News archive

Supreme Court case considering whether the Scottish Ministers had given adequate reasons for their decision to approve the Fife Structure Plan with modifications; Ms Uprichard arguing that the reasons given by the Ministers had not adequately addressed her objections to proposed modifications to the plan.

 In brief, the essence of Ms Uprichard’s objection was that the modifications to the plan did not contain any modification to the strategy within the plan that St Andrews should become an economic driver for Fife (by significantly expanding the town). In support of her contention that there should have been such a modification, she referred to both a 1998 study which asserted that St Andrews was “at its landscape capacity” and to the “Grant Report” which concluded that there was limited scope for development.

Amongst the reasons given by the Ministers for not modifying the structure plan on the basis of objections such as those given by Ms Uprichard, was “reason 33” to the effect that the Grant Report had indicated that there was some scope for development (subject to mitigation) to the west of St Andrews. Ms Uprichard argued that this did not address her objection (which she claimed was that the available capacity could not accommodate the scale of the planned development rather than that there was no capacity for development). Ms Uprichard’s arguments were rejected in the Inner house and her appeal to the Supreme Court was also dismissed.

The assertion that St Andrews was at landscape capacity appeared in Ms Uprichard’s’ letter of objection and reason 33 addressed objections of that general tenor by referring to the finding of the Grant Report that there existed some scope for development to the west of St Andrews. The broader point made by Ms Uprichard that the scale of development envisaged in the structure plan would damage the landscape setting of the town was addressed by the substance of further reasons given by the Ministers. The Supreme Court found that the reasons given, when read as a whole, provided an intelligible explanation to a well-informed reader such as Ms Uprichard as to why the Ministers were not persuaded by her objections.

The full judgement is available from the Supreme Court here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

There were few surprises arising from the publication of Scottish Labour’s Devolution Commission’s interim report.

The starting point for these commissions is always the same.  They look around for reasons why a particular power should not be devolved.  They do not look at what could be achieved by control of that power being passed to the Scottish Parliament.

The main problem that I have with this report is that we have heard all this before and in fact quite recently.  The Calman Commission taught all of us with an interest in seeing the creation of a Scottish tax system how its opponents behave.   I like to call this the Calman doctrine.

“Make a huge fuss about having someone look at the issue, take your time, offer as little as possible, exaggerate any problems, minimise or ignore any advantages and ensure HMRC and HM Treasury remain in control.”

Calman also taught us that even if a report is produced and its recommendations are accepted not all of those recommendations actually make it to a Scotland Act.  That is why the Scotland Act 2012 is called “Calman minus”.

The absence of common sense is also a problem.  Why not look at which powers are already devolved and then devolve the areas of taxation most closely connected to these already devolved powers.  For example inheritance tax and succession law, tobacco and alcohol duties and health and vehicle excise duty and transport.  This would greatly help the development of policy and at the same time provide the Scottish Parliament with a serious number of economic levers.

Simplification for both the UK tax system and the new Scottish tax system is not even considered.

So what does report say?

The main taxes other than income tax are quickly dealt with and also the largest area of law not yet devolved, welfare.  The report rules out devolving National Insurance and with it any control of the welfare state, corporation tax and North Sea revenue.  That immediately restricts what can be done.    As VAT can only be devolved if Scotland becomes independent, of the 5 major sources of revenue, that only leaves income tax.

The report is quite clear and does not recommend devolving complete control of income tax.  At most it recommends devolving control of the rates, thresholds and allowances.  Almost all of the underlying law that governs how income tax is charged, or the type of reliefs, or the collection rules or who pays and when would not be devolved.   That means that income tax would have two masters.  As with the Scotland Act income tax proposal this is a recipe for disaster.

The report then looks at a number of minor taxes and uses a number of the “usual suspect” reasons as to why they should not be devolved.  They generally do not say that a particular minor tax should not be devolved but rather there is an “issue”.   The main issues are “concerns about avoidance” and “subject to EU law”.  This covers fuel duties, tobacco duties, alcohol duties, stamp duties other than SDLT which is already being devolved, insurance premium tax, betting and gaming duties, most of capital gains tax and a number of other minor taxes on income and wealth.  It is not clear what is proposed regarding climate change levy. Revenue from our TV licences and the National Lottery are simply described as “not relevant”.

