atticus - issue 2
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Journal NewsletterTRANSCRIPT
Issue 2
Making them payGetting the best deal out of business bankingCreating a tax advantage for your businessCan you point me towards the exit?Light at the end of the tunnel
a lupton fawcett periodical
Finding thebalance with
mediationEveryone wins when nobody
can afford to lose
Contents3. News in brief Product screening and Bribery Act updates
4. Making molehills out of mountains Has your business prepared for the worst?
5. New faces, solid foundations and fresh approaches An interview with Lupton Fawcett’s Managing Director
6. Finding the balance with mediation Everyone wins when nobody can afford to lose
8. Making them pay Controlling your finances at a time when ‘cash is king’
9. Your Will. Your Way The numerous benefits of making a Will
10. Creating a tax advantage for your business Underused tax advantages explained
11. Can you point me towards the exit? Discussing the future of corporate finance
12. Getting the best deal out of business banking Practical advice for business borrowers
13. Light at the end of the tunnel Is anyone threatening your right to natural light?
14. Once tasted loved forever An interview with Seabrook’s Chief Executive and Chairman, Ken Brook-Chrispin
Welcome to the second edition of atticus. Building on the positive response to atticus’s first issue, this edition offers sound business advice and guidance: the kind that keeps you on your toes and ahead of the game in these tough financial times. We hope this advice will give you the law of advantage, helping you to strengthen, support and grow your business.
The main aim of atticus is to inform and entertain,
but we also hope to give you an insight into
Lupton Fawcett, and some of our clients and contacts,
along the way. We don’t intend this to be a technical
publication, but we will keep you up-to-date with any
changes and trends in the law that we think are
interesting or relevant.
Finally, we fully expect to evolve and develop
this journal over time to better reflect the kinds
of articles that you would like to read, so please
don’t hesitate to let us know what you
think and to make any suggestions
for future editions.
E-mail your thoughts to
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Kevin EmsleyChairman
Lupton Fawcett LLP Yorkshire House East Parade Leeds LS1 5BD
Leeds: T: 0113 280 2000 F: 0113 245 6782
Lupton Fawcett LLP Velocity House 3 Solly Street Sheffield S1 4DE
Sheffield: T: 0114 276 6607 F: 0114 276 6608
www.luptonfawcett.com
Get to grips with the new Bribery Act
News in brief
A Lupton Fawcett Periodical. Issue 2 02/03
Product ScreeningCan you spot the winners?
In light of these changes, Lupton Fawcett offers a compliance package which provides essential training on the direct and indirect obligations imposed on UK businesses by the Act. Critical in the new legislative regime is Risk Assessment. Our compliance package, which is split into Compliance Officer Training, Advanced Training, and Basic Training, provides online, step-by-step training for risk assessment and implementation. There is lots of practical guidance, with numerous examples and explanations of the new law. For employees who require only general awareness of the new law and its potential impact on your business, and on them personally, our Basic Training course provides easily absorbed guidance.The training package provides a straightforward and proportionate way to ensure compliance. This is going to be increasingly important as major
organisations, such as the NHS and associated foundation trusts, have made it clear that being able to demonstrate compliance will be essential for all their contractors and agents.
This service avoids the need for expensive face-to-face training and takes the compliance burden off the shoulders of senior managers and directors. For further information, please contact either Tanya Forret on 0113 280 2195 or via e-mail [email protected] or Andrew Davidson on 0113 280 2104 or [email protected]
Once a business has generated new product ideas, product screening is used as a method of spotting and dropping poor ideas as early as possible. As the costs of developing a product increase during each successive stage of development, the earlier a weak idea is identified, the better. Businesses need to perfect their product screening process in order to avoid making the following errors, and find the middle ground.
Drop Error: taking too conservative an approach to product screening and abandoning product ideas that, in hindsight, could have been successful if developed.
Go Error: taking an ambitious yet inexperienced approach to product screening by moving poor product ideas into the development and commercialisation stages.
Businesses will either develop their own screening process or commission another business to screen their product ideas for them, in order to determine which products to develop and bring to market.
Consider the following points when screening any new products:• Can you clearly demonstrate your business is the inventor?• Is the product easy to copy or reproduce?• What certifications and qualifications are needed?• Does it raise any environmental issues, e.g. carbon footprint?• Is there potential to license the product or to start a
joint venture?• Does it fit into your business’s portfolio and meet your overall
business plans and objectives?• How easy or hard will the product be for you to develop and
put to market?
Rating each product against these criteria will at least give you some idea of its suitability to your business. As always, Lupton Fawcett are on hand to offer advice, so please contact John Sykes on 0113 280 2113 or [email protected] if you would like to discus this further.
The Act creates four new offences of bribery and represents a significant expansion of the current law.
IN CASE OFEMERGENGY
BREAK GLASS
Facing strong competition from Volkswagen
in the small car market in the late 1970s, Ford
took the decision to shorten the development
stage of its new ‘Pinto’ model and rush it
into production some eighteen months
ahead of schedule. Pre-production, it
was discovered the Pinto’s fuel system
ruptured easily, even in low-speed
rear-end crashes. Despite the discovery,
Ford pressed on with production – and several
hundred deaths and serious injuries were
attributed to Pintos bursting into flames
following low-speed, rear-end collisions.
Ford’s action in continuing to produce the vehicle
(and only taking action to modify its design after eight
years of accidents) was explained by a cost-benefit analysis
leaked into the public domain. Ford had calculated that
the costs of recalling the vehicle, halting production and
modifying the design would be $137m whilst insurance
claims arising from vehicle damage, injuries and fatalities
would amount to $49.5m.
