News archive

Sheriff court case in which Wimpey sought damages from Mr Henderson in respect of his failure to pay the purchase price for subjects at Ferry Village in Renfrew.  Mr Henderson was acting on behalf of a group of investors who were purchasing multiple properties from Wimpey. Missives were concluded on 21st December 2007.  Wimpey had been anxious to conclude missives before Christmas and put pressure on Mr Henderson to conclude.  However, although Mr Henderson was also keen to proceed, he had concerns about the state of the property market and the fact that he was purchasing before the subjects had been built as he required finance for the transaction and the amount he could borrow would depend on a valuation of the property which could not be obtained until completion of the subjects.

This led to an email exchange indicating an underlying agreement by which missives would be concluded allowing Wimpey to show the properties as sold on their accounts but by which the properties would also be re-valued during 2008. Further negotiations could then take place and the properties could, if necessary, be re-marketed by Wimpey. In particular, Wimpey made the following comment by email:

“With this in mind, I want to give you some reassurance that should the circumstances arise that there are difficulties with the valuations we will find a resolution one way or another and I suggest that against this background I would like to have a “gentleman’s agreement” that we will have valuations carried out in the new year with a view to having them all back early Feb which will be the basis of any negotiations (if need be). I just want to give you the comfort that in concluding missives now will still allow for further negotiation should the valuations necessitate this.”

And, in response to a question by Mr Henderson as to what would happen if exchange bonds (being used by the parties in place of a deposit)[1] were not in place by the end of January as had been agreed:

“I would take the view of (sic) should this happen then we remarket the properties. If the question is will we come after you then I can give assuarnce (sic) that we wont, all I need is enough notice, ie as early in the year as possible to remarket. Hope this helps.”

Further emails were exchanged in which it was agreed that a condition would be inserted into the missives providing  that, if exchange bonds were not in place by 31^st January 2008 for plot 38, then Wimpey would be entitled to withdraw from the transaction at their instance. In the course of these emails Wimpey also advised that they could agree that, should the situation arise that all Bonds were in place and the property had not achieved the values required, an agreement would be reached by both parties whereby Wimpey could remarket all or some of the properties.  They said that, in effect Wimpey would resile from the missives at no penalty to Mr Henderson expressing the hope that this would alleviate the concerns of Mr Henderson and his business partner. However, nothing to this effect was inserted into the missives.

In September 2008 valuations were obtained which were substantially below that required for Mr Henderson to obtain finance for the subjects. The parties entered into negotiations aimed at enabling the sale to proceed but no agreement was reached. Nevertheless Wimpey wrote to Mr Henderson advising that the subjects were ready for occupation and that entry should take place on 17 October 2008. Entry was not taken and Wimpey resiled from the bargain, resold the property and sought damages from Mr Henderson in terms of the missives.

Mr Henderson argued that Wimpey were personally barred from enforcing the missives and also sought rectification[2] of the missives to reflect the true agreement; in his opinion that, following a revaluation of the properties, the price could be revised or the transaction aborted.

Sheriff William Holligan found that Mr Henderson was not entitled to rectification of the missives as he was unable to show that there was a common intention[3] between the parties as to what would happen in respect of valuations were any further negotiations to fail.

“I return to the proposition that section 8 concerns a defectively expressed document. In this case it is said to be defective because it does not contain a provision as to what would happen if the negotiations failed. What then was the common intention of the parties on that issue? Viewed objectively, I find myself unable to say what that was. I have no doubt, with the benefit of hindsight, [Mr Henderson] is quite clear what he expected. However, even if [Wimpey’s sales director] accepted that his expectation might have been reasonable, I cannot conclude it reflects the common intention of both parties… The issue is one of rectification. This does not allow the court to write into a contract provisions where it is not proved both parties shared a common intention on that particular issue.”

However it was clear that, when agreeing to conclude missives, Mr Henderson had relied on the content of the emails and Wimpey were found to be personally barred from enforcing the missives:

“On any view of this matter, the missives did not reflect the whole commercial relationship between the parties. Not only did both parties know that but they both acted on the strength of it.”

