DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
The Review
for individuals and families
The Family Business Survival Guide The Family Charter Downsizing the family home What do you need to know about the new Consumer Rights Act? Protecting your inheritance: The corridor of uncertainty Rugby World Cup facts
Autumn 2015 1
THE REVIEW AUTUMN 2015
Barlow Robbins, Woking Reception.
Barlow Robbins, Woking Meeting Room 1. Art on office wall ‘Autruches’ by Francois Gruson.
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DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
Dear Clients and other readers, The international legal fraternity is a close knit community, except of course when the Rugby World Cup is on, when suddenly ‘my learned friends’ abroad feel able to unleash all manner of observations on the dubious performance of the England rugby team. Happily I then have the choice whether to go all patriotic and to point out that at least England did not lose to the Japanese (and what a great and unexpected sporting joy that day so deservedly proved to be to them) or deftly to deflect to my earlier upbringing and to pretend that as I was raised on ‘Fußball’ that I am not that bothered. The trouble is that is not entirely true. When I first encountered the game of rugby at Sevenoaks School I thought that it was just like ‘Fußball’, except that everyone had forgotten the rules. I soon learnt that rugby has probably just as many regulations, but that there seemed to be a powerful code of conduct about the sheer fairness of play, which is why the old adage that ‘rugby is a game for hooligans played by gentlemen’ seems so apposite.
not involved in the management of the enterprise all benefit from an agreed modus operandi. Such arrangements are in place in many well-known companies, family estates and farming businesses where the enterprise is better kept together rather than being fragmented amongst the children of the founder or current owner. On a related point, what if it is your wish not to include your children in your Will at all? The decision in Ilott v Mitson which was widely reported in the summer has given some useful guidance for those who may contemplate such a decision. Our article on that case will tell you more. With best wishes,
Bernd Ratzke
Managing Partner Client Services
Which brings me to this Autumn edition of the Review. We have included an article on Family Charters, essentially codes of conduct for families with valuable family businesses where the business and those
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By Sehaj Lamba
A family charter is a valuable tool to help family businesses achieve longevity & success.
Family charters (also known as constitutions) are agreements entered into by family members in relation to their family’s business. The purpose is to set out the business practices which family members should follow from day-to-day, in addition to the long-term strategy of the business. A family charter allows family members to focus their minds on important business issues. Typically these can include ownership, what is required before family members can become employed and/or have a shareholding, voting and control, dispute resolution and succession. The agreement is not usually a legally binding document (in contrast to a shareholders’ agreement) however family members may decide for parts of it to be so. It can be adapted to meet business needs as a business grows and include family members who are not direct shareholders, such as the beneficiaries of a family trust owning shares in the business.
66%
Family Businesses
account for: 66% of all SME’s in the UK.
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Source: .GOV Small Business Survey
DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
There are significant benefits to entering The family charter is a powerful creature into a family charter. The agreement can due to its ability to include a “code of provide certainty and minimise family conduct” of family values and standards conflict by clearly laying out “rules of of behaviour to be instilled both in the the road”, thereby avoiding lengthy business and personal sphere. This can and costly conflicts. The process of be valuable in helping to maintain the reaching such an agreement can also goodwill and brand of a business, by be a constructive exercise, as families setting expectations to avoid behaviour work together to develop which could otherwise a transparent and unified result in adverse The agreement can approach to the business. effects on the business’ provide certainty and reputation. Their biggest advantage is minimise family conflict by laying out rules of A well drafted charter that family charters provide a clear separation between can be a unique and the road... the collective interests of sensible investment the business and the often varying interests for a family business. Not only do they of individual family members. They can provide businesses with a clear and provide a fair way to deal with sensitive organised governance structure, they issues such as succession and the death of also encourage families to think ahead family members. This can be particularly and work towards common goals, with valuable for families where emotions a view to fostering both business and and loyalties come into play in ways not family well-being. witnessed by non-family businesses.
30% Professionalising
30% of respondents agree that professionalising the business is a key challenge over the next five years.
82%
Conflict:
82% of family businesses have at least one procedure in place to deal with conflict, up from 75% in 2012.