Ford’s apparently cynical approach caused outrage
at the time. The company’s reputation was significantly
threatened. However, today Ford’s reputation remains
strong. Why did the Pinto scandal not signal the end of
consumer confidence in Ford?
Ford was quick to highlight
in public statements and court filings
that the number of injuries and
fatalities caused by rear-end collisions
in their model was far lower than had
been reported. The company cited
National Highway and Traffic Safety
Administration (NHTSA) statistics to
support its position and advertised the
fact that comparably-sized competitors’
models had higher fatality rates. In court
on charges of negligent homicide, Ford’s
lawyers argued that the cost-benefit
analysis that had caused the media
frenzy was not admissible in evidence
against the company. This argument was
upheld and Ford was acquitted. It paid
damages in civil actions but, through a
carefully planned and executed legal and
PR strategy, avoided catastrophic injury
to its brand.
Any business can find itself in
a crisis which, if not correctly managed,
will have crippling, but avoidable,
consequences. The Gulf of Mexico oil spill,
for example, has already cost BP a huge
amount of money. It has also cost CEO
Tony Hayward his job. Referring to the
disaster as ‘relatively tiny’ compared to
the ‘very big ocean’ and taking a sailing
holiday during the crisis are decisions
which perhaps he will not recall with fondness as he looks
back over his time in charge of the company. He may well
reflect that, in this digital, 24-hour news age, it is extremely
easy for reputations to be quickly and severely undermined,
with little time for effective damage control.
Headline-making news reporting, rival companies seeking to
take commercial advantage, disgruntled ex-employees and
unhappy customers can all contribute to the way a business
is represented; whether reportage is fair or not, a relatively
small voice can have a disproportionate impact.
Lupton Fawcett was recently instructed by a
company in connection with defamatory remarks that had
been published about it online by a ‘protest organisation’.
The remarks alleged unfair business practices, and that
they were not true. A search revealed the protestors had
made similar claims about other companies as well. Those
other companies were competitors of our client. Our client’s
instinct was to seek an injunction restraining the protestors
from libelling it. However, following rapid research into the
history and previous behaviour of the protest organisation,
we concluded that adopting a positive PR campaign and
holding back from a legal confrontation, and allowing
the client’s competitors to engage in a very public court
application with the protest organisation, would enable our
client to drop off the protestors’ radar screen. The competitor
was consequently subjected to further adverse publicity,
which our client was able to avoid.
Nevertheless, whilst PR is an important tool in
reputation management, sometimes it is necessary to
resort to legal process, and on those occasions we use it
to its full extent to protect our clients. We were recently
instructed to defend a well-known client’s name and
business following serious allegations relating to his
personal life. The allegations were entirely fabricated and
deliberately targeted to damage his business. In that case,
immediate legal action was taken to prevent the spread
of the damaging comments. Within 48 hours a written
apology and unequivocal retraction was signed, costs
and substantial compensation were paid, and the client’s
reputation was protected.
In crisis situations, businesses and individuals
need their advisors to have the ability to analyse scenarios
quickly and to recommend and implement appropriate
news management and damage limitation strategies.
A key skill is to be able to judge whether to adopt a subtle
approach or to take a hard line. Lupton Fawcett’s team of
specialist Dispute Resolution lawyers is one of the most
experienced in the North of England. Combining the skill
and experience of our litigators with the knowledge of PR
professionals who work alongside us, we are able to offer a
formidable reputation management service to our clients.
Lupton Fawcett’s Jonathan Warner-Reed looks at why businesses large and small should give careful consideration to the steps they take to manage their reputations and considers how poor crisis management can have disastrous effects for any business or brand.
Making molehills out of mountains
Jonathan Warner-Reed
A Lupton Fawcett Periodical. Issue 2 04/05
In the first edition of atticus, I told you of our
intention to become our region’s mid-market law
firm of choice and described our plans to serve you
in even more effective ways. These plans included
developing a proposition that’s equal to the current
mid-market offering, and providing commercial
solutions that reflect a real understanding of your
business and objectives, at a price that delivers
real value.
I am delighted that we have made progress with both
the strength and depth of our services since then, supported
by our ability to maintain value. Let me outline some of the
changes we’ve made.
Fresh facesWe have recently been joined by Russell Davidson, previously
principal of Davidson Large LLP. Russell joins us as a Director
and brings substantial expertise in the hotel and wider leisure
industry, in particular in the property and development arena.
Russell spent the early part of his career in The City
with Linklaters & Paines before returning to Yorkshire to serve
a national client base. He now recognises that he can provide
for this client base even more effectively with support from our
much broader range of services. We are delighted to welcome
Russell and his clients and we’re certain that he’ll add huge
value to our existing hotel and leisure industry sector offering.
Home sweet homeThere has been much debate in recent years, amongst both
clients and lawyers, as to the office space that lawyers and
other professionals might be expected to occupy. In light of
this debate we have further strengthened our cost base going
forward, and so our ability to deliver value, by our choice of
office accommodation for our Leeds premises over the
next decade.
On one hand, most commercially-savvy clients do not
wish to feel they are paying for unnecessarily palatial offices
and the all too ubiquitous cavernous marbled reception. On the
other hand, advisors need to attract high quality staff, and part
of this process involves providing them with an inspiring and
attractive working environment.
This balance is a difficult one to strike and,
unfortunately, many advisors got it badly wrong in the years
leading up to the economic collapse of 2008. Unfortunately,
one major firm was so misguided in their choice of office
accommodation that when times became tough they were
unable to service the cost of their building. Ultimately and
very sadly, this led to the firm’s collapse.
Thinking to the futureThe existing lease of our premises at Yorkshire House in Leeds
expires in 2012, and we have seriously considered the many
alternatives available to us through the plethora of new build
and refurbished office space currently available in Leeds.