And further:

“To leave [Wimpey] with the unqualified right to insist on their rights under the missives, given [Mr Henderson’s] business model, does not make commercial sense. It would make the agreement to renegotiate the price almost meaningless. Whether [Wimpey] deliberately said nothing or genuinely did not turn their minds to the issue does not matter. As I have said the matter requires to be looked at objectively. The missives said one thing: the words and to some extent the actions of [Wimpey] conveyed to [Mr Henderson] something different. To that extent there was inconsistency. The element of unfairness is largely self evident.”

A full report is available from Scottish Courts here.

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

Where shall I start?

I think I will start with the small matter of Scotland’s constitutional future.  The news coverage this week shows that this is no longer a strictly Scottish debate.  I personally have found it fascinating watching and listening to UK political commentators trying to get up to speed as quickly as possible.  It won’t be long before they realise that a yes vote will mean tax competition, a Scottish Exchequer, the end to the Barnett formula and less Liberal MPs (there is a bigger loss in percentage terms of MPs to the Liberals than Labour).  I am sure I will come back to this topic regularly throughout 2012.

Not to the sudden upsurge in interest on tax avoidance and the likelihood of the UK Government introducing a general anti-avoidance rule (“GAAR”).  Recent statements by both the PM and Deputy PM strongly suggest that such a provision will be approved this year. The Deputy PM has said: “there should be a general rule that you can’t play the system” and that a “simpler, more open, fairer tax system in which everyone pays their fair share should be created.”  The UK Government’s own report on GAAR came out in favour of a narrowly focused GAAR.  It seems after many years of lurking in the shadows GAAR’s time has come.  I for one welcome this as it is a step on the road to a simpler tax system.

Now back to an old favourite from 2011.  The PM has insisted that the 50p tax rate on higher earners is “temporary” and has hinted that the issue will be reviewed in the run-up to the UK Budget.  The news coverage on this issue suggests that the PM is coming under pressure from business leaders and backbench Conservative MPs.  The question is who will the PM listen to?  There is an equally strong lobby arguing for its retention.  This includes his coalition partner.  I expect to see a report within the next few weeks pointing out how little revenue the higher rate produces.  That though is only part of the debate.  The bigger picture cannot be ignored and I am sure the PM is well aware of this.

Now to a Scottish Government tax proposal.  This proposal was dubbed the “Tesco tax”.  The Scottish Government prefer to refer to this as a “public health levy”.  The supermarkets’ campaign against this proposal started in earnest this week.  The supermarkets claim that the new levy on all major stores selling alcohol and cigarettes will reduce their profits by 10%.  This debate, for debate read battle, has just begun.  An article from the Scotsman on this can be found here.

I like to remind people from time that on one side there is taxation and on the other there is public spending.  The National Audit Office produced another eye watering figure this week.  They said that more than £31 billion of taxpayers’ money has been wasted across government departments in the past two years.  They analysed more than 70 reports and found both annual overspending and waste from delayed and abandoned projects in areas ranging from welfare and capital projects to farm payments.

Now to HMRC and two positive stories.  Following a concerted campaign from numerous business and other professional bodies HMRC is reconsidering its Business Records Check project under which small businesses can be fined £3,000 for not keeping full records during the current tax year even if it later turns out that their tax affairs are in order.  While the review is under way HMRC will not penalise taxpayers and agents for poor record-keeping “except in extreme cases.”  This announcement is to be welcomed.

HMRC is also piloting a new method of resolving its disputes with small business. The Alternative Dispute Resolution (ADR) procedure will use ‘independent’ HMRC facilitators to resolve certain kinds of dispute during a compliance check but before a decision or assessment has been made.  More information can be found here.  Again a positive move by HMRC.

Europe is rarely out of the news for long.  I was interested to read that President Sarkozy is insisting that France must press ahead with a tax on financial transactions to force the issue in Europe.  It seems that the French will introduce legislation next month even without knowing if other countries will follow.  Expect to see this raised at the next European summit.

Finally to football and HMRC’s continuing interest in the so called “beautiful game”.  HMRC has sent a questionnaire to all of the UK’s leading football clubs asking about remuneration and perks for players and their families.  Can you imagine what might be disclosed?

