Council Tax on Houses in Multiple Occupation

The High Court has just decided (in the case of R (Goremsandu) v London Borough of Harrow)  that the landlord of a house in multiple occupation (HMO) was not liable to pay council tax to the local authority and that the liability remained with the tenants.

 

Given that many local authorities have been actively pursuing landlords for the payment of council tax where tenants have failed to pay, there will be many investors this morning heaving a sigh of relief!

James Maxey says Never Say Never

This week has seen the launch of the mediation website www.mediated-solutions.co.uk and as always when mediation is discussed, inevitably it leads to me being asked by clients and lawyers alike if mediation really works. It is 14 years since I first experienced mediation and the biggest thing that has changed in that time is the increasingly enlightened attitude of clients and lawyers who are finally recognising that, without any sign of weakness, the willingness to sit down with a neutral third party and explore creative solutions to a dispute can actually bring savings of time and money.

“But why do we need a mediator” is the next chirpy comment that emerges. “If we can’t settle it ourselves sitting round the table then a mediator could never settle it”. But this misses the invaluable dynamic a mediator can bring to a settlement meeting.

A mediator is neutral and can talk to the parties without being for or against their case. A mediator is objective and can test the realities. A mediator should be the trusted honest broker. Most importantly, a mediator is confidential and can get into the unique position of fully understanding both of the parties private positions and therefore seeing if there is any overlap.

And the reasons mediations fail?

In my own experience around 90% of mediations result in settlement, and of disputes where I have been appointed as mediator, so far 2010 has a 100% success rate. But the major impediment I usually see is a lack of preparation. It is essential that the clients and their lawyers have spent some serious time thinking about what is actually achievable if they take their case to court and the realistic risks and costs they face. Providing those issues are addressed then a competent mediator stands a very good chance of bringing favourable settlement terms to most disputes. Don’t knock it until you have tried it. And never say never.

Air Rage - it's not just the passengers!

Poor Steven Slater - it all got too much for this experienced member of the Jet Blue cabin crew after a passenger allegedly verbally absued him and opened a storage locker on his head.  Steven gave the lady concerned a rather poor review over the aircraft tannoy and promptly exited the plane via the emergency slide.  You can only wonder just how many other cabin crew the world over have felt like taking the same sort of actions at one time or another!

But air rage is on the increase generally - and it's worth considering that certain behaviour on board an aircraft does carry some hefty crimial penalties.  Even mere "unruly bahaviour" can result in a fine of up to £2,500.00 (making it a pricey old break to the sun!).  The more serious offences - usually involving physical violence - carry a maximum fine of £5,000.00 and up to 2 years residing at Her Majesty's pleasure.  Try getting that absence past HR!

Airlines now have a zero tolerance policy to all these types of behaviour and anyone falling foul will certainly find the local police waiting for them on the tarmac.  There's apparently slightly more tolerance to the joining of the mile high club - though recent passengers on a Dutch flight weren't shown that tolerance given the fact that their club application was made whilst still in their seats!

Impact of the forthcoming VAT increase on SDLT

As everyone is no doubt aware, the standard rate of VAT will increase to 20% with effect from the 4 January 2011.  It has until now been slightly unclear what effect this might have on leases already in existence where VAT is payable on the rent.  Since SDLT is calculated on the VAT inclusive amount of the rent (thanks HMRC - nothing like being taxed on tax eh!!) any change in the VAT rate is theoretically notifable to the Revenue.

The Birmingham Stamp Office has advised that the requirement to review the SDLT calculation for leases with variable or uncertain rent (by virtue of being subject to VAT and there being possible fluctuations in the VAT rate) at the earlier of the end of the fifth year of the term or when the rent for the first five years of the terms becomes ascertained, is modified so that the review date will always fall at the end of the fifth year of the term.

Essentially, what this means that where the rent review date occurs before 4 January 2011, the 4 January 2011 VAT rate increase can be ignored. Only leases granted after 3 January 2006, for which this review date falls on or after 4 January 2011 will need to take the VAT increase into account.

There is a 30 day deadline from that review date to pay any additional SDLT due and file a further return.

Will Aid Success

Every year we take part in Will Aid.
For the month of November, clients are able instead of receiving a bill from us for preparing their Will, to make a donation to Will Aid instead.

Funds raised through Will Aid are used in projects all over the world - from the NSPCC's Childline project to helping the victims of the Haitian earthquake.

We're proud that this year, Buckles clients contributed £1,920.00 towards Will Aid and as a national total the campaign raised an amazing £1.25m!

So just a big "thank you" to everyone who participated - both our clients for their generous donations, and our lawyers who give of their time to run the project in the firm every year!

We've just received a nice certificate from Will Aid so I thought I'd share that with you too!

Obligatory Budget Summary

Not anything you won't have seen elsewhere this, but thought we might as well summarise yesterday's budget, given that it is the first in a generation to make such drastic changes to both taxation and benefits regimes

Corporation Tax will be cut next year by 1% to 27%. Annual reductions will then be imposed until the rate reaches 24%.

The Small Companies tax rate will reduce to 20%.

On 4th January next year, the main rate of VAT will rise from 17.5 to 20% - bad news for shoppers and bad news too for those of us in service sectors who are obliged to charge VAT on our services.

More bad news for higher rate tax payers with capital assets - the rate of Capital Gains Tax rises by 10% to 28% as from midnight last night. Those with investment properties on the market at present will be amongst the first to suffer that hike.

To add to that particular misery, the annual exemption for CGT remains at £10,100.00 but will apparently continue to rise with inflation.

The personal income tax allowance will increase by £1,000.00 in April, taking the amount that you can earn before paying income tax up yo £7,475.00

However, higher rate taxpayers will not benefit from that change, and the higher rate income tax threshold will remain frozen to 2013-14.

James Maxey, head of Dispute Resolution says....

The Sunday Times this week seemed to hit the right note with an article on page 9 of the Business Section headed "Try not to see your customers in court".

For the relatively small claims which make up most of the county court claims issued, the main difficulty lawyers have is delivering a cost effective solution. Factor in the wasted management time and the risk, whatever it may be, of losing, and you quickly see how suing on a modest dispute is often bad news even if you win.

A face to face meeting to try to resolve the dispute consensually is usually the best way forward, says the Times. Quite right. And if that does not work, whether or not litigation follows, consider mediation as a serious option. Yes, it may mean sharing the baby, but if you factor in the savings in risk, costs and time it usually offers a viable outcome.

And if you are a defendant reading this blog, does it mean things have gone soft and you can exploit opportunities to avoid paying? Not really. With the jittery economy we have today, more and more emphasis is being placed credit scoring and so forcing your opponent into suing and ending up with a judgment against you is seriously bad for your financial health. So even if your antics meant you got away without paying your debts on this occasion, was it really worth ruining your personal and business reputations for years to come?

Think about that next time you need to talk to your bank. So either everyone loses, or everyone wins.

I know which I would prefer.