Category Archives: Reform

Google’s Controversial UK Tax Arrangements Ruled Legal

Google LogoHM Revenue and Customs (HMRC) has reportedly ruled that the highly controversial and very complex tax arrangements are within the boundaries of UK law. The ruling will see the multinational firm only required to pay a fraction of the tax that would otherwise have been due.

The ruling, which followed an investigation over the course of six years and has not previously been published, means that the American search giant is not required to pay tax on proceeds from the sale of advertising in the UK. This decision clears up some of the confusion around the fact that Google is only paying an additional £130 million in tax for the past ten years, which represents a very small percentage of its actual UK-generated earnings.

While it has been decided that the company’s tax practices are legal, many critics still label them tax avoidance and the agreement reached between Google and HMRC has been heavily criticised. The arrangement means that Google pays an effective tax rate of only 3% on the millions of pounds of income it generates in the UK.

The main tactic used to minimise Google’s tax bill involves taking steps to register the bulk of its UK profits in Ireland. A separate company based in Ireland carries out all of Google UK’s operations. The company works exclusively for Google, but is legally a separate business. They carry out work on behalf of Google UK in return for a fee. As a result, from a legal viewpoint only this fee qualifies as profit generated in the UK, and is therefore kept as low as possible. All other profits, which amount to millions, are counted as profits generated in Ireland where the business is based.

A number of other multinational businesses use similar arrangements to register their UK profits as occurring overseas in jurisdictions with lower rates of tax. The ruling that Google is operating within the boundaries of the law could therefore have important implications when it comes to assessing the legality of other major companies engaging in alleged tax avoidance. Technology giant Apple and major online retailer Amazon are among the more prominent examples of companies employing similar tactics.

The decision that this practice is currently legal has also led to increased pressure on the government to take steps to close loopholes and prevent profits from multinational businesses being diverted abroad in order to avoid paying tax in the UK on income that has been generated here.

Legal Funding For Personal Injury Still Available – Despite Legal Reform

“The removal of legal aid will start to undermine the rule of law. People will feel like the government isn’t giving them access to justice and that will either lead to frustration and lack of confidence in the system, or it will lead to people taking the law into their own hands.”

 

Such was the opinion of Lord Neuberger, the President of the Supreme Court, prior to the 2013 enactment of the much maligned and criticised “Jackson Reforms,” enshrined mostly in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

In the post- LASPO world, civil litigation has become increasingly of concern for the legal sector, and civil rights campaigners. A key part of LASPO was to reduce legal aid funding. Consequently, a great majority of people are now, quite simply, unable to take their cases to court. The cost of going to court, of obtaining legal representation, in most cases now has to be met by the parties concerned. With no recourse to legal aid, more and more are simply unable to obtain justice.

The secondary impact of that has been to radically reform the legal sector in other ways. Small law firms have had great struggles in a post LASPO world, as fewer civil litigants are coming to them. Many law firms have either gone under, merged, or diversified. For both litigants and lawyers alike, the post LASPO legal landscape has been greatly damaging. Indeed, a 2014 Ministry of Justice select committee investigation was damning in the scale of the damage done to the provisions of civil justice.

However, LASPO has not been a total disaster across the board; some sectors have remained relatively unscathed, or have suffered little, due to the Jackson Reforms. Immigration is one such area. Although only specific immigration cases can now be handled under a legal aid certificate, many immigration matters (predominantly asylum) are still eligible for public funding. Another such area of civil law is personal injury, and certain areas of employment law.

However, personal injury (PI) has for a long time funded itself in many cases outside the provisions of legal aid. Since 1998, until 2013, the majority of PI cases were funded under a Conditional Fee Agreement (CFA). With a CFA, the lawyers and court costs are only paid after the case is settled, and on the understanding that the litigant will win their case. If the litigant does not win, then they themselves do not pay their legal costs. The same year that LASPO was enacted saw the CFA structure alter, but although changed, the essential details remained the same. Consequently, PI is one area of civil law that is still very much accessible for the average person regardless of financial means, due to CFA’s.

Personal injuries can often arise as the result of accidents at work. Despite the best safety procedures, and strict health and safety guidelines, and regular inspections, it is only too easy to have an accident at work- often with a long lasting medical impact. Employment law itself has had varied fortunes following LASPO. Discrimination cases are still eligible for public funding- with many discrimination cases often starting in the workplace. Many workplace issues and disputes now end up in arbitration or workplace mediation, or dealt with by the relevant Trade Unions, prior to an Employment Tribunal or civil court, and it is before such mediation that most settlements are actually arrived at. As such, the need to go to court regarding an employment dispute has in many instances fallen. Accidents at work, and matters of employer liability in that area, still remain one of the greatest sources of workplace related litigation. Accidents at work, though, are often still handled under CFA’s, being as they are PI cases.

As such, in some areas of civil law (such as employment law, immigration, and PI), litigants are still able to get access to justice, if only via mediation or alternative funding means. However, in a great many civil cases (notably family), the Jackson reforms have ushered in an era of limited access to justice.

That limited access to justice, criticised roundly by many in all areas of the legal sector, is set to stay for the time being. Law firms and lawyers will suffer as fewer seek legal representation due to the cots involved. However, it is the would be litigant who will suffer the most, as they are driven away from seeking their absolute right of a legal remedy to a civil dispute, in most cases.

EU Justice Chief Calls for Better Rights Online

Internet PrivacyVera Jourova, Czech politician and the European Union’s justice commissioner, has said that “fundamental rights that apply offline should also apply online.” Speaking at the recent Global Law Summit, Jourova made the comments as part of the first public speech she has given in the UK since last Autumn when she accepted responsibility for matters of justice, consumer protection and gender equality.