Have a good weekend.

Outer House Case considering a lease of premises at Wardpark South Industrial Estate in Cumbernauld.  Batley acquired the tenant’s interest in the lease and North Lanarkshire Council were sub-tenants.

Central to the dispute was a minute of agreement entered into between Batley’s predecessors as tenants and North Lanarkshire Council regulating the terms and conditions on which the Council could carry out alterations to the property.  It provided:

“By the expiration and sooner determination of the period of the sub lease (or as soon as the license hereby granted shall become void) if so required by the mid landlord and at the cost of the sub tenant to dismantle and remove the Works and to reinstate and make good the premises and to restore it to its appearance at the date of entry under the sub lease, such reinstatement to be carried out on the same terms (mutatis mutandis) as are stipulated in this license with respect to the carrying out of the works in the first place (including as to consents, the manner of carrying out works, reinstatement, inspection, indemnity, costs and otherwise).”

 The lease came to an end on 18 February 2009. On 20 February 2009 the Council received a schedule of dilapidations in respect of the property.  However, they claimed that, as they had received the schedule after the expiry of the sublease, there was no obligation to remove the alterations (it having died on expiry of the lease). They argued that the notice provisions from the head lease were incorporated in the sub lease and any notice required to be in writing and to be served prior to the end of the lease.

This argument was rejected by the temporary judge (Morag Wise QC) who noted:

 “the wording of clause 2.5 which obliges the sub-tenant “if so required by the mid-landlord to remove the works” makes no mention of a notice. The means by which the sub tenant can be so required are not specified. In my opinion, it cannot be said to be a mandatory term of the Minute of Agreement that the mid-landlords convey in writing to the sub-tenants the requirement to remove the works unless [it] can be implied that service of some form of notice or request is part of that term.  If written notification of the type envisaged in clause 5.8 of the head lease cannot be so implied, then clause 2.5 would seem to me to permit the pursuers to offer to prove that they required the defenders to remove the work by conveying that to them orally.”

 And further:

“It seems to me that the [Council's] argument is predicated upon a notice being necessary for the purposes of clause 2.5. However, there is nothing in that provision of the Minute of Agreement to support the contention that something formal is necessary before the sub-tenants can be required to remove the works. For that reason I do not accept the submission that the notice provisions of the lease automatically apply to the “if so required” provision of clause 2.5.”

 An amendment to the pleadings was allowed in which Batley claimed that surveyors acting on their behalf had contacted the Council on 22 December 2008 and, after receiving confirmation that the Council were intending to leave the premises, advised them that the surveyors would require access to the property to prepare a schedule of dilapidations and that Batley would require reinstatement of the premises to their original condition.

The temporary judge found that this was ‘just’ sufficient to entitle Batley to a proof before answer on the question of whether or not they had adequately conveyed the requirement for reinstatement of the premises to the Council before the expiry of the sub lease.

 The full judgement is available from Scottish Courts here.

(NB: See also appeals to Inner House and Supreme Court)

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

Happy New Year to you all.

I think I will start with something I have blogged on a few times before.  This week’s storm has caused a huge amount of damage in Scotland and in other parts of the UK.  This is going to mean a lot of extra work for our building industry.  That will mean increased revenue for the UK Government primarily through VAT receipts.  That gives us the perfect opportunity to justify a reduction in VAT on residential property repairs and improvements.  As I have noted before this already happens in the Isle of Man.

I was interested to hear what Nick Clegg was saying on Radio 4 earlier today.   In essence he said: “… the public is angered that large companies and a wealthy elite get out of paying their fair share of tax.”   It seems that the UK Government has at last realised that the public must feel that, and to borrow a well worn phrase, “we are all in this together”.  This was in fact the main point of my last blog of 2011 which can be found here.

I am also sure it is not a coincidence that the Prime Minister in his New Year message and again today vowed to tackle excessive “City” pay and to promise a new clampdown on tax avoidance.  David Cameron said: “While a few at the top get rewards that seem to have nothing to do with the risks they take or the effort they put in, many others are stuck on benefits, without hope or responsibility.”  Reward without risk is a terrible combination.