So, along with slightly more control of income tax, what is left?  Possibly air passenger duty and aggregates levy as recommended by Calman but not included in the Scotland Act, possibly vehicle excise duty, possibly part of capital gains tax, possibly inheritance tax and possibly control of the Crown Estate.  The recommendations are not that dissimilar to the Liberal Democrat Home Rule Commission proposal.  Please see my earlier blog on this which can be found here.

The conclusion is simple.  The vast majority of tax revenue and taxes will remain controlled by the UK Government.   In any case, the response from a number of Labour MPs to the interim report tells us all we need to know as to the likelihood of these relatively minor proposals being enacted.

“A new bill introduced to the Scottish Parliament [on] April 17th could see Scotland adopt a new tax to replace UK Landfill Tax and tackle illegal waste disposal while bringing benefits to community and environmental groups.

Finance Secretary John Swinney introduced the Landfill Tax (Scotland) Bill, which will see Scotland take responsibility from the UK Government for administering landfill tax.  If passed, the Bill will help tackle the problem of unauthorised dumping activity and encourage the proper disposal and recycling of materials.

The Bill also introduces a Scottish communities fund which will support environmental organisations and provide assistance to communities living in close proximity to landfill sites. “

More on this can be found here.

Outer House case in which Whyte and Mackay sought to enforce an adjudicator’s decision requiring Blyth & Blyth to pay them almost £3m in damages.

Blyth & Blyth had designed the structure of a new bottling plant at Whyte and Mackay’s Grangemouth premises. Whyte and Mackay claimed that the foundations were defective and would result in settlement and damage to the building. They referred the resulting dispute to an adjudicator (as they were entitled to do in terms of the contract between the parties)[1].

When Whyte and Mackay sought to enforce the adjudicator’s decision in the Court of Session, Blyth & Blyth argued that the adjudicator had failed to give adequate reasons for his determination and that to enforce the decision was incompatible with Blyth & Blyth’s rights under the European Convention on Human Rights.

Reasons for the decision
Lord Malcolm found that the adjudicator had failed to give adequate reasons for his determination as he had failed to deal with Blyth & Blyth’s contention that, even if the additional piling deemed necessary to make the foundations adequate had been specified in their design, Whyte and Mackay would not have been prepared to pay the additional time and financial costs required to carry out the extra work. This was potentially a complete answer to the claim and a very significant omission from the adjudicator’s decision. As such, it was sufficient to justify reduction of the award.

Human Rights
Arguably of more importance, however, was Lord Malcolm’s finding that to enforce the adjudicator’s award would be a disproportionate interference with Blyth and Blyth’s right to their possessions under article 1 of the first protocol to the Convention on Human Rights.  Lord Malcolm observed that adjudication is a “rough and ready” process which is “designed to provide a speedy and relatively cheap provisional award pending a final determination by litigation, arbitration or agreement”; the “rough and ready” aspect being particularly true in large and relatively complicated cases such as this one. He also noted judicial concerns as to whether difficult questions of law should be referred to adjudication. Whilst a court, in the face of a Convention challenge, will usually be able to justify enforcement of an adjudicator’s award on the basis of the general interest benefits arising from adjudication (e.g. speed, cost, efficiency and cash-flow requirements), this was a case where such benefits were largely, if not entirely absent. No general or public interest had been served by Whyte and Mackay taking the dispute to adjudication (it would be many years until the cost savings gained by the absence of piling would be outweighed by the projected losses and the bulk of the claimed losses would not occur until 2035/6).

In coming to this conclusion, Lord Malcolm also dismissed Whyte and Mackay’s argument that a decision not to enforce the adjudicator’s award on the basis of article 1 of the first protocol would undermine the whole adjudication scheme, finding such a contention to be “exaggerated and unconvincing”.

