The Act states that HMRC will become a preferential creditor for insolvencies that take place after 1 December 2020. Previously only employees and the Financial Services Compensation Scheme had preferential status. Now HMRC will be a preferential creditor for VAT, PAYE, NIC, and CIS but not for Corporation Tax.

Many will look at this and conclude that this only applies if a business goes into liquidation or administration. To a certain extent this is true but shrewd business owners are now looking at how the lenders will react to being pushed down the list of creditors.

Lenders may now look at the tax position of a borrower and may require information on any changes in their tax position. Overall some lenders may conclude that lending risk has increased and will require additional security before considering lending and / or increase the costs associated with the lending. They may also request ongoing information about the trading and tax position of the business.

For many small businesses this could mean even more personal guarantees or at least an increase in reporting.

For those businesses that are looking to source new or extra lending it will now be especially important to consider the finer detail of any lending documentation, to ensure that moving forward, they remain within its terms.

Business owners or lenders seeking legal advice on funding should contact RRP Associates for help.

0745 127 0008

info@rrpassociates.co.uk

The post More Lending Problems for SME’s? appeared first on RRP Associates.

A Lasting Power of Attorney (LPA), is a legal agreement whereby you identify a person(s) to make decisions about your care and finances should you become incapacitated. LPA’s are very good practice when it comes to planning personal affairs however, business owners should apply similar thinking when it comes to their business.

If you are a business owner it is important to consider what would happen if you had an accident that kept you out of the business temporarily or permanently, or you developed a medical condition that incapacitated you or even if you became stuck away from the business for an extended period of time.

The way in which the business is set-up will determine what can be done. However, many small businesses are individually run, perhaps as a sole trader or as the sole director within a limited company structure. With this kind of structure business owners often assume that a close colleague or family member will take control of the business. This is probably not the case and could leave the business (and any employees) at risk. It is unlikely that a friend or relative could extract cash from a business without an LPA, even if it is for the benefit of the owner. Decision making will be compromised and previously successful well-run businesses can fail very quickly.

LPA’s need not be all encompassing and is possible to draft them providing authority for someone to act in a number of limited areas. A business LPA should be separate from a general finances LPA. Incapacitation can be long or relatively short term. The recent Covid-19 outbreak has shown us that it is quite possible for people to be out of a business at a time when key decisions need to be made. If there is no provision for this the business is at risk, perhaps with many years hard work lost in a very short space of time.

Some may be concerned about the power that an LPA could grant to a third party. However, well drafted LPA’s can place limitations and guidance, such as limiting cash withdrawals from the business, or limiting the scope of decision making. Whilst the Attorney has power to make decisions they should always – as far as possible – consult with the business owner. The Attorney can be held personally liable for losses if there is a breach of duties.

For Partnerships there could be some provisions written into the Partnership agreement that deal with the incapacitation of member however, this should not be assumed and a LPA that does not conflict with the Partnership agreement could be appropriate.

Larger companies will likely have articles of association that set out what will happen should a director be unable to fulfil their responsibilities, but once again this is worth checking.

Can I make an LPA that covers my personal life and my business life?     

This is possible however, it may not be appropriate to have the same person(s) appointed as the attorney for your personal and business matters. Fortunately it is possible to have more than one LPA. People often decide to separate their personal affairs from their business affairs. Unfortunately others fail to consider the implications for their personal or business life should they become incapacitated and may not even have a current will!

What if I don’t have an LPA covering my business?

Should you be unable to make decisions about your business and don’t have a business LPA in place it may be necessary to apply to the Court of Protection to appoint a deputy. This can be expensive and the deputy appointed may not be someone you would have chosen. It can also take quite a long time to appoint a deputy which could cause significant problems for a business.

Businesses can take many years to establish yet they can fail as a result of even short term incapacitation. It therefore makes considerable sense to take time to plan for any period of sustained absence by the owner through an LPA.

Should you require assistance in drafting a personal or business LPA please contact Sian Aung or Melissa Browning.

T: 0745 127 0008

E: info@rrpassociates.co.uk

The post SMEs and Lasting Powers of Attorney appeared first on RRP Associates.

