in action being taken by a number of regulatory bodies such as local Trading Standards, the Advertising Standards Agency and even the OFT.

Background

The case involved action by the Swedish consumer ombudsman against Ving Sverige AB, a Swedish travel agency, who offered trips to New York “from SEK 7,820” in a newspaper advertisement. The ombudsman contended that the advertisement was misleading to consumers as it omitted information required to be provided to consumers when making an ‘invitation to purchase’, such as information regarding flight times that would affect the price. Ving Sverige AB argued that the advertisement did not constitute an ‘invitation to purchase’, and therefore was not required to specify the following information.

What information is required?

The Unfair Commercial Practices Directive requires the following information be provided when making an ‘invitation to purchase’ unless it is apparent from the circumstances:

The main characteristics of the product e.g. name, size, material, make, model, colour, what the product is and what it does
The geographical address and identity of the trader
The price inclusive of taxes (including all additional charges that may be payable i.e. freight, delivery or postal charges)
Arrangements for payment, delivery, performance
Any complaints handling policy
The existence of any withdrawal or cancellation rights.

What is an ‘invitation to purchase’?

The ECJ held that an ‘invitation to purchase’ exists as soon as the product information and price advertised is sufficient for a consumer to make a decision whether or not to purchase the product. Notably:

There does not need to be an actual opportunity (e.g. order form), mechanism (e.g. direct reply to a text message) or means to purchase the product/service.
It does not matter if the advert is not made at the same time or in the same place as an opportunity to purchase the product/service (e.g. advertisements outside of retail stores).
Only an entry-level price is required (e.g. ‘From £30’)
A verbal or visual reference to a product/service is sufficient (e.g. photographs and radio advertisement)

What impact will this have upon UK retailers?

The Unfair Commercial Practices Directive is implemented in the UK by the Consumer Protection from Unfair Trading Regulations (CPRs). The UK view had previously been that an ‘invitation to purchase’ would only arise if it gave a consumer an actual means or opportunity to make a purchase. Current guidance on the CPRs gives examples of restaurant menus, newspaper order forms, price tags on products in a shop and interactive TV adverts through which direct orders can be placed. The ECJ’s ruling has now removed this element. As a result, most adverts are likely to fall within the definition of an ‘invitation to purchase’.

What should retailers and advertisers do?

Retailers and advertisers should therefore ensure their adverts contain the information listed above, and any additional information, to avoid misleading consumers. However, where this is not possible, for example due to space constraints, retailers can refer consumers to their website for full details.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2011. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

© TLT LLP 2011. TLT LLP is a limited liability partnership registered in England and Wales number OC 308658.

Tax agent strategy stirs debate (Tax Journal)

http://www.lease-a-finance-director.co.uk

 

Tax agent strategy stirs debate

Date:
08 June 2011
Author(s):
Andrew Goodall

A fortnight after the CIOT’s new President, Anthony Thomas, called for a return to ‘healthy tension’ between HMRC and the professional bodies, his wish appeared to have been granted with the publication of HMRC’s consultation, ‘Establishing the future relationship between the tax agent community and HMRC’.

The consultation sets out proposals and options for implementing a strategy for engaging with tax agents. HMRC do not seek to regulate the profession but say that there could be ‘value’ in all tax agent firms being expected to meet a ‘minimum level of competence’. Agents’ representatives were quick to warn that any system of enrolment of tax agents must be overseen by an independent body.

‘Not good enough’

Thomas had told CIOT members that HMRC had been in a state of constant change in recent years, and the result had been ‘disastrous in many respects’. HMRC have set out the changes that have been made ‘to improve services’ but accept that some agents have been disappointed that local relationships ‘no longer exist’, and that some believe the changes have been accompanied by ‘poorer levels of service generally’.

