Category: Articles

Illegal working civil penalties in the food sector

Posted on by Oliver O'Sullivan

Huge fines for the food sector:

Between 1 July and 30 September 2023, the government issued £985,000 in illegal worker civil penalties to companies based in London and the South East of England. 47% of these civil penalties were issued to companies in the restaurant and take away sectors who were collectively fined £465,000.

With fines to individual companies as high as £90,000, the impact of employing someone illegally puts a lot of companies out of business. What is it about this sector that makes it so prone to illegal working and companies being penalised?

 

How civil penalties are issued:

Companies are fined for failing to take the proper steps to prevent hiring someone who does not have permission to work in the UK. Between July and September last year, companies would be issued a penalty of £15,000 per illegal worker for a first breach. This £15,000 penalty could then be reduced in increments if the company have good procedures in place to check a new employer’s right to work.

As of February this year, these first-time breach civil penalties have been increased to £45,000 per illegal worker. That same company that faced a fine of £90,000 would now be fined £270,000 for the same offence.

In some instances, either knowingly employing a person who does not have the right to work or having reasonable cause to believe a person does not have the right to work but hiring them regardless can be criminally prosecuted.

 

Why the food industry is vulnerable to civil penalties:

The food sector is one that is routinely scrutinised by the Home Office. It is not unusual for immigration officials to arrive at one end of a street lined with restaurants, bars and take-aways and work their way through every building, checking the right to work of all employees as they go. I once even had a client whose food factory was even visited by armed officers supporting an immigration visit.

Restaurants often have a high turnover of staff and branches where the right to work is checked by local managers who aren’t always trained. I’ve worked alongside a major global fast-food restaurant to develop training materials and policies across their branches and helped with double checking right to work for candidates and seen first hand the issues faced by human resources in managing restaurants.

Restaurants are often looking for the best talent for a specific cuisine. One restaurant I represented required a very niche set of skills in their chefs that was only commonplace in a particular region of India. Chefs can be sponsored under the Skilled Worker visa scheme, but the minimum salary threshold is set above the median of the market rate. Currently that minimum salary is £26,200 per annum based upon a 39-hour week but will imminently rise to £38,700 per annum. Hiring chefs will soon become a lot more expensive.

The risks with the restaurant sector centre on policies with regards who is hiring and who is then checking the right to work of new employees, which is where the disconnect often lies.

 

What can be done to mitigate the risk:

A company can mitigate the risk of civil penalty by having best practice procedures for checking the right to work and assuring that all relevant hiring managers are trained to the same level. The documents then need to be safely stored, either digitally or physically.

Companies should be familiar of what happens in a Home Office inspection and how to be prepared for one. It is always a good idea to take stock and audit your own documents and processes to understand where any remedial actions need to be taken.

Companies should understand who their employees are, which might mean clarifying the position of some members of the workforce.

Our team has great experience with working with restaurants, fast food chains, bars and public houses. We have undertaken mock inspections, reviewed and rewritten policies and procedures and most of all been on hand to provide advice as and when it is needed.

If you have any concerns about your workforce, we would love to hear from you.

 

This article was prepared by our Head of Immigration, Oliver O’Sullivan who you can reach via email at Oliver.OSulivan@wellerslawgroup.com or by phone 020 7481 2422.

Immigration Changes Coming in 2024

Posted on by Oliver O'Sullivan

The U.K. Government has announced the dates for a number of changes to visas and immigration legislation which are set to come into force in the first half of 2024.

The changes are set out below:

Date Visa Type Changes
6th February 2024 Immigration Health Surcharge The lower rate surcharge will rise from £470 to £776 per year for visa applicants under the age of 18, students, their dependants and applicants applying for the Youth Mobility scheme visa.
11th March 2024 Health and Care visas The right for care and senior care workers to bring dependents into the country will be removed.
4th April 2024 Skilled Worker visas The minimum salary to sponsor skilled workers will rise from £26,200 to £38,700.

Health and care visas are not included. This change also does not apply to workers in national pay scale occupations e.g. teachers.
4th April 2024 (unconfirmed date) Shortage Occupation List The 20% going rate on the Shortage Occupation List will be removed.

New occupations will be temporarily added to the new immigration salary list as per the recommendations by the Migration Advisory Committee.
6th April 2024 Sponsor Licences All licences expiring on or after the 6th April 2024 will be automatically renewed for 10 years.

If your licence expires before the 6th April, you will be subject to a licence renewal fee depending on whether you are a small, medium or large business.
11th April Family visas The minimum income requirement for spouse/partner visas will rise from £18,600 to £29,000.