Despite a number of landlords offering us extremely attractive
alternative spaces, we have made the decision to remain in
Yorkshire House.
Two main factors contributed to this decision.
Firstly, we recognise that moving operations would entail a
large amount of disruption and distraction, at a time when
we want to focus on the needs of our clients. Secondly,
we negotiated an excellent deal with our landlord that
secures significant improvements to the building and gives
us substantial control over our property costs into the
future, thus enabling us to remain cost effective.
With maintaining value being one of our key objectives
for the coming years, we are confident that we have reached
the right decision for our clients and staff alike.
The Law of AdvantageIf we are to succeed in becoming the region’s mid-market law
firm of choice, we understand that we must deliver a real brand
that lives its values. The Lupton Fawcett brand is all about
The Law of Advantage, which in turn is not just about what
we do, but how we do it. It’s about our commercial approach,
our unrivalled service level, our commitment to understanding
our clients and, of course, quality.
We have recently taken two major steps to improve
our quality, the first of which was a full review leading to
the production of a Quality Plan – a road map for delivering
continual improvement. The second step involves the
implementation of this plan, starting with the introduction
of Quality Circles across our business.
As you may be aware, Quality Circles are a
management technique that was first developed in Japan’s car
industry and subsequently widely adopted. This technique
involves asking staff to engage with ways of improving all
aspects of their work, and for those ideas to be tested, captured
and cascaded through other parts of the organisation. This
technique is not about major change, although of course that
may happen, but about small incremental cumulative change
which delivers substantial and continuing improvement.
We have so far been delighted with the response
from our staff, as we work hard to implement their ideas for
enhanced client delivery wherever appropriate and possible.
I hope that this brief overview demonstrates
that we are serious about our objectives
and that we are making progress. Most
importantly, it shows that we operate in a
commercial environment and face the same
issues as any other business – thus increasing
our understanding of the challenges you face
and our ability to respond to them.
Richard Marshall is Lupton Fawcett’s Managing Director. He explains how Lupton Fawcett intends
to serve their clients even more effectively in the coming years.
New faces, solid foundations
and fresh approaches
Richard Marshall
Mediation, where a third party mediator assists two
or more parties to negotiate their own settlement
in order to resolve a dispute, has been around in the
UK for almost 30 years now, growing in popularity
during the last decade. As financial restrictions
on the Court service begin to bite, it’s clear that
mediation is going to take on an even more central
role in the litigation process, as it provides an
opportunity to settle cases before they get to
Court, thus saving Court resources.
The major benefit of mediation is its ability to
produce positive outcomes from negative situations that
become unachievable once a case has gone to court.
This is because Courts are looking for a clear winner and loser
in each case; they declare who wins and who loses in a dispute
and decide who pays what to whom. Mediation allows both
parties to settle their disputes in a far more creative way,
often involving an element of give and take.
An example of successful mediationAs always, an example helps. We mediated a dispute between
a tenant who ran a residential caravan park and the Local
Authority that leased him the site. There had been a breach of
the lease and the Local Authority wanted to remove the tenant
and regain possession of the site. Sounds straightforward, but
before the mediation both parties had been unable to discuss
the dispute, and so neither party could see the whole picture.
The Local Authority knew that if it repossessed the
caravan park, it had no infrastructure to deal with the caravan
owners who lived on the site for much of the year.
These subtenants had legally enforceable rights to be there,
and this would be a real problem to the Authority
in the future. However, the Authority needed part of
the site back to allow some significant development
works to be carried out in the local town. The tenant
knew they were in trouble with the lease but wanted to
retain their livelihood, as the leased area was actually
two separate sites, only one of which
was profitable.
Through mediation, it became
apparent that the tenant would happily and
voluntarily surrender the non-profitable
site if they could buy the profitable one,
and so avoid onerous terms under a lease.
As it was the non-profitable site that the
Authority needed for its development, it
liked this idea; it got the land it needed
whilst removing the risk of a defaulting
tenant along with all of the issues it wasn’t
equipped to deal with.
So a simple land repossession
case, where one party would have lost
and the other won, turned into a property
transaction worth £1.2m. It was agreed in
principle on the day and put into effect
over the following two weeks.
The many benefits of mediationThe mediation process encourages early
settlement, the benefits of which shouldn’t
be taken lightly. This is particularly handy
in cases where you’re likely to lose or the
prospects of success are poor, as it will
help you save on solicitors’ bills. Going to
mediation and settling early in a case that
you are likely to win (albeit at a discount)
removes any risk early on; no case is risk-
free in litigation and you also save your own
legal costs and so derive a cash flow benefit.
As the figures show that more than 80% of
mediations result in settlement, the sooner
the process is conducted, the greater the
financial benefits.
Most importantly, and usually
ignored or forgotten in the heat of battle,
mediation allows you to save all of the
management time and effort that goes
into running a piece of litigation.
Your efforts are always better spent
doing what you do well, which is running and growing your
business, or getting on with your job and private life; not
fighting over something that happened perhaps two or three
years earlier and in which all of the major decisions are taken
by lawyers, not you. If you choose litigation, remember that
a lawyer can only make a really good job of your case if you
put in the hard work of providing documents, comments on
pleadings and witness statements, being available to take
decisions over the phone at short notice and by feeding him
or her the ammunition necessary to present the case at its
best in Court.
Objective or subjective?As a mediator, and a litigator for over 25 years, I think the
major advantage to mediation is that the mediation day
gives all parties the opportunity to spend time focusing
solely on the dispute and the risks and benefits to them as
individuals or businesses. There is also an opportunity to try
and obtain information both from the other side and from
your own legal team. This allows for a thorough risk analysis
to take place.
What’s more, mediation allows decisions to be made
objectively, removing the heat and drama of the courtroom.