At some periods and in some areas, HMRC admit, ‘performance has not been good enough’. They will continue to seek improvements in services and the quality of ‘staff performance’. However, the focus of this consultation is the relationship between HMRC, tax agents and clients. Improving the quality of service for all parties will make compliance easier, they say.
►Professional reputations and livelihoods are at stake, says Elizabeth Wilson

The ‘agent strategy’ is not intended as a substitute for improving service standards, HMRC told Tax Journal. John Andrews, Chairman of the CIOT’s Low Incomes Tax Reform Group, had said the proposed strategy was ‘not an alternative to dealing with poor service levels at HMRC call centres and delays in responding to correspondence’.

An HMRC spokesman said: ‘Giving agents the ability to control certain transactions directly through enrolment and self service will in practice mean an improved customer experience. We will also continue our drive to improve our performance generally. We get many things right but we are committed to build on this by improving key services such as access to contact centres and post turnaround times.’

Cost savings

Whatever the outcome of this consultation, one thing is certain. A lot of people are going to spend a lot of time talking about it. The CIOT presented a webinar within days of the announcement, and it has put 38 questions to members in an online survey.

Attempts to change the existing relationship between HMRC and tax agents will inevitably raise concerns, said Paul Aplin, Chairman of the ICAEW Tax Faculty’s technical committee. But there are potential cost savings for agents and clients as well as HMRC in ‘self serve’, he writes in this week’s issue of Tax Journal.

Derek Allen, Director of Tax at ICAS, said: ‘It’s a substantial cultural change that’s being offered. This is an opportunity to produce significant improvements by cutting HMRC errors, reducing tax compliance costs and improving the quality of information held by HMRC.’
Worrying undertones

Elizabeth Wilson, Senior Solicitor, Macfarlanes LLP

The concept of ‘understanding the total engagement of individual agents’ has worrying undertones. Will agents with ‘good’ records of compliance not be deterred from taking on more tricky clients (which is likely to assist in the collection of tax from those clients) if accepting those clients might affect an agent’s good standing record with HMRC?

Many professional tax advisers do not hold a ‘recognised accountancy or tax based qualification’. Is the suggestion really that practitioners take such examinations even when they have been advising on tax for decades? HMRC say they do not propose to seek regulation of tax agents … but that HMRC might be allowed to refuse to deal with an agent who it considers has acted dishonestly or has abused HMRC’s systems.

Given that professional reputations and livelihoods are at stake, before HMRC can refuse to deal with an agent and notify clients of that agent accordingly, HMRC’s decision to do this and their reasons should be notified to the agent in confidence first, together with an opportunity for that agent to appeal to an independent arbiter. Only after an appeal process has been exhausted should notice be given to clients of the agent concerned.
Far reaching proposals

George Bull, Senior Tax Partner, Baker Tilly

The consultation document sets out some interesting and far sighted proposals. ‘Self-serve’ will enable registered agents access to some of HMRC systems online. Security is, unsurprisingly, an important factor and the proposals include a system of enrolment or registration of professional tax agents together with a system of monitoring their performance.

Under self-assessment HMRC’s role, broadly, is clerical. In the main the data supplied by the taxpayer is further processed so as to be suitable for whatever then needs to be done …However, major failures by HMRC in correctly dealing with the information (such as the issue of numerous incorrect tax coding notices) appear to have led to the wish to out-source even more of the processing to tax agents.

The removal of the need for clerical processing by HMRC should provide some clear benefits for both HMRC and taxpayers … However, a robust system will be essential to protect against fraud or abuse.

UK Regional Trade in Goods estimates are released today, for the first quarter 2011.

09 June 2011

UK Regional Trade in Goods estimates are released today, for the first quarter 2011.

Exports

* The total value of UK exports for the 12 months ending March 2011 was £273,081m, an increase of £40,813m (17.6 per cent) compared to the 12 months ending March 2010.

