Appealing a Corporation Tax Assessment: A Practical Walkthrough for Business Owners

Imagine you have just wrapped up another hectic year of running your business. Then, out of the blue, a letter from HMRC arrives. It claims you have underpaid your corporation tax and includes a hefty corporation tax assessment demanding immediate payment. But as you check your books, you realise something does not add up. HMRC has disallowed legitimate expenses or misclassified some of your income. What can you do?

Mistakes like these happen more often than you might think. By understanding the steps involved and when to seek professional advice, you can protect your business and ensure you’re only paying what you are genuinely required to.

The First Step: Asking HMRC for a Review

The first step in disputing a tax assessment is to ask HMRC to review their decision. This must be done within 30 days of receiving the assessment notice. In your request, explain why you think the decision is wrong and include any supporting documents, such as receipts, invoices, or business records.

For example, if HMRC claims your travel expenses are not deductible, you could provide evidence showing those trips were directly related to client meetings or conferences. Once they’ve received your request, HMRC will assign the case to a review officer who was not involved in the original decision.

This initial review process is your first opportunity to resolve the matter without the need for a formal tribunal hearing, making it an important step to approach thoroughly and strategically. Failing to provide everything that is asked for, or to give consistent and accurate explanations for any gaps, could result in HMRC maintaining their decision against you.

The First-tier Tribunal: Where Facts Are Decided

If you’re not happy with the outcome of HMRC’s review, the next step is to take your case to the First-tier Tribunal (Tax Chamber). This is where your case will be examined in detail by an adjudicator, making it the most important stage of the entire appeals process.

The tribunal operates much like a court but is less formal and designed to be accessible. Nevertheless, the procedural steps are strict and closely resemble those of a court hearing. You or your representative will have the opportunity to present your case, submit evidence, and, if necessary, call witnesses. For example, if HMRC argues that certain expenses were personal rather than business-related, you could bring in your accountant, employee, or travel agent as a witness, and submit additional records demonstrating how those trips and expenses were essential to your business.

The tribunal’s primary role is to establish the facts and apply the law to them. It is not only the evidence presented that matters but also how the testimony is given. The credibility and clarity of witnesses can significantly influence the outcome. This makes it crucial to consider having professional legal representation to manage your case.

Once the tribunal issues its decision, this will typically be the final word on factual matters. Later stages of the appeal process, such as the Upper Tribunal, generally will not revisit the facts or hear from witnesses unless there are exceptional circumstances.

What Happens If You Disagree with the First-tier Tribunal’s Decision?

If the First-tier Tribunal rules against you, you can apply for permission to appeal. Your application should clearly identify the grounds for appeal, which must involve a point of law rather than a dispute over the facts.

Grounds for appeal include situations where the tribunal has: i) Misapplied or misinterpreted the law, ii) Failed to give adequate reasons for its decision, iii) Considered irrelevant factors or failed to consider relevant ones or iv) Acted procedurally unfairly.

If the First-tier Tribunal refuses your application for leave to appeal, you can also apply directly to the Upper Tribunal for leave to appeal. The Upper Tribunal will review your application and decide whether to grant permission based on the legal grounds you have raised.

Upper Tribunal Appeals: Focusing on Legal Issues

If permission to appeal is granted, your case will proceed to the Upper Tribunal. Unlike the First-tier Tribunal, the Upper Tribunal does not re-examine the facts or hear new evidence. Instead, it focuses solely on whether the First-tier Tribunal made an error of law. For example, if the First-tier Tribunal misunderstood how allowable expenses should be calculated under tax law, the Upper Tribunal would consider whether this legal mistake affected the outcome. The Upper Tribunal may call a hearing to allow the parties to present their viewpoints.

If the Upper Tribunal finds that an error of law was made, it may set aside the First-tier Tribunal’s decision and either substitute its own decision or send the case back to the First-tier Tribunal for reconsideration.

While it’s rare, some appeal cases may eventually reach the Court of Appeal or Supreme Court if they involve significant legal issues that have wider implications. However, for most small businesses, the First-tier Tribunal represents the most critical stage of the process.

Why Businesses Owners Should Take Action

Dealing with a tax assessment can be stressful, but the appeals process is designed to ensure fairness. A skilled lawyer can assist with every stage of the process, from managing your case and preparing evidence to developing a strategy and advocating on your behalf. They will analyse your case thoroughly, identify any gaps in your evidence, and highlight weaknesses in HMRC’s position. An experienced lawyer’s ability to present these points effectively during the hearing can have a significant impact on the outcome.

If you’re considering appealing a tax assessment, don’t hesitate to reach out to Lisa’s Law. Our team is here to guide you every step of the way and ensure your case is presented as effectively as possible.