The question must be considered: do you achieve more by
fighting than settling, and at what level should you settle?
This opportunity did not exist before mediation arrived.
Lawyers ran cases and occasionally the client received a
phone call to say that some form of settlement was being
offered or should be offered, and some discussion took place as
to whether it was a good or bad one. The problem was that this
usually happened well into the litigation process, after most
of the costs had been incurred. Also, it didn’t really involve
the client. Mediation changes that completely by making the
process of deciding whether or not to settle one that the client
controls – after detailed advice from their legal team – and
with serious consideration of the commercial and personal
drivers, which are present in all cases.
Finding the balance with mediation
Recent case law stipulates that a failure to mediate can lead to parties not being awarded costs, even if they are later successful at trial. Our Dispute Management expert, Paul Houghton, explains why mediation should be seen as a win-win process for all involved.
PaulHoughton
A Lupton Fawcett Periodical. Issue 2 06/07
Being honest, with yourselfAnother example helps illustrate this. We try to persuade
individuals involved in disputes that mediation offers an
opportunity to discuss the things that really matter to them,
not just whether they are going to win or lose. We were involved
in the litigation of an inheritance dispute that ran all day,
and concentrated mostly on the legal merits and
got quite heated. After it settled, the claimant
was very relieved; when asked why, he said it was
because his son was about to go to university
and he wouldn’t have been able to afford both the
lawyers’ legal fees and his son’s university fees.
That was the single most important thing to the
claimant and if he had expressed it at the outset,
we would have made much quicker progress and
saved still more fees.
The process is also confidential and
without prejudice. You can talk freely to the
mediator, making sure he or she knows what is
confidential and what isn’t. Knowing these things allows the
mediator to tailor the process to allow the real drivers in a
dispute to be dealt with, so that the end result can be achieved
more quickly and effectively.
Finally, mediation really can be a positive process;
but even if the outcome is not completely ideal for both
parties because of the necessity to compromise, it is a shared
experience, and that is what achieves the result.
Mediation has the ability to produce positive, win-win outcomes from negative situations that become unachievable once a case has gone to court.
The phrase ‘cash is king’ has never been
more relevant than in these times of
austerity. Working capital lock-up – the costs of
labour and/or materials that are paid for by the
supplier, before they receive any payment from
the customer – is one of the greatest challenges
to running a business profitably.
In many businesses, customers expect the work
to be finished before they have to pay for your services.
From the day you start working, you are incurring costs
and therefore, for all intents and purposes, lending
money to the client. It’s the business equivalent of being
introduced to a stranger at a party who immediately asks
you to lend them £1,000 without any ties.
Even when the job has been completed and
the invoice sent for payment, there will often be delays
because everybody is trying to hang on to their cash for
as long as possible. Ensuring that you receive your share
without delay becomes paramount to business success.
Of course for many businesses, from shops,
restaurants and petrol stations to telephone companies,
local authorities and gas and electricity suppliers,
‘working capital lock-up’ simply isn’t an issue.
So what can you learn from these suppliers?
How can you improve your cash flow? Here are
five tips that we hope you will find helpful.
1. Clear instructionThe first and most
important thing is to make
it clearly understood, right at the beginning of the job,
what you are expecting to do for the customer, how much
you expect to be paid, and when you expect to be paid.
So before a pen is lifted or a ‘sod turned’, the customer has
agreed to these three basic things. Make sure the customer
knows what is included in the price and, importantly, what
is excluded.
2. Maintain channels of communicationCommunicating with your customer throughout the period
of work is essential, and so it’s the next most important
thing on my list. You must explain straightaway if there
are any deviations from the original scope of the work to
be done for which you expect to be paid. It’s no good telling
the customer that it didn’t work out as you had expected
and that the invoice has gone up after you’ve finished
the job. If this is a complete surprise, it will be the cause
of potential dispute, which inevitably means delay.
Give them a revised quote for the additional fees as soon as
you possibly can, making them fully aware of the changes.
3. Explore payment routinesThere is no reason why customers should not pay the
whole or part of the costs,
either up front or during the
delivery of the service.
To some extent this
depends on how long the
job is. If it is the sale of a
product, take an initial
deposit before delivery.
If you have to outlay
expenses for the customer,
such as procuring the
services of a third party,
then you should always
ensure that payments
for these services are
received before or
immediately after delivery.
If you are delivering and
commissioning a product
then split the payment
into three phases; a deposit
up front, a payment on delivery and the final payment
when the equipment is fully commissioned. If it’s a service
contract that will last for a period of time, then weekly or
monthly payments will help cash flow. One big advantage
of seeking payment before or during a job is that you
will establish a payment history with the customer.
If they don’t pay on time then putting them on stop is
an extremely effective tool to ensure prompt payment.
This tactic becomes unavailable once the job is
over, however.
4. Prompt invoice = prompt paymentMake sure that you send detailed accounts to the right
address with a clear explanation of what it is for. Any errors
or uncertainties are bound to delay the repayment of your
customer’s “loan”. It’s important to make sure that the final
account is submitted as soon as possible after completion
of the job; if you have done a good job for the customer,
then at that point they will be the happiest they are ever
going to be about paying your account. Particularly in the
case of work for consumers, it is sensible, if you are able, to
have the invoice with you as you finish so you can hand it
over there and then. If you lurk around a little you might
even have the pleasure of going home with the payment.
5. Less is more than noneFinally, when dealing with complaints or queries over the
invoice or the service levels, if there is any genuine merit
to the complaint, and remember that you may not be the
best person to judge this, then it can save a lot of trouble,
delay and hidden management cost to quickly agree
a compromise. However, one tip here is to ensure that
the reciprocation for any discount offered is immediate
payment by the customer. This will help bring things to
an end rather than let any wounds fester.