Her priorities over the coming year, Jourova said, would be to ensure that the full potential benefits of new technologies are exploited, but that this is balance with the need for people’s rights to be recognised online in the same way they would in real life. She also called for new legislation designed to ensure that users of the internet have “more control and more choice, while future-proofing protections suitable for the digital age.” This legislation, she said, should establish a better balance between the advantages of information technology and the need to safeguard the privacy of individuals accessing the internet.

This speech formed part of a panel discussion entitled “A Digital Magna Carta and the State of Exception.” The debate was chaired by Catherine Dixon, chief executive of the Law Society.:

Jourova’s comments had the support of Anne Jellema, CEO of the World Wide Web Foundation. Jellema said: “The web has unleashed a tidal wave of innovation, but it has also created a tidal wave of data about ourselves.” When it comes to protecting individual privacy, she said, “The law is lagging behind the power of technology.” This is particularly concerning, Jellema contended, at a time when “governments are moving aggressively to expand their surveillance capacities.”

The job of winding up the debate fell to Dr Gus Hosein. Hosein, who is director of the campaign group Privacy, expressed similar sentiments. He pointed to GCHQ’s programme entitled “Squeaky Dophin,” through which it monitors activity on social media websites. Describing the current state of affairs when it comes to privacy safeguards for internet users, he said bluntly that “the present is broken.”

Despite his dim view of the present, however, Hosein remained positive about the potential outlook for the future. He pointed to the way major companies and prominent innovators such as Google are becoming more and more aware of such issues, and taking greater steps to safeguard users.

Concluding, Hosein said that users can protect themselves in three ways: “Understand the technology, demand better technology and don’t allow the internet to discriminate against you – as it does in the US, where American citizens may not be spied upon, but foreigners routinely are.”

Senior Judge Praises Televised Pistorius Trial

Lord Neuberger, president of the Supreme Court, has praised South Africa’s Oscar Pistorius trial, which was controversially televised. Neuberger’s comments were included in a speech in which he stressed the value of open justice.

Neuberger said that broadcasting trials “is merely the modern extension of enabling the public to enter the courts physically.” Like making courts open to public visitors, televising a trial gives ordinary people access to the proceedings of the justice system and the ability to see how decisions are reached first hand.

Lord Neuberger, speaking in Hong Kong to the Hong Kong Foreign Correspondents’ Club, said that “Open justice is an essential feature of the rule of law. In its most basic form, it means that court hearings take place in public and judges’ decisions are available to the public.” He also stressed the importance of making sure that the way in which information was provided to the public was not only accessible but comprehensible, and described the role of the media in doing this as “essential.”

By contrast, he said, “if courts sit in private, judges cease to be properly accountable for their decisions, as the public do not know what the evidence and arguments were put before the judge, or why the judge reached a particular decision.” Furthermore, Neuberger warned that courts may “get into bad habits” should the doors be shut to the press and the public, and this could erode confidence in the integrity of the justice system.

On this basis, Neuberger decidedly expressed his support for the concept of televising trials. However, he acknowledged that it is important to approach the matter in the right way. For example, he described the US’ trial of OJ Simpson as a lesson “in how not to do it.” By contrast, he praised the more recent coverage of South Africa’s trial of Paralympian Oscar Pistorius, calling the media handling of the trial “impressive.”

Neuberger also stressed that it was essential journalists do not abuse their privileged position in passing on vital information about legal proceedings to the public. He acknowledged that simplification and even bias are likely to creep into the way that judgements are reported, and also that the media will likely level criticism at some aspects of the law. However, he insisted that through this the reporting process should remain “based on accuracy and truth rather than misreporting and propaganda.”

Summing up the importance of journalistic integrity in this process, he said “Inaccurate and unfair reporting of a judge’s decision in order to make a good story is an abuse of the freedom of expression accorded to the press and it undermines the rule of law.”

Legal Tips for Employers in the Coming Year

Small business owners need to be aware of any changes to employment laws. The ramifications for breaking any of these laws can be serious, even if the employer wasn’t aware of the change ahead of time.

These laws are changing quickly so employers will need to be diligent about keeping up with them. A number of new laws are already being introduced in 2013 that you will need to be aware of.

What Changes Should We Expect in 2013?

The government is passing several new laws that will extend more rights to employees throughout the United Kingdom. Here are some of the biggest changes that you will need to be aware of.

Shareholder Contracts with Employees

Many employers have shareholder contracts with their employees. A new law will require these contracts to be structured differently two months from now. Shareholder contracts will give employees the right to demand training when needed and file a complaint when they believe they were unfairly terminated.

Addition of Tribunal Fees

The government has grown concerned that too many employees have tried to manipulate the complaint system and file compensation claims against their employers. This new system will charge a fee of 250 pounds to discourage employees from trying to exploit their employers.

Limits of Compensation on Any Claims

More jaded employees have filed unjust termination claims against their employers. The government wants to ensure employees who have a legitimate case will still be able to seek compensation. However, they are also going to place some limitations on the amount that they can claim. There are two new criteria that set the limit of the amount an employee can claim:

  • The employee cannot be awarded more than  £74,200
  • The employee also will not be awarded more than a year’s salary

Wrongful termination claims can be financially devastating to small and medium sized businesses, so these new standards should limit the financial damages they will face.

Be Aware of these Laws in the Coming Year

Employment laws change drastically throughout the year. You will want to make sure that you understand the changes that will go into effect in 2013 and adopt to them as best as possible.