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 Brief overview of changes to HMRC Powers (01/04/2010)

Why are things changing?

The powers inherited by the merged HM Revenue & Customs (HMRC) were unaligned and out of date. HMRC and its customers wanted a more tailored approach which allowed any ’checking’ action to respond to the particular circumstances in each case, to include the nature of the risk. To reflect this, new powers and a consistent set of safeguards are being introduced. These will apply for SDLT in respect of returns made on or after 1 April 2010.

What changes in April 2010?

The new legislation provides HMRC with:

• one set of powers to inspect business records, assets and premises
• a non-appealable right to require production of statutory business records
• a new power to correct obvious errors in a tax return based on information held by HMRC
• a single approach across all taxes to asking taxpayers and third parties for supplementary information, based on formal information notices with a right of appeal

The legislation also makes some changes to the way HMRC must carry out compliance checks, including

• a ban on inspecting purely private dwellings without consent
• a requirement for HMRC to give at least seven days prior notice of a visit, unless either an unannounced visit is necessary, or a shorter period is agreed
• a new requirement that unannounced visits must be approved beforehand by a specially trained HMRC officer
• a requirement on HMRC to act reasonably
The new penalties for inaccuracies will be extended to most taxes for return periods starting on or after 1 April 2009, for documents that are due to be filed on or after 1 April 2010.
• HMRC is also introducing one consistent penalty system across most taxes when people fail to notify a new tax liability or a new activity on which tax is due.
• under the new system, if you take reasonable care to get your tax right, HMRC will not penalise you, even if you make a mistake.

What changes in April 2011?

The legislation makes some changes to the way HMRC must carry out compliance checks, including
• a new four year time limit for assessments and claims
• reductions in extended assessment time limits
Where can I find out more?

Website: New Compliance Checks

Website: Briefing on new penalties

Website: New penalties for errors on tax returns and documents

 Law Lords ruling on claim for back rent (03/11/2008)

The law lords have backed brewers Scottish & Newcastle over an attempt to reclaim rent on a hotel building.

Scottish & Newcastleís solicitor said the Court of Appeal’s decision on the case last year caused "consternation" in the commercial property world and threatened the ability of landlords to reclaim millions in rent arrears.

Delivering judgment in Scottish & Newcastle v Raguz [2008] UKHL 65, Lord Scott said the brewers assigned two underleases to a building in Leicester Mr Raguz in 1982, which he later assigned to another company.

By 1999, the underleases were owned by a company which went into administration, defaulting on the rent. The reversion was owned by National Car Parks (NCP).

A rent review was already under way, resulting in greatly increased rents for both underleases being fixed in 2000 and 2001. Following this, NCP demanded around £500,000 in unpaid rent from Scottish & Newcastle as original tenants. The brewers paid, and claimed the money from Raguz as assignee, on the basis of the statutory indemnity covenant implied into all assignments by section 24 of the Land Registration Act 1925.
Raguz argued that NCP had failed to preserve their rights against S & N by correctly serving notices under Section 17(4) of the Landlord and Tenant (Covenants) Act 1995.

As a result, Raguz argued that S & N did not need to pay NCP the additional rent for the period between the rent review date and the day when the revised rent was set.

Rejecting this argument, Lord Scott said it would be a "ridiculous conclusion" for section 17 to be construed in such a way that an original tenant would be obliged to serve a notice on an assignee during a rent review every six months, whether or not the current tenant was in default, and specifying the amount unpaid as "nil".

He went on: "The original tenant would surely not expect to be given notice of a process under which nothing is yet due and in respect of which there is no default on the part of the current tenant."

Lord Scott rejected a further argument by Raguz that S & Nís final payment to NCP included sums that the brewers were under no legal liability to pay.

He dismissed the appeal by Raguz and allowed S & Nís cross-appeal against the decision of the Court of Appeal that the rent review increases could not be recovered because of the failure to serve notices correctly.

Lords Hoffman and Brown concurred. Lords Walker and Hope agreed that the appeal should be dismissed but allowed the cross-appeal to only a limited extent.

Lord Walker said the original tenantís failure to serve notices "made irrecoverable any instalments of the balance of the revised rent which had already notionally accrued".