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Increased Action Against Illegal Working – Nail Bars, Supermarkets, Car Washes, and Construction Companies Beware!

Recent government action has brought illegal working into sharp focus, with a 25% increase in arrests for illegal working since the change of government. According to new data released by the Home Office, the period between 5 July and 31 October 2024 saw 2,299 arrests stemming from over 3,188 operational visits targeting businesses suspected of hiring illegal workers.

This rise in enforcement highlights the government’s commitment to cracking down on employers who fail to follow legal hiring practices. Nail bars, supermarkets, car washes, and construction industries were among the key areas targeted.

While these measures aim to protect vulnerable workers and create a fair playing field for law-abiding businesses, they also underscore the critical need for businesses to understand and comply with the regulations governing employment and immigration.

The Importance of Compliance

Employing individuals without conducting the necessary right-to-work checks can lead to severe consequences, including hefty civil penalties of up to £60,000 per worker and reputational damage to the business. For many employers, navigating the complex regulations surrounding employment and immigration compliance can be daunting. Mistakes, even unintentional ones, can lead to significant legal and financial repercussions.

During a recent nationwide operation in November, known as Operation Tornado, civil penalty referral notices worth up to £4 million were issued to over 50 businesses. These penalties are a reminder of the importance of establishing robust compliance processes to avoid hiring individuals without proper authorisation.

How We Can Support Your Business

If your business is currently facing challenges related to compliance, including allegations of hiring illegal workers, or if you are seeking to establish secure processes for hiring international employees, we can help.

Our immigration team specialises in assisting businesses with obtaining sponsor licences, a critical requirement for employing skilled workers from abroad. A sponsor licence not only ensures compliance with UK immigration laws but also opens the door to a broader pool of talent to meet your business needs.

We offer tailored support throughout the sponsor licence application process, including:

Assessing your readiness: We evaluate your current systems and advise on any adjustments needed to meet Home Office requirements.
Preparing your application: Our team will guide you in compiling and submitting all necessary documentation to ensure your application meets stringent compliance standards.
Providing training and ongoing support: Once you have obtained your licence, we offer continued support to help you maintain compliance, including guidance on record-keeping, monitoring responsibilities, and preparation for potential audits by the Home Office.

Act Now to Protect Your Business

The recent government focus on illegal working demonstrates that compliance is not optional but essential. By proactively addressing your business’s employment and immigration processes, you can protect your operations from costly penalties and reputational harm.

We have extensive experience supporting businesses across various industries to meet their legal obligations while empowering them to grow and thrive. If you are concerned about your current hiring practices or wish to secure a sponsor licence to access international talent, contact us today to learn how we can help you achieve compliance and peace of mind.

Have questions? Get in touch today!

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The Challenges of Rent Review: Navigating the Complexities of Lease Agreements

Rent review is a standard feature in commercial and residential lease agreements, designed to ensure that the rental rate reflects the current market conditions. However, despite its widespread use, the process of rent review often presents a variety of challenges for landlords, tenants, and property managers alike. These challenges stem from differences in market assessments, unclear lease terms, and sometimes, the inherent imbalance of negotiating power. This article explores the key obstacles encountered during rent reviews, offering insights on how to navigate them effectively.

Understanding Rent Review

A rent review clause in a lease agreement allows either the landlord or tenant to request an adjustment to the rent at predetermined intervals, typically every three to five years. This ensures that the rent stays in line with market conditions, which can fluctuate due to changes in demand, inflation, and other economic factors. Rent reviews are often based on the open market rent, meaning the rent is adjusted to the rate that a willing tenant would pay for similar premises in the current market.

Key Challenges of Rent Review

Disagreements Over Market Rent Valuation

One of the most common challenges in the rent review process is the disagreement between landlords and tenants over the appropriate market rent. Rent reviews are often based on valuations conducted by independent surveyors, but even professional appraisers can have differing opinions on the value of a property. Factors such as the property’s location, condition, and market trends can be interpreted differently, leading to disagreements that may require mediation or arbitration.

Tenant Concerns: Tenants may argue that market conditions do not support an increase in rent, especially if there is economic downturn or a surplus of vacant properties in the area.
Landlord Concerns: Landlords, on the other hand, may be frustrated if the rent review does not lead to an increase, particularly if inflation or rising property demand suggests that rent should go up.

Ambiguous Lease Terms

Another significant challenge arises from unclear or vague lease terms regarding the rent review process. In many cases, the language of the lease agreement may not specify the method of calculation for rent reviews, leaving room for interpretation and dispute. For instance, the lease may outline that rent will be reviewed “in line with market conditions,” but it may not detail how market conditions will be assessed, which factors will be considered, or what mechanisms are in place to resolve disputes.