In addition HMRC have been accused of focusing on small firms while taking a more relaxed approach to the tax liabilities of major companies.  Again this goes back to an issue that I wrote about in my last blog of 2011.   It is claimed that up to 20,000 firms will be inspected from April to assess if they can back up their tax returns with paperwork going back several years.   The article from the Guardian can be found here.

The UK Government has also this week had to defend its policy of tax breaks for hiring new workers after the Labour Party estimated that just 10,000 companies had taken advantage of the incentive since its introduction.  In the 2010 Budget George Osborne said that up to 400,000 small businesses would take up relief on national insurance payments for new employees.  The BBC news report can be found here.

Couples with young children will be hardest hit by changes in the tax and benefit system, with the typical family losing more than £1,200 over five years, a new study has estimated.  The report from the Institute for Fiscal Studies also suggested that the UK Government’s welfare reforms will reduce the financial incentives for mothers to go out to work.   The BBC news report can be found here.

Now to a phrase that I had thought had gone out of fashion: “stealth taxes”.  Labour are claiming that the sharp rise in the cost of council services for elderly and disabled people in England and Wales is in effect a “stealth tax”.  Pot kettle black springs to mind.  The BBC news report can be found here.

I would also like to finish on a winter theme.  Winter fuel allowance became a news topic just before Christmas when it was reported that this payment is also made to British expatriates in Europe’s hottest countries.  These payments have almost doubled in five years to around £14m a year.  That though is not the main issue.  If we are truly in such a poor financial state not only does the payment to those living in sunnier climes need to be looked at but whether we can continue to make such a payment at all.  The cost of this allowance is now approaching £3bn.  At the very least there needs to be a debate on whether it should be means tested.

Have a good weekend.

Outer House case concerning the creation of a servitude right of access by prescriptive possession. Mr and Mrs Gray owned 40 Montgomerie Drive, Fairlie and a lane running to it from Montgomerie Drive.  Mr and Mrs Jones owned 38 Montgomerie Drive and sought declarator that a servitude right of pedestrian and vehicular access had been created in favour of no 38 over part of the lane leading to the rear of their property and garage.

The Joneses also said that the Grays had erected a lockable post and fence in front of their garage so as to obstruct access to it from the lane and sought a decree ordaining removal of the obstructions and interdict preventing the Grays from interfering with the disputed area.

Section 3(2) of the Prescription and Limitation (Scotland) Act 1973 provides:

“If a positive servitude over land has been possessed for a continuous period of twenty years openly, peaceably and without judicial interruption, then, as from the expiration of that period, the existence of the servitude as so possessed shall be exempt from challenge.”

In support of their action, the Joneses claimed that their predecessors in title had taken access over the disputed area including daily access to the garage with their car and with their sailing dingy from time to time between April 1979 and June 2007.  The access had been free and uninterrupted and it was consistent with exercise as a matter of right. The Joneses had taken access over the disputed area from June 2007 for parking their car in the garage, unloading their car and getting from the lane to the garage doors.

The Grays argued that the Joneses had not adequately specified the continuity, volume and frequency of the possession in their pleadings nor had they demonstrated that possession had been continuous for the prescriptive period or that it was open and ‘as of right’. They contended that the action should be dismissed on the basis the Joneses arguments were irrelevant and/or that they did not give fair notice of important matters to the Grays.

Lord Doherty was not satisfied that the case should be dismissed. Applying the test set out in Jamieson v Jamieson (1952), it was not a case which would necessarily fail even if all of the Joneses arguments were proved.  Several of the issues between the parties involved questions of fact and degree which would be capable of determination after a proof (e.g. whether possession was continuous). Lord Doherty was also not persuaded that there was a lack of fair notice on important matters. The crux of the Grays’ complaint was that the use of the word “included” suggested that the Joneses would be able to lead evidence of other unspecified modes of access of which no notice had been given. Lord Doherty considered that use of the word “included” did not reserve them a free hand to do so and if it were to happen the Grays would be entitled to object to such evidence being led.

A proof before answer was allowed.

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.

Merry Christmas from Legal Knowledge Scotland.

Thanks for all the support during our first year and best wishes for 2012.