And that wraps up our five simple tips; some of these
may seem common sense but it always pays to have
a plan to follow. We hope that you find them both
interesting and helpful.
Lupton Fawcett Chairman and Director of Corporate Finance, Kevin Emsley, shares his five golden steps to help you avoid working capital lock-up, or as he likes to call it, “interest free, unsecured loans to strangers”.
Making them pay
From the day you start working, you are incurring costs and lending money to the client. Kevin
Emsley
A Lupton Fawcett Periodical. Issue 2 08/09
We all have those niggling lists of things that we
know we simply must get round to doing, from
contacting old school friends to clearing out the
garage. And then of course, always right at the
bottom of the list, there’s making a Will.
Worryingly, only 30-40% of adults in the UK
have a Will, and that’s not taking into account
Wills that are well past their sell-by-date: those
that don’t reflect changes in circumstances such
as a divorce or remarriage, new grandchildren or
that unexpected inheritance.
To help them get off the bottom of life’s to-do pile,
here’s why they are so important.
I don’t need a Will, do I?There are some standard assumptions about not having a Will.
By far the most common is that if you are married, everything
will automatically go to your surviving spouse. Well, it might,
but then again it might not. You are leaving matters to chance
rather than taking control of the situation and providing for
your loved ones. For unmarried couples the position is even
worse, when a very real possibility is that the surviving partner
will get nothing.
Another common excuse is, “I don’t really have
anything to leave”. Sound familiar? Well, anyone with a home,
even if it’s mortgaged, has a significant asset. Without a Will,
the family’s future security is at risk.
In answer to both of these objections, a Will should
be viewed as a structure around which other planning for the
family can be built. It should seek to ensure that additional
inheritance tax savings and long-term asset protection,
including care issues, can be facilitated. It’s all about families
planning together in a more joined-up way.
Professional advice? Costs too much!Another issue that is often raised about getting a Will is that
it is too expensive. People are either put off altogether by how
much they think it will cost, or are lured into buying something
cheap and cheerful from the internet or a high street store.
Although it may be hard to believe, after a house
purchase and mortgage, a Will is probably the most valuable
document most people put in place in terms of the value of the
assets that it deals with.
If the 1950s nuclear family was still society’s norm,
people without a Will would probably get by under the
statutory rules. Now, however, with co-habitation, second
marriages, greater wealth and property ownership,
the importance of a properly-thought-out Will is much more
relevant. We’re all living longer, which raises issues of people’s
capacity to make decisions. This can become critical and
makes challenges to estates far more likely, which is why a
£10.99 one-dimensional internet Will is unlikely to be robust
or sophisticated enough.
Not having a Will means running the risk
of a family dispute following a death, and being
vulnerable to all the upset and expense that
goes with it. If a dispute does arise, the family
could end up spending very considerable fees
on legal advice that can easily amount to at
least thirty to fifty times more than the cost
of preparing a Will.
A small insurance policy, the Will,
saves cost, time and possible family
break up.
I’m a busy person – I don’t have timeSadly, the increasingly electronic age we live
in doesn’t appear to have provided us with
more leisure time. Many of us find it a constant
struggle to balance the pressures of work,
home and family. It is understandable in this
context that something like a Will, along with
most of our financial affairs, gets kicked into
the long grass. Add to this the fact that
most of us expect, or at least hope, the
need for a Will to be a long way off and finding even a
few moments to sort it out seems impossible.
So what to do?To address the issues of cost and access we came up
with “Your Will. Your Way”, which offers a professional and
robust Will writing at your place of work. On-site meetings are
held with employees over the course of a morning, usually
taking about 20 minutes each. The Wills are produced on-site
and arrangements made for these to be signed and completed
in the afternoon. Each Will costs £100 including VAT, and in
some cases employers recognise this as an opportunity to
provide added-value employee benefit: by covering the
cost themselves.
The service requires us to see between 10-15 people
in any one day and we’ve found that businesses employing
about 40 people should have a sufficient take-up. It is not
just workplaces that can benefit from this service – other
associations of people, such as sports clubs, societies, and
churches can also offer their members valuable “added-value”
by participating in our programme.
Bringing Wills into the workplace has proved an
important way of ensuring people don’t end up in the
two-thirds of the population whose affairs on death are
substantially at risk of dispute.
Duncan Milwain, Head of the Trusts, Wills and Estates Department, discusses the numerous benefits of making a Will.
Your Will Your Way
DuncanMilwain
Claire Boyce, solicitor in our tax department, provides helpful advice on some frequently underused tax advantages that your business could benefit from.
Creating a tax advantage for your business
Entrepreneurs’ Relief – advance planning can lead to significant savingsEntrepreneurs’ Relief allows individuals and some trustees to
claim relief on qualifying gains, made on the disposal of any
of the following:
• All or part of a business
• The assets of a business after it has
stopped trading
• Shares in a company
The relief is available for you as an individual if you are in
business, for example as a sole trader or a partner in a trading
business, or if you hold shares in your personal trading
company. The relief is also available for some trustees,
but not available for companies.
It is very important that you get tax advice for
Entrepreneurs’ Relief at an early stage, as advanced
planning could save you up to £3.6 million.
Such planning should include:
• Properly detailing reasons for holding cash
in a company
• Using alternative structures to ensure the
5% condition is satisfied
• Transferring shareholdings to family members who are
officers or employees of the company at least 12 months
before the sale of a business.
Using EMI options as tax-efficient staff incentivesAn EMI (Enterprise Management Incentive) scheme lets you
grant tax advantaged share options to employees to help
recruit and retain them within your company. EMI options
are designed for smaller companies, combining flexibility
with high tax efficiency, so we recommend that you consider
this option if you think that your company might qualify.