Potential Pitfalls: This lack of clarity can cause delays and additional legal costs as both parties seek to understand the terms and negotiate a fair outcome. Ambiguous terms can also lead to misunderstandings about the frequency of reviews, what triggers a rent increase, and who is responsible for certain costs during the review process.

Timing of Rent Reviews

Rent review clauses typically specify that the review occurs at regular intervals, but the timing of these reviews can sometimes be problematic. Timing mismatches can create financial strain for one party or lead to a rent adjustment that is not aligned with current market conditions. This challenge is particularly evident in leases where the rent is reviewed periodically, but market conditions have drastically changed between review dates.

For Tenants: Tenants may find themselves locked into long-term agreements where rents are reviewed annually or biennially, potentially leading to sharp increases in rent during periods of market volatility.
For Landlords: Landlords may find that their rents remain stagnant due to rent caps or other market factors, leaving them unable to adjust rent upwards as much as they might like.

Inflation and Economic Factors

Inflation and broader economic factors pose a significant challenge in the rent review process. In a high-inflation environment, tenants may face significant increases in rent, which can strain their finances and, in some cases, force them to seek alternate premises. Conversely, in times of economic recession or when property values are declining, landlords may struggle to justify rent increases or may face lower-than-expected rent reviews.

Economic Disruptions: Factors such as shifts in interest rates, changes in consumer demand, and the broader health of the economy can drastically alter property values and, consequently, rent levels. The inability to predict or account for these fluctuations in the rent review process can lead to unforeseen challenges for both landlords and tenants.

Power Imbalance Between Landlord and Tenant

In many rental agreements, particularly commercial leases, there is a significant power imbalance between landlords and tenants. Landlords often hold more bargaining power, especially if they control premium properties or in markets with limited supply. This disparity can make it difficult for tenants to negotiate fair rent reviews, particularly in the absence of strong legal protections.

Pressure on Tenants: Tenants may feel pressured to accept unreasonable rent increases or unfavourable terms due to the lack of alternative properties or because they fear the consequences of challenging the review.
Challenges for Landlords: On the other hand, landlords may find it difficult to push for rent increases when tenants are unwilling to cooperate, especially if tenants can make a strong case based on market conditions.

Legal and Procedural Challenges

Legal frameworks around rent reviews vary widely between jurisdictions, and understanding the specific rules governing the process is crucial. For instance, in some regions, the terms of the lease may dictate that a certain type of rent review procedure, such as mediation or arbitration, must be followed. Failure to comply with these rules could result in the review being invalidated or prolonged, leading to legal costs and delays.

Complex Legal Processes: In addition, some rent review procedures may involve legal complexity, such as ensuring that the right surveyor is appointed, complying with statutory timeframes, and adhering to specific methods of assessment (such as fixed increase vs. market comparison).

Disputes and Disagreement Resolution

Finally, disputes between tenants and landlords are inevitable, and resolving these conflicts in a fair and efficient manner can be challenging. Many commercial leases require the involvement of third-party surveyors or arbitrators, but disagreements over the choice of appraiser or the methodology used can exacerbate tensions. Further, the costs of dispute resolution can be a burden on both parties.

Resolution Process: Mediation, conciliation, and arbitration are commonly used methods for resolving rent review disputes, but the success of these approaches depends heavily on the willingness of both parties to engage in negotiations.

Navigating the Challenges

While rent reviews can be fraught with challenges, there are ways to mitigate the potential pitfalls:

Clear Lease Terms: Both landlords and tenants should ensure that lease agreements are clearly written, specifying the rent review mechanism and how market conditions will be assessed.
Regular Communication: Open lines of communication between landlords and tenants can help pre-empt disputes and ensure that both parties understand each other’s expectations.
Professional Assistance: Engaging experienced surveyors, property managers, and legal advisors can help ensure that the rent review process is fair and in compliance with local regulations.
Negotiation and Compromise: Both landlords and tenants should be open to negotiation and consider compromise in order to avoid lengthy disputes and unnecessary costs.
Pay attention to the clauses of the agreement: If the agreement states that “time is of the essence”, the landlord may not be able to review the rent retrospectively. This may be because where the clause requires that notice be served by a particular time if the Landlord wishes to review the rent. There may be timeline for the Tenant to serve a counter notice. In the circumstances where the timelines are passed, it is very unlikely that the Landlord will be able to backdate the rent review. However, if the rent review clause states that “time is not of the essence”, the Landlord can always backdate a rent review.
Being pro-active in the process: Tenant may ask the Landlord to put in writing when he or she intends to carryout the rent review, whether it is when due or later as to backdate it.
Things to bear in mind where the rent review is to be backdated: The Landlord may ask the tenant to pay the balancing sum in lumpsum with interests as expressed in the lease. However, the tenant may negotiate to pay the balancing sum in instalments. The interests are considered as compensation for the lower rent paid for the period when the review had not happened.
Appreciating the balancing sum payment: The balancing sum payment puts the Landlord back in the state or position they would have been in but for the late review. Hence, the Landlord ask for the balancing sum payment.