A year in which we were told the economy would grow and the recovery would begin in earnest.   A year ending with almost everyone predicting hard times ahead.

The past year has been dominated by the economic crisis and the fiscal powers debate.  Let’s start with the economic crisis.

The link between what a government spends and how it funds this spending is an obvious one.  Whatever the government spends it needs to match by taxation or borrowing.  The consensus now is that we have a “debt crisis” rather than a recession.  The main political debate is between those who wish to restrict government spending and those who argue for more government spending to grow the economy.

I agree that spending must be reduced.  There is little doubt that the UK has been living beyond its means.  Even when the UK Government manages to balance its books the national UK debt needs to be serviced and at some point paid off.  The scale of the task is such that even under coalition government plans it is going to be at least another five years before the books are balanced.

If there is to be additional spending on say infrastructure then public spending in another should be reduced.  Growth is important but so is reducing the debt mountain.  The trick is to somehow do both.  Is there a simple answer to this conundrum?  Of course there isn’t.

There is though a related issue that needs to be addressed.  We are often told “we are all in this together”.   The problem with that statement is we keep hearing about sections of society that seem to be treated differently.  Bankers and their bonuses is close to becoming a cliché but what of those in senior positions in the public sector.  Can it be right that salary levels, bonuses and the numerous associated benefits of many of those who work in the public sector are so high and wide ranging and far in excess of the majority rest of the workforce?  One example.   Dave Hartnett head of HMRC is to take early retirement next summer with a pension pot of £1.7 million.  I have blogged on Mr Hartnett before.  It seems he may even get a bonus this year.

That is where the public spending debate is moving.  If public spending needs to be reduced, and let’s be clear it does, then the starting point cannot be reducing those who in the public’s eyes actually do the work.  First things first.  I keep hearing and reading about highly paid public sector managers who earn lots but no one is sure what they do.  My question is a simple one.  Is this actually true?

Then there is HMRC and the claim by the House of Commons Public Accounts Committee that there is £25bn in tax owed by large companies.  HMRC has “previous” with this Committee of which I have blogged on before.  The taxation of large companies is complicated but that is a huge sum of money.  Again this makes me wonder if we are all in this together.

The taxation of large companies is complicated but does HMRC treat all businesses the same?    Evidence gathered by the law firm McGrigors showed that HMRC is increasingly using legal powers to force the settlement of unpaid tax bills in Scotland.  The use of similar powers in England and Wales fell over the same period.  Does this mean that not all businesses are treated equally?  I don’t know but the question needs to be asked and answered.

What about the richest in our society?  Our governments, both in London and Edinburgh, along with HMRC must do more to defeat the perception that for the wealthy paying tax is a choice.  One example.  The avoidance of Stamp Duty Land Tax on valuable residential properties via offshore companies should be stopped.

Are we all in this together?  It does not seem so.

One last point before I move on to the fiscal powers debate.

The UK Government’s decision to waive VAT on the Military Wives Choir Christmas single is an example of what is wrong with how we decide as to whom and what we tax.  Is this a great cause?  Yes of course.  Are there lots of other equally great causes?  Yes there are.

Now to the fiscal powers debate.  The result of the Scottish General Election has ensured that the fiscal powers debate in Scotland has taken centre stage.  The Scottish Parliament may even refuse legislative consent for the Scotland Bill.   I like to refer to the Scotland Bill as “Calman minus”.  My own opinion is that the Scotland Bill was never meant to be fit for purpose.

The fact that the UK Government will not even agree to devolve air passenger duty or control over the Crown Estate shows how out of touch they are.   The debate has moved on.  My last few tax blogs show how quickly the debate is moving.  Even senior members of the Labour party in Scotland favour “devo max”.  Hopefully in 2012 we will learn more of what “devo max” actually means.

The fiscal powers debate is no longer confined to Scotland.  I must admit I did not see this coming.  The Eurozone crisis and proposals such as a European Financial Transaction Tax has stirred the euro sceptics and that was before the call for greater fiscal union amongst the Eurozone countries.  The analogy between Scotland’s relationship with the UK and the UK’s relationship with the European Union is an obvious one.  The European angle to the fiscal powers debate has the potential to cause problems for those who arguing for major fiscal powers for the Scottish Parliament and those who oppose this.  I suspect I will be blogging on this regularly throughout 2012.