An EMI option scheme could benefit your company
by providing key employees with a financial reward that’s
determined by business success, and may also be taxed at a
much lower rate than a conventional
bonus. Shared ownership can also be a
powerful tool, as your staff can
better understand how well the
company is performing, and key
people can be encouraged to stay
with the company by way of
committing to the scheme.
As long as the relevant
conditions are met, the grant of the
EMI options are generally tax-free and
there will be no income tax or national
insurance contributions for you or
your employee when the option is
exercised. Capital gains tax is payable
on any uplift in value.
The rates of capital gains tax are lower
than income tax rates and employees
will be able to take advantage of their
annual exemption, making the first £10,600 tax-free.
EMI schemes can be structured in a number of
different ways depending on the needs of your company,
and can be either stand-alone schemes or can be put in place
in conjunction with performance conditions or an employee
benefit trust.
Be green and save taxThe Enhanced Capital Allowance (ECA) scheme is an
important part of the Government’s programme to manage
climate change. It provides businesses with enhanced tax
relief in return for investment in equipment that meets
published energy-saving criteria.
You can benefit from enhanced capital allowances
of 100% if your business purchases energy-saving plant,
machinery, and technology, and if it uses low emission cars.
If it is loss-making, these can be surrendered for a tax credit
of 19%, providing your company with a much-needed cash
flow advantage.
Consider applying for EIS status to attract more investment in your company
EIS (Enterprise Investment Scheme) relief was introduced to
encourage individuals to invest in small, higher-risk trading
companies. Those who invest in qualifying companies can
benefit from a range of attractive tax benefits such as:
• 30% relief against income tax payable up to the annual
investment limit of £500,000 (£1 million from April 2012)
• Unlimited deferral of CGT (capital gains tax) liabilities
incurred up to three years prior to and one year after the
date of subscription for shares
• Inheritance tax benefits after being held for two years
• Capital losses can be relieved against income tax or
capital gains
• Capital profits on the sale of EIS shares are free from CGT
if they are held for at least three years
Should you wish to apply for EIS status, we will be able to
fully inform you before you make these important decisions.
Transferring investment properties to an LLP to reduce tax on chargeable gainsIf your company holds an investment property, it may be
possible to release any growth in value into personal hands.
This will allow your company to avoid the deferred/double
tax on chargeable gains, and any capital growth in the
property can then be taxed to an individual’s CGT at 18%
or 28%, rather than an effective rate of up to 53%.
Take advantage of the increased annual investment allowanceThe annual investment allowance for capital purchases is
currently £100,000 per year, but this will reduce drastically
from April 2012 to just £25,000. By bringing any spending on
capital items forward, you can make the most of the current
allowance before it vanishes.
R&D (Research and Development) ReliefFollowing an increase in the rate to 200% of expenditure,
which is set to increase again to 225% from April 2012,
R&D is now a very attractive tax relief for SMEs.
Furthermore, if your company is loss-making, R&D Relief
can be surrendered for a tax credit of 14% giving you a much
needed cash flow advantage. R&D is not just applicable to
pure research-based enterprises and you may be surprised
to learn that your company can claim R&D Relief.
Make use of HMRC’s national insurance ‘holiday’New businesses in certain areas that start up during the
period from 22 June 2010 to 5 September 2013 may qualify
for a deduction of up to £50,000 from the employer NICs that
would normally be due.
Make tax work to your advantage by getting the best possible adviceTax law is complicated and business tax law doubly so.
It is as simple as that. Reliefs and exemptions are built in to
encourage businesses to thrive and grow. Talking to our tax
lawyers will save you and your business money. We can help
you plan future strategies – the timing could make a huge
difference to the benefits you can derive from having expert
tax advice on hand.
ClaireBoyce
A Lupton Fawcett Periodical. Issue 2 10/11
The private equity and M & A markets seem to
be showing signs of life. There is still a tension
between investor confidence and uncertainty, but
there are plenty of opportunities, and opportunity
is what makes the private equity market thrive.
The University of Nottingham Centre for Management
Buy-Out Research recently reported that UK-led private equity
buy-outs in the first half of 2011 amounted to £5.7 billion.
That’s a big number in anyone’s book. And a lot of this activity
has been played out in Yorkshire and Humberside, where
Lupton Fawcett’s corporate team is very active.
We have just been instructed on the creation of a
new private equity fund in Leeds, which is being backed
by a number of prominent business people, each with an
impressive track record. Elsewhere in the corporate team,
we are talking to other venture capitalists who are coming
out of hibernation and raising finance. This gives opportunities
for existing business owners wishing to make an exit.
As always, there is still a gap between vendor
expectations and purchaser valuations. It can be a difficult
tightrope to walk, bringing the competing demands of these
parties together. But if deals are to happen, everyone has to be
happy. When sellers want to sell, they have to be flexible and
imaginative. But so do buyers. And the lawyers
have to be creative, as well as understanding
the law.
VCs and private equity teams are spreading
their wings by acting as bankers as well as
investors. Indeed, they have to, as many banks
seem to have less of an appetite to fulfil their
traditional roles than was previously the case.
How will the VC and private equity markets
develop over the coming months? As ever,
crystal ball gazing is an art rather than a
science. And a very inexact one at that.
The outlook remains uncertain, but that
doesn’t mean parties won’t come to agreements
and deals won’t happen. They will. Indeed,
a good many equity investors will tell you
they make more money during a disruptive,
uncertain period than at any other time.
Whatever the future holds for corporate
finance activity, it’s essential that the lawyers
supporting these transactions know what they
are doing, and can complete deals on time,
within budget and with skill and expertise.
Fortunately, that’s where Lupton Fawcett is
very strong.