Source: PWC The Family Business Report
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THE REVIEW AUTUMN 2015
By Sarah Slade
Q
My partner and I are looking to retire in the next few years and are currently downsizing from our family home. With the finances released from the move, coupled with some savings, we hope to purchase a small flat in London with a view to renting this out as a source of income for our retirement. What are the main implications of this town and country split that we should be aware of – both financially and with regards to responsibilities as future landlords?
A
As you near retirement, downsizing can be a sensible way to free up equity that you can then reinvest to provide for your retirement. Downsizing will also reduce your bills, simultaneously increasing your income while creating an opportunity to invest in a buy to let property that provides a reliable return, if you do the right research.
Location is a vital factor when becoming a landlord. London homes can rent in days or even hours. You need to consider the type of rental income you will get in an area, as well as the overall return you will get on the property. Looking in areas that have a high percentage of young professionals with good transport into central London will equate to strong rental demand for properties. You should ask a solicitor to check the term of the lease to ensure you will not have to pay the Freeholder for a lease extension during your ownership, check
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DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
the Lease does not contain a prohibition from letting the flat and also, that there are no surprises with the service charge - any major works planned for the building would substantially increase the service charge payments and keep a lid on your yields. In the last 5 years there have been a number of changes and additions to the responsibilities and legal obligations landlords face whether they have one property or multiple properties. A basic understanding of these factors is crucial to ensure that you do not face action against you and have penalties imposed.
There is also the cost and inconvenience that comes with managing a rental property - which can eat into your personal time and income especially if you are planning on renting further afield from home as it would be harder to keep an eye on it. If you do not wish to, or are unable to take on this responsibility, you may want to consider using an agent to manage the property for you. If you employ the services of a managing agent the landlord’s responsibilities and obligations remain with the landlord and do not transfer to the agent, so choose your agent carefully!
Some of the most important areas include keeping your rented property safe and free from health hazards, making sure all gas and electrical equipment you supply is safely installed and maintained, following fire safety regulations, providing an Energy Performance Certificate for the property and protecting your tenant’s deposit in a government-approved scheme.
Tax is another financial responsibility to be aware of. Rental income is added to any other income you earn during the year so you may have to pay income tax on your rental income, minus your day-to-day running expenses. When you come to sell a property that is not your main home - including a rental property - it’s likely that you will have to pay Capital Gains Tax on any gain. 7
THE REVIEW AUTUMN 2015
WHAT DO YOU NEED TO KNOW ABOUT THE NEW CONSUMER RIGHTS ACT? By Laurie Heizler When you buy goods, services or digital products as a consumer you may find that the “small print” has changed. This is because traders are now bound by the Consumer Rights Act 2015 (“CRA”) which came into force on 1 October 2015. You will now find that your rights are stronger than they used to be and that you have better remedies against disreputable traders.
goods or agree a price reduction. If these things don’t happen, you will have a final right of rejection. The new rules also mean companies can be punished if they do not deliver your goods within a reasonable time. You are now entitled to a full refund if retailers fail to deliver your purchases within 30 days or on a date that has been agreed.
You might be a consumer of digital content, which is now dealt with as a product category distinct from goods and services. It means “data which are produced and supplied in a digital form” so it will cover You are now materials you download or stream. Digital content must entitled to a full refund if retailers fail to be of satisfactory quality, fit for its purpose and comply deliver your purchases with its description. It will within 30 days or on also be implied into the contract that the trader has a date that has the right to provide it to you.
The legislation does some completely new things. For example, it makes rules to govern the sale of “digital content”, such as downloaded music. It also gives you the power to bring been agreed. legal actions against traders Another benefit to consumers created by the who act in an anti-competitive way (for CRA relates to notices, disclaimers and contract example, price cartels that make the cost of terms. To be enforceable, they must be not things you buy higher than they should be). be unfair and be written in plain, intelligible language (there is scope for argument here). In the past, goods must be “of satisfactory Unfair and obscure terms in the “small print” quality”, be as described, fit for a particular of contracts cannot be enforced against you. purpose and match any actual example you have seen, and if it is relevant, be correctly installed. If these terms are broken, you will have the right to reject the goods, or to have them repaired or replaced. If you want to reject the goods, you will now have a 30day short term right to do so. In this time, the trader is entitled to repair or replace the
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The CRA is a very large body of law and we can only give the briefest summary here. However, the tables are definitely being turned on “rogue traders”!
DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
Heather Ilott) will not necessarily win a financial award and that where an estate is left to charities, as was the case here, a child’s claim will not always succeed.
By Rhoderick McGrigor
Summer is truly behind us and looking back, what sticks in your memory? Some will think back to England’s Test cricket team regaining the Ashes unexpectedly, few will recall Tuesday 28 July. This was to be the No News Day immediately before the (victorious) Third Test at Edgbaston. In fact (in case it escapes your memory) it was the day that our print, digital and social media became saturated not by match-spoiling rain, but by the case of Ilott v Mitson, in which the Court of Appeal awarded around £163,000 to Heather Ilott, a woman who had been cut out of her mother’s Will. The public mood was unsympathetic, and it was reflected in the resulting queries we received from our clients, who mostly asked: “How can I make sure my wishes are respected?” The good news for clients is that, despite suggestions in the media, the Court did not change the law as such, which is based on the Inheritance (Provision for Family and Dependants) Act 1975 which the courts have considered many times over the past 40 years. We can therefore reassure our clients that this case has not created an unqualified new right for children to claim from the estates of their parents. The law remains that even children who are very needy (like
But the Ilott case has provided guidance on the way some aspects of the 1975 Act will be interpreted and (as cricket fans might say) widened the “corridor of uncertainty”. The Court of Appeal emphasised that deciding responsibility for family estrangement is “difficult to quantify”, the question of maintenance for an adult child remains subjective, and if its approach is followed in future, maintenance factors covering a broader time period than before could be taken into account. For those who have chosen to limit their adult children’s inheritance there are still ways to give effect to their wishes and to narrow the uncertainty. We should not forget that the charities in this case still received two thirds of the deceased’s estate, and if Heather Ilott’s mother had kept clearer records of why she favoured these charities over her daughter the outcome would probably have been different. The Ilott decision did not therefore change the law as such but it was very widely reported, making people more aware of the risks that their intentions may be examined quite closely by the Courts after their death. If clients are concerned about their own Wills they should take advice from their lawyers to narrow the “corridor of uncertainty” as much as possible. If then their executors have to go out to bat on their behalf, they will have all the protection they need.
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THE REVIEW AUTUMN 2015
A defending champion has NEVER WON the World Cup‌
The only nations to host and win a tournament are New Zealand (1987, 2011) and South Africa (1995).
In all seven Rugby World Cup finals, a combined total of just NINE tries have been scored.
South Africa FAILED to score a try in either of their finals but WON BOTH matches.
No team has won a
Uruguay’s Diego Ormaechea was the oldest player to feature in a Rugby World Cup aged 40 years and 26 days.
Tri Nations tournament and the World Cup in
the same year.
New Zealand hold the record for the most points scored in a Rugby World Cup match - they ticked up 145 against Japan in 1995.
Jonny Wilkson holds the record for scoring the most amount of drop goals in a Rugby Union World Cup tournament. 10
The largest winning margin is held by Australia,
who beat Namibia 142-0 in the 2003 championship.
Jonny Wilkinson holds the record for the most points scored (277), most penalities (58) & most drop goals (14) in Rugby World Cups.
DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
MEET THE CONTRIBUTORS
Bernd Ratzke
Sehaj Lamba
Laurie Heizler
Rhoderick McGrigor
Managing Partner Client Services Corporate & Commercial T. 01483 464221 berndratzke@barlowrobbins.com
Senior Associate Intellectual Property, Technology & Media T. 01483 464272 laurieheizler@barlowrobbins.com
Trainee Solicitor Corporate & Commercial T. 01483 464209 sehajlamba@barlowrobbins.com
Sarah Slade
Senior Residential Property Executive Residential Property T. 01483 543213 sarahslade@barlowrobbins.com
Senior Associate Probate, Wills & Trusts T. 01483 543229 rhoderickmcgrigor@barlowrobbins.com
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THE REVIEW AUTUMN 2015
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