* During the same period the total value of exports for England rose by 16.5 per cent to £196,355m. Exports from Wales rose by 33.8 per cent to £12,598m, exports from Scotland rose by 4.8 per cent to £15,494m, and exports from Northern Ireland rose by 8.7 per cent to £5,472m. However, the value of exports unable to be allocated to a region rose by 25.2 per cent to £43,161m (see note 5). This accounts for 15.8 per cent of the total UK export trade.

* Within England, the South East had the largest total value of exports of £43,255m for the 12 months ending March 2011. The South West had the smallest total value of exports of £11,468m.

* The largest percentage change in the English regions for this period was for the North East region which increased by 29.5 per cent to £12,776m. The North West region had the smallest change, with an increase in exports of 8.0 per cent to £25,410m. All regions within England saw an increase in exports.

* The number of exporters in the UK for Quarter 1 2011, compared with the same quarter last year, increased by 1.4 per cent to 48,168. Northern Ireland had the largest percentage change with a decrease of 4.9 per cent to 1,280. All other regions or countries showed a positive increase in the number of exporters, ranging from 0.3 per cent in the South East to 4.4 per cent in the North East.

Imports

* The total value of UK imports for the 12 months ending March 2011 was £371,062m, an increase of £55,090m (17.4 per cent) compared to the 12 months ending March 2010.

* During the same period the total value of imports for England rose by 16.8 per cent to £295,935m. Imports to Wales rose by 15.0 per cent to £6,843m, imports to Scotland rose by 9.6 per cent to £11,688m and imports to Northern Ireland rose by 10.4 per cent to £5,335m. However, the value of imports unable to be allocated to a region rose by 24.6 per cent to £51,262m (see note 5). This accounts for 13.8 per cent of the total UK import trade.

* Within England, the South East has the largest total value of imports of £77,954m. The smallest total value for imports is in the North East of £10,179m.

* The largest percentage change for the English regions this period was for the North East region which increased by 39.5 per cent to £10,179m. The smallest change was for the North West region which saw an increase of 11.0 per cent in imports to £25,077m. All regions in the UK saw an increase in imports.

* The number of importers in the UK for Quarter 1 2011 compared with the same quarter last year, decreased by 4.6 per cent to 65,233. Northern Ireland had the largest percentage decrease of 12.7 per cent to 1,398. All other regions or countries also showed a decrease in the number of importers, ranging from a decrease of 2.3 per cent in the East of England to a decrease of 6.2 per cent in the North East.

© Crown copyright 2011.

SMEs told: improve record keeping or face second visit (Accountancy Age)

http://www.lease-a-finance-director.co.uk

 

 

SMEs told: improve record keeping or face second visit
Companies in business records pilot being told they must improve sales invoice record keeping

02 Jun 2011 Accountancy Age

By Jaimie Kaffash

Be the first to comment

More from this author
hmrc-records-check-booklet

THE TAXMAN is telling businesses that are part of a mandatory pilot scheme that they may receive another visit if their record keeping does not improve, Accountancy Age has learnt.

The pilot scheme was announced in April this year following a consultation that ended in March. Although HM Revenue & Customs has not yet responded to the consultation, the businesses that were chosen to be part of the pilot scheme are being informed how they need to improve their record keeping.

Insolvency Service Director of Home improvement company sentenced

http://www.lease-a-finance-director.co.uk

03/06/2011 12:37

Insolvency Service

Director of Home improvement company sentenced

A bankrupt and former director of a home improvement company, Peter Stephen Matthews of Suffolk, was this week sentenced to 3 months imprisonment suspended for 12 months plus a Community Order with a requirement to complete 180 hours unpaid work, by Cambridge Crown Court following an investigation and prosecution by The Insolvency Service and the Department for Business, Innovation and Skills. He was also ordered to pay £5,000 in compensation.