Some things to remember

Where the Landlord chooses to delay rent review and carry it out later, as backdated rent review, they should review the rent as though they were doing it when the rent review was due. For instance, if the rent review was due five years ago, and it is an open market rent review, the Landlord must review it against the market rates five years ago rather than the current date.

The Tenant may request a rent review if the lease allows, especially if the Landlord has missed the date, to prevent or avoid the occurrence of a balancing sum payment. Under section 19 of the Limitation Act 1980, it provides that “rent” is subject to a limitation period of six years.

Under the Renters’ Rights Bill, Landlords will be able to increase rents once a year to the market rate – “the price that would be achieved if the property was newly advertised to let”. To do this they will have to serve a simple section 13 notice, setting out the new rent and giving at least two months-notice of it taking effect. If the tenant believes that the proposed rent increase exceeds market rate, they can then challenge this at the First tier Tribunal, who will determine what the market rent should be.

Conclusion

Rent reviews are an essential part of lease agreements, but they can also be complex and contentious. Understanding the common challenges involved — such as valuation disagreements, ambiguous lease terms, economic factors, and power imbalances — can help both landlords and tenants navigate the process more effectively. By ensuring clear terms, engaging in professional assistance, and fostering open communication, both parties can minimize disputes and reach fair agreements that reflect current market conditions.

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Shell Group Awarded Final Injunctions Against Environmental Protesters

This judgment, delivered remotely on December 5, 2024, addresses three claims involving Shell and environmental protesters. The court considered whether Shell should be granted final injunctions against unnamed individuals and specific protesters who disrupted Shell’s operations in 2022.

Background

The case revolves around protests against Shell’s fossil fuel activities, which the protesters argue contribute to climate change. They claim their actions are necessary to raise awareness and push for government action against fossil fuel use.

The judgment details various protests targeting Shell’s facilities, including blocking access to oil refineries and petrol stations, which led to significant disruptions and damage.

Legal Framework

The court examined the relevance of the Aarhus Convention, which protects environmental defenders from legal penalties for their activism. The protesters argued that granting injunctions would violate this convention.

The court granted Shell’s requests for injunctions to prevent future unlawful protests at three locations: the Haven Oil Refinery, Shell Centre Tower, and various petrol stations. The injunctions are intended to protect Shell’s legal rights while allowing for lawful protests.

The injunctions will last for five years, with provisions for annual reviews to ensure they remain necessary and proportionate.

Shell decided not to seek costs against the protesters, which relieved them of potential financial burdens. At the very end of legal submissions on the second listed day of the hearing, Shell announced through counsel that it would not be seeking costs against the named defendants in this claim. This was announced in open court without notice to the court or the two attending defendants

Conclusion

The court found sufficient evidence to support Shell’s claims and determined that the injunctions were justified to prevent future disruptions. The judgment emphasises the need to balance the rights of protesters with the rights of businesses to operate without unlawful interference.

This judgment highlights the ongoing legal and social tensions surrounding environmental protests and the fossil fuel industry, reflecting broader concerns about climate change and public safety.

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Ministry of Justice Announces £20 million Annual Investment in Civil Legal Aid

While it may have gone slightly under the radar, a significant announcement was recently made by the Ministry of Justice. For the first time since 1996, there will be a funding increase in civil legal aid. This figure stands at an extra £20 million per year, and those to benefit first will include vulnerable people who are facing eviction or those who are at risk of homelessness.

The legal aid increase will also benefit the immigration legal sector, with the Ministry of Justice announcing that the investment will support lawyers who were providing advice to victims of modern slavery, trafficking and domestic abuse.

Why is civil legal aid important?

The increase is designed to address the crisis in legal aid and the backlog in civil courts. UK legal aid spending fell by approximately 38% between 2010 and 2020, partly due to the Legal Aid, Sentencing, and Punishment of Offenders Act (LASPO) 2012. Civil legal aid expenditure also halved from £1.06 billion in 2010-11, to approximately £620 million in 2020-21. This has therefore had a detrimental impact of access to justice for the most vulnerable in UK society.