A further challenge to the award under article 6 of the Convention (the right to a fair hearing) was rejected on the basis that article 6 is only engaged when a civil right or obligation is being determined and an adjudication cannot be regarded as a final determination of the right or obligation at stake.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Inner House case considering a claim for damages under the Occupiers Liability (Scotland) Act 1960. Mr Dawson worked as a self employed courier and was delivering a package to Ms Page’s cottage. Building works were taking place at the cottage and the surroundings resembled a building site.  After making two unsuccessful visits to the cottage to deliver the package, Mr Dawson left the package under an oil storage tank in the back garden. As he was leaving the cottage he slipped on a wet plank over a trench in the garden and injured his hand.

Mr Dawson’s claim for damages failed in the Outer House.  After noting wet planks are slippery and a notice is not required to point that out, Lord Glennie found that there was no requirement on Ms Page to exclude people from the site or give warning of the risks. The Inner House observed that the fundamental aim of the 1960 Act had been to the restore a broad test of reasonableness in relation to such claims and rejected Mr Dawson’s appeal which was based the argument that Lord Glennie should not have reached the conclusion that a state of affairs which is obvious is not a danger.

The full decision is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Latest HMRC Stamp Taxes bulletin can be found here.

Content:

All Taxes

Changes to Stamp Taxes telephone/fax numbers

Land

Disadvantaged Areas Relief
New Annual Tax on Enveloped Dwellings
15% SDLT
Paying Stamp Duty Land Tax (SDLT) into the correct bank account
Tenancies at will
Variable or uncertain rent- adjustments in line with RPI
When a land transaction return should not have been submitted
Recent updates to the Stamp Duty Land Tax Manual

Are your property styles up to date?

Do they need some maintenance?

Contact Andy Duncan for a quote.

Andy’s contact details can be found here.

Just as the weather in Scotland likes to tease us, so do the Tories over tax powers for the Scottish Parliament.  You can sense the nervousness growing in those opposing substantial tax and fiscal powers for the Scottish Parliament.  They feel that need to be saying something substantial but they just don’t know what to say.  They think that a hint of something substantial will be enough.

Look how the Liberal Democrats talked up their recent ‘Home Rule Commission’ report and the amount of power being devolved under Scotland Act 2012.  The reality as usual being very different.  My earlier blog on this can be found here.

So what have the Tories been saying, or rather hinting at?  Ruth Davidson has announced that yet another group will examine the existing devolution settlement in order to set out a clear alternative to independence in next year’s referendum.  A “clear alternative to independence”, I think not more a clear case of déjà vu.  More on this from the Scotsman can be found here.

The UK Government’s nervousness on the devolving of tax powers is not confined to Scotland.  The negative reaction it has received to one particular announcement shows how difficult a position it is now in.  The recent move to put off the decision to devolve corporation tax to Northern Ireland has not gone down well.  Peter Robinson, Northern Ireland’s First Minister said he had told the Prime Minister: “What, effectively, you are saying to the people of Scotland is that if you want more fiscal autonomy than you have at the present time, the only way to have it is through independence.”  More on this from the Herald can be found here.

Now to HMRC.  So much is happening with them just now it is difficult to keep up.

HMRC has announced that it is postponing payroll reforms for small businesses that require businesses to send real time information to HMRC amid fears that small businesses are unprepared for the changes.  More on this from the Financial Times can be found here.

The House of Commons Public Accounts Committee has also criticised HMRC target of answering 80% of tax enquiry calls within 5 minutes as “unambitious and woefully inadequate”.  It also found that Britons waste £136m a year attempting to get through to HMRC, with about 20 million of the 79 million calls received by HMRC going unanswered each year, despite spending £900m on improving customer service.  HMRC’s premium rate phone lines are also to be replaced.  Phone company Cable and Wireless is making a profit of about £1m a year from callers to HMRC’s 0845 enquiry numbers, according to a report by the House of Commons Public Accounts Committee.  The lines are to be replaced with cheaper 03 numbers. More on this from the BBC news website can be found here.