Andrew Lindsay, Director in the Corporate Finance Department of Lupton Fawcett and a Director of the Leeds, York & North Yorkshire Chamber of Commerce, discusses the future of corporate finance activity in today’s uncertain market.
Can you point me towards the exit?
AndrewLindsay
Although some bankers are taking advantage of
the current market to maximise income, more
and more banks are returning to active business
lending, giving greater choice to prospective
borrowers and allowing them to start voting
with their feet. Bankers need to remember the
old adage that win-win negotiations make for
long and happy relationships, or suffer the
consequences further down the line.
When negotiating with your business banker,
you need to remember that you’re not negotiating with
the individual, you’re negotiating with the bank and its
pricing policies. Entering the negotiations with a clear
understanding of what is important to the bank, and of the
parameters the individual banker is working to, will help
you get a better deal.
Interest rate marginSME business lending is dictated by your security value
and credit rating as it is viewed by the bank at that
particular moment in time. This is calculated by banks
using constantly shifting parameters that are difficult to
predict, as they vary bank by bank. This system allows
banks to strategically price their lending according to risk.
So, the higher the risk, the higher the pricing.
In this environment, lending rates become a
moving feast for the banks, which is why they are so keen
to renegotiate margins on lending when they come up for
review; not surprisingly, the new rates are usually higher to
coincide with deteriorating finances. This also means that
bankers usually have little power to vary the applicable
rate, so it’s usually wiser to focus your negotiations onto
the reduction of charges and ancillary fees.
Links, fees and chargesWhen banks borrow from the markets to fund their
business lending, they borrow at rates linked to LIBOR
(London Interbank Borrowed Rate). If banks lend these
funds out to clients linked to the Base Rate, they run the
risk of the two becoming disparate, as was the case in
2007 and 2008. Linking your deal to LIBOR rather than
the Base Rate might make it look as though your bank
is attempting to make more money, when it is actually
responsibly managing one of its risks.
Fees are charges for work done, so there is no sense
in a ‘standard’ 1% or 2% fee being levied – is there 10
times as much work for a banker in a £10m deal as there
is for £1m? You should always ask your bank to provide
clear justification for all fees, and ask for a clear picture of
any potential discounts if fees are paid upon acceptance
rather than drawdown. Alternatively, the banker may be
quite happy to divert the up-front fee into a “success” or
redemption fee.
Other fees are usually the easiest ones to negotiate
down, or even away, as they are often not subject to
internal standard bank tariffs. These include security fees,
early redemption penalties, success fees, covenant breach
fees, and management, monitoring and site visit fees.
Finally, any facility letters issued by the bank
must be overviewed by your professional advisor, solicitor
or accountant to ensure that any lending conditions, and
there will be some, are fully understood before the facility
letter is signed.
Get the best deal out of business bankingThese days, getting financial support from your bank can be far more important than the structure or pricing of the deal offered. Begbies Traynor Director, Mark Whitaker, takes a break from coordinating Begbies’ business development activity to provide some insight into the negotiation process.
Top tips for business borrowersEverything is negotiable – any aspect of deal structure
can be linked into pricing
Don’t haggle over 0.25 % of margin – unless the debt
is significant, it’s not worth your time and effort
Offer tangible security – if you believe in your business,
then put your money where your mouth is and benefit from a
reasonable improvement in margin
Check for other charges – and seek reductions in these
Talk about timings of fees – arrange these to suit your
business cash flow
Be reasonable – your banker wants the deal as much
as you do
Most importantly, remember that pricing isn’t
everything – deal structure, covenants and conditions can
be far more important.
A Lupton Fawcett Periodical. Issue 2 12/13
There are few things that will make
two neighbours behave quite as
unreasonably as when one impinges
on the other’s right of receiving natural
light to their property. Developers may
develop away with little thought for
others, whilst those with the benefits
of the right may seek to extort money
without any thought for the benefit of
the amenity proposed.
This issue, which has recently played
out dramatically on our doorstep, has been
thrown into stark relief by the judgement in
‘Toronto Square versus Aspire’, where the judge
ruled that part of a Leeds city centre office
block should be pulled down after another
property owner claimed it blocked out his light.
This underlines the fact that the legal system
can and will make an order to demolish the
offending part of the building, or indeed the
whole building, which blocks an established
right to light. More importantly this will still be
the case even if the complainant could and
possibly should have acted earlier.
The courts have made it clear that the
risk remains with the developer. This risk has
normally been one that the developer has been
willing to take on board, even costing for sums
that they may have to pay to resolve rights of
light issues into their development programme.
The problems associated with reinstating the
building far exceed the burden of simply paying
damages, and indeed are far more costly. This was the threat
in Toronto Square, where the new storeys would have had to
be removed to satisfy the neighbours.
The judgement in this case also made it clear that there
is no pressure on any claimant to make early protest in order
to bring the matter to the attention of the developer or the
courts. This further heightens the likelihood that even if the
developer believes that the claimant’s case is weak, it will settle
the dispute by paying the claimant
a substantial sum to be rid of the
problem. Any alteration of plans,
both physically or on paper, will
inevitably be both expensive and
the cause of delay.
There is planning
legislation guidance included
in BS8206-2 2008 (Lighting for
Buildings – Code of Practice).
However the planning community
do not, in practice, consider their
role to be one of protecting private
property, and as such remain
happy to leave it to the individuals
and the courts to resolve the position. This leaves any
developer at risk. In the past, developers were able to get a clear
view of those who were serious about enforcing their rights by
waiting to see who would have the courage to seek an interim
injunction which, should it prove ineffectual, would expose the
claimant to costs and, potentially, damages. As the law now
does not insist on the claimant to a right to light acting with
any haste, this financial protection is largely nullified – as any
claimant will now find themselves in the happy position of
threatening without actually showing their hand or taking any
irreversible or costly action.