The investment also comes on the back of a significant increase in possession orders as revealed by the Ministry of Justice. For example, mortgage possession orders have soared by 38% compared to the same period in 2023, and landlord possession orders increased by 7%. According to the Law Society, these statistics could result in nearly 25,000 people facing eviction. With the country also facing a housing crisis of high rents and lack of available social housing, this issue is all the more pressing.

The funding increase is subject to consultation, however the government plans to invest an additional £20 million every year as part of its proposal. They added that in addition to the announcement for civil legal aid for the housing and immigration sectors, fees for other civil legal aid categories would remain under consideration.

The Lord Chancellor and Secretary of State for Justice, Shabana Mahmood, said the following:

“Civil legal aid plays a crucial role in our justice system, providing legal support for vulnerable people thereby helping to ensure access to justice.

This Government is determined to improve the civil legal aid sector which was left neglected for years. This is an important step as we rebuild our justice system, ensuring it is fit for purpose for the society it serves and those who serve within it.”

Criminal legal aid increase

This announcement follows a rise in criminal legal aid last month, with an investment of £24 million to back solicitors working in police stations and youth courts. Despite organisations welcoming the proposals, they have also called for greater funding.

The President of the Law Society, Richard Atkinson, called for investment across all areas of civil legal aid, stating: “The ministry needs to restart the review of civil legal aid and provide a timetable for further investment, as well as steps to reduce the cost of delivering legal aid services, setting out a clear vision for putting this public service on a sustainable footing.”

Those working within the sector will hope that the government’s announcements are a step towards great investment in civil legal aid, rather than the sum of it.

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Home Office announcement – expired BRP cards can be used to travel until 31st March 2025

The Home Office have announced that they will allow Biometric Residence Permits or EU Settlement Scheme BRP Cards expiring on or after 31 December 2024 as valid travel evidence until at least 31 March 2025.

The UK Home Office is undergoing a significant transformation to modernise its border and immigration systems. As part of this effort, Biometric Residence Permit (BRP) holders are being transitioned to a new digital eVisa system. All BRP cards are expiring on 31^st December 2024, which has caused a massive rush for BRP holders to set up E-Visa accounts.

We have provided an article before explaining how to set up the e-visa account, however many are experiencing difficulties and is causing panic with the expiry date drawing closer.

Expiry of BRPs on December 31, 2024

BRPs held by many individuals will expire on December 31, 2024. It is important to note that this expiry does not affect the underlying immigration status of the holder. For instance, if an individual has leave to remain until September 2025, that status remains valid despite the BRP’s expiration.

The Home Office has confirmed that expired BRPs will still be valid for travel until at least March 31, 2025. During this period, travellers should carry their expired BRPs to avoid any complications. However, it is strongly advised that individuals transition to the eVisa system to ensure continuous and seamless access to their immigration status.

Guidance for visa stamp holders

For individuals with older documents such as ink-stamped passports, these can still be used as proof of rights where permitted. However, transitioning to an eVisa is recommended to benefit from improved accessibility and security. The Home Office has simplified the No Time Limit (NTL) application process to help legacy document holders make this change.

Airlines

The Home Office has worked closely with travel operators to ensure they are prepared for this transition. Airlines have been trained to verify immigration status using eVisas or expired BRPs. Travelers are encouraged to familiarise themselves with the updated procedures to avoid delays. Additionally, a 24/7 carrier support hub is available for verification queries.

Support for Vulnerable Individuals

The Home Office has put in place several measures to assist those who may face difficulties transitioning to eVisas:

Resolution Centre: Support is available through email, webchat, and telephone for those needing help setting up a UKVI account.
Assisted Digital Service: In-person support is offered for individuals who face challenges with digital technology.
Community-Based Support: Specialist help is provided by four grant-funded organisations to ensure no one is left behind.

Individuals can also nominate a trusted person to assist with their account creation and management.

Our comments

The transition to eVisas marks a significant step forward in the UK’s immigration system, offering improved security and convenience. While adjusting to these changes may be challenging for some, the long-term benefits are clear. Individuals are advised to act promptly to ensure their immigration status remains accessible and secure.

This case underscores the importance of staying informed about immigration policy changes. Sign up for our newsletter to ensure that you receive all the latest updates.

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George v Cannell – Scope of Malicious Falsehood Clarified under the Defamation Act 1952

The Supreme Court decision in George v Cannell [2024] UKSC 19 clarifies the scope of malicious falsehood claims under the Defamation Act 1952. The ruling by the Court pays particular attention to Section 3 (1) of the Act, clarifying that in the action of defamation, the claimant should pay attention to whether they suffered actual financial loss and damages. Otherwise, even if the court rules in favour of the claim, they may only be awarded nominal damages.