A quick word on Ireland.  How far will countries such as Ireland be willing to go to stay a member of the Eurozone?  Will Ireland give up its treasured low rate of corporation tax?  Does Ireland have a choice?

Lastly what am I hoping for on the tax front in 2012?  Now is not the time to be greedy.  A VAT reduction for home repairs and improvements is much needed.  A tax exemption for the governing body and the competitors of Glasgow 2014 is essential for the success of these games.  Less specifically I would like to see some evidence from the powers that tax us that we are all in this together.

Merry Christmas and best wishes to you and yours for 2012.   See you again in the New Year.

Outer House case concerning the damages payable as a result of a solicitor’s professional negligence.  VMH LLP advised Kirkton in relation to the purchase of a site at 144 to 148 Slateford Road in Edinburgh in 2005 from HBJ 590. The site had the benefit of conditional planning permission for 19 terraced townhouses and 8 apartments.

Two of the conditions related to a requirement for the installation of a ventilation system to a fish and chip shop (the Codfather) situated adjacent to the site to ensure that odours from the shop exited at a suitable level.

In March 2005, the owner of the Codfather, Slateford Developments entered into an agreement with HBJ 590 allowing HBJ 590 to carry out the works to install the ventilation system.

Kirkton[1]  concluded missives for the sale of the site from HBJ 590 in April 2005 and in July 2005 Slateford Developments sold the Codfather to Ian McDonald Enterprises.

Kirkton began construction of the Development in autumn 2005. However, Ian McDonald disputed Kirkton’s entitlement to install the ventilation system and requested a payment of £75k in return for allowing the installation. Kirkton refused this offer on advice from VMH to the effect that they had a legal right to install the system.   However, it was subsequently found that Kirkton did not have a real right enforceable against the new owner of the Codfather.

In November 2007, having sought and failed to obtain a variation of the planning permission, Kirkton agreed to pay Ian McDonald £324k in return for the grant of a right to install the vent. In the meantime Kirkton had postponed active marketing and the launch of the development. Unfortunately for Kirkton the events also coincided with the onset of the property slump.

Kirkton argued that, as a result of VMH’s breach of duty, marketing and sales were delayed and VMH were liable for the consequences of the delay including the additional bank borrowing costs and lower sales prices as obtained a result of their increased exposure to the vagaries of the property market.

Having initially argued otherwise, VMH accepted that an enforceable right could have been constituted against the shop owner, it was their duty to advise Kirkton of that and take the required steps to constitute the right and that, by failing to do so, they were in breach of their duties to Kirkton. However, they contended that the losses claimed in respect of additional bank charges and diminution in sales proceeds were not within the scope of their duties. VMH  had not assumed the risk of such losses and it would not be fair and reasonable to impose it on them.

Lord Doherty disagreed:

“In my opinion the scope of the [VMH’s] duties to [Kirkton] was sufficiently wide to include the duty to avoid causing them each of the kinds of loss and damage they say were sustained…

They were not merely providing information to [Kirkton]. Their duties were more exacting. They were under a duty to take the necessary legal steps to protect the position of the [Kirkton] in relation to the ventilation issue at the time they concluded missives; and they were under a duty to advise them correctly of their legal position at the time of the proposal by [Ian McDonald] so that a properly informed decision could be made then as to what action to take…

Having regard to the nature and content of [VMH's] duties to [Kirkton], and to the whole circumstances in which they arose and were breached, it appears to me to be fair, just and reasonable that the scope of [VMH’s] duties should extend to the kinds of loss and damage  claimed… It was reasonably forseeable that [VMH’s] breach of duty might result in interruption to the planned progress of the development and sale of the properties, and might occasion delay and expense. [VMH] were aware that the development was being financed by bank borrowing. It was reasonably foreseeable that delay would result in additional borrowing costs. It was reasonably foreseeable that delay in achieving sales might result in longer exposure to the vagaries of the property market.”