Businesses have responded very quickly to a fast changing economic and social environment. As a result of this many are having a good look at what they do and how they do it. Which in turn has involved a review of a wide range of practices and relationships. Many of these are supported by contracts and service agreements – which are essential to most organisations.

The speed at which many organisations have had to adapt has placed considerable strain on the senior teams of businesses who have had to make decisions much quicker than they normally would. Now they are looking at the shape of their business going forward. Contractual agreements provide the skeleton that hold businesses together.

In becoming more agile business owners should not skimp on the detail associated with key business agreements. Whether the agreement be associated with a supplier serving the business or the business providing products or services to others, the detail needs to be robust and well crafted.

Such agreements need to represent the interests of the business, be able to accommodate change, limit risk and of course comply with the law. Any poorly drafted agreements can lead to conflict, possible brand damage or a costly legal dispute. It is also worth noting that during a ‘due diligence’ review in a merger or acquisition well drafted agreements will significantly influence the price associated with a business sale or purchase.

A well-designed contract provides a basis for a successful mutually beneficial commercial relationship. Drafting them is however, a skilled process and the content should always been reviewed by someone who can determine if it is robust, enforceable or even legally binding.

If you need help in drafting or reviewing contracts or commercial agreements please contact Nesta Gresham at RRP Associates .

T: 0745 127 0008

info@rrpassociates.co.uk

The post Don’t let the Devil be the Detail appeared first on RRP Associates.

The Prime minister recently outlined a change in status from ‘stay at home’ to that of ‘stay alert’. This represents the first step in the easing of restrictions, a process that we are told could be halted or reversed depending upon the control of COVID-19 within the general population. Further details are expected and there has been some criticism in relation to the timing, the perceived vagueness and even the variation between different parts of the United Kingdom. However, what it does represent is a fundamental change in terms of work. There is a clear shift from staying at home to going back to work if people cannot work from home. This may be problematic for some given people are being encouraged to avoid public transport, but the emphasis is clear – a phased return to work is beginning.

So what does this mean for employers? The first thing to bear in mind is that normal Health and Safety rules apply, which require employers to do all they can to protect the good health of their staff whilst they are performing their duties.

We have heard much about the challenges of social distancing in travel, social and workplace environments. Hand washing and sanitising is still very much regarded as best practice whilst there continues to be debate about mask wearing.

All workplaces are different and it will be important to consider post COVID-19 safe working practices. The Health and Safety Executive clarifies the general obligations of employers on its website:

“It is an employer’s duty to protect the health, safety and welfare of their employees and other people who might be affected by their business. Employers must do whatever is reasonably practicable to achieve this.

This means making sure that workers and others are protected from anything that may cause harm, effectively controlling any risks to injury or health that could arise in the workplace.

Employers have duties under health and safety law to assess risks in the workplace. Risk assessments should be carried out that address all risks that might cause harm in your workplace.”

It is reasonable therefore, to suggest that returning to work should probably be accompanied by a review of health and safety policies, procedures and working practices and will likely involve completion of risk assessment(s) specific to different tasks.

Health and safety and regulatory law is a relatively complex area, as such employers seeking guidance should contact RRP Associates to discuss their concerns. We can then work collaboratively with an employer on a plan of action, thereby helping to protect against health risks and mitigate against any regulatory non-compliance.

T: 0745 127 0008

info@rrpassociates.co.uk

The post Return to work – employer considerations appeared first on RRP Associates.

Businesses large and small are currently looking at ways to borrow more to see them through the current lockdown. The recently announced ‘Bounce Back Loan’ scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000. Under this scheme the Government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. The term of the loan will be up to 6 years and no repayments will be due during the first 12 months.

It will be very interesting to see how this scheme progresses with the government saying it will work with lenders to agree a ‘low rate of interest’ (2.5%) for the remaining period of the loan. The scheme will be delivered through a network of accredited lenders with some of the big banks already marketing this scheme. Of significant interest is the fact that lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).

However, not every business will be eligible and it is worth noting that the borrower remains 100% liable for the debt.