 

Got any questions about the new immigration changes?

Get in touch with our immigration team today for enquiries on these changes, for information on managing Sponsor Licences and more:

Navigating Inheritance Tax Implications for Cohabitating Couples

Posted on by Wellers

In a rapidly evolving social landscape, cohabitation has become a prevalent lifestyle choice for many couples. However, when it comes to inheritance tax, cohabitating couples often find themselves in a challenging situation when it comes to writing their wills and making them tax efficient.

Inheritance tax laws are typically structured to provide certain benefits and exemptions for legally married or civilly partnered couples. Unfortunately, cohabitating couples may not automatically enjoy the same rights and protections. As a result, the passing of assets from one partner to another in the event of death can trigger tax liabilities that may not be evident in traditional marital arrangements.

In many jurisdictions, married couples benefit from generous estate tax exemptions and the ability to transfer assets to a surviving spouse without incurring inheritance tax. Cohabitating couples, however, may face a different reality. Upon the death of one partner, the surviving partner could be subject to inheritance tax on assets that exceed the prevailing tax-free threshold (currently £325,000).

While cohabitating couples may face additional challenges, they are not without recourse. Strategic estate planning can play a pivotal role in mitigating tax liability and ensuring that a partner’s legacy is preserved.

Crafting a comprehensive and legally sound will is of paramount importance for cohabitating couples. A well-drafted will can outline the distribution of assets and provide clarity on the intentions of the deceased partner. Additionally, cohabitants should explore the inclusion of specific provisions to minimize tax exposure and enable the surviving partner to inherit without undue financial burden.

Cohabitating couples may consider strategic lifetime gifting as a means of transferring assets while minimising tax implications. By gifting assets during their lifetime, partners can potentially reduce the taxable value of their estate, thereby decreasing the inheritance tax liability for the surviving partner.

Understanding the nuances of inheritance tax is crucial for preserving financial legacies and safeguarding the interests of both partners. Cohabitating couples can take proactive steps, such as strategic estate planning, crafting comprehensive wills, and seeking professional advice in relation to cohabitation agreements, to navigate the challenges posed by inheritance tax. By doing so, they can ensure that their intentions are realised, their financial well-being is protected, and their loved ones inherit their assets as they intended in most tax-efficient way possible.

This article was prepared by Naomi Augustine-Walker, a private client solicitor in our London office. You can contact Naomi by email: Naomi.Augustine-Walker@wellerslawgroup.com or by telephone: 020 3831 2669 For our Bromley office please call 020 8464 4242 and for Surrey the number is 01372 750100.

The Difference Between Chargeable Lifetime Transfers (CLT) and Potentially Exempt Transfers (PETs)

Posted on by Wellers

A Sunday Times article by Ali Hussain entitled “Inheritance Tax is Staying but here’s how to avoid it” discussed various useful ways in which to reduce a potential inheritance tax bill. The easiest way to reduce your Estate is to spend it!  This can be done either by enjoying the money yourself during your lifetime or gifting it to friends, relatives or charities. It is also important to make the distinction between Chargeable Lifetime Transfers and Potentially Exempt Transfers (Lifetime Gifts).

 

What is a Chargeable Lifetime Transfer (CLT)

A Chargeable Lifetime Transfer (CLT) is immediately chargeable to IHT (Inheritance Tax). Such transfers commonly involve payments into a Trust which will incur a 20% payment to IHT on anything over the settlor’s Nil Rate Band (NRB).

 

What is a Potentially Exempt Transfer (PET)

A Potentially Exempt Transfer (PET), also known as a Lifetime Gift, is a gift that is not immediately chargeable to IHT but reduces the donor’s amount of available NRB (currently £325,000) by the amount of the gift (less the available annual allowance). Once 7 years has passed and assuming the donor has not expired during this time, the NRB clock is reset and the gift exempt from IHT altogether. If the donor died within 7 years, then the gift may still be exempt from IHT if the value was within the NRB (i.e. under £325,000). If the gift exceeded the value of the NRB, or there were numerous gifts and the aggregated value exceeded the NRB, then tax will be payable at 40% on the proportion of the gift over the NRB, with the most recent gift being the first in the firing line. Depending on when it was made the 40% may be subject to taper relief of between 20% to 80% if it was made more than 3 years before the date of death.

Gifts to charities and spouses are exempt from IHT and therefore you can gift as much as you like during your lifetime to either or and there will be no IHT payable.

Each person has a total annual gift allowance of £3,000 which means that an individual can gift up to that sum without it affecting their NRB.