Background

In this case, the claimant Fiona George sued her former employer, Linda Cannell, and her company, LCA Jobs Ltd, for defamation and malicious falsehood through making false statements. The recruitment agency alleged that the claimant was in breach of contract by actively targeting LCA’s clients.

Decision

In the High Court it was decided that the statements made were false and malicious due to Linda Cannell not believing the statements to be true. However, the issues in the appeal to the Supreme Court were whether the claimant was entitled to damages for injury to feelings in case of the lack of financial loss.

In the Supreme Court’s ruling, the court addressed the following issues :-

The presumption of financial loss is irrebuttable. The court considered that section 3(1) of the Defamation Act recreates an irrebuttable presumption of financial loss. There is no need for the claimant to prove the actual financial loss to succeed in the claim for nominal damages.
Damages for injury to feelings. The court differentiated between nominal damages and damages for injury to feelings. The court held that the claimant had to prove the substantial financial loss before she could recover the damages for injury to feelings. As the claimant failed to prove that she suffered substantial financial loss, her claim for damages for injury to feelings failed.

Our thoughts

The Supreme Court ruling provides a clear interpretation of the malicious falsehood claims under the Defamation Act 1952, particularly concerning the requirement to prove financial loss and the conditions for awarding damages. It also highlights the importance of providing evidence when substantiating claims for financial loss and emotional distress. It is likely that this will set a precedent for future claims in the years to come.

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How the Court of Appeal’s Ruling on Penalties for Employing Illegal Workers Affects Your Restaurant

Restaurants that employ workers without the legal right to work in the UK face significant penalties from the Home Office. However, it’s not just the employment of illegal workers that can lead to fines — the way the penalty notice is issued to restaurants employing illegal workers also matters. To avoid costly disputes and ensure the penalty is enforceable, it’s crucial that the notice complies with legal requirements.

A recent Court of Appeal ruling has clarified key aspects of these notices, shedding light on what restaurant owners need to know to protect their business from unjust penalties.

Akbars Restaurant (Middlesbrough) Ltd v Secretary of State for the Home Department [2024] EWCA Civ 1387

The Court of Appeal’s recent decision in Akbars Restaurant (Middlesbrough) Ltd v Secretary of State for the Home Department [2024] EWCA Civ 1387 provides important clarity on the legal requirements for civil penalty notices issued to employers under the Immigration Asylum and Nationality Act 2006 (the “2006 Act”). The case primarily focuses on whether the penalty notice issued to the employer, Akbars Restaurant, was valid, and whether the Secretary of State (SSHD) was entitled to change the grounds on which the penalty was issued during the appeal process.

The court’s decision addresses two critical issues: first, the sufficiency of the penalty notice in terms of identifying the grounds for liability, and second, the extent to which the SSHD can amend or shift the basis of the penalty during the appeal.

Judgement

In this case, the Court of Appeal ruled that the penalty notice did not need to identify the specific statutory ground under section 15(1) of the 2006 Act that applied. Instead, it was sufficient for the notice to outline the facts and evidence supporting the conclusion that an employee lacked the right to work, and that the employer was therefore liable to a penalty. The court made clear that the notice should identify the reason behind the decision, but it did not need to specify which of the various grounds under section 15(1) applied. This interpretation avoids an overly formalistic reading of the law and places emphasis on the factual basis of the penalty rather than the precise legal grounds.

A key aspect of the judgment was the interpretation of the phrase “state why the Secretary of State thinks the employer is liable to the penalty” in section 15(6)(a) of the 2006 Act. The court confirmed that this requirement is not as restrictive as some might assume. Rather than detailing every possible legal ground under section 15(1), the notice simply needs to provide a clear statement of the facts that led the SSHD to conclude that the employer was liable. This makes the process more straightforward for both the SSHD and employers, as long as the factual basis for the penalty is clear.

Another significant element of the case concerns the appeal process. The court affirmed that, on appeal, the employer is not limited to contesting the penalty solely on the grounds identified in the original notice. Under section 17(3) of the 2006 Act, the court can consider all relevant facts, including those that may not have been identified in the original penalty notice. This means that even if the SSHD initially relied on one ground for issuing the penalty, it is open to the court to examine additional grounds during the appeal. The employer may need to prepare to challenge not just the original grounds cited, but any new arguments or evidence presented by the SSHD.

In practical terms, this means that employers should not get overly focused on the technicalities of the penalty notice itself. While the notice must provide a clear factual basis for the penalty, it does not need to specify the exact legal provision relied upon by the SSHD. Employers who receive a penalty notice should focus on the underlying facts of the case, such as whether the employee had the right to work and ensure they can provide evidence to contest these facts if necessary.

