VAT Liability and Partnership Deeds

 
From 1 May 2007 partnerships have to register for VAT if they exceed or are likely to exceed the VAT registration threshold, which is currently £67,000, in respect of certain classes of services. Recent information from HMCE appears to indicate that where a VAT liability arises in respect of such services, it should be made clear whether the VAT liability falls on either the partnership or the individual partner providing the services. If this is not clarified in the Partnership Deed it appears that HMCE will deem the liability to fall on the partnership. This may result in the practice reaching the level where registration for VAT payments is necessary, which would not otherwise have been the case.
 

It is of course a matter for the practice as a whole as to how liabilities should fall but Ros Parkin – rap@lockharts.co.uk will be happy to advise on changes that may be necessary to practice Parntership Deeds.

Partnership Issues

While it is the wish of every partnership that things run smoothly, there will always be occasions when circumstances pose problems for your business, its partners and its employees.  Whether you are an existing partnership, or contemplating the formation of a new firm, it is essential that you take appropriate advice as these circumstances dictate.

Whether a problem arises out of a dispute over the nature or interpretation of your partnership agreement, your employee's rights and obligations, a matter relating to professional discipline, or a combination of several issues, it is crucial that you deal with it effectively and efficiently. 

Lockharts have considerable experience and expertise in acting for partnerships and are able to offer legal advice in the following key areas.
 
Partnership law
  • Drafting of partnership agreements for partnerships or LLPs,
  • Fixed price partnership agreement assessment,
  • Advising on the meaning and enforceability of clauses in existing Deeds,
  • Developments in the law such as the extension of the applicability of the Age Discrimination legislation to partnerships.
     Partnership Disputes
  • Negotiations and settlements when Partners retire voluntarily or compulsory,
  • Advice on internal partnership disputes, dissolutions and expulsion of partners,
  • Acting on behalf of partnerships and individual partners in ADR, mediation, arbitration and Court proceedings,
  • Advising on the enforceability of restrictive covenants, including acting to obtain injunction applications.
      Employment law
  • Drafting of employment contracts, staff handbooks and employment policies,
  • Advice on unfair dismissal, disciplinary and grievance procedures, redundancy, discrimination and business transfers (TUPE),
  • Advice on dispute resolution and compromise Agreements,
  • Representation and advice on claims before the employment tribunal,
  • More information.
      Disciplinary and Fitness to Practise Issues
  • Legal assistance to practitioners who are being or may be investigated or charged with a disciplinary offence by their professional or regulatory body,
  • Preliminary advice for practitioners who have been contacted by their regulatory body,
  • Representation for practitioners who are being investigated or subject to disciplinary hearings before a panel or Tribunal,
  • Combined experience of working almost exclusively with professional practitioners with expertise in partnership law, regulatory law and litigation,
  • Membership of the Association of Regulatory and Disciplinary Solicitors.
Property law
  • Commercial business sales and acquisitions,
  • Leases and premises development,
  • Re-mortgaging and co-ownership,
  • More information.
Intellectual property
  • Advice on trade marks,
  • Registrations at home and abroad,
  • Passing-off and infringement,
  • Assigning and licensing trademarks,
  • Advice on internet domain names,
  • More information.  
Whether or not your partnership issue appears to come under any of the above, please do contact our Head of Partnership Rosalind Parkin who will be happy to discuss your concerns with you or complete our enquiry form.

Partnership Issues

Partnership Issues

Changes in Capital Gains Tax (CGT)

Chancellor of the Exchequer Alistair Darling announced in the pre-Budget report that the rules on capital gains tax (CGT) will change from 6 April 2008.  The current system of taper relief allows investors to pay just 10% on investments held for two years. In place of the taper relief, Mr Darling is introducing a new flat rate of 18%.  He has intended to raise additional taxation to target private equity investors, who have been described as ‘paying less tax then their cleaners’.  The details of how this is to be done were not precisely spelled out. 
 
The net effect will be to set back the growth of the economy over coming years, by discouraging longer term investment and risk-taking.  This will hit all businesses in the UK and reduce the tendency for entrepreneurs to start new businesses.  The previous arrangements encouraged entrepreneurs to take higher risk and the tax system rewarded them accordingly.  The changes lead to expectations that many business owners will sell up in the period up to 5 April 2008, as people make sales to avoid much larger tax bills. 
 
This compares with the CGT position on disposal of personal assets.  The current effective rate is 24%. With the flat rate of 18%, general investors in shares and those with buy-to-let or second properties will find their position improved.  No holding period will be required to benefit from this new rate. 
 
Despite the new flat rate in CGT, Mr Darling said that the UK would remain “one of the most competitive single rates of any major economy”. 
 

Termination by Notice - The 'Crouch' Judgment and its Effect on PMS

On the morning of Wednesday 10 December 2008, the judgment of the Court of Appeal (The Master of the Rolls, Dyson LJ, Jackson LJ) was handed down in the case of Crouch v South Birmingham PCT. Lockharts were instructed by The British Dental Association who were an interested party in these proceedings. 

The subject matter of the case concerned a clause within a PDS Agreement, which purported to allow the PCT to terminate the PDS Agreement by notice and without cause. The clause related to paragraph 67 of Schedule 3 to the NHS PDS Agreement Regulations 2005:
 
67   (1)   The Relevant Body may terminate the agreement by serving notice in writing on the contractor at any time.
       (2)   Where a notice is served pursuant to sub-paragraph (1), the agreement shall terminate on the date provided for in the agreement.
 
The case had previously been argued before the Administrative Court when Mr Justice Collins found in favour of Mr Crouch. The Secretary of State appealed the decision reached by the Administrative Court and the Appeal was dismissed.
 
The Court of Appeal held that the right to terminate by notice under PDS is not a “standalone” right and is merely a procedural provision to be read in conjunction with the provisions in the Agreement where the PCT has a specified cause (under the Regulations) to terminate (untrue information, grounds of suitability, etc).
 
Applicability to PMS Agreements
 
The PDS Agreement Regulations 2005 and the PMS Agreement Regulations 2004 are very similar in construction and paragraph 67 of the PDS Regulations very closely mirrors paragraph 100 of the PMS Regulations. We believe the judgment in Crouch is very likely to be applicable to termination under a PMS arrangement.
 
Consequently, PMS practices, who are currently being threatened with the termination of their PMS Agreements under a ‘termination by notice’ provision may be able to reject such a notice on the grounds that the PCT may be attempting to act beyond its powers in terminating the PMS Agreement.
 
Since the judgement in the case is not directly applicable with regard to PMS, we would advise practices to seek legal advice immediately if the PCT is attempting to terminate their PMS Agreement without cause. Our involvement in, and understanding of, the Crouch case makes us well placed to advise practices on this issue and we would be very pleased to advise in further detail.  In the first instance, please contact Mark Jarvis, one of our solicitors who specialises in PMS. He can be contacted by email at mj@lockharts.co.uk or on 0207 383 7111.
 
Please also note that the Lockharts’ PMS Agreement (clauses 498 and 499) is compliant with the PMS Regulations and with the meaning as clarified in the Crouch case. Other PMS Agreements may have different notice provisions and these will need to be analysed in each case
 

 

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