After discussion as to causation and valuation of the loss, Lord Doherty awarded damages of more than £1.1m broken down as follows:

1. the settlement payment paid to Ian McDonald-                   £324,000
2. the other extrication costs-                                                  £55,812
3. diminution in sales proceeds-                                              £545,818
4. additional bank borrowing costs-                                         £209,742

The full text of the 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.

Let’s start with the fiscal powers debate.

Another interesting week.  When I started writing about the fiscal powers debate I was of course writing about Scotland and its relationship with the rest of the UK.   That debate is now reaching maturity and the end of the Scottish “Phoney War” is in sight.  That being the Scotland Bill.  The real debate between “devo max” and independence is just about to break through the Ardennes.

What I have found fascinating this week is the emergence of a second fiscal powers front into the public domain.  This is no longer just an issue for a relatively small group of Euro sceptics.

Prior to WWII the Germans feared a second front.  Even though they feared it, that is what they ended up with.  The UK now finds itself fighting on two fiscal powers fronts.  The second front being its fiscal relationship with the European Union.  This goes further than the proposed European financial transaction tax.  How much fiscal union will Germany and France press for?  That is the elephant in the room.

As I have blogged on before, the analogy between these two fiscal powers debate is an obvious one and poses difficult questions for each side in the debate.   Just to add to the complexity of this matter, two other fronts could flair up at anytime: Northern Ireland and Wales.

So what has been happening here in Scotland.  The Scottish Parliament’s Scotland Bill Committee has now issued its final report.  The report can be found here.  The Committee has said it is “unable to recommend” the Bill.  The  Committee also found that the plans were “not yet fit for purpose”.

What will the UK Government do?  I suspect many in Westminster and not just in the coalition would like to see the Bill fail.  Excellent blog by Alan Trench on this point.  Alan’s blog can be found here.

The report shows perfectly how the gulf between the UK Government and those arguing for “devo max” or independence is as wide as ever.  One example.  The UK Government’s refusal to devolve complete control of the Crown Estate to the Scottish Parliament.  Last week a similar announcement was made concerning air passenger duty.  Even the Labour, the Tory and the Lib Dem members of the Scotland Bill Committee want control over the Crown Estate to be devolved.

The UK Government, and the Labour party, will also have to deal with an amendment by George Foulkes to the Scotland Bill.  His amendment calls for all fiscal powers to pass to the Scottish Parliament.

As I said another interesting week.  Also difficult to keep up with all that is happening.

A quick point on Europe.  Glad to see that the Prime Minister finally started to talk about Scotland and Birmingham in the context of financial services.  He clearly realised that continuously banging on about the City of London was not going down well in other parts of the UK.

Now to other matters.  Finance Secretary John Swinney has announced that business rates will rise by 5.6% next year.  The rate currently stands at 42.6p, and will rise to 45p.  An opportunity missed?  Possibly.  We might not have heard the last on this.

HMRC have published information on the new “Rural Fuel Duty relief scheme” for retailers of road fuel on the Inner and Outer Hebrides, the Northern Isles, the Islands of the Clyde and the Isles of Scilly.  This is being introduced on 1 January 2012.  More information can be found here.  This has received relatively little publicity.

I was not surprised to read that the controversial head of HMRC, Dave Hartnett, will “retire” in the summer of 2012.  Mr Hartnett is no stronger to controversy.  His recent apology to the House of Commons Public Accounts Committee MPs for the tax deal negotiated by HMRC with Goldman Sachs was I suspect the final straw.

Finally, I found myself agreeing with the claim made by McGrigors that tax officials are increasingly using legal powers to force the settlement of unpaid tax bills in Scotland.   Information obtained by McGrigors under the Freedom of Information Act showed the number of petitions for bankruptcy filed by HMRC in Scotland increased by 97% over a three-year period.  The use of similar powers in England and Wales fell over the same period.  The story from BBC News can be found here.  Excellent work by McGrigors.

Have a good weekend.

The Scottish Government is to raise the various limits relating to a claim of prior rights by a surviving spouse or civil partner and also as what constitutes a “small estate”.

These are pragmatic and sensible increases.

The new and previous prior rights limits can be found here.

The new small estate threshold can be found here.

Both changes come into force on 1 February 2012.