Matthews, who is already subject to a five-year Bankruptcy Restrictions Undertaking, was sentenced after pleading guilty to the removal of property after an order or judgement for money had been obtained, which remained unsatisfied at the date of bankruptcy. Specifically, he spent money that should have been paid to his creditors, on a new car and on family holidays, among other things.
Mr Matthews was the director of Heathcroft Homes Improvements Ltd (‘Heathcroft’), through which he worked as a fitter.
The court heard that, upon the winding-up of Heathcroft in 2009, Mr Matthews became liable for the company’s debts as a result of personal guarantees he had given to trade creditors. However, despite being served with a court judgement relating to these debts, he failed to pay these creditors following the sale of his family home. Instead, he transferred the funds to his partner and the funds were never recovered.
The court heard that Matthews spent some of the funds on advance rent and general living expenses for his family.
The court was shown bank statements revealing that Mr Matthews bought a car for £5,500 and paid £3,000 for a holidays for various family members. The bank accounts also revealed numerous transactions between Matthews’ account and a new business, H I Solutions, owned by his partner, through which he continued to provide his services as a window fitter. Funds were not used to satisfy either Matthews’ trade or personal creditors.
As a consequence of his actions, Mr Matthews’ creditors have lost out to the tune of almost £24,000.
Commenting on the case, Stephen Speed, Chief Executive of The Insolvency Service said:
“People genuinely struggling with debt who want to benefit from the debt relief arrangements offered by the insolvency regime must be prepared to declare all of their assets or face the penalty imposed on them. It is for the Official Receiver to decide which assets should be sold for the benefit of the creditors and which may be retained by the debtor.”
Commenting on the case, Ian West, an investigator with the Department for Business, Innovation and Skills said:
“Mr Matthews’ sentence sends a clear message to bankrupts who fail to keep to the terms of their bankruptcy order. We can and will investigate bankrupts, and where appropriate, take action when we find evidence of them deliberately acting to the detriment of their creditors”.

© Crown Copyright 2010

Employer’s refusal to allow a Muslim to take time off to attend Friday prayers during working hours was objectively justified (TLT LLP)

http://www.lease-a-finance-director.co.uk

Employer’s refusal to allow a Muslim to take time off to attend Friday prayers during working hours was objectively justified

In the recent case of Cherfi v G4S Security Services Ltd, an employer’s refusal to allow a Muslim employee time off on Friday lunchtimes to attend the mosque for prayers was found to be objectively justified.

Background

Previous case law has established that where an employer operates a rule, policy or practice which has the effect of preventing an employee from taking time off to pray, or requires the employee to work on a religious day of rest, such action will likely be regarded as indirect religious discrimination unless the employer can show that the requirement is objectively justified.

Facts

Mr Cherfi, a Muslim, worked for G4S Security Services as a security guard at a client’s site in Highgate. He would regularly leave the site on Friday lunchtimes to attend a mosque in Finsbury Park.  In October 2008, Mr Cherfi was told that he could no longer leave the site on Friday lunchtimes as G4S was contractually obliged to ensure that a specified number of security guards were present throughout operating hours including during their lunch break (for which they were paid).

There was a prayer room at the Highgate site and G4S also offered to amend Mr Cherfi’s contract to a Monday to Thursday pattern with the option to work a Saturday or Sunday instead of Fridays. Mr Cherfi refused to work during the weekend and claimed, among other things, that the requirement that he remain at work on Friday lunchtimes constituted indirect religious discrimination.

Decision

On appeal the EAT upheld the Tribunal’s original decision and dismissed Mr Cherfi’s indirect discrimination claim.

Although the requirement that Mr Cherfi work during Friday lunchtimes did place him at a disadvantage as a practising Muslim and consequently amounted to indirect religious discrimination, this treatment was objectively justified as it amounted to a proportionate means of achieving the legitimate aim of meeting the operational needs of G4S’ business.

In assessing whether the treatment could be objectively justified the Tribunal balanced the discriminatory effect of the treatment on Mr Cherfi and the reasonable needs of G4S.  This approach was upheld by the EAT.  The Tribunal noted in particular that:

G4S would be in danger of financial penalties or even losing its contract with its client if a full complement of security staff was not on site throughout the day;
G4S could only run its business on a sound financial basis by engaging security guards to work shifts of at least eight hours;
Mr Cherfi had refused a variety of arrangements offered to accommodate his requirements and had the use of the prayer room on site; and
G4S had not relied on cost considerations alone to justify its practices.