Gifts of up to £250 will not count towards this total unless they are made to the same person, in which case they are aggregated and the total amount of money gifted to that particular person in one year will apply over £250.

Any unused annual gift allowance can be rolled over into the following tax year for one year only.  This means if you only use £1,500 of your gift allowance in one tax year, you can roll over £1,500 to the next giving you a maximum of £4,500 in the next tax year.  If you only gift £500 in that tax year, you can still only roll over a maximum of £3,000 to the next year.  This can be useful if you are a couple and want to gift a large amount to a child or grandchild.  If both of you have unused allowance from the previous year, it means that potentially a couple can make a single gift of up to £12,000 to one person in a single tax year without it affecting their NRB.

The rules also allow individuals to make wedding gifts to children of £5,000 without it affecting the NRB.  If it’s grandchildren, it’s £2,500 and for anyone else, £1,000.  Again, a couple could potentially make a gift of £10,000 in this respect.

The article also points out that surplus income is an underused way of giving away money without any tax implications.  You can give away as much surplus income as you like without IHT consequences as long as it does not diminish your standard of living and the payments are habitual.  Therefore, you could make a regular payment of £300 out of your income to someone on a regular basis and it would not decrease the NRB.

 

To learn more about how PETs and CLTs affect you, get in touch with Annelise Tyler by email annelise.tyler@wellerslawgroup.com or by phone 01732 446374 today.

SDLT on Mixed Use Property

Posted on by Wellers

With Stamp Duty Land Tax (SDLT) charged differently on residential and non-residential property, the disposal of a mixed-use property can lead to tax consequences that may affect the value you receive on sale.

Recently, the Chartered Institute of Taxation and the Stamp Taxes Practitioners Group agreed new guidance with HM Revenue and Customs (HMRC) on the classification of property in some common cases where there is mixed use of the premises.

HMRC have decided that the prior guidance that if the property is marketed as residential, it will be a residential property for SDLT purposes should not apply. Instead the test will be if the property is used or suitable for use as a residential property at the date of sale.

If a building is demolished or derelict, it will not be regarded as being ‘in use or suitable for use as a dwelling’, and where such a building is being reconstructed, the position will be decided on the facts: the work has to be significant – there is no ‘golden brick’ rule.

Lastly, where there is a mixed residential/non-residential use, the SDLT status of the property will depend on the facts – a ‘home office’ will be residential, but a self-contained business office (e.g. a surgery) or area let separately is likely to be classified as commercial. The test here is whether an identifiable use of an area precludes use of that area for any other purpose.

Always take professional advice before putting a property on the market.

 

Losing Capacity – Don’t leave it too late to get an LPA

Posted on by Wellers

Most of us will need to consider who will manage our affairs and look after us in our later life or, if and when we lose the ability to do this for ourselves.  It may be that we first have to consider this for our ageing parents or a family member.

Most people first experience the need for a Lasting Power of Attorney (LPA) because a friend or relative has lost capacity without making one.  If you lose mental capacity and have not made a Lasting Power of Attorney, your relatives, friends or even the local authority, can apply to the Court of Protection to be able to make decisions on your behalf as a “Deputy”.  You should bear in mind that once mental capacity for decision making has been lost there is no option but to apply to the Court of Protection, which will normally be a time-consuming and expensive process, often lasting in excess of six months and during which time assets may be effectively frozen.

Generally, the Court of Protection do not appoint deputies to make decisions about your health and welfare – instead preferring to deal with issues on a decision by decision basis.

Loss of capacity is not, unfortunately, something that is limited to old age. We therefore recommend all our clients prepare both types of Lasting Power of Attorney before they are needed.

What is an LPA?

An LPA is a legal document that enables you (the Donor) to choose people (Attorneys) to make decisions on your behalf, about such things as your finances, property and your personal welfare, at a time in the future if you become physically or mentally incapable of dealing with those affairs yourself.

Anyone over the age of 18 can set up an LPA providing they have the mental capacity to understand the meaning and the effects of it. There are two types of Lasting Power:

  1. Property & Financial Affairs (e.g. dealing with the sale of your house and paying bills and making investments on your behalf); and
  2. Health & Welfare (e.g. deciding which care home you go to or where you live and medical treatment)

Appointing attorneys

You can appoint as many attorneys as you wish.

You need to consider, however, how you want them to act in practice. There are different options for this such as ‘jointly’ (doing everything together) or ‘jointly and severally’ (acting either together or separately) or a mixture of the two.

You can appoint different people for the different types of LPA based on their ability to carry out their duties. You can give attorneys as much power as you like (they do by default have the same powers as the donor). You can also place conditions and restrictions on their power.