Employers also need to be aware that the grounds for the penalty can evolve during the appeal process. This highlights the importance of being prepared for a broader re-hearing of the case, where the court can consider any relevant facts, not just the original grounds presented in the penalty notice.

Conclusion

Ultimately, this judgment reinforces the need for employers to maintain robust systems for checking the right to work status of their employees. It also underscores the importance of addressing the facts of the case in an appeal, rather than getting caught up in procedural technicalities. Employers should be proactive in ensuring compliance with the legal requirements, and in the event of a penalty, be ready to present a strong case based on the facts, rather than relying on challenges to the wording of the penalty notice.

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Sumit Singh

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What is a Lifetime Mortgage?

In the UK, there are various types of mortgages available, designed to meet different needs and financial circumstances. One specific type of mortgage is the lifetime mortgage, which is a form of equity release. A lifetime mortgage allows homeowners aged 55 or over to borrow money secured against the value of their main residence property. The loan, along with any interest accrued, is repaid when the homeowner either dies or moves into long-term care. It is a popular option for people looking to unlock the value of their home to provide extra income in retirement without having to move or sell their property.

Key Features of a Lifetime Mortgage

1. Eligibility: Lifetime mortgages generally require homeowners to be 55 or older, with some providers setting a higher minimum age. The property must be their main residence. There are also minimum property value requirements, often starting around £70,000 to £100,000, depending on the lender.

2. Loan Amount: The amount you can borrow depends on multiple factors such as age, the value of the property, and the lender’s criteria. Generally speaking, the older you are, the more you can borrow, as the loan is repaid upon death or when the homeowner moving into long-term care.

3. Interest: The interest is typically compounded, meaning it is added to the loan balance rather than paid on a monthly basis. This can lead to the debt growing significantly over time, but you don’t need to make monthly repayments (unless you choose to). The interest rate is usually fixed for the lifetime of the loan.

4. Repayment: The loan, along with the accumulated interest, is repaid when the homeowner dies or moves into long-term care. If there is any equity left in the property after the loan and interest are repaid, it will be passed on to the homeowner’s estate.

5. No Negative Equity Guarantee: One of the key features of a lifetime mortgage is the no negative equity guarantee, which ensures that you will never owe more than the value of your property. Even if the loan grows to exceed the sale price of your property, the lender cannot claim more than the sale proceeds. Any shortfall is absorbed by the lender, not your estate.

Different types of Lifetime Mortgages:

There are different types of lifetime mortgages, each with different features to suit different financial needs. They include the following:

1. Drawdown Lifetime Mortgage – With a drawdown lifetime mortgage, the homeowner is given an initial lump sum, but the remainder of the loan is available in the form of a reserve. The homeowner can choose to draw on the reserve whenever they need additional funds.

2. Lump Sum Lifetime Mortgage – The homeowner receives a one-off lump sum of cash, which is typically the full value of the equity released. It is ideal for individuals who need a large amount of cash upfront.

3. Interest-Only Lifetime Mortgage – The homeowner takes out a loan, but instead of letting interest accumulate, they make regular interest payments (usually monthly). The original loan amount is repaid when the homeowner dies or moves into care.

4. Enhanced Lifetime Mortgage – An enhanced lifetime mortgage is designed for people with specific health conditions or lifestyle factors that may affect life expectancy. Lenders may offer a higher loan-to-value (LTV) ratio, meaning you can release more equity from your property than with a standard lifetime mortgage. However, you may be required to provide medical evidence or go through a health assessment to qualify.

Advantages of a Lifetime Mortgage

There are many advantages that come with a lifetime mortgage depending on your situation. These include:

No monthly repayments (unless you choose to pay the interest).
Can help fund retirement by unlocking property value.
Full ownership of your home is retained, and you can stay in it for as long as you wish.
Flexibility Some lifetime mortgages allow you to access funds as you need them.

Disadvantages of a Lifetime Mortgage

Why there are many positives which come with a lifetime mortgage, there are also a few disadvantages. These include:

Interest: accumulates over time, meaning the amount you owe can grow quickly.
Amount owed: The amount owed may exceed the value of your home, especially if the interest is compounded for many years.
Reduced inheritance: The loan and interest will be repaid from the sale of the home upon the homeowner’s death, which could reduce the inheritance left to heirs.
May affect means-tested benefits: If you are receiving any means-tested state benefits, releasing equity from your home could affect your eligibility.

Regulation

In the UK, Lifetime mortgages are regulated by the Financial Conduct Authority (FCA), which ensures that the products are sold fairly, transparently, and with consumer protection in mind. Homeowners and their partners are encouraged to get independent financial and legal advice before taking out a lifetime mortgage, especially as the product can have long-term implications.