Comment

Whilst the refusal to allow Mr Cherfi to attend the mosque for Friday prayers was held to be objectively justified, much emphasis was placed on the particular circumstances surrounding the case, e.g.:  the contract with the client specifying that security guards had to remain on site at all times (and the significant penalties for non-compliance), the availability of a prayer room and the employer’s willingness to offer Mr Cherfi an alternative working pattern.

To establish justification, employers will need to be able to demonstrate that there is a legitimate aim (a real business need) and that any discriminatory provision, criterion or practice is proportionate to that aim, i.e. that it is reasonably necessary in order to achieve that aim, and there are no less discriminatory means available.  In practice this will mean exploring all other options to ensure that discriminatory effects are minimised e.g. offering alternative working patterns or places to pray where appropriate.

© 1999 – 2011, TLT LLP is a Limited Liability Partnership

Bribery Act and the Proceeds of Crime Act (PwC Fraud Academy)

http://www.lease-a-finance-director.co.uk

 

 

Bribery Act and the Proceeds of Crime Act
The recent High Court action brought by the Serious Fraud Office against MW Kellogg Limited under the Proceeds of Crime Act 2002 (“PoCA”), has highlighted the risks facing UK companies receiving dividends from entities where unlawful activities have taken place. MW Kellogg Limited was ordered to pay just over £7 million in recognition of sums it was due to receive which were generated through the corrupt activities of third parties.

Amid all the controversy surrounding the Bribery Act, the risks of breaching PoCA have been forced to take something of a backseat. We think this is a mistake. In summary terms, the key risks to UK companies are as follows:
•    It is an offence under PoCA to acquire, use or possess criminal property without disclosure to the relevant authorities;
•    The definition of criminal property is very wide and certainly covers dividends paid out of profits generated through corrupt behaviour;
•    The entity receiving the property needs only to suspect criminal behaviour for the Act to apply; it is not necessary for the recipient to “know for sure” that the funds are tainted.
This is of real importance to UK companies for at least three reasons:
•    There is no defence of adequate procedures;
•    Some commentators believe it is easier to achieve a conviction under PoCA than under the Bribery Act, and that in times of scarce resources, the SFO (or a successor organisation) may therefore make greater use of PoCA;
•    PoCA carries penalties which in some respects are even more severe than those under the Bribery Act, for example 14 years in jail, not 10.
Companies considering how much attention and resource to devote to the prevention of bribery should think carefully about the scope for prosecutions under PoCA as well as the Bribery Act.

ICO given new powers to impose fines for marketing breaches (TLT LLP)

ICO given new powers to impose fines for marketing breaches

The Information Commissioner’s Office (ICO) has been granted new powers as a result of an amendment to the UK’s Privacy and Electronic Communications Regulations (PECR). The new powers, which came into effect on 25 May 2011, include:

Extended financial penalties: the ICO can impose a penalty of up to £500,000 for the most serious breaches of the PECR. This covers nuisance marketing emails, texts and phone calls.
Increased investigatory powers: the ICO can require telecoms companies and Internet Service Providers (ISPs) to provide information needed to investigate breaches of the PECR.
Compulsory notification when breaches occur: telecoms companies and ISPs must notify the ICO, and their customers, when a personal data breach occurs. A fixed penalty of £1,000 per offence will apply where personal data breaches are not notified.
Increased audit powers: the ICO can audit telecoms companies and ISPs for compliance with personal data breach notification requirements.
New rules for websites using cookies: the ICO will be responsible for ensuring compliance with new cookie consent requirements. (see Related publications).