Paul Moorcroft, head of real estate litigation at Eversheds acted for Scottish & Newcastle. He said: "The previous interpretation of the section had been met by consternation in the commercial property sector, as it put at risk (in times of financial stringency) landlords’ ability to recover many millions of pounds of rent arrears.

"The new ruling is a significant boost for the sector as it allows for less complex property management, is likely to cut legal fees and reduces risk for landlords and their solicitors."

Source - The Solicitors Journal


October marks the final roll-out of energy certificates to all buildings and today
(Tuesday, 9 September 2008) Communities and Local Government has updated
the Energy Performance of Buildings regulations for Energy Performance
Certificates, responding to consumer and industry needs.
The infrastructure is in place to support 1st October 2008 go live date when the
certificate will be extended to rented homes, commercial properties under
2,500m2 and all remaining homes for sale including those on the market
before the phased introduction of EPCs for domestic properties in 2007. By
1st October public buildings will also need to have a Display Energy

Since being introduced in 2007, more than one million Energy Performance
Certificates (EPCs) have been produced and registered in England and Wales
with the average rating being a ’C’ for commercial properties and a ’D’ for

The measures which come into force for October include:

• extending the validity period of the EPC for homes when marketed for

• currently one year - to three years. This has been the result of
extensive consultation; and

• clarifying arrangements for the October roll-out for commercial
buildings already on the market which will be similar to those put in
place in April and July. This means that any non-domestic building on
the market before 1st October and remaining on the market will need
an EPC by 1st January at the latest. If it is sold or rented out in the
meantime, an EPC must be commissioned and then handed over as
soon as is practicable. This measure is intended to make it easier for
owners and landlords to comply with the legislation, avoid market
fluctuations and is in response to expectations from the industry.
October marks the completion of the introduction of EPCs. The full timetable
is below:


• Since 1st August 2007 all homes going on the market with 4+
bedrooms have required an EPC when sold

• Since 10th September 2007 all homes going on the market with 3+
bedrooms have required an EPC when sold

• Since 14th December 2007 all homes going on the market with one or
more bedrooms have required an EPC when sold

• Since 6th April 2008 all new-built homes have required an EPC

• From 1st October all remaining homes for sale (including those which
had been on the market from before the above dates) will require an
EPC and all homes for rent will require an EPC when newly rented.


• Commercial buildings also require an EPC when built, sold or rented.
Since 6th April 2008 this has applied to buildings over 10,000m2; since
1st July 2008 to buildings over 2,500m2.

• From 1st October they will apply to all remaining commercial buildings.


1. The package forms part of EPBD regulations laid before Parliament on
Tuesday, 9th September. A copy of the regulations will be available
later this week on the Office of Public Sector Information website The summary of responses on the EPC validity
consultation will be available on the Communities website shortly.

2. More information on Energy Performance Certificates and the other
measures being introduced to improve energy efficiency of buildings is
available on Communities website

 Don‘t get your fingers burned! (16/05/2007)

On 1st October 2006 the Fire Safety Order 2005 came into force. In the coming months this should become a ‘hot‘ topic for many local businesses.

It will apply to all non-domestic premises, which includes the common parts of flats.

In summary, all fire certificates and plans cease to be valid and the standards previously set by the Fire Service will be replaced by a system of risk-based assessment, whereby accountability lies firmly with 'the responsible person'. This is the employer in a work place or any other person who may have control of any part of the premises for example an owner or occupier.

At the core of the legislation lies the fire risk assessment This is an organised appraisal of work activities and premises to enable identification of potential fire hazards, and a decision on who (including employees and visitors) might be in danger in the event of fire, and their location. Risks and hazards are evaluated to decide whether the existing fire precautions are adequate, or whether more action needs to be taken.

Fire Protection Officers will audit the fire risk assessments relating to any premises and on conclusion of the premises' audit the 'responsible person' will be notified of their compliance level. The Fire Protection Officers may then use a number of their powers to rectify any concerns. These powers range from possible prosecution, notification of defects to be rectified or simply educating and informing.

The government recommends that fire risk assessments be done professionally. There are a number of health and safety and fire risk companies that have professionals trained to do the assessments.

It is a breach of the Law if a business or landlord cannot produce a fire risk assessment to a Fire Protection Officer on request.

Martin Garner