Our thoughts

Lisa’s Law continues to deliver good outcomes for retail customers. This is at the heart of our strategy and business objectives. If you are looking to mortgage your property, be it a lifetime mortgage or other type of mortgage, do not hesitate to contact us today.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

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Sumit Singh

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Investigation against Temu under EU Digital Service Act

Over the last few years, the rise of Temu has seen it become a serious competitor in the low-budget marketplace, rivalling companies such as Shein and Amazon. However, its practises have also seen it come under legal pressure, particularly in the EU which recently launched an investigation against Temu.

Background on Temu and the European Union’s Digital Services Act

In May 2024, Temu was designated as a Very Large Online Platform (VLOP) under the European Union’s Digital Services Act (DSA), a classification that mandates stringent compliance measures due to its substantial user base of over 45 million monthly active users in the EU. As a VLOP, Temu is required to assess and mitigate systemic risks associated with its services, ensuring the safety and well-being of its users. By September 2024, Temu reported an impressive 92 million monthly users, further emphasising the platform’s significant impact on the digital marketplace.

Formal Proceedings Opened by the Commission

On 31 October 2024, the European Commission initiated formal proceedings to investigate potential breaches of the DSA by Temu. This decision follows a review of a risk assessment report submitted by Temu in late September 2024, along with responses to the Commission’s inquiries made on June 28 and October 11, 2024.

If the Commission’s suspicions are substantiated, Temu could face liability for infringing several articles of the DSA. The formal proceedings empower the Commission to gather further evidence, issue additional requests for information, and potentially adopt a non-compliance decision. However, it is important to note that the opening of these proceedings does not imply any predetermined outcome.

The investigation will delve into several critical areas, including:

1. Sale of Non-Compliant Products: The Commission will examine the effectiveness of Temu’s systems designed to prevent the sale of illegal products within the EU, particularly focusing on measures to curb the re-emergence of previously suspended rogue traders.

2. Addictive Design Risks: The inquiry will assess the platform’s design features, such as game-like reward programs, which may contribute to addictive behaviours and their potential negative impacts on users’ physical and mental health.

3. Content Recommendation Compliance: The investigation will scrutinise how Temu recommends products and content to users, ensuring transparency in the parameters used and providing non-profiling options.

4. Data Access for Researchers: The Commission will evaluate Temu’s adherence to DSA obligations regarding access to publicly available data for researchers.

As the investigation unfolds, the Commission will continue to collaborate with national authorities to ensure compliance with the DSA and consumer protection laws. This ongoing scrutiny highlights the importance of regulatory adherence in the rapidly evolving digital marketplace, underscoring the need for platforms like Temu to prioritise user safety and transparency.

Our thoughts

For legal guidance on navigating compliance with the relevant legislation and other regulatory frameworks, our law firm is here to assist you. Contact us today to learn more about how we can support your business in meeting its legal obligations.

Have questions? Get in touch today!

Call us on 020 7928 0276, phone calls are operating as usual and we will be taking calls from 9:30am to 6:00pm.

Email us on info@lisaslaw.co.uk.

Use the Ask Lisa function on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/ask-question/

For more updates, follow us on our social media platforms! You can find them all on our Linktree right here.

Sumit Singh

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News and Insights

The First Step: Asking HMRC for a Review

The First-tier Tribunal: Where Facts Are Decided

What Happens If You Disagree with the First-tier Tribunal’s Decision?

Upper Tribunal Appeals: Focusing on Legal Issues

Why Businesses Owners Should Take Action

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The Importance of Compliance

How We Can Support Your Business

Act Now to Protect Your Business

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Understanding Rent Review

Key Challenges of Rent Review

Disagreements Over Market Rent Valuation

Ambiguous Lease Terms

Timing of Rent Reviews

Inflation and Economic Factors

Power Imbalance Between Landlord and Tenant

Legal and Procedural Challenges

Disputes and Disagreement Resolution

Navigating the Challenges

Some things to remember

Conclusion

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Background

Legal Framework

Conclusion

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Why is civil legal aid important?

Criminal legal aid increase

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Expiry of BRPs on December 31, 2024

Guidance for visa stamp holders

Airlines

Support for Vulnerable Individuals

Our comments

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Background

Decision

Our thoughts

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Akbars Restaurant (Middlesbrough) Ltd v Secretary of State for the Home Department [2024] EWCA Civ 1387

Judgement

Conclusion

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Key Features of a Lifetime Mortgage

Different types of Lifetime Mortgages:

Advantages of a Lifetime Mortgage

Disadvantages of a Lifetime Mortgage

Regulation

Our thoughts

Have questions? Get in touch today!

Background on Temu and the European Union’s Digital Services Act

Formal Proceedings Opened by the Commission

Our thoughts

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