The ICO will be issuing guidance on their new enforcement powers but the date for release is yet to be confirmed.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2011. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

© TLT LLP 2011. TLT LLP is a limited liability partnership registered in England and Wales number OC 308658.

Joining the right board (TLT LLP)

Joining the right board

Updated June 2011

Earlier this year the Financial Reporting Council published its guidance on board effectiveness. This emphasises the importance of non-executive directors to general corporate governance and sets out a number of areas where boards may look to improve their effectiveness.

One of the main areas highlighted was looking at board composition and reviewing whether a board contained a diverse mix of directors with complementary skills and abilities. It also suggested that a skills analysis should be undertaken to identify particular skill sets which were missing from the current board. This could then be used as a benchmark when appointing new directors.

This is not to say however that responsibility for ensuring a diverse board lies only with the existing directors. In May 2011 the Institute of Chartered Secretaries and Administrators (ICSA) published a guidance note for potential non-executive directors on how to join the right board. It emphasises that all potential non-executive directors should carry out their own due diligence before joining a board to ensure that it is right for them.

The guidance does not require an in-depth analysis of the company but suggests that some research be undertaken as follows:

Review published information on the company to gain an insight into the business model, the governance, recent performance and any obvious risks or uncertainties. At the very least this should involve checking the website and last annual report.
Have pre-appointment meetings with the board or alternately the chairman, CEO, CFO, company secretary, and if possible the appointment committee.
Where taking the role of chairman or head of the audit committee, meetings should be held with the company’s auditors and senior management.
Board meeting dates should be checked for the year ahead to ensure that the prospective director can attend. The guidance on board effectiveness stresses the need for directors to be able to devote sufficient time to the company.
If the company is listed then it will not be able to disclose price sensitive information ahead of the appointment. The prospective director should research and observe the rules on insider trading, market abuse and the rules on dealing with inside information generally.

Finally the guidance sets out a checklist of due diligence questions which will assist in investigating a company. It stresses that these are non exhaustive but they are a good starting point.

Please see Related links for the full text of the guidance.

Contributor: Mark Stockdale

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2011. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

© TLT LLP 2011. TLT LLP is a limited liability partnership registered in England and Wales number OC 308658.

Car VAT crime crackdown

http://www.lease-a-finance-director.co.uk

01/06/2011 09:24

HM Revenue & Customs

Car VAT crime crackdown

Consultation on a new online system to stop criminals evading VAT on road vehicles they bring into the UK has been launched by HM Revenue & Customs (HMRC).

The document – “Tackling VAT evasion on road vehicles brought into the UK” – asks questions on the development of a new online system to begin in 2013 that will ensure that the correct VAT is paid.
David Gauke, Exchequer Secretary to the Treasury, said:
“If no action is taken, significant revenue could be lost in future years. This is due to organised criminals exploiting the current manual-based system. This new online process will stop them in their tracks and put an end to opportunities for this fraudulent activity. This will deliver an additional £125m in the first full year.”
Richard Bysouth, HMRC, said:
“From 2013 the new online system will mean no one will be able to get their vehicles registered with the DVLA unless they have notified the vehicle online and the VAT has been paid or HMRC is confident that the VAT will be paid.
“We are seeking views from people who bring road vehicles into the UK either in a business capacity or as private individuals.”
Budget 2011 announced a joint HMRC/DVLA initiative to replace existing manual procedures with a mandatory online notification requirement for road vehicles entering the UK for permanent use on UK roads. This will enable real-time verification of the VAT status of notified vehicles, with collection of the VAT up-front in some cases. Consequently, the DVLA will be provided with timely information, enabling it to refuse vehicle registration if the VAT is not assessed as secure by HMRC, thereby protecting the tax.
This is a joint HMRC/DVLA initiative aimed at countering high levels of VAT fraud in this area and to simplifying the system for all users.
This consultation is designed to inform the development of the new system.
The document can be accessed at http://www.hmrc.gov.uk/consultations.

© Crown Copyright 2010