It will be interesting to see what action the relevant
local authority takes in relation to the new proposed
development by Great Portland Estates at New Fetter Lane
in The City. To add interest, the objector to the development
is Michael O’Leary, better known as Chief Executive of
Ryanair. There is some thought that, in this case, the relevant
planning authority may use its powers under the Town &
Country Planning Act to establish to developers that there is
still a desire to have new development in the City of London –
where space is at a premium and consequently rights of light
are an ongoing issue. It seems clear with the ‘Toronto Square
versus Aspire’ case that the balance of power has swung in the
direction of the offended party who holds the right.
The lesson here is that if you are a developer,
you should consult with your legal advisors at
the earliest opportunity to see where right to light
objections are likely to come from, and begin early
negotiation – potentially saving you time, money
and large amounts of stress in the process.
DavidBowden
Light at the end of the tunnelLupton Fawcett’s Director of Commercial Property, David Bowden, discusses recent developments brought about by court rulings around infringements on the right of natural light, and their implications for both developers and businesses looking to expand.
The legal system can and will make an order to demolish the offending part of the building, or indeed the whole building, which blocks an established right to light.
You’ve been working with Lupton Fawcett for almost four years now. What was the original problem or challenge that you engaged them with and what business areas do they support you in today?Before we started working with Lupton Fawcett, our incumbent
legal advisors had not treated Seabrook very well, and
consequently we were seeking
new advice. We were aware
that Lupton Fawcett had
acquired Fox Hayes and
of the firm’s strong reputation
for providing sound,
professional legal guidance.
Fortuitously I had a personal
contact there, Kevin Elmsley,
who put me in touch with an
expert team to provide us with
legal assistance.
Initially we were looking
for advice on patents, so we
were working with John
Sykes, a Director at Lupton
Fawcett and a specialist in
Intellectual Property and
Competition Law.
John and his team
were extremely helpful,
their advice was second to
none, and they fixed us up
with a local firm of patent
agents who were able to support us with everything we needed.
Because our initial engagement with Lupton Fawcett
was such a positive experience, when we had some HR issues
a few months later we turned to them for assistance. In this
incidence we were assigned to Louise Connacher and the firm’s
team of Employment Law specialists who provided us with
equally sound advice. As a result, Seabrook have been working
with Lupton Fawcett ever since.
Can you identify what impresses you most about Lupton Fawcett’s approach, and the main benefits of working with them?Although the real, tangible benefit is the solid advice we
receive, perhaps more importantly we never felt that time
was an issue. Sometimes when you visit a legal advisor it
genuinely feels like you’re on a stopwatch – being charged for
every single second and every piece of guidance. With Lupton
Fawcett it doesn’t feel that way. It really helps to know that
there is always someone available at the end of the line to
speak to when you have a query or want some quick advice.
Building on this, I was particularly impressed by their
straight talking, no nonsense, and more importantly, honest
approach. For example, if they think you have a chance of
winning a case then they equip you with all the knowledge
Once tasted loved foreverKen Brook-Chrispin, Chief Executive and Chairman of Seabrook Crisps, discusses how and why he works with Lupton Fawcett.
A Lupton Fawcett Periodical. Issue 2 14/15
For me, to go into any situation forewarned
and forearmed is ‘The Law of Advantage’ –
when you’ve got the law on your side, and you
know exactly where you stand. I believe that
Lupton Fawcett can give you that advantage.
and advice you need, but equally if they don’t think you have
a strong case then they tell you straight. Of course, this has
benefits from both a financial and a timesaving perspective.
What else differentiates Lupton Fawcett from their competitors? There’s an old saying that a company is only as good as the
last piece of advice they’ve given you. I have to say, all the
advice that we’ve received so far from Lupton Fawcett has
consistently been spot on. The main thing that differentiates
the firm is their professional yet personal approach; you
have people to talk to and rely on for the best possible
legal guidance.
Kevin in particular is a great mentor, and in fact
everyone we’ve dealt with at Lupton Fawcett has proved to
be worth his or her weight in gold. If this is the standard
practice across the whole firm then it certainly gives them
the competitive advantage. Based on my personal experience
with the firm, I’d be happy to recommend them for
commercial guidance.
Here in the UK, we tend to seek legal advice when we have business or legal problems, rather than avoiding problems in the first place. What’s your opinion of this approach, and have you benefited from ‘The Law of Advantage’ that Lupton Fawcett claim to put on your side? I’m a big believer that knowledge is power. If you don’t
know your limitations before you enter into competition then
you’re going to fail. I think it’s essential to equip yourself with
the right tools for the job, because if you don’t have the correct
knowledge then you’ve lost before you’ve even started.
What’s more, you lose respect.
It’s also my firm belief that going into any negotiation
cold is committing corporate suicide. For me, to go into any
situation forewarned and forearmed is ‘The Law of Advantage’
– when you’ve got the law on your side, and you know exactly
where you stand. I believe that Lupton Fawcett can give you
that advantage.
Finally, why do you continue to use Lupton Fawcett? In summary, I value their straight talking approach,
their business culture and their sound advice. And until any of
that changes, they are the best people for me!
To some it’s aboutthe companythey attractTo us it’s about thecompany we keep
Business is never as usual at Lupton Fawcett
– it’s the result of our unique approach to
client relationships. We are prepared to think in
an untraditional way, and advise you as though we
were advising our own business. It’s a culture that’s
helped us form solid partnerships with businesses
all over the country. We call it The Law of Advantage.
Leeds: 0113 280 2000
Sheffield: 0114 276 6607
www.luptonfawcett.com