HMRC is also to close all of its 281 Enquiry Centres, which gave face-to-face help to 2.5 million people with tax queries last year.  The closures in 2014 by HMRC, which aim to save £13m a year, are expected to add 2 million extra calls to phone lines while also putting 1,300 jobs at risk, though the authority aims to deploy these staff elsewhere.  HMRC aim is to replace the Enquiry Centres with interviews in a range of convenient locations.  This might include a person’s own home or business.  We shall see.  More on this from the BBC news website can be found here.  The matter of how we deal with tax enquiries is an issue that we in Scotland also need to look at as we create a Scottish tax system.

Now to attempts by the UK Government to reduce tax avoidance.

A tax loophole that allows firms to escape £100m a year in National Insurance will be closed under a new scheme targeting offshore payroll services.  From April 2014 the UK government will prevent employers avoiding National Insurance Contributions by paying their staff through an offshore intermediary.  It estimates that at least 100,000 workers are now being employed through an offshore agency, often without their knowledge, losing tax contributions of £100m a year.  More on this from the BBC News website can be found here.  The question is: why has it taken so long to try and put a stop to this.

The number of UK-resident non-domiciles has fallen by almost a fifth since the “remittance basis charge” was introduced in 2008.  Non-doms can elect to pay tax on UK income alone and keep their overseas income out of the UK tax net.  But if they elect to use this system long-term, they must pay the annual remittance basis charge after seven years of residence. The charge starts at £30,000 and increases to £50,000 after 12 years of residence.  More on this from the STEP journal can be found here.

HMRC is to launch a campaign aimed at people who have failed to declare capital gains on the sale of a second home, possibly going back many years.  This is yet another long overdue measure.  More on this from the STEP journal can be here.

The Charity Commission for England & Wales has been criticised by the House of Commons Public Accounts Committee for failing to provide more substantial oversight of the sector after 50 organisations were found to be using charity rules to avoid tax.  More on this from the Telegraph can be found here.

Now to matters slightly further afield.

Let’s start with Cyprus and yet another banking disaster.  After much wrangling, Bank of Cyprus depositors with more than €100,000 could now lose up to 60% of their savings.  The original proposal was a one-off levy of up to 10% to be imposed on all bank accounts held on the island.  More on this from the BBC news website can be found here.

The UK should withhold extra aid to Pakistan unless the country does more to gather taxes from its wealthier citizens and tackle corruption, the House of Commons International Development Select Committee has suggested.  The UK Government is planning to increase the amount of aid to Pakistan to £446m by 2015 and the Chairman of the Committee, has said that it is a question of “how justified it is to increase [aid] at a time when [the] wealthiest people in Pakistan are paying little or no tax”.  More on this from the BBC news website can be found here.

Now to France.  President Hollande has announced that French companies will be taxed at 75% on any salaries they pay over €1m.  His original plan for a 75% top rate of income tax on individuals was struck out by the constitutional court earlier this year.  More on this from the Guardian can be found here.

Let’s end with a story from China.  According to reports, China’s property market has been thrown into turmoil by the announcement that capital gains tax on residential property is to be raised to 20%.  At the moment, the seller of a residential property pays between 1 and 2% of the total sale price. Officially, gains from selling second homes have been taxable for several years, but the tax has not been strictly enforced.  The measure is one of several just issued by the People’s Republic State Council in an effort to cool off the booming housing market.  More on this from the STEP journal can be found here.

One last thing.  Congratulations to Ryan Mania.  An absolute fantastic achievement today on winning the Grand National.  Another reminder of just how great it is to be from the Scottish Borders.

From 8 April 2013, retailers operating in Northern Ireland must charge their customers at least 5p for new single use carrier bags used to contain purchased goods, such as groceries or clothing.

The proceeds of the levy will be forwarded to the Northern Ireland Department of Environment and will be used to fund environmental programmes and activities.

More on this can be found here.

Excellent Scottish Government booklet that provides practical advice at a time of bereavement.

The booklet can be found here.