Replacement Attorneys, who would step in if your first appointed attorneys could no longer act, can also be appointed.

The Property & Financial Affairs LPA can be used as soon as it is registered (the court registration fee is £82 per LPA, though this is reduced if your income is below £12k per annum or if you are in receipt of certain benefits). This can be useful from a practical point of view, if for example, you still have mental capacity but have had an accident and wish others to do things for you.

Whilst you have mental capacity, your attorney must follow your instructions when making any decisions with you/on your behalf.

Health & Welfare attorneys will only be able to make decisions for you once you are unable to make those decisions for yourself (case specific).

What if I have an Enduring Power of Attorney?

Enduring Powers, since October 2007, cannot be created anymore. If your Enduring Power of Attorney was made correctly, signed and witnessed before October 2007 it should still be valid. Even if they are valid, however, there are likely to be issues with them and they should be reviewed.

In particular:

  • Enduring Powers do not cover health and welfare decisions – they are limited to decisions over property and finance.
  • Much of what is covered now when Lasting Powers are prepared professionally was not considered when Enduring Powers were made.
  • Enduring Powers have less safeguarding than LPAs as there is no requirement to register them until the Donor loses capacity. This may appear to be a benefit, but registration takes time and during that time the document can often not be used easily.

Why should I seek professional help?

Whilst you can prepare LPAs yourself, seeking professional legal help is the only way to ensure you receive the individual advice needed to complete the LPAs properly.

Preparing the forms correctly is only one aspect of putting effective LPAs in place for the future. Without individual advice and support it is likely only your family will find out if the LPAs have been well done.

All our service options include:

  • Reviewing your surrounding circumstances and what you wish to do (i.e. who you wish to appoint and why).
  • Advising on the options available both in terms of who to appoint and how this will work in practice.
  • Advising on the authorities, conditions, and restrictions you should include (and those you should not) and discussing alternate options with you to achieve your wishes.
  • Providing practical advice on issues you are likely not to have considered yourself.
  • Confirming the advice provided in writing by way of a written report.

The different service options are:

  • Advice only: you prepare the documents (we will provide you with a link to do this) and we review them and provide advice. You can then finalise the forms knowing they have been checked over and the advice you need has been provided; or
  • Advice & preparation: we provide advice and prepare the forms to include acting as your Certificate Provider (an independent person who confirms you know what you are doing, no one is forcing you to complete the forms and there is no reason for you not to prepare them) and you then finalise the documents; or
  • Advice, preparation & registration: this is a full service in which we do the work for you, on your instructions, through to registration of the LPAs.

 

The Team here at Wellers will ensure that you receive the advice you need to put the appropriate documents in place to suit your personal circumstances.  Get in touch today to start your LPA. For our London office please call 020 7481 2422 , for Bromley the number is 020 8464 4242 and for Surrey call 01372 750100.

Contact us by email: enquiries@wellerslawgroup.com

 

Gifts to Pets in Your Will

Posted on by Wellers

In the realm of estate planning, one aspect that is often overlooked or not well-understood is the inclusion of provisions for pets in your will. Whilst pets are considered cherished members of many families, the law typically views them as property. As such, they require special consideration in your estate planning to ensure their continued care and well-being after your passing.

The first step in bequeathing a gift to your pet in your will is to clearly identify the pet or pets you wish to provide for. Include their names, species, and any distinguishing characteristics to avoid any ambiguity. This will help ensure that there is no confusion regarding your intent.

Selecting a trustworthy individual to care for your pet is crucial. This person will be responsible for your pet’s daily needs and ensure they receive the love and attention they deserve. Make sure to discuss your intentions with this person beforehand and gain their consent.

To support your pet’s care, you can set aside funds in your will. It’s advisable to specify a reasonable amount to cover food, veterinary care, grooming, and any other needs your pet might have. You can either leave a lump sum or establish a pet trust to manage these funds.

A pet trust is a legally binding document that outlines how the allocated funds should be managed for your pet’s benefit. This ensures that the funds are used exclusively for your pet’s welfare. Specify the trustee’s role, the duration of the trust, and how any remaining funds should be distributed after your pet’s passing.

Life circumstances can change, and it’s essential to revisit your will periodically to ensure that your pet’s needs are adequately addressed. If your designated “pet guardian” becomes unable or unwilling to care for your pet, it may be necessary to appoint a new caretaker.

Consulting with an experienced estate planning professional is advisable when including provisions for your pets in your will.

This article was prepared by Naomi Augustine-Walker, a private client solicitor in our London office. You can contact Naomi by email: Naomi.Augustine-Walker@wellerslawgroup.com or by telephone: 020 3831 2669 For our Bromley office please call 020 8464 4242 and for Surrey please call 01372 750100.

Ownership of Property Depends on Intention

Posted on by Wellers

Property can be owned in joint names as joint tenants, which means that each co-owner owns an undivided share in the whole property (and would therefore be the sole owner on the death of any co-owners), or as tenants in common, where each co-owner has a specified share in the property that is not necessarily equal. It is also possible for the deeds to a property to be in the name of one person but for another person to acquire an interest in it.

The relevant law in this area was set out clearly in a recent High Court case, which involved a dispute over the exact ownership of a converted barn in North Yorkshire. Arthur Aspden met Joy Elvy in 1985. In 1986, following Mr Aspden’s purchase of Outlaithe Farm, the couple began living together and went on to have two children.

The couple split up in 1995/1996. Ms Elvy left the farm with the children, but continued to be in daily contact. In 2006, Mr Aspden transferred a barn at the farm into Ms Elvy’s name and this was subsequently converted into a dwelling house at a cost of about £90,000. Mr Aspden alleged that he had provided the majority of the cash funds and carried out labouring work for the conversion, which he said he had done because the couple intended to marry and live in the barn. Ms Elvy denied this. She argued that it was ‘in recognition of her contributions to the family’ and that Mr Aspden consequently had no beneficial interest in the barn, which by this time was worth £400,000.

Judge Behrens pointed out that if a property is in joint names, the presumption will be that the co-owners intended to own it as joint tenants. This presumption can be overturned, but it is difficult to achieve this unless there is evidence that the co-owners actually intended to own the property in agreed proportions. By comparison, where a property is in a sole name, the person alleging a beneficial interest, whose name is not on the deeds, has to establish the existence of some sort of trust. There is no presumption of joint ownership. However, such a trust could arise some years after a property was initially acquired in one name.

In this particular case, the judge held that there was ‘a common intention that Mr Aspden should have some interest in the barn as a result of his substantial contribution in money and labour’. He found that Mr Aspden had a beneficial interest in the property which the judge assessed at 25 per cent.

Ripped Off By a Rogue Trader? You Can Be Compensated!

Posted on by Wellers

Elderly people and those who are vulnerable are sadly prime targets for rogue traders, but the law is not powerless when it comes to helping those affected. The successful prosecution of a rogue builder promises more than £200,000 in compensation for his victims.

The builder’s modus operandi was to con householders, mostly pensioners who lived on their own, into paying extortionate sums for unnecessary work that was shoddily carried out. One victim paid more than £300,000 for work which was assessed as being worth only £1,500.

The builder was ultimately jailed for five years and four months after pleading guilty to three counts of fraud and one of theft. Proceedings followed under the Proceeds of Crime Act 2002 and he received a confiscation order requiring him to pay £217,214. That sum represents the entirety of his available assets and the authorities intend to use it to compensate his victims for their losses, at least in part.

The facts of the case emerged as he challenged the order before the Court of Appeal. He argued that his matrimonial home and a bank account containing about £100,000 were his wife’s alone, although both were held in joint names. The Court rejected his appeal as entirely lacking in merit.

Unfair Post-Nuptial Agreement Set Aside by Court

Posted on by Wellers

A Russian ‘serial non-discloser’ of assets said to be worth millions of pounds had his attempt to bind his ex-wife to the terms of their post-nuptial agreement dashed recently in the family court.

The agreement was entered into in Israel after ten years of marriage. Mr Justice Mostyn ruled that although the man’s ex-wife would have understood the agreement in a literal sense, she would not have understood the rights she was thereby giving up under English law. The agreement, therefore, was grossly unfair and was set aside by the court.

Instead of the $1 million specified in the agreement, the ex-wife was awarded £12.5 million to meet her reasonable needs and those of the couple’s children.

However, the practical issue for the woman will be locating and obtaining her ex-husband’s assets. He denies having significant wealth, claims to face litigation to settle a $10 million debt and appears to have placed his assets in offshore trusts.

British courts will not enforce agreements that are, on the face of them, grossly unfair. A pre-nuptial or post-nuptial agreement which is reasonably fair and which is entered into by both parties freely and with the benefit of professional advice is likely to be upheld by the court. This was not such an agreement, however. Further information on agreements can be found in an article written by Diane Flowers, one of our family law team here.

Please contact our family team on 020 8464 4242 or email enquiries@wellerslawgroup.com for more information.