Some businesses will no doubt look to extend existing borrowing from a bank or other lender, or seek alternative forms of investment. Already we are seeing some lesser known organisations move into the market offering funding and there will no doubt be some scams that come to light.

We can also expect that some businesses may decide to look for external investment in their business. Furthermore, as we come out of the downturn we can expect that some businesses may make themselves available for acquisition which could fuel a round of acquisition focussed lending.

All lending arrangements involve a form of contract between the lender and the borrower. Some of the terms can be rather confusing and difficult to understand. The rush for funding should not dilute the attention to the legal detail and obligations contained within the agreement. If business owners are in any doubt they should take legal advice on the contents of the agreements and the implications for the borrower and those who may be ultimately liable for any debt.

For more advice on the legal aspects of lending please contact Rodolfo R.:

0745 127 0008

info@rrpassociates.co.uk

The post Business Lending and Legal Obligations appeared first on RRP Associates.

The current outbreak has caused substantial problems for businesses in terms of how they carry on trading. Depending upon the sector in which they operate there have been a variety of announcements regarding Government support. For example, the Government has announced cash grants for the retail, hospitality and leisure sector. Under this scheme there are cash grants of up to £25,000 per property.

Under the Small Business Grant Fund (SBGF) all businesses in England in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

Properties covered include properties being used primarily as shops, restaurants, cafes, drinking establishments, cinemas, live music venues, for assembly and leisure and as hotels, guest and boarding premises and self-catering accommodation.

The Government has also announced that there will be an ‘Expanded Retail Discount’ business rates scheme which will provide a 100% discount for the year 2020/21 for eligible properties. Businesses need to take no action and Local Authorities will send a revised bill but if you consider yourself eligible for this relief, and have not heard from your Local Authority, you should contact them. This scheme applies to the majority of properties that have had to close as a result of the current outbreak.

Coronavirus Act 2020, Section 82

This act has some components that will be of interest to tenants.

(1) A right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent may not be enforced, by action or otherwise, during the relevant period.

(2) During the relevant period, no conduct by or on behalf of a landlord, other than giving an express waiver in writing, is to be regarded as waiving a right of re-entry or forfeiture, under a relevant business tenancy, for non-payment of rent.

In effect the government has announced that commercial tenants who are unable to make rent payments as a result of the coronavirus outbreak will be protected from eviction. This protection will cover England, Wales and Northern Ireland and last until 30th June, with an option for the government to extend this period if needed.

Suspension clauses in leases and lease renewals

Some commercial leases allow tenants the option to seek a suspension of rent payments. Not all leases are the same and the clauses dealing with any suspension and the circumstances surrounding these vary.

For other businesses their current lease may be coming to an end, or indeed business owners may feel that they have to seek a change to the existing agreement.

Many landlords will be willing to reconsider the terms of a lease or be helpful in agreeing new provisions in any new lease. Business owners however, need to take considerable care when agreeing to revised or new terms in a commercial lease and they should always seek legal advice.

Any business owners looking to vary or renew their lease can benefit from support from one of property specialists for an initial fixed fee discussion of £250.

For more information contact Hiromi Kuda. E: info@rrpassociates.co.uk

or T:084586 08775

The post Commercial Leases and COVID-19 appeared first on RRP Associates.

James Thornton, a Partner in RRP Associates ’ Commercial Dispute Resolution Team will talk about lenders, why they insist on personal guarantees, what are the implications and the borrowers’ obligations.

This event will be popular and we recommend you reserve your place as soon as possible. To guarantee a place please click on the link to register.

http://bit.ly/2PpoaW3

The post Landlord and Business Owners Seminar appeared first on RRP Associates.

Manage the risk

Do you know your client? Review your client’s credit – consider whether they would be prepared to complete a credit reference agency report or bank report.  It is easier to do this now than later on down the line when you are trying to gather evidence to enforce a debt.  However, this could be off putting for the client, particularly if the relationship is new so look at other resources and do your own research; websites like Red Flag and Companies House are a good starting point. Ask your own contacts whether they have had any dealings with this client.

Terms and conditions

Review them now. What are your terms and conditions? Do you even have any and are they clear, up to date or could they be misinterpreted? Make sure the client knows what they are. Do they benefit you and are they favourable to you i.e. consider shorter payment terms.

Set out clearly the scope of the work so the client is clear what is included (and not included) and ensure you make it clear what the costs will be if you are required to do work beyond the scope of the agreement.

Prepare to be flexible and negotiate with your client, particularly if the contract is of importance and you want to get off on the right footing. Ensure that the terms and conditions deal with retention of title, payment periods and interest for late payment and that they comply with legislation. Make sure there is a provision to vary the contract, ideally in writing, to avoid any later disputes. Finally, review your terms and conditions every 6 -12 months and update your clients on any changes.

Be prompt

Send your invoice as soon as the work is completed. If you are prompt with your bills, your clients are more likely to be prompt paying them. Ensure there is a written record of the bill being sent. If there any disputes over the work or the goods or the price the issue will hopefully be brought to light quickly rather than months down the line. If the work is likely to be long term, agree a payment plan with the client which helps them to manage their cash flow and helps you to manage yours; perhaps consider billing them in the middle of the month and at the end of the month.

Chase debts

Do not put this off. Strike while the iron is hot! You have carried out the work/supplied the goods and you are entitled to be paid.  Be polite, chase the client in person and discuss the reasons for late payment – sometimes there are legitimate reasons. Formulate a strategy to chase debtors and decide who in your business is going to take responsibility for chasing debts.  Ensure that you add on interest; that way the client may think twice about late payment next time. Make a note of any conversations regarding late payment as these may come in useful later on if the debt needs to be enforced.  On the 12th day after the invoice was due, step it up and request payment of the debt formally by letter or email, keep a record of the request and make it clear on what date you expect payment to be made. If that fails, and you reach the 19th day after the invoice was due, cease work, recall the goods (if the contract allows you to) and proceed with writing a letter of claim – this is a letter before taking Court action giving the client one final opportunity to pay up.

Keep on top of managing debt. If clients think you are not bothered about being paid, and being paid promptly, then they won’t be bothered either. Be proactive, not reactive and if all else fails consider taking specialist legal advice.

James Thornton, Partner and Solicitor in our Commercial Dispute Resolution Team can offer advice in relation to debts and the best way to enforce them.  Alternatively, if you want to tighten up your terms and conditions, Nesta Gresham a Consultant in our Commercial Team can provide your business with an MOT to ensure it is protected and operating effectively. Julian and Nesta and their teams can be contacted on 01582 878526

The post Less debt, more cash appeared first on RRP Associates.

Consequently, later on when you begin to raise money or enter into large commercial agreements, these overlooked points can lead to much larger problems.

Below I’ve listed a few things you should ideally get in place early on which could help you avoid costly disputes:

1.       Documenting your shareholding structure

Starting a company is quite straight forward as well as issuing initial shares as these shares have nominal value therefore having few tax implications.   However, where an investor comes along suddenly the company and the shares have added value and they are no longer free to move around.  The shareholders may have agreed to share the equity equally however this is not always documented from the outset and the shares are often still in the original shareholders name.  When trying to transfer these shares at a later stage this can become very expensive as there could be tax to pay on the transfer of the shares.  It is therefore important that shares and entitlements are documented from the outset to try and prevent such issues arising at a later stage.

2.       Ensuring there is a shareholder agreement in place

It is not uncommon for companies to overlook the importance of a shareholder agreement especially when starting a new business. However, failing to have this agreement in place can cause considerable problems in the future. A shareholder agreement is an agreement that structures the relationship between the shareholders of the company. A well drafted shareholder agreement should outline each party’s expectations with clear rules that describe the relationship between the shareholders and outline how the company is to be managed.

A shareholder agreement can also address and protect minority shareholder interests by prescribing a fair method of valuation and a course of action to be followed upon the sale of the shares.

Moreover, a shareholder agreement can include other basic measures to ensure a smooth process and fair outcome for all shareholders for example:

a.       Disposing of Shares; shareholders may agree that any transferor disposing of shares have to first offer them to the existing shareholders.

b.      Shareholder Approvals; shareholders may agree certain transactions within the business need all member approvals whereas other transactions may only need a smaller percentage of the members to agree.

c.       Restrictions; shareholders may think it sensible that all members should not carry on any similar business activities in any other company that is similar and or in competition with their company.  This would limit any potential conflict of interests.

d.      Dividend Policy; shareholders may want to agree to a certain type of dividend policy for example, dividends can only be paid after taxation payments have been paid, a certain amount of profits have been made or not before a business loan has been paid off.

3.       Roles;  Who does what? Who owns what?

More often than not new companies are never clear from the outset on who does what or who owns what.  One person may put in more money and the other may be the one putting in more time.  Sometimes a simple co-founder agreement could assist that clearly defines what the business does and who owns what.  In this instance a solicitor isn’t always needed.  Simply putting this on a piece of paper that all parties agree to and sign can be enough to get you started. If ever a disagreement arose this is something all parties could refer to and help clear up any potential legal disputes.

4.       Trade names and logos

Trademark registration is also something you should consider. It may be worth asking an expert to advise on whether registrations only in the UK and or other countries are also needed.  A company’s goodwill will become more and more valuable as a business grows and becomes more successful.  It is therefore imperative to protect this from the outset so you are in a strong position in stopping anyone attempting to use your company name or logo.  Trademarks can also open the way for business expansion over time from one industry to another.  It could also make your company attractive to others and could lead to the acquisition of your company by a larger corporation.

There are other intellectual property rights that should not be overlooked for example, design rights, patents and copyrights.  It is always advisable to seek legal advice early on to ensure your business is adequately protected from the outset.

If you have any questions regarding the best ways to protect your business, regardless of whether you have just started trading or not, please feel free to contact me where I would be happy to assist.

Contact Nesta Gresham on 01908 355770 or by email nesta.gresham@rrpassociates.co.uk

The post Nesta’s top tips for start-up companies appeared first on RRP Associates.

If you wish to take back possession of the property you must give written notice under Section 8 of the Housing Act 1988 setting out the grounds for possession before you can start legal proceedings.  These can be mandatory grounds for example, the Tenant is more than 2 months in arrears with rent or discretionary grounds, for example consistent late payment of rent.

On expiry of the Section 8 notice, anywhere between 2 weeks to 2 months, you will be entitled to start legal proceedings for possession under the standard procedure. If you are applying on a mandatory ground it is likely the Court will grant you a possession order at the hearing.  However, if the Tenant suddenly makes a payment which brings the total rent arrears to less than 2 months then the mandatory ground will fall away. This means you will be left with only a discretionary ground for possession and whether or not a possession order is granted is entirely at the Court’s discretion.

Some Landlords don’t realise that a Section 21 notice can also be served giving the Tenant 2 months to vacate the property, providing you have served on the Tenant all the required documentation (for example, EPC Certificate, Gas Safety Certificate and the Government’s ‘how to rent’ Guide) which ensures that the notice is valid.  If there is no written Tenancy Agreement you cannot apply to the Court using this Section alone but you can use this Section as an alternative if the Court decides not to grant you possession based on a discretionary ground.

Adil Patel, a Trainee Solicitor with RRP Associates currently training in our Civil and Commercial Dispute Resolution Team says “It is not always necessary to have a written agreement in place and not having one does not mean you are prevented from regaining possession of your property.  It is important to  ensure you have complied with any applicable conditions and  ensure the restrictions do not apply to you prior to serving the notice.  An invalid notice can delay the process which means waiting for the notice to expire before starting the process again.  I recommend Landlords take legal advice at the start of the process to ensure possession is regained at the earliest opportunity ina t cost effective way”.

If you are considering regaining possession of a property, with or without a written Tenancy Agreement in place contact Adil Patel on 0845-RRP -0000 or James Thornton on 0845-RRP -8807.

The post A Brief Guide to Regaining Possession of your Property appeared